AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1999

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

[X]     Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act  of  1934  for  the  fiscal  year  ended  December  31,  1998
                                              -------------------
                                       OR
[   ]     Transition  report  pursuant  to Section 13 or 15(d) of the Securities
Exchange  Act  of  1934

                           Commission File No. 0-17139
                                               -------

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

                            CALIFORNIA     94-2790804
   (State or other jurisdiction of     (I.R.S. Employer Identification Number)
                         incorporation or organization)

                  1139 Karlstad Drive, Sunnyvale, CA     94089
             (Address of principal executive offices)     (Zip Code)

Registrant's  telephone  number,  including  area  code  (408)  747-7120
                                                         ---------------
Securities  Registered  Pursuant  to  Section  12(b)  of  the  Act:  None
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, no par
value

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
                                             --

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  Registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K.  [   ]

The  aggregate  market  value  of the voting stock held by non-affiliates of the
Registrant,  based  upon the closing sale price of the Common Stock on March 22,
1998  in  the over-the-counter market as reported by the NASDAQ National Market,
was  approximately  $32,499,410. Shares of Common Stock held by each officer and
director  and by each person who owns 5% or more of the outstanding voting stock
have  been  excluded  in  that such persons may be deemed to be affiliates. This
determination  of affiliate status is not necessarily a conclusive determination
for  other  purposes.

As  of  March  22,  1999,  Registrant  had  18,113,791  shares  of  Common Stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Parts  of  the  following  document are incorporated by reference in Part III of
this  Form  10-K Report: Proxy Statement for Registrant's 1999 Annual Meeting of
Shareholders-Items  10,  11,  12  and  13.


                                     PART I

ITEM  1.

BUSINESS

     Genus,  Inc.  ("Genus"  or  "the  Company") was formed in 1982 and designs,
manufactures  and  markets  capital  equipment  and  processes  for  advanced
semiconductor  manufacturing.  The  Company's  thin film deposition products are
used  worldwide  to produce integrated circuits ("ICs") for the data processing,
communications,  medical,  military,  transportation  and  consumer  electronics
industries.  Genus  pioneered  the  technical  development  of  chemical  vapor
deposition  ("CVD") tungsten silicide ("WSiX"), which perform two critical steps
in  the  manufacture  of  semiconductors.  These  technologies  enable  chip
manufacturers  to  simplify  their  IC  production  process  and  lower  their
cost-of-ownership.

     The  Company's global customer base consists of semiconductor manufacturers
in  the  United States, Europe and Asia/Pacific including Japan, South Korea and
Taiwan.

CURRENT  MARKET  AND  PRODUCTS

Thin  Film  (CVD)  Market

     The  manufacture of ICs includes the formation of isolation, transistor and
interconnect capabilities. Genus' CVD equipment provides thin films for the gate
electrode  of  the transistor and for barrier metal to clad the interconnect and
contact  elements.  WSiX  is  used  as  a  gate  electrode and also improves the
conductivity  of  local  interconnects,  producing  faster Dynamic Random Access
Memory  ("DRAM"), Static Random Access Memory ("SRAM") and flash memory devices.
Tungsten  nitride  ("WN")  is  emerging as a barrier-of-choice for advanced gate
formation,  memory  cell  electrodes  and  metal  interconnect  and  contact
applications  in  logic.

     CVD  sales  accounted for 35%, 32% and 38% of total revenues for 1998, 1997
and  1996,  respectively.

     The current products manufactured by Genus include three CVD systems. These
products  are  available  with  a  variety  of  options  and/or  upgrades.

Thin  Film  Products

     Genus'  CVD  systems  are designed for the deposition of WSiX and WN on the
gate  electrode  and  interconnect.  The  Company offers the Lynx2(TM) (formerly
called  the  7000  Series),  a  single wafer, thin film cluster tool. Genus' two
other  hardware architectures, the 8700 Series and the 6000 Series, deposit WSiX
using  batch  processes.

     Genus  Lynx2 System. Introduced in December 1994, the Genus 7000 Series was
renamed  the  Lynx2 in July 1997 in conjunction with the introduction of two new
films.  The  Lynx2  system  was  designed  to  meet  the  advanced  technology
requirements  of  the 16Mbit DRAM generation and beyond. This single wafer, open
architecture  cluster  tool  supports silane ("SiH4") and dichlorosilane ("DCS")
process  chemistries. Semiconductor manufacturers benefit by the high throughput
offered  by  the  Lynx2,  which  results  in  higher  productivity  and  lower
cost-of-ownership.  By offering the lowest fluorine content, manufacturers using
DCS  also  gain more reliable gate oxides with the Genus Lynx2. In addition, its
low deposited stress provides higher process yields with improved step coverage.

     This  system  is  currently used in production by manufacturers of advanced
DRAM  and  flash  memory  devices  to  0.18-micron. The Lynx2 features a Modular
Equipment  Standards  Committee ("MESC") compatible wafer handling platform from
Brooks  Automation  with  a  centrally located, dual end effector robot for high
throughput  operation  with  up  to  four  process  modules. The cluster tool is
controlled  by  an  easy-to-use  Windows(TM)-based  graphic  user interface. The
modular design of the Lynx2 enables the addition of other process modules to the
cluster  tool.  Other  manufacturing  advantages  offered by the Lynx2 include a
multi-zone resistive heater for more uniform wafer heating, two-zone showerheads
for  improved  film  composition  uniformity and a state-of-the-art gas delivery
system  that  minimizes  chamber-to-chamber  variance.

     LRS Silicide. LRS silicide, a Low-Resistivity, low-Stress ("LRS") CVD WSiX,
was introduced by Genus in December 1996. LRS silicide offers a 20% reduction in
resistivity  and  extremely  as-deposited  low  stress,  while  retaining  the
advantages  of conventional DCS chemistry. Memory device manufacturers using the
production-proven  DCS  and  tungsten hexafluoride chemistries can easily insert
LRS  silicide into existing process flows, providing increased yields and faster
devices.

     PECVD  Tungsten Nitride. In July 1997, Genus announced the industry's first
plasma-enhanced  CVD  ("PECVD")  WN barrier film. This film, compatible with the
Lynx2  product  platform,  has  the  potential  for  broadening Genus' thin film
customer  base  by bringing the Company's CVD products into the logic market. WN
enables  gigabit-scale  DRAM  device  production  by  serving as the top barrier
electrode  for tantalum oxide ("Ta2O5") capacitors. WN is amorphous as deposited
(to  500 degrees centigrade), and acts as a superior barrier even when deposited
to  a  thickness  of  100  angstroms.  It  has also been proven to be a superior
barrier  for  copper  diffusion relative to titanium nitride ("TiN"), and can be
used  as  an  adhesion  layer  for  blanket  tungsten.

     CVD  Tungsten  Nitride. In November 1998, Genus introduced the availability
of a new CVD WN film. This film, compatible with the Lynx2 product platform, may
offer  significant advantages in the production of next generation DRAM devices.
WN,  when  used  as an electrode material, results in 10 times lower leakage for
Ta2O5  capacitors compared to other electrode materials, such as TiN. Genus' CVD
technique  to  deposit  WN  uniformly  coats  the  intricate structures that are
present  in  modern  DRAM  capacitors.  This  development gives the advantage of
controlling  particles  and  repeatability  to  levels  consistent  with today's
production  requirements.

     Lynx2  CBS.  In  November  1998,  Genus  introduced the first all CVD-based
integrated  approach for copper barrier seed ("CBS") for advanced metallization.
The  Lynx2  CBS  enables  efficient  scaling  of  copper  metallization  to  the
0.18-0.15-micron  generation  and beyond, and is based on a well-established low
temperature,  highly conformal PECVD WN barrier film. This integrated product is
available  on  the  Lynx2.

     Lynx3(TM).  In January 1999, Genus introduced its first 300 mm low pressure
chemical  vapor deposition ("LPCVD") cluster tool. The Lynx3 is based on a newly
developed and Genus-patented process chamber concept that results in exceptional
uniformity.

     Genus  8700  Series  and  6000  Series. The 8700 Series and 6000 Series are
Genus'  previous  generation  thin film products. While Genus no longer actively
sells  these  products, it does continue to sell spare parts and provide service
for  these  products  pursuant  to  spare parts purchase and service agreements.

     Genus'  thin  films manufacturing facility maintains and operates a Class-1
cleanroom  to demonstrate integrated applications with its customers.  The Genus
technical  staff  includes  an  experienced  consulting  resource for successful
process  integration  of  its  products  and  processes.

     Samsung  Electronics  Company, Ltd. is the primary customer for the current
generation  thin film product. A representative list of Genus' CVD customers for
spare  parts  and  service revenue are Advanced Micro Devices, Fujitsu, Hitachi,
IBM,  Integrated  Device Technology, Intel, M/A Com, Sanyo, and SGS-Thomson. See
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations-Risk  Factors-Reliance  on  a  Small  Number  of  Customers  and
Concentration  of  Credit  Risk."

MARKETING,  SALES  AND  SERVICE

     Genus sells and supports its CVD products through direct sales and customer
support  organizations  in the U.S. and South Korea and through seven exclusive,
independent  sales  representatives and distributors in the U.S., Europe, Japan,
South  Korea,  China  and  Southeast  Asia.  Yarbrough  Southwest provides sales
distribution  in the southwestern region of the U.S. and SemiTorr provides sales
distribution  in the Northwest. Tony Fletcher & Assoc. supports and sells Genus'
equipment  in Europe, and AVBA, Ltd. represents Genus in Israel. In August 1998,
the  exclusive  sales  and service agreement with Innotech Corp. was terminated,
and Innotech is now under contract as a non-exclusive service organization, with
primary  responsibility for the systems that were sold under their sales tenure.
Pacific  International  has  been contracted as the new sales representative for
Japan.  United  Vision  International  (UVI) has been contracted as an exclusive
sales  and  service  representative  for  China and Malaysia. Genus Korea, Ltd.,
provides  in-country  field  service  and support, and in late 1997, assumed all
responsibilities  for  system  sales  in South Korea. Sales in the Singapore and
Taiwan market segments were served by the representative organizations of Spirox
Singapore,  Pte.  Ltd.  and  Spirox Taiwan, respectively. As of January 1, 1999,
sales and service responsibility for this region transferred to IdealTech. Genus
distributes  spare  parts  from  several  worldwide  depots including Sunnyvale,
California  and  Seoul,  Korea. To facilitate its marketing efforts, the Company
has  cleanroom  applications  laboratories  in  Sunnyvale,  California.

     Genus'  products  are  sold  primarily  to  domestic  and  foreign  device
manufacturers,  including  both  foundries  (companies  producing semiconductors
principally  for  other  semiconductor  manufacturers)  and  companies producing
semiconductors  mainly  for  outside  sales.

     The Company maintains sales, technical support and service personnel at its
principal  executive  offices  located  in Sunnyvale, California. Genus has also
established a subsidiary, Genus Korea, Ltd., to facilitate its sales and service
activities in Seoul, Korea. This subsidiary provides installation, field service
and  maintenance,  as  well  as  additional  technical  support to assist Genus'
customers  in  effectively  utilizing  the  Company's  products.  Other  foreign
subsidiaries  include Genus KK in Tokyo, Japan, Genus Europa Ltd., France, Genus
Europa  GmbH  in  Stuttgart,  Germany and Genus Europa Srl. in Milan, Italy. The
Company warrants its products against defects in material and workmanship for 12
months.

     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  and  could  have a material adverse effect on the Company's business,
financial  condition  and  results  of  operations.

     Historically, the Company has relied on a limited number of customers for a
substantial  portion  of  its  net  sales.  In  1998,  three  customers, Samsung
Electronics  Company,  Ltd.,  Advanced Micro Devices and Micron Technology, Inc.
accounted  for  28%,  15%  and 12%, respectively, of the Company's net sales. In
1998,  three  customers,  Samsung  Electronics  Company,  Ltd.,  M/A Com and SGS
Thomson  accounted  for  68%,  8%  and 5%, respectively of the Company's CVD net
sales  and  three customers, Advanced Micro Devices, Micron Technology, Inc. and
Atmel  accounted  for  21%,  18%  and  14%,  respectively,  of the Company's ion
implantation  net sales. In 1997, Samsung Electronics Company, Ltd. and Innotech
Corporation accounted for 47% and 17%, respectively, of the Company's net sales.
Additionally,  three  customers,  Samsung  Electronics  Company,  Ltd.,  Philips
Semiconductor  and  Atmel,  accounted  for  an  aggregate  of  78%  of  accounts
receivable  at  December  31,  1998;  and  three  customers, Samsung Electronics
Company,  Ltd.,  Micron Technology, Inc. and Innotech Corporation, accounted for
an  aggregate  of  75%  of accounts receivable at December 31, 1997. Because the
semiconductor  manufacturing  industry  is  concentrated  in a limited number of
generally  larger  companies,  the Company expects that a significant portion of
its  future  product  sales  will  be  concentrated  within  a limited number of
customers.  None  of  these  customers  has  entered  into a long-term agreement
requiring  it  to purchase the Company's products. Furthermore, sales to certain
of  these  customers  may  decrease  in the future when those customers complete
their  current  semiconductor  equipment  purchasing  requirements  for  new  or
expanded  fabrication  facilities.  The  loss  of  a significant customer or any
reduction  in  orders  from  a significant customer, including reductions due to
customer departures from recent buying patterns, market, economic or competitive
conditions  in  the semiconductor industry or in the industries that manufacture
products  utilizing  ICs,  could have a material adverse effect on the Company's
business,  financial  condition  and  results  of  operations.

     Backlog.  The  Company's  backlog  at  December  31, 1998 was approximately
$293,679  compared  with  approximately  $25.6  million  at December 31, 1997. A
multiple  system  purchase  order from a major DRAM manufacturer was received in
February  1999,  and  not  included  in  the  1998 backlog. Backlog in 1997 also
included  the ion implant product line, which was sold to Varian. Genus includes
in  its  backlog  only those orders for which a customer purchase order has been
received and a delivery date within 12 months has been specified. Because of the
possibility  of  customer  changes  in  delivery  schedules  or cancellations of
orders,  the  Company's  backlog  as  of  any  particular  date  may  not  be
representative  of  actual  sales  for  any  succeeding  period.

RESEARCH  AND  DEVELOPMENT

     Constant  technological  change,  fierce  competition  and  a  high rate of
technical  obsolescence  are  key characteristics of the semiconductor equipment
industry.  Genus'  future  prospects  depend in part on the Company's ability to
broaden  its  market  acceptance by differentiating its products on the basis of
production-worthiness,  technical capability, productivity, particle control and
customer  support.  For  thin  film,  the Company's research and development has
focused  on tungsten nitride film, a general-purpose process module and advanced
ultra  thin  film  CVD technologies. For ion implant, the Company's research and
development  focused  on  a  multipurpose  implanter.  The Company has a Class 1
applications  laboratory  and  a  separate  thin  films  development  area  in
California.  The  Company spent $8.9 million, $12.3 million and $14.6 million on
R&D  during  1998,  1997 and 1996, respectively. R&D decreased in 1998 primarily
due  to  the  Asset Sale. To maintain close relationships with its customers and
remain responsive to their requirements, continued investment is needed for thin
film  R&D.

COMPETITION

     The  Company  believes  that  the  principal  competitive  factors  in  the
semiconductor equipment market are product performance, quality and reliability,
wafer  throughput,  customer  support,  equipment  automation,  price  and
relationships.

     Genus  competes with a number of companies that historically have had wider
name  recognition,  broader  product  acceptance  within  the  industry  and
substantially  greater  resources.  In addition, the rapid rate of technological
change  in the industry creates opportunities for firms to enter this market and
apply  new  technologies to meet its needs. Accordingly, the Company anticipates
that  it  will  continue  to face competition in the domestic as well as foreign
market from both well-established and new competitors. There can be no assurance
that  the  Company  can  successfully  compete  with  such  companies.

     Genus  competes with other producers of CVD systems, as well as alternative
methods of deposition, such as sputtering and thin films other than WSiX, WN and
DCS.  The Company has an installed base of over 400 tools worldwide. The Company
estimates  that  its market share for the stand-alone WSiX was 32% for 1998. The
Company faces direct competition in all three films from Applied Materials, Inc.
and  Tokyo  Electron,  Ltd.  The impact of their presence in these niche markets
continued  to  increase  during  1998.  There can be no assurance that levels of
competition in the Company's particular CVD product market will not intensify or
that  Genus'  technical  advantages  may  not  be reduced or lost as a result of
technical  advances  made  by competitors or changes in semiconductor processing
technology.

MANUFACTURING  AND  SUPPLIERS

     Most  of  the  components  for  the  Company's  CVD systems are produced in
subassemblies  by  independent  domestic  suppliers  according  to the Company's
design  and  procurement specifications. The Company anticipates that the use of
such  subassemblies  will  continue  to  increase in order to achieve additional
manufacturing  efficiencies. The Company has alternate sources of supply for the
components  and  parts  purchased  from  outside  suppliers,  except for certain
components  used  in its CVD tungsten products that are presently available only
from  a  single  source.  To  date, the Company has been able to obtain adequate
supplies  of  such  components  in  a  timely  manner from existing sources. The
inability to develop alternate sources or to obtain sufficient source components
as required in the future, however,  could result in delays of product shipments
that would have a material adverse effect  on  the  Company's operating results.

     The  Company's thin film CVD operation is located in Sunnyvale, California.

INTELLECTUAL  PROPERTY

     The  Company believes that because of the rapid technological change in the
industry,  its  future  prospects  will  depend primarily upon the expertise and
creative skills of its personnel in process technology, new product development,
marketing,  application  engineering  and  product  engineering,  rather than on
patent  protection.  Nevertheless,  the  Company has a policy to actively pursue
domestic  and  foreign  patent  protection  to cover technology developed by the
Company.  The  Company currently holds 17 United States patents relating to thin
film.  All  of  the  patents  have  at least five years remaining on their term.

EMPLOYEES

     As  of  December  31,  1998,  the Company employed 83 people on a full-time
basis.  Genus reduced its workforce by 25% in the April 1998 reorganization, and
transferred  145  ion  implant  employees to Varian in July 1998, as part of the
Asset  Sale.  The  Company  believes  that  its relations with its employees are
satisfactory.  None  of  the  employees  are  covered by a collective bargaining
agreement.

ENVIRONMENTAL  REGULATION

     Federal,  state and local regulations impose various environmental controls
on  the  discharge of chemicals and gases used in the manufacturing process. The
Company  believes  that  its  activities  conform  to  present  environmental
regulations.  Increasing  public  attention  has,  however,  been focused on the
environmental  impact  of  semiconductor  operations.  While the Company has not
experienced  any  materially adverse effects on its operations from governmental
regulations, there can be no assurance that changes in such regulations will not
impose  the  need  for  additional  capital equipment or other requirements. Any
failure  by  the  Company  to  adequately  restrict  the  discharge of hazardous
substances  could  subject  it  to  future  liabilities  or  could  cause  its
manufacturing  operations  to  be  suspended.

SALE  OF  ASSETS

     In  July  1998,  the  Company sold selected assets and transferred selected
liabilities  related  to the Millions of Electron Volts ("MeV") ion implantation
equipment  product  line  to  Varian  Associates,  Inc.

MeV  Ion  Implantation  Market

     Ion  implantation  is  the  process by which a beam of electrically charged
dopant  atoms  (ions)  are  accelerated and driven into the surface of a silicon
wafer.  This  process  alters  the  electrical characteristics of the silicon by
making  it  more  or  less  conductive.

     The  market  for  ion  implanters consisted of three primary segments: high
current,  medium current and high energy. High and medium current ion implanters
made  up  approximately  67%  of  the  total  ion  implantation  market.

     Ion implantation sales accounted for 65%, 68% and 62% of total revenues for
1998,  1997  and  1996,  respectively.

     Information  regarding  the  Company's  foreign and domestic operations and
export  sales  is  included  in  Note  14  of  Notes  to  Consolidated Financial
Statements.

MeV  Ion  Implant  Products

     The  Kestrel(TM)  Family of Ion Implanters. Introduced in July 1997, Genus'
fourth-generation  of  implanters, the Kestrel Family, offered high productivity
manufacturing,  low  cost-of-ownership  and  flexibility for MeV, medium current
backup,  chained  implants,  mainstream  retrograde  well  and  advanced  well
applications.

     Kestrel  650  and  750.  The  Kestrel  650  had  been optimized to meet the
requirements  of  established  retrograde well applications that require a lower
price/performance  point.  The  accelerator  design  was the same as that of the
Tandetron(TM)  1520 that was used worldwide for retrograde well, R&D, as well as
production  applications.  The  Kestrel  750,  the  most  recent addition to the
Kestrel  family,  was  best  used  for advanced well applications such as triple
wells  and  Genus  developed  and  patented  Buried  Implanted Layer for Lateral
Isolation  ("BILLI").

     Tandetron  1520  and Genus 1510. Introduced in 1995 and 1992, respectively,
the  Tandetron  1520  and  Genus  1510  were  Genus' previous generation MeV ion
implant  products. While the Company no longer actively sold these products, the
Company  did continue to provide service and sell spare parts for these products
pursuant  to  service  and  spare  parts  purchase  agreements.

     A  representative  list  of Genus' ion implant customers included: Advanced
Micro  Devices,  Atmel,  Fujitsu,  Macrotron,  Micron  Technology, Inc., Newport
Wafer-Fab  Ltd., Philips Semiconductor, Samsung, SGS-Thomson, and Symbios Logic.
See  "Management's Discussion and Analysis of Financial Condition and Results of
Operations-Risk  Factors-Reliance  on  a  Small  Number  of  Customers  and
Concentration  of  Credit  Risk."

ITEM  2.  PROPERTIES

     The Company's executive offices, thin film manufacturing and R&D operations
are  presently  located  in  one  building  in  Sunnyvale,  California, totaling
approximately  100,500  square  feet,  of  which  the  Company  has  subleased
approximately 40,000 square feet to third parties. The California facilities are
occupied  under  a  lease expiring in October 2002, with a current annual rental
expense  of  approximately  $713,580.  The Company also leases sales and support
offices in Seoul, Korea. The Company owns substantially all of the machinery and
equipment  used  in  its  facilities. See Notes 3 and 8 of Notes to Consolidated
Financial  Statements.  The  Company  believes  that its existing facilities and
capital  equipment  are  adequate  to  meet  its  current  requirements and that
suitable  additional  or  substitute  space  will  be  available  as  needed.

ITEM  3.  LEGAL  PROCEEDINGS

     The  Company  and  Varian Associates, Inc. ("Varian") are in the process of
resolving  a  dispute  through arbitration. This dispute is in regard to whether
Genus  or  Varian  has rights to one ion implant sale and related inventory.  In
accordance  with  generally  accepted  accounting  principles,  if  the  Company
prevails  in  the  arbitration,  any  adjustments  to  the  Company's  financial
statements  as  a result of this gain contingency will be made in the quarter in
which the decision is rendered  and  the collection of the amount in question is
probable.  The Company is  not  conceding  any  rights to the disputed sales and
believes  that  it  will  prevail  in  the  arbitration.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     None.


                                     PART II

ITEM  5.  MARKET  FOR  THE  REGISTRANT'S  COMMON  EQUITY AND RELATED STOCKHOLDER
MATTERS

Common  Stock  Information

     The  common  stock  of Genus, Inc. is traded in the over-the-counter market
under  the  NASDAQ  symbol GGNS. The high and low last sales prices for 1998 and
1997  set  forth  below are as reported by the NASDAQ National Market System. At
March  22,  1999,  the  Company  has  439 registered shareholders as reported by
ChaseMellon  Shareholder  Services.

<TABLE>
<CAPTION>

                          1998              1997
                   ----------------   ------------------

                     HIGH      LOW      HIGH      LOW
                   -------   ------   --------   -------
<S>                <C>       <C>      <C>        <C>
First Quarter      $ 4       $ 2      $ 6-7/8    $ 3-5/8
Second Quarter       2-3/4     31/32    6-7/16     3-1/8
Third Quarter        1-9/16    7/16     7-7/8      4-1/2
Fourth Quarter       1-3/4     5/8      6-15/16    3-1/8
</TABLE>

     The  Company  has  not  paid  cash  dividends  on  its  common  stock since
inception,  and  its  Board  of  Directors  presently  intends  to  reinvest the
Company's earnings, if any, in its business. Accordingly, it is anticipated that
no  cash  dividends  will  be paid to holders of common stock in the foreseeable
future.

     In  February  1998,  the  Company  issued  equity  securities to accredited
investors  through a private placement of 100,000 shares of Series A Convertible
Preferred  Stock  ("Series  A  Stock")  and warrants to purchase an aggregate of
400,000 shares of common stock ("Warrants") for net proceeds of $4.8 million. In
August  1998,  the  Company  redeemed  70,000 shares of the outstanding Series A
Stock for cash and exchanged the outstanding 28,000 shares of Series A Stock for
Series  B Convertible Preferred Stock ("Series B Stock"). The Series B Stock was
convertible  into  shares  of  the  Company's  common stock at the option of the
holder  at a conversion price of $1.25. As of March 1, 1999, no remaining Series
B Stock were outstanding as all have been redeemed or converted to common stock.

     The  issuances  of  the  above  securities  were  deemed  to be exempt from
registration  under  the  Securities  Act of 1993 in reliance on Section 4(2) of
such  Securities  Act  as  transactions  by  an  issuer not involving any public
offering.  The  recipients  of  the  securities  represented their intentions to
acquire the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed to
the  share certificates and Warrants issued in such transactions. All recipients
had  adequate  access,  through  their  relationships  with  the  Company,  to
information  about  the  Company.  The  resale  of  the common stock issued upon
conversion  of  the  Series  B  Stock  and  exercise  of  the  Warrants has been
registered  pursuant  to  the Registration Statement on Form S-3 dated August 5,
1998,  and  all  amendments  and  supplements  thereto.

ITEM  6.  SELECTED  FINANCIAL  DATA

<TABLE>
<CAPTION>

                   SELECTED CONSOLIDATED FINANCIAL DATA
                     FOR THE YEARS ENDED DECEMBER 31,
          (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND EMPLOYEE DATA)

                              1998       1997       1996       1995       1994
                            ---------  ---------  ---------  ---------  --------
<S>                         <C>        <C>        <C>        <C>        <C>

Net sales                   $ 32,431   $ 84,286   $ 82,509   $100,350   $63,616 
Gross profit                   8,230     29,524     26,972     39,239    24,967 
Gross profit as a
  percentage of sales             25%        35%        33%        39%       39%
Income (loss) from
  operations                 (27,513)    (3,129)   (11,458)     7,976     3,729 
Net income (loss) available
  to common shareholders     (29,503)   (19,336)    (9,205)    19,282     4,177 
Net income (loss) per
  share-basic                  (1.71)     (1.15)     (0.56)      1.26      0.33 
Net income (loss) per
  share-diluted                (1.71)     (1.15)     (0.56)      1.20      0.32 

Cash and cash equivalents      8,125      8,700     11,827     12,630    10,188 
Total assets                  31,827     76,738     89,132     95,247    54,997 
Long-term obligations,
  less current portion            50        971      1,260      1,034       523 
Working capital               15,799     30,774     39,290     50,061    23,201 
Shareholders' equity          19,953     48,357     68,251     75,361    36,986 
Backlog                          294     25,554     19,846     44,996    44,011 
Number of employees               83        301        325        319       264 
</TABLE>

ITEM  7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

     Statements  in  this  report  which  express  "belief",  "anticipation"  or
"expectation"  as  well  as  other  statements which are not historical fact are
forward-looking  statements  within the meaning of Section 27A of the Securities
Act  of  1933  and  Section  21E  of  the Securities Exchange Act of 1934. These
forward-looking  statements  are subject to certain risks and uncertainties that
could  cause  actual  results  to  differ  materially from historical results or
anticipated  results,  including  those  set  forth under "Risk Factors" in this
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations"  and elsewhere in or incorporated by reference into this report. The
following  discussion should be read in conjunction with the Company's Financial
Statements  and  Notes  thereto  included  elsewhere  in  this  report.

1998  Compared  to  1997

     In  July  1998,  the  Company sold selected assets and transferred selected
liabilities  related  to the Millions of Electron Volts ("MeV") ion implantation
equipment  product  line to Varian Associates, Inc. ("Varian") for approximately
$24.2  million  ("Asset  Sale").  As  a result of the Asset Sale, the Company no
longer engages in the ion implant business and has refocused its efforts on thin
film  deposition.  The  Company  used  the  net  proceeds  of the Asset Sale for
repayment of certain outstanding indebtedness as well as for working capital and
general  corporate  purposes,  including  investment  in  Research & Development
("R&D")  of  thin  film  products.  In  connection  with  the Asset Sale and the
refocusing  of  the  Company's  business  on  thin  film  products,  the Company
significantly  reduced  the  workforce at its Sunnyvale, California location. In
addition,  James  Healy resigned as President and Chief Executive Officer of the
Company  and William W.R. Elder, the Company's Chairman, returned to a full-time
role  as  Chairman,  President  and  Chief  Executive  Officer.

     The  components  of  the  Company's  statements of operations, expressed as
percentage  of  net  sales,  are  as  follows:

<TABLE>
<CAPTION>

                                                    YEARS  ENDED  DECEMBER  31,
                                                    ---------------------------

                                                       1998     1997     1996
                                                     --------  -------  -------
<S>                                                   <C>      <C>      <C>

Net sales                                             100.0%   100.0%   100.0% 
Costs and expenses:
  Cost of goods sold                                   74.6     65.0     67.3  
  Research and development                             27.5     14.6     17.7  
  Selling, general and administrative                  43.5     24.1     21.7  
  Special charge                                       39.2        0      7.2  
                                                     --------  -------  -------
    Income (loss) from operations                     (84.8)    (3.7)   (13.9) 
Other income (expense), net                            (0.3)    (1.6)     0.1  
                                                     --------  -------  -------
    Income (loss) before provision for income taxes   (85.1)    (5.3)   (13.8) 
Provision for (benefit from) income taxes                 0     17.6     (2.7) 
                                                     --------  -------  -------
    Net income (loss)                                 (85.1)%  (22.9)%  (11.1)%
                                                     ========  =======  =======
</TABLE>

     Net sales for the year ended December 31, 1998 were $32.4 million, compared
to  net  sales  of  $84.3 million in 1997. The primary reason for the decline in
sales  volume  was  the  divestiture  of  the  ion  implant  product line, which
contributed  $23.8 million of revenue in 1998 compared to $57.1 million in 1997.
Also,  the  semiconductor  equipment  industry  continued  in  one  of its worst
recessions  in  1998, and the Company's sales volumes were adversely affected by
the  lack  of  capital  investment  by  semiconductor  manufacturers due to DRAM
overcapacity.  To  strengthen  the  Company's financial position, Genus made the
decision  during  the  second  quarter  to  sell the MeV ion implant products to
Varian  Associates,  Inc.  and  focus  the  Company's resources on the thin film
product line. Export sales accounted for 56% of the Company's net sales in 1998,
compared to 74% in 1997. Non-system sales were 32% of total revenue, compared to
20% in 1997. This was attributed to significantly fewer system unit shipments in
1998  compared  to  1997,  while non-system revenues decreased at a slower pace.

     In  1998,  the  Company  recorded  a  special charge of approximately $12.7
million (Note 15). Included in this special charge are personnel charges of $1.7
million  associated  with  the  Company's reduction in workforce as well as $5.4
million  in  inventory  write-downs,  and  $1.1 million in leasehold improvement
write-offs.  In  addition,  this  charge  included  $1.4  million  for  expenses
associated with the closing of several sales offices and transaction losses as a
result  of  the  sale of the ion implant products to Varian and $1.0 million for
legal,  accounting,  and  banking  fees  associated with the Varian transaction.
Finally,  the  special  charge  included a $2.0 million write-off of ion implant
inventory  that  is currently a matter of dispute with Varian in connection with
the  Asset  Sale.  The  Company  and  Varian are in the process of resolving the
dispute  through  arbitration  to  determine  whether  the Company or Varian has
rights  to  the  one  ion  implant  sale and related inventory.  If and when the
Company prevails in the arbitration,  any adjustments to the Company's financial
statements  as  a result of this gain contingency will be made in the quarter in
which  the  decision is rendered and the collection from the end customer of the
amount  in  question is probable. The Company is not conceding any rights to the
disputed  sale.

     At  December  31, 1998, the following cash components of the special charge
remain unpaid: $300,000 in payroll costs associated with the reduction in force,
$220,000 in foreign subsidiary closing costs, and $720,000 in transaction costs.
The Company expects these amounts to be paid by the end of the second quarter of
1999.

     Gross  margin  for  the  year  ended  December  31,  1998 was 25.4%, a 10.6
percentage point decline compared to 35% in 1997. Inventory and warranty reserve
reversals  of  $1.6 million during 1998 increased the gross margin percentage by
5%.  The  decrease  in  gross  margin  is  primarily attributed to underabsorbed
fixed  operations  and  service  costs due to depressed sales volumes during the
first  half  of  1998.  During  that time,  Genus operated as a two-product line
company,  with  separate manufacturing facilities for each product line.  During
the  second  half  of  1998,  when the Company was a focused thin film equipment
provider,  the  gross margins from operations  (exclusive of the $1.6 million in
inventory and warranty reserve reversals taken in the fourth quarter) were 38.6%
(see  Note  15 in Notes to Consolidated  Financial  Statements).  The  Company's
gross  margins  have historically been affected by variations in average selling
prices,  changes in the mix of product sales, unit shipment levels, the level of
foreign  sales  and competitive pricing pressures.  The Company anticipates that
these  conditions  may  continue  for the foreseeable future in light of current
market  conditions.

     As  a percentage of net sales, R&D expenses for the year ended December 31,
1998 were 28%, compared to 15% for the year ended December 31, 1997. On a dollar
basis,  R&D expenses of $8.9 million for 1998 were $3.4 million lower than 1997,
due  to  decreased expenditures associated with the MeV ion implant product line
which was sold in July, 1998. Thin film R&D spending of $5.4 million in 1998 was
relatively  flat  compared  to  1997. The Company serves markets that are highly
competitive and rapidly changing, and the Company believes that it must continue
to  maintain its investment in R&D to develop competitive products. Accordingly,
the  Company  anticipates  that  R&D expenses will increase in the future, as we
continue  to  invest  in  programs  critical  to  our  future  success.

     Selling, General and Administrative ("SG&A") expenses were 44% of net sales
for  the year ended December 31, 1998, compared to 24% of net sales for the year
ended  December  31,  1997. While the Company took significant actions to reduce
SG&A  expenses  in  1998,  the  decreased  sales  volumes adversely affected the
percentage.  Actual  SG&A  expenses  were  $14.1 million in 1998, a $6.2 million
decrease  over 1997. Included in SG&A for 1998 was a $1.4 million net charge for
the  write-off  of an outstanding receivable from Innotech Corporation, formerly
the  Company's  Japanese  distributor.

     In 1998, the Company had $86,000 in other expense, compared to $1.4 million
for  the  comparable  period in 1997. Due to the strengthening of the Korean won
and  the  Japanese yen, the Company recorded a foreign exchange gain of $318,000
during  the  fourth  quarter of 1998. In the fourth quarter of 1997, the Company
incurred  foreign  exchange losses of $1.1 million due to the weakening of these
two  currencies.  Net  interest  expense  for the year was $109,000, compared to
$289,000  for  1997.

     Due  to  current  market conditions, the fluctuation in the Company's order
rates  in  the  last 12 months, the Company's continued reliance on one customer
for  a  significant  portion  of  its  orders,  the  slowdown  in  the  Korean
semiconductor  market,  the  continued  competitive  market  environment for the
Company's  products,  and  the historically cyclical nature of the semiconductor
equipment  market,  the  Company  remains  cautious  about the prospects for its
business  over  the  next twelve months. The Company continues to make strategic
investments  in  new  product  development and manufacturing improvements with a
view  of  augmenting future performance by enhancing product offerings; however,
such  investments  may  adversely  effect  short-term operating performance. The
Company  is  also  continuing its efforts to implement productivity improvements
for  future  operating performance. There can be no assurance that the Company's
strategic  efforts  will  be  successful.

1997  Compared  to  1996

     Net sales for the year ended December 31, 1997 were $84.3 million, compared
to  net  sales of $82.5 million for the year ended December 31, 1996. While 1997
sales  were  essentially  flat  on a year-to-year basis, the Company experienced
volatility  on  a  quarterly  basis  during both years. Sales for the nine month
period  ended  September 30, 1997 increased over the same period for 1996 as the
industry  and  the  Company  recovered  from  the  slowdown  in  the DRAM market
experienced  during  the  latter half of 1996. However, in the fourth quarter of
1997,  the  Company's  sales  fell  from  the prior quarter due partially to the
financial  crisis  in Asia that caused some customers to push out their required
delivery  dates.  Export  sales  accounted for 74% of the Company's net sales in
1997,  compared  to  84%  in  1996.  Non-system  sales  remained relatively flat
year-to-year,  accounting  for  20% of revenue in 1997, compared to 23% in 1996.

     During  1996,  in  response  to the industry slowdown, the Company incurred
$5.9  million  in  special  charges  during  the third and fourth quarters as it
restructured  its operations to attain profitability at a decreased sales level.
These  charges  reflected  capacity  cost  reductions,  including  reductions in
headcount,  write-off  of  some  manufacturing equipment and increased inventory
reserves.  During  1997,  these  measures  resulted in lower expenses in cost of
goods  sold  and  R&D.

     Gross margin for the year ended December 31, 1997 was 35%, a two percentage
point  improvement  compared  to  33%  for  the  year  ended  December 31, 1996.
Improvements  in  operating  efficiencies  as a result of the restructuring were
mitigated  by  pricing pressures, especially from Asian customers. The Company's
gross  margins  have historically been affected by variations in average selling
prices,  changes in the mix of product sales, unit shipment levels, the level of
foreign  sales  and  competitive  pricing  pressures.

     As  a percentage of net sales, R&D expenses for the year ended December 31,
1997 were 15%, compared to 18% for the year ended December 31, 1996. On a dollar
basis, R&D expenses during 1997 decreased $2.3 million when compared to the same
period  in  1996, primarily due to the restructuring. The Company serves markets
that  are highly competitive and rapidly changing, and the Company believes that
it  must  continue  to  maintain  its  investment  in R&D to develop competitive
products.

     SG&A  expenses  were 24% of net sales for the year ended December 31, 1997,
compared  to  22% of net sales for the year ended December 31, 1996. Included in
SG&A  for  1997  was  a  write-off of an outstanding receivable from a Malaysian
customer.  Absent  this bad debt expense, SG&A expense would have increased only
approximately  $300,000  or  2%  from  1996.

     In 1997, the Company had $1.4 million in other expense, compared to $53,000
in  other  income  for  the  comparable period in 1996. As a result of the Asian
financial  crisis  and the devaluation of the Korean won, the Company incurred a
foreign  exchange  transaction loss of $1.1 million during the fourth quarter of
1997. Net interest expense for the year was $289,000 as compared to net interest
income  of  $124,000  for  1996  as  a  result  of higher outstanding short-term
borrowings  and  lower levels of invested cash and cash equivalents during 1997.

     During  the  fourth quarter of 1997, management determined that, based upon
the  weight  of  available  evidence  as  prescribed  by  Statement of Financial
Accounting  Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), it is
more  likely  than not that the net deferred tax asset at December 31, 1997 will
not  be realized and, therefore, provided a full valuation allowance against the
net  deferred  tax  asset  resulting in a tax provision of $14.8 million for the
year.  Accordingly,  the effective tax rate for the year ended December 31, 1997
was  330%  compared  to  an  effective  tax  rate  of  (19)%  in  1996.

Liquidity  and  Capital  Resources

     At  December  31,  1998,  the Company's cash and cash equivalents were $8.1
million,  a  decrease  of  $575,000 from the prior year. Operating activities in
1998  used  cash  of $18.9 million, primarily due to a $27.6 million net loss, a
$2.5  million  increase in inventories, and a $11.7 decrease in accounts payable
and  accrued  expenses,  partially offset by a $4.8 million decrease in accounts
receivable  and  non-cash  charges for restructuring activities and depreciation
and  amortization  of  $15.2  million. Operating activities in 1997 used cash of
$3.7  million,  primarily  due  to a $19.3 million net loss, offset partially by
non-cash  charges  for deferred taxes of $14.8 million; and operating activities
in  1996  provided  cash of $2.4 million, primarily due to decreases in accounts
receivable  of  $11.2 million, partially offset by a $9.2 million net loss and a
$4.5  million  increase  in inventories. The Company received $23.2 million from
the  sale of its MeV ion implant product line to Varian, and used these funds to
pay  certain existing obligations, including $16 million of accounts payable and
$2.8  million for the outstanding bank line of credit. Additionally, the Company
redeemed  70,000  shares  of its Series A Convertible Preferred Stock and 12,000
shares  of its Redeemable Series B Convertible Preferred Stock for approximately
$5.3  million. Financing activities in 1998 used cash of $4.3 million, primarily
due  to the net repayments of short-term bank borrowings and the net redemptions
of  preferred stock. Financing activities in 1997 and 1996 provided cash of $5.0
million  and  $3.7  million, primarily due to net short-term bank borrowings and
proceeds  from  issuance  of  common  stock.

     Capital  expenditures  during  1998  were  $919,000,  related  primarily to
acquisition  of  machinery  and equipment for the Company's R&D and applications
laboratories. These expenditures were financed by the Company's working capital.
The Company anticipates that any additional capital expenditures in 1999 will be
funded  through  existing  working  capital  or  lease  financing.

     The  Company's  primary  source  of funds at December 31, 1998 consisted of
$8.1  million  in  cash  and  cash  equivalents,  and  $13.0 million of accounts
receivable,  most of which are expected to be collected during the first half of
1999.  Included  in  the cash balance was $4.0 million in short-term borrowings,
utilizing  the  Company's accounts receivable purchase agreement. This borrowing
represents the maximum amount available under that credit facility, and the $4.0
million  balance  was  repaid  in  January  1999.

     The  Company  believes that its existing working capital and cash generated
from  operations,  if  any, will be sufficient to satisfy its cash needs through
the  end  of fiscal 1999. There can be no assurance that any required additional
funding,  if needed, will be available on terms attractive to the Company, which
could  have  a  material  adverse  effect  on  the Company's business, financial
condition,  and  results  of  operations. Any additional equity financing may be
dilutive  to  shareholders,  and  debt  financing,  if  available,  may  involve
restrictive  covenants.

Recent  Account  Pronouncements

     In  June 1998, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 133, "Accounting for Derivative Instruments
and  Hedging  Activities"  ("SFAS  133").  SFAS  133 establishes a new model for
accounting  for  derivatives  and  hedging  activities  as  is effective for the
Company's  fiscal year 1999. The impact of the implementation of SFAS 133 on the
consolidated  financial  statements  of the Company has not yet been determined.

     In  March  1998,  the  Accounting  Standards Executive Committee ("AcSEC"),
released  Statement of Position 98-1, "Accounting for Costs of Computer Software
Developed  or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 requires certain
costs  of  computer  software  developed  or  obtained  for  internal  use to be
capitalized,  provided  that  those  costs are not research and development. SOP
98-1  is  effective  for  the  Company's fiscal year 1999, and the impact of the
adoption  of SOP 98-1 on the Company's consolidated financial statements has not
yet  been  determined.

     In  April  1998, AcSEC released Statement of Position 98-5, "Accounting for
Costs  of  Start-Up  Activities"  ("SOP  98-5").  SOP 98-5 requires the costs of
start-up  activities to be expensed as incurred. Start-up activities are defined
as  those  one-time  activities related to opening a new facility, introducing a
new  product  or  service,  conducting  business  in a new territory, conducting
business  with  a new class of customer, initiating a new process in an existing
facility,  or  commencing  some  new  operation.  SOP  98-5 is effective for the
Company's  fiscal  year  1999, and the impact of the adoption of SOP 98-5 on the
Company's  consolidated  financial  statements  has  not  yet  been  determined.

Financial  Risk  Management

     The  Company  faces  exposure  to  adverse  movements  in  foreign currency
exchange  rates.  These  exposures  may  change  over time as business practices
evolve  and  could  seriously  harm  the Company's financial results. All of the
Company's  international sales, except spare parts and service sales made by the
Company's  subsidiary in South Korea, are currently denominated in U.S. dollars.
All  spare  parts  and service sales made by the South Korean subsidiary are won
denominated.  An  increase  in  the value of the U.S. dollar relative to foreign
currencies  could  make  the  Company's  products more expensive and, therefore,
reduce  the  demand for the Company's products. Reduced demand for the Company's
products  could  seriously  harm the Company's financial results. Currently, the
Company  does  not  hedge  against  any  foreign  currencies.

Risk  Factors

     Certain  sections  of  Management's  Discussion  and  Analysis  contain
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as  amended.  Actual results could differ materially from those projected in the
forward-looking  statements  as  a  result  of  the  factors  set forth above in
Management's  Discussion  and  Analysis  and  this  Risk  Factors  section.  The
discussion  of  these  factors  is  incorporated  by  this  reference as if said
discussion  was  fully  set  forth  in  Management's  Discussion  and  Analysis.

     Historical  Performance.  The  Company  has  experienced  losses  of  $29.5
million,  $19.3 million, and $9.2 million for the years ended December 31, 1998,
1997 and 1996, respectively. As a result of the Company's inconsistent sales and
operating  results  in  recent years, there can be no assurance that the Company
will  be  able  to  attain  or  sustain  consistent  future  revenue growth on a
quarterly  or  annual  basis,  or  that  the  Company  will be able to attain or
maintain  consistent  profitability  on  a  quarterly  or  annual  basis.

     Reliance  on  International Sales. Export sales accounted for approximately
56%,  74%  and  84%  of  total net sales in the years ended 1998, 1997 and 1996,
respectively.  In  addition,  net  sales to South Korean customers accounted for
approximately 34%, 50% and 59%, respectively, of total net sales during the same
periods.  The  Company  anticipates that international sales, including sales to
South Korea, will continue to account for a significant portion of net sales. As
a  result,  a  significant  portion  of  the  Company's sales will be subject to
certain  risks, including unexpected changes in regulatory requirements, tariffs
and other barriers, political and economic instability, difficulties in accounts
receivable collection, difficulties in managing distributors or representatives,
difficulties  in  staffing  and  managing  foreign  subsidiary  operations  and
potentially  adverse  tax  consequences.  Although  the Company's foreign system
sales  are primarily denominated in U.S. dollars and the Company does not engage
in  hedging  transactions,  the Company's foreign sales are subject to the risks
associated  with  unexpected  changes  in  exchange  rates, which could have the
effect  of making the Company's products more or less expensive. 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.

     Further,  the  Company has a wholly owned South Korean subsidiary providing
service  and  support  to  the  installed base of customers and whose functional
currency  is  the won. There can be no assurance that the Company will not incur
currency  losses  or  gains  in  future  quarters  as  the  currency fluctuates.

     A substantial portion of the Company's sales are in Asia. Recent turmoil in
the  Asian  financial  markets  has  resulted in dramatic currency devaluations,
stock  market  declines,  restriction  of available credit and general financial
weakness.  In addition, DRAM prices have fallen dramatically and may continue to
do  so  as some Asian IC manufacturers may be selling DRAMs at less than cost in
order  to raise cash. These developments may affect the Company in several ways.
Currency  devaluation  may make dollar-denominated goods, such as the Company's,
more  expensive  for  Asian  clients.  Asian  manufacturers  may  limit  capital
spending.  Furthermore,  the  uncertainty  of  the  DRAM  market  may  cause
manufacturers  everywhere  to  delay capital spending plans. These circumstances
may  also  affect  the  ability  of  Company  customers  to  meet  their payment
obligations,  resulting in the cancellations or deferrals of existing orders and
the  limitation  of  additional  orders. Such developments could have a material
adverse  effect  on  the  Company's business, financial condition and results of
operations.

     Reliance  on  a Small Number of Customers and Concentration of Credit Risk.
Historically,  the  Company  has  relied  on a limited number of customers for a
substantial  portion  of  its  net  sales.  In  1998,  three  customers, Samsung
Electronics  Company,  Ltd.,  Advanced Micro Devices and Micron Technology, Inc.
accounted  for  28%,  15%  and 12%, respectively, of the Company's net sales. In
1998,  three  customers,  Samsung  Electronics  Company,  Ltd.,  M/A Com and SGS
Thomson  accounted  for  68%,  8%  and 5%, respectively of the Company's CVD net
sales  and  three customers, Advanced Micro Devices, Micron Technology, Inc. and
Atmel  accounted  for  21%,  18%  and  14%,  respectively,  of the Company's ion
implantation  net sales. In 1997, Samsung Electronics Company, Ltd. and Innotech
Corporation accounted for 47% and 17%, respectively, of the Company's net sales.
Additionally,  three  customers,  Samsung  Electronics  Company,  Ltd.,  Philips
Semiconductor and Atmel accounted for an aggregate of 78% of accounts receivable
at  December  31,  1998; and three customers, Samsung Electronics Company, Ltd.,
Micron  Technology, Inc. and Innotech Corporation, accounted for an aggregate of
75%  of  accounts  receivable  at  December  31, 1997. Because the semiconductor
manufacturing  industry  is concentrated in a limited number of generally larger
companies,  the Company expects that a significant portion of its future product
sales  will  be concentrated within a limited number of customers. None of these
customers  has  entered  into a long-term agreement requiring it to purchase the
Company's  products.  Furthermore,  sales  to  certain  of  these  customers may
decrease in the future when those customers complete their current semiconductor
equipment  purchasing  requirements  for new or expanded fabrication facilities.
The loss of a significant customer or any reduction in orders from a significant
customer,  including  reductions  due  to customer departures from recent buying
patterns,  market,  economic  or  competitive  conditions  in  the semiconductor
industry  or  in  the  industries that manufacture products utilizing ICs, could
have  a  material  adverse effect on the Company's business, financial condition
and  results  of  operations.

     The  Company  is dependent on a small number of customers. Accordingly, the
Company  is subject to concentration of credit risk. If a major customer were to
encounter  financial difficulties and become unable to meet its obligations, the
Company  would  be  adversely  impacted.

     Cyclical  Nature  of  the  Semiconductor  Industry.  The Company's business
depends  upon  the capital expenditures of semiconductor manufacturers, which in
turn  depend  on  the current and anticipated market demand for ICs and products
utilizing  ICs.  The semiconductor industry is cyclical and experiences periodic
downturns,  which  have an adverse effect on the semiconductor industry's demand
for  semiconductor  manufacturing  capital  equipment.  Semiconductor  industry
downturns  have adversely affected the Company's revenues, operating margins and
results of operations. There can be no assurance that the Company's revenues and
operating  results  will not continue to be materially and adversely affected by
future  downturns  in  the  semiconductor  industry.  In  addition, the need for
continued  investment  in  R&D,  substantial  capital equipment requirements and
extensive  ongoing  worldwide customer service and support capability limits the
Company's  ability  to  reduce expenses. Accordingly, there is no assurance that
the  Company  will  be  able  to  attain  profitability  in  the  future.

     Fluctuations  in  Quarterly  Operating  Results.  The Company's revenue and
operating  results  may  fluctuate  significantly  from  quarter to quarter. The
Company derives its revenue primarily from the sale of a relatively small number
of high-priced systems, many of which may be ordered and shipped during the same
quarter.  The  Company's results of operations for a particular quarter could be
adversely  affected  if  anticipated orders, for even a small number of systems,
were  not  received  in  time to enable shipment during the quarter, anticipated
shipments  were  delayed  or canceled by one or more customers or shipments were
delayed  due  to manufacturing difficulties. The Company's revenue and operating
results  may  also  fluctuate due to the mix of products sold and the channel of
distribution.

     Competition.  The semiconductor manufacturing capital equipment industry is
highly  competitive.  Genus  faces substantial competition throughout the world.
The  Company  believes  that  to remain competitive, it will require significant
financial  resources  in order to offer a broader range of products, to maintain
customer service and support centers worldwide and invest in product and process
R&D. Many of the Company's existing and potential competitors have substantially
greater  financial  resources,  more  extensive  engineering,  manufacturing,
marketing and customer service and support capabilities, as well as greater name
recognition than the Company. The Company expects its competitors to continue to
improve  the  design and performance of their current products and processes and
to  introduce  new  products  and  processes with improved price and performance
characteristics. If the Company's competitors enter into strategic relationships
with  leading semiconductor manufacturers covering CVD products similar to those
sold  by the Company, it would materially adversely effect the Company's ability
to  sell its products to these manufacturers. There can be no assurance that the
Company will continue to compete successfully in the United States or worldwide.
The  Company  faces  direct competition in CVD WSiX from Applied Materials, Inc.
and  Tokyo  Electron,  Ltd.  There  can  be  no  assurance  that  these or other
competitors  will  not succeed in developing new technologies, offering products
at  lower  prices  than  those of the Company or obtaining market acceptance for
products  more  rapidly  than  the  Company.

     Dependence  on  New  Products  and Processes. The Company believes that its
future  performance  will depend in part upon its ability to continue to enhance
its  existing  products  and  their  process  capabilities  and  to  develop and
manufacture  new  products  with improved process capabilities. As a result, the
Company  expects  to  continue  to  invest  in R&D. The Company also must manage
product  transitions  successfully,  as  introductions  of  new  products  could
adversely  effect sales of existing products. There can be no assurance that the
market  will  accept the Company's new products 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 to satisfy customer needs or achieve market
acceptance.  The  failure  to  do so could have a material adverse effect on the
Company's  business, financial condition and results of operations. Furthermore,
if  the  Company  is  not successful in the development of advanced processes or
equipment  for  manufacturers  with  whom it has formed strategic alliances, its
ability to sell its products to those manufacturers would be adversely affected.

     Product  Concentration;  Rapid  Technological  Change.  Semiconductor
manufacturing equipment and processes are subject to rapid technological change.
The Company derives its revenue primarily from the sale of its WSiX CVD systems.
The  Company  estimates  that  the  life  cycle  for  these systems is generally
three-to-five  years. The Company believes that its future prospects will depend
in  part upon its ability to continue to enhance its existing products and their
process  capabilities  and to develop and manufacture new products with improved
process  capabilities.  As  a  result,  the  Company expects to continue to make
significant investments in R&D. The Company also must manage product transitions
successfully,  as  introductions of new products could adversely effect sales of
existing products. There can be no assurance that future technologies, processes
or product developments will not render the Company's product offerings obsolete
or  that  the  Company  will  be  able  to develop and introduce new products or
enhancements  to its existing and future processes in a timely manner to satisfy
customer  needs  or  achieve  market  acceptance.  The  failure  to  do so could
adversely  effect  the  Company's  business,  financial condition and results of
operations.  Furthermore, if the Company is not successful in the development of
advanced  processes  or  equipment for manufacturers with whom it currently does
business,  its  ability  to  sell  its  products to those manufacturers would be
adversely  affected.

     Dependence on Patents and Proprietary Rights. The Company's success depends
in part on its proprietary technology. While the Company attempts to protect its
proprietary  technology through patents, copyrights and trade secret protection,
it  believes  that  the success of the Company will depend on more technological
expertise,  continuing  the  development  of new systems, market penetration and
growth  of  its  installed base and the ability to provide comprehensive support
and  service  to  customers.  There can be no assurance that the Company will be
able  to  protect its technology or that competitors will not be able to develop
similar  technology  independently. The Company currently has a number of United
States  and  foreign  patents and patent applications. There can be no assurance
that  any  patents  issued to the Company will not be challenged, invalidated or
circumvented  or  that  the  rights  granted thereunder will provide competitive
advantages  to  the  Company.

     From  time-to-time,  the  Company  has  received notices from third parties
alleging  infringement of such parties' patent rights by the Company's products.
In  such  cases, it is the policy of the Company to defend against the claims or
negotiate  licenses  on  commercially  reasonable  terms  where  considered
appropriate. However, no assurance can be given that the Company will be able to
negotiate  necessary  licenses  on  commercially reasonable terms, or at all, or
that any litigation resulting from such claims would not have a material adverse
effect  on  the  Company's  business  and  financial  results.

     Dependence  on  Key Suppliers. Certain of the components and sub-assemblies
included  in  the  Company's  products  are obtained from a single supplier or a
limited  group  of  suppliers.  Disruption or termination of these sources could
have  a  temporary  adverse  effect  on  the  Company's  operations. The Company
believes  that  alternative  sources  could  be obtained and qualified to supply
these  products,  if  necessary.  Nevertheless,  a prolonged inability to obtain
certain  components  could  have  a  material  adverse  effect  on the Company's
business,  financial  condition  and  results  of  operations.

     Dependence  on  Independent  Distributors.  The Company currently sells and
supports  its  CVD  products  through  direct  sales  and  customer  support
organizations  in  the  U.S.,  Western  Europe and South Korea and through seven
exclusive,  independent  sales  representatives  and  distributors  in the U.S.,
Europe,  Japan,  South  Korea,  Taiwan, China and Malaysia. The Company does not
have  any  long-term  contracts with its sales representatives and distributors.
Although  the  Company  believes  that  alternative  sources of distribution are
available,  the  disruption  or  termination  of  its  existing  distributor
relationships  could  have a temporary adverse effect on the Company's business,
financial  condition  and  results  of  operations.

     Volatility  of  Stock  Price.  The  Company's  common stock has experienced
substantial  price  volatility,  particularly  as a result of quarter-to-quarter
variations  in  the actual or anticipated financial results of, or announcements
by,  the  Company,  its  competitors  or  its  customers,  announcements  of
technological  innovations  or  new  products by the Company or its competitors,
changes  in  earnings  estimates  by  securities  analysts  and  other events or
factors.  Also,  the  stock  market  has  experienced  extreme  price and volume
fluctuations  which have affected the market price of many technology companies,
in  particular, and which have often been unrelated to the operating performance
of these companies. These broad market fluctuations, as well as general economic
and  political  conditions  in  the United States and the countries in which the
Company  does  business,  may adversely effect the market price of the Company's
common  stock.  In  addition,  the  occurrence of any of the events described in
these  "Risk Factors" could have a material adverse effect on such market price.

     Readiness  for  Year 2000. Many existing computer systems and applications,
and  other  control  devices, use only two digits to identify a year in the date
field,  without  considering  the  impact of the upcoming change in the century.
These  computer  systems and applications could fail or create erroneous results
unless  corrected  so  that  they can process data related to the year 2000. The
Company  relies  on  its  systems,  applications  and  devices  in operating and
monitoring  all major aspects of its business, including financial systems (such
as  general  ledger,  accounts  payable  and payroll modules), customer service,
infrastructure,  embedded  computer  chips,  networks  and  telecommunications
equipment  and  end  products.  The  Company  also relies on external systems of
business  enterprises  such  as  customers,  suppliers,  creditors,  financial
organizations,  and  of governments both domestically and globally, directly for
accurate  exchange  of  data  and  indirectly.

     The  Company is currently completing the planning process for its Year 2000
readiness  project,  although  many  mission  critical  issues have already been
addressed. The director of operations and facilities chairs the project team and
it  includes  project  managers  from  the  finance,  information  technology,
facilities, engineering, and customer support organizations. The team is meeting
weekly,  and  has  conducted  a  thorough analysis to identify systems that will
possibly  be  impacted  by  the  Year  2000  problem.  These  systems  have been
classified  into  four  major  segments:  facilities,  mission critical business
operations systems, non-mission critical business operations systems and general
office  equipment.  The  project  team has assigned one of its members to be the
project  manager for each segment, and each of these segment project managers is
in  the  process  of  identifying  an  implementation  manager  for  each system
identified  as part of their segment. Each implementation manager is responsible
for  developing  a  detailed  plan  that  includes  an  assessment  of Year 2000
compliance,  followed  by  phases  to  define  a  contingency  plan,  evaluate
alternatives, select a solution, design and implement the solution and, finally,
to  test  and  verify compliance. Some of the critical systems already addressed
are  discussed  in  the  following  paragraphs.

     End  Products.  The  control systems for each of the Company's products are
computer  driven.  Thorough testing of these products was completed during 1998.
Testing addressed not only the Company designed elements of the system, but also
the  embedded  controls  in  manufactured  components  integrated  into  the end
products.  Each  product  requires a software upgrade, and the oldest systems in
the  product  line  require  a  control system computer replacement as well. The
Company  is charging a nominal amount for these upgrades on the older generation
systems,  while  upgrades  for  the  current  Lynx2  products are supplied at no
charge.  The  design  and  testing  of  each of these product upgrades have been
completed,  and  the  upgrades  have  been  shipped and installed at some of the
Company's customer's sites worldwide. The Company has contacted and offered this
upgrade  to all of its customers, but some customers have decided not to upgrade
their  systems.

     Enterprise  Resources  Program.  During  1997,  the  Company  started
implementation  of a new business system. One criterion for the selection of the
enterprise  software  was  compliance  with  Year  2000  issues.  The system was
installed and implemented at the Company's Newburyport, MA facility in September
1997,  but implementation at the Sunnyvale, CA headquarters was postponed during
1998  due  to  the  Asset  Sale.  The  system hardware and software was recently
returned to Sunnyvale, and cutover from the existing system to the new system is
scheduled  for August 1, 1999. Year 2000 compliance on the new system was tested
on the system while it was installed in Newburyport. The system is considered to
be the most critical internal Company resource at risk to the Year 2000 problem,
so  timely  implementation  is  essential.

     Supplier  Readiness.  Each  implementation  manager  is  responsible  for
assessing  the  readiness  of  the  suppliers who support their system to ensure
there  will  be  no  lapses in service that may interrupt operations. This is in
addition  to addressing readiness of the hardware and software products provided
by  these  suppliers. Suppliers of inventory material for the Company's products
will  be surveyed during the second quarter of 1999. This is one of the projects
under the mission critical business operations systems segment. Readiness of the
supplier's  products has already been established under the end product project,
but  disruption  of the supply pipeline due to supplier business readiness still
needs  to  be  addressed.  Preliminary  discussions  with  some of the Company's
critical  suppliers  indicate that most are ahead of the Company in establishing
their  own  readiness.

     The  Company's  estimated  expenses  incurred through December 31, 1998 are
$300,000. The 1999 projected costs are $115,000. The single largest risk element
is  the  business  system,  and  implementation  of the new system is adequately
budgeted  in 1999. The Company believes that costs to fix the Company's products
have  already been fully incurred. Several capital investments have already been
made  in  1999  to replace aging equipment, and Year 2000 compliant systems were
purchased  in  all  cases.  This  includes  new network and electronic mail file
servers.  The  Company's  voicemail  system  is  not  Year  2000  compliant, and
replacement  is  already  budgeted  as  a  1999 capital improvement. There are a
number  of  hardware and software systems, both mission critical and non-mission
critical,  which may require upgrades at the Company's expense over the next few
quarters,  but  preliminary  estimates  indicate  these  expenses  will  not  be
material.  There  can be no assurance that the Company's current estimated costs
associated  with  the  Year  2000  issue,  or  the consequences of incomplete or
untimely  resolution  of  the  Year 2000 issue, will not have a material adverse
effect  on  the result of operations or financial position of the Company in any
given  year.

     The  Company  has  not yet identified any specific contingency plans in the
event  that  projects  are  not  completed  in  time or if planned fixes fail to
operate  as  expected.  Each  implementation  project manager is responsible for
completing  contingency  plans  for  assigned  projects  as part of the planning
process.

     At  this  time,  the  Company  does not plan to use any outside agencies to
provide  independent  verification  of  readiness,  although  individual
implementation  project  managers may decide to include independent verification
as part of their project plans. The independent verification requirement will be
based  on  the  risk  associated  with failure of the particular project/system.

ITEM  8.  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

<TABLE>
<CAPTION>

                          GENUS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                               AS OF DECEMBER 31,
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                              1998       1997
                                                            ---------  ---------
<S>                                                         <C>        <C>
ASSETS
Current Assets:
  Cash and cash equivalents                                 $  8,125   $  8,700 
  Accounts receivable (net of allowance for doubtful
    accounts of $500 in 1998 and $1,097 in 1997)              13,008     19,469 
  Inventories                                                  5,338     28,986 
  Other current assets                                           379      1,029 
                                                            ---------  ---------
    Total current assets                                      26,850     58,184 
  Property and equipment, net                                  4,659     15,276 
  Other assets, net                                              318      3,278 
                                                            ---------  ---------
                                                            $ 31,827   $ 76,738 
                                                            =========  =========

LIABILITIES AND REDEEMABLE PREFERRED STOCK
Current Liabilities:
  Short-term bank borrowings                                $  4,000   $  7,200 
  Accounts payable                                             2,193      8,723 
  Accrued expenses                                             4,794     10,613 
  Current portion of long-term debt and capital
    lease obligations                                             64        874 
                                                            ---------  ---------
    Total current liabilities                                 11,051     27,410 
Long-term debt and capital lease obligations, less
  current portion                                                 50        971 
                                                            ---------  ---------
    Total liabilities                                         11,101     28,381 
                                                            ---------  ---------
Commitments (Note 8)
Redeemable Series B convertible preferred stock,
no par value:
  Authorized 28,000 shares;
    Issued and outstanding, 16,000 shares (1998)
    and none (1997), liquidation preference, $50 per
    share (1998) and none (1997)                                 773          0 
                                                            ---------  ---------

SHAREHOLDERS' EQUITY
Common stock, no par value:
  Authorized 50,000,000 shares;
    Issued and outstanding, 18,113,791 shares (1998) and
    17,120,628 shares (1997)                                  99,849     99,149 
  Accumulated deficit                                        (78,255)   (48,863)
  Accumulated other comprehensive loss                        (1,641)    (1,929)
                                                            ---------  ---------
    Total shareholders' equity                                19,953     48,357 
                                                            ---------  ---------
                                                            $ 31,827   $ 76,738 
                                                            =========  =========
<FN>

     The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

<TABLE>
<CAPTION>

                         GENUS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

                        FOR THE YEARS ENDED DECEMBER 31,
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                    1998       1997       1996
                                                 ---------  ---------  ---------
<S>                                              <C>        <C>        <C>
Net sales                                        $ 32,431   $ 84,286   $ 82,509 
Costs and expenses:
  Cost of goods sold                               24,201     54,762     55,537 
  Research and development                          8,921     12,327     14,639 
  Selling, general and administrative              14,115     20,326     17,901 
  Special charge                                   12,707          0      5,890 
                                                 ---------  ---------  ---------
    Income (loss) from operations                 (27,513)    (3,129)   (11,458)
Other income (expense), net                           (86)    (1,363)        53 
                                                 ---------  ---------  ---------
  Income (loss) before provision for
  (benefit from) income taxes                     (27,599)    (4,492)   (11,405)
Provision for (benefit from) income taxes               1     14,844     (2,200)
                                                 ---------  ---------  ---------
  Net income (loss)                               (27,600)   (19,336)    (9,205)
  Deemed dividends on preferred stock              (1,903)         0          0 
                                                 ---------  ---------  ---------
  Net income (loss) available to common
  shareholders                                    (29,503)   (19,336)    (9,205)
Comprehensive income (loss)
  Deemed dividends on preferred stock               1,903          0          0 
  Currency exchange adjustment                        288     (1,792)      (137)
                                                 ---------  ---------  ---------
  Comprehensive income (loss)                    $(27,312)  $(21,128)  $ (9,342)
                                                 =========  =========  =========

Net income (loss) per share-basic                $  (1.71)  $  (1.15)  $  (0.56)
                                                 =========  =========  =========
Net income (loss) per share-diluted              $  (1.71)  $  (1.15)  $  (0.56)
                                                 =========  =========  =========
<FN>

     The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

<TABLE>
<CAPTION>

                    GENUS, INC. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

               FOR THE THREE YEARS ENDED DECEMBER 31, 1998
              (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                             ACCUMULATED
                                                                OTHER
                             PREFERRED  COMMON  ACCUMULATED COMPREHENSIVE
                               STOCK     STOCK    DEFICIT       LOSS      TOTAL
                              --------  -------  ---------  ----------  --------
<S>                           <C>       <C>      <C>        <C>         <C>
Balances, January 1, 1996     $     0   $95,683  $(20,322)  $      0   $ 75,361 
  Issuance of 310,471
    shares of common stock
    under stock option plan         0     1,125         0          0      1,125 
  Issuance of 249,917 shares
    of common stock under
    employee stock purchase
    plan                            0     1,107         0          0      1,107 
  Net loss                          0         0    (9,205)         0     (9,205)
  Translation adjustment            0         0         0       (137)      (137)
                               -------  -------  ---------  ---------  ---------
Balances, December 31, 1996         0    97,915   (29,527)      (137)    68,251 
  Issuance of 124,199 shares
    of common stock under
    stock option plan               0       364         0          0        364 
  Issuance of 272,502 shares
    of common stock under
    employee stock purchase
    plan                            0       870         0          0        870 
  Net loss                          0         0   (19,336)         0    (19,336)
  Translation adjustment            0         0         0     (1,792)    (1,792)
                               -------  -------  ---------  ---------  ---------
Balances, December 31, 1997         0    99,149   (48,863)    (1,929)    48,357 
  Issuance of 100,000 shares
    of Series A convertible
    preferred stock and
    warrants for 400,000
    shares of common stock
    (Note 9)                    6,222       385    (1,792)         0      4,815 
  Conversion of 2,000 shares
    of Series A convertible
    preferred stock to common
    stock                        (124)      124         0          0          0 
  Redemption of 70,000 shares
    of Series A convertible
    preferred stock            (4,725)        0         0          0     (4,725)
  Exchange of 28,000 shares
    of Series A convertible
    preferred stock for
    28,000 shares of Series B
    convertible preferred
    stock                      (1,373)        0         0          0     (1,373)
  Issuance of 5,000 shares
    of common stock under
    stock option plan               0        14         0          0         14 
  Issuance of 237,522 shares
    of common stock under
    employee stock purchase plan    0       177         0          0        177 
  Net loss                          0         0   (27,600)         0    (27,600)
  Translation adjustment            0         0         0        288        288 
                              --------  -------  ---------  ---------  ---------
Balances, December 31, 1998   $     0   $99,849  $(78,255)  $ (1,641)  $ 19,953 
                              ========  =======  =========  =========  =========
<FN>

     The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

<TABLE>
<CAPTION>

                           GENUS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                        FOR THE YEARS ENDED DECEMBER 31,
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                     1998       1997       1996
                                                  ---------  ---------  --------
<S>                                               <C>        <C>        <C>
Cash flows from operating activities:
  Net income (loss)                               $(27,600)  $(19,336)  $(9,205)
  Adjustments to reconcile to net cash
  from operating activities:
    Depreciation and amortization                    2,480      5,073     6,945 
    Provision for doubtful accounts                  1,670      2,930         0 
    Deferred taxes                                       0     14,844    (2,534)
    Special charge                                  12,707          0     5,890 
  Changes in assets and liabilities:
      Accounts receivable                            4,781     (7,181)   11,191 
      Inventories                                   (2,461)    (2,998)   (4,509)
      Other current assets                             650       (391)     (865)
      Accounts payable                              (6,530)     3,419    (1,825)
      Accrued expenses                              (5,153)      (543)   (1,094)
      Other, net                                       626        527    (1,545)
                                                  ---------  ---------  --------
        Net cash provided by (used in)
        operating activities                       (18,830)    (3,656)    2,449 
                                                  ---------  ---------  --------
Cash flows from investing activities:
  Acquisition of property and equipment               (919)    (3,835)   (6,611)
  Sale of MeV ion implantation products             23,151          0         0 
  Capitalization of software development costs           0          0      (360)
                                                  ---------  ---------  --------
        Net cash provided by (used in)
        investing activities                        22,232     (3,835)   (6,971)
                                                  ---------  ---------  --------
Cash flows from financing activities:
  Proceeds from issuance of common stock               191      1,234     2,232 
  Proceeds from issuance of preferred stock
  and warrants                                       4,815          0         0 
  Redemption of preferred stock                     (5,325)         0         0 
  Proceeds from short-term bank borrowings           4,000     50,290     4,000 
  Payments of short-term bank borrowings            (7,200)   (45,590)   (1,500)
  Payments of long-term debt and capital leases       (761)      (939)     (990)
                                                  ---------  ---------  --------
        Net cash provided by (used in)
        financing activities                        (4,280)     4,995     3,742 
                                                  ---------  ---------  --------
Effect of exchange rate changes on cash                303       (631)      (23)
                                                  ---------  ---------  --------
Net increase (decrease) in cash and cash
equivalents                                           (575)    (3,127)     (803)
Cash and cash equivalents, beginning of year         8,700     11,827    12,630 
                                                  ---------  ---------  --------
Cash and cash equivalents, end of year            $  8,125   $  8,700   $11,827 
                                                  =========  =========  ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest                            $    186   $    445   $   210 
Cash paid for income taxes                               6         94       105 
Non-cash investing and financing activities:
  Purchase of property and equipment
  under long-term debt obligations                       0        515     1,544 
  Deemed dividends on preferred stock                1,792          0         0 
  Conversion of Series A Stock to common stock         124          0         0 
<FN>

     The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

                          GENUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE  1.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Nature  of  Operations

     Genus,  Inc.  designs,  manufactures  and  markets  capital  equipment  and
deposition  processes  for  advanced  semiconductor manufacturing. The Company's
products  are  marketed  worldwide  either  directly  to  end-users  or  through
exclusive sales representative arrangements. In January 1996, the Company opened
a  subsidiary  in  South  Korea  to  provide sales and service support to Korean
customers.  The  Company's customers include semiconductor manufacturers located
throughout  the  United  States,  Europe and in the Pacific Rim including Japan,
South Korea and Taiwan. Genus conducts its business within one industry segment.
The  following  is  a  summary  of  Genus'  significant  accounting  policies.

Principles  of  Consolidation

     The  consolidated  financial statements include the accounts of Genus, Inc.
and  its wholly owned subsidiaries after elimination of significant intercompany
accounts  and  transactions.

Sale  of  Assets

     In  July  1998,  the  Company sold selected assets and transferred selected
liabilities  related  to the Millions of Electron Volts ("MeV") ion implantation
equipment  product  line  to  Varian  Associates, Inc. for approximately $24,150
("Asset  Sale"). As a result of the Asset Sale, the Company no longer engages in
the  ion implant business and has refocused its efforts on thin film deposition.
In  connection  with the Asset Sale and the refocusing of the Company's business
on  thin  film  products, the Company significantly reduced the workforce at its
Sunnyvale,  California  location.

Cash  and  Cash  Equivalents

     The  Company  considers  all  highly  liquid investments with a maturity of
three  months  or  less  when  purchased  to  be  cash  equivalents.

Fair  Value  of  Financial  Instruments

     The  carrying  amounts  of  cash and cash equivalents approximate estimated
fair  value  because of the short maturity of those financial instruments. Based
on  rates  currently  available  to  the Company for debt with similar terms and
remaining  maturities,  the  carrying amounts of debt approximate estimated fair
values.

Concentration  of  Credit  Risk

     Financial  instruments,  which  potentially  subject  the  Company  to
concentrations  of  credit  risk,  consist  principally  of  cash  and  trade
receivables.  The  Company  places  its  cash with high credit quality financial
institutions  located  in  the  United  States.  The  Company  does  not require
collateral  from  its  customers  and  maintains an allowance for credit losses.

     Three  customers  accounted  for  an  aggregate  of 78% and 75% of accounts
receivable  at  December  31,  1998  and  1997,  respectively.  South Korean and
Japanese  customers  accounted  for  an  aggregate  of  61%  and 70% of accounts
receivable  at  December  31,  1998  and  1997,  respectively.

Inventories

     Inventories are stated at the lower of cost or market, using standard costs
that  approximate  actual  costs,  under  the  first-in,  first-out  method.

Long-Lived  Assets

     Property  and  equipment  are  stated  at  cost  and  depreciated using the
straight-line  method  over their estimated useful lives, which range from three
to  ten  years.  Leasehold  improvements  are  amortized using the straight-line
method  over their estimated useful lives or the remaining lease term, whichever
is  less.

     Other assets include goodwill and software development costs and are stated
at cost. Goodwill represented the cost in excess of the fair market value of net
assets  of  an acquired business and was amortized on a straight-line basis over
15  years.  Software  development  costs  represent costs incurred subsequent to
establishing  the  technological  feasibility  of  software  products  and  were
amortized  over the expected life of the products,  estimated to be three years.

     Whenever  events  or  changes  in  circumstances indicate that the carrying
amounts  of  long-lived  assets  and goodwill related to those assets may not be
recoverable,  the  Company  estimates  the  future  cash flows, undiscounted and
without  interest  charges,  expected to result from the use of those assets and
their eventual disposition. If the sum of the future cash flows is less than the
carrying  amounts  of  those  assets,  the Company recognizes an impairment loss
based  on the excess of the carrying amounts over the fair values of the assets.

Revenue  Recognition

     Revenue  related  to  systems  is  recognized  upon  shipment  or, prior to
shipment,  upon  completion of customer source inspection and factory acceptance
of the system where risk of loss and title to the system passes to the customer.
A  provision  for the estimated future cost of system installation, warranty and
commissions  is  recorded  when  revenue  is  recognized.

Use  of  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  could  differ  from  those  estimates.

Income  Taxes

     The Company accounts for income taxes using a method that requires deferred
tax assets to be computed annually on an asset and liability method and adjusted
when  new  tax  laws  or rates are enacted. Valuation allowances are established
when  necessary  to  reduce  deferred  tax  assets to the amounts expected to be
realized.  Income  tax expense (benefit) is the tax payable (refundable) for the
period  plus  or  minus the change in deferred tax assets and liabilities during
the  period.

Foreign  Currency

     The  Company  has foreign sales and service operations. With respect to all
foreign subsidiaries excluding South Korea and Japan, the functional currency is
the  U.S.  dollar, and transaction and translation gains and losses are included
in  net  income  (loss)  and  have  not been material in any year presented. The
functional currency of the Company's South Korean subsidiary is the won, and the
functional  currency  of  the  Company's  Japanese  subsidiary  is  the yen. The
translation  from  the  applicable foreign currency to U.S. dollars is performed
for balance sheet accounts using current exchange rates in effect at the balance
sheet  date  and  for  revenue  and  expense accounts using the weighted average
exchange rate during the period. Adjustments resulting from such translation are
reflected  as  a  separate  component  of  stockholders' equity. Gains or losses
resulting  from  foreign  currency  transactions,  including  intercompany
transactions,  are  included  in  the  results  of  operations.

Net  Income  (Loss)  Per  Share

     The  Company  has  computed and presented net income (loss) per share under
two methods, basic and diluted. Basic net income (loss) per share is computed by
dividing  income (loss) available to common shareholders by the weighted average
number  of  common  shares outstanding for the period. Diluted net income (loss)
per  share  is  computed  by  dividing  income  (loss)  available  to  common
shareholders,  adjusted  for  convertible  preferred  dividends  and  after-tax
interest expense on convertible debt, if any, by the sum of the weighted average
number of common shares outstanding and potential common shares (when dilutive).

Recent  Account  Pronouncements

     In  June 1998, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards No. 133, "Accounting for Derivative Instruments
and  Hedging  Activities"  ("SFAS  133").  SFAS  133 establishes a new model for
accounting  for  derivatives  and  hedging  activities  as  is effective for the
Company's  fiscal year 1999. The impact of the implementation of SFAS 133 on the
consolidated  financial  statements  of the Company has not yet been determined.

     In  March  1998,  the  Accounting  Standards Executive Committee ("AcSEC"),
released  Statement of Position 98-1, "Accounting for Costs of Computer Software
Developed  or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 requires certain
costs  of  computer  software  developed  or  obtained  for  internal  use to be
capitalized,  provided  that  those  costs are not research and development. SOP
98-1  is  effective  for  the  Company's fiscal year 1999, and the impact of the
adoption  of SOP 98-1 on the Company's consolidated financial statements has not
yet  been  determined.

     In  April  1998, AcSEC released Statement of Position 98-5, "Accounting for
Costs  of  Start-Up  Activities"  ("SOP  98-5").  SOP 98-5 requires the costs of
start-up  activities to be expensed as incurred. Start-up activities are defined
as  those  one-time  activities related to opening a new facility, introducing a
new  product  or  service,  conducting  business  in a new territory, conducting
business  with  a new class of customer, initiating a new process in an existing
facility,  or  commencing  some  new  operation.  SOP  98-5 is effective for the
Company's  fiscal  year  1999, and the impact of the adoption of SOP 98-5 on the
Company's  consolidated  financial  statements  has  not  yet  been  determined.

NOTE  2.  INVENTORIES

     Inventories  comprise  the  following:

<TABLE>
<CAPTION>

                               DECEMBER  31,
                             ---------------

                              1998     1997
                             ------  -------
<S>                          <C>     <C>
  Raw materials and parts    $4,796  $15,210
  Work in process               244    6,879
  Finished goods                298    6,897
                             ------  -------
                             $5,338  $28,986
                             ======  =======
</TABLE>

NOTE  3.  PROPERTY  AND  EQUIPMENT

     Property  and  equipment  are  stated  at  cost and comprise the following:

<TABLE>
<CAPTION>

                                                                DECEMBER  31,
                                                            --------------------

                                                               1998       1997
                                                            ---------  ---------
<S>                                                         <C>        <C>
  Equipment (useful life is 3 years)                        $  7,227   $ 19,510 
  Demonstration equipment (useful life ranges
    from 3-5 years)                                           14,345     14,352 
  Furniture and fixtures (useful life is 3 years)              1,015      2,645 
  Leasehold improvements (useful life ranges
    from 4-10 years)                                           3,003      6,631 
                                                            ---------  ---------
                                                              25,590     43,138 
  Less accumulated depreciation and amortization             (21,243)   (28,833)
                                                            ---------  ---------
                                                               4,347     14,305 
  Construction in process                                        312        971 
                                                            ---------  ---------
                                                            $  4,659   $ 15,276 
                                                            =========  =========
</TABLE>

     Equipment  includes  $584  and  $3,745  of  assets  under capital leases at
December  31,  1998  and  1997,  respectively. Accumulated amortization on these
assets  is  $584  and  $2,628  at  December  31,  1998  and  1997, respectively.

NOTE  4.  OTHER  ASSETS

     Other  assets  comprise  the  following:

<TABLE>
<CAPTION>

                                                         DECEMBER  31,
                                                       ---------------

                                                       1998     1997
                                                       -----  --------
<S>                                                    <C>    <C>
  Goodwill                                             $   0  $ 3,802 
  Software development costs                               0    1,347 
                                                       -----  --------
                                                           0    5,159 
  Accumulated amortization-goodwill                        0   (2,675)
  Accumulated amortization-software development costs      0     (980)
                                                       -----  --------
                                                           0    1,494 
  Other                                                  318    1,784 
                                                       -----  --------
                                                       $ 318  $ 3,278 
                                                       =====  ========
</TABLE>

     Amortization expense for software development costs was $128, $401 and $507
in  1998,  1997  and  1996,  respectively.

NOTE  5.  LINE  OF  CREDIT

     The  Company  secured an Accounts Receivable Purchase Agreement with a bank
on  September  30,  1998.  This  agreement  allows the Company to sell qualified
receivables to the bank for a transaction fee of .1875%, and pay interest at the
rate  of  1% per month on the average outstanding balance. The bank will advance
80%  of  the qualified receivables ($4,000 maximum outstanding at any one time).
This agreement expires September 30, 1999. On December 31, 1998, the Company had
$4,000  in  outstanding  borrowings  under  the  Accounts  Receivable  Purchase
Agreement,  which  was  repaid  in  January  1999.

NOTE  6.  ACCRUED  EXPENSES

     Accrued  expenses  comprise  the  following:

<TABLE>
<CAPTION>

                                          DECEMBER  31,
                                         --------------

                                          1998    1997
                                         ------  -------
<S>                                      <C>     <C>
  System installation and warranty       $  583  $ 3,741
  Accrued commissions and incentives        538    2,062
  Accrued payroll and related items         536    1,264
  Restructuring reserves (Note 11)        1,240        0
  Other                                   1,897    3,546
                                         ------  -------
                                         $4,794  $10,613
                                         ======  =======
</TABLE>

NOTE  7.  LONG-TERM  DEBT  AND  CAPITAL  LEASE  OBLIGATIONS

     Long-term  debt  and  capital  lease  obligations  comprise  the following:

<TABLE>
<CAPTION>

                                                                  DECEMBER  31,
                                                                ----------------

                                                                  1998    1997
                                                                -------  -------
<S>                                                             <C>      <C>
  Capital lease obligations with interest rates ranging from
    4.5-15.6%                                                   $  114   $1,737 
  Mortgage loan payable in monthly installments through
    October 2000 at 9.25% interest per annum and
    collateralized by a building                                     0      108 
                                                                -------  -------
                                                                   114    1,845 
  Less amounts due within one year                                 (64)    (874)
                                                                -------  -------
                                                                $   50   $  971 
                                                                ======   =======
</TABLE>

     The  future aggregate payments of capital lease obligations are as follows:

<TABLE>
<CAPTION>

<S>                                                                        <C>
  1999                                                                     $ 68 
  2000                                                                       51 
                                                                           -----
                                                                            119 
  Less amounts representing interest on capital lease obligations            (5)
                                                                           -----
  Principal payments and present value of minimum capital lease
    obligations                                                            $114 
                                                                           =====
</TABLE>

     Certain  of the capital lease agreements require the Company to comply with
specific  financial  covenants  and  to  pay  stipulated amounts upon default or
termination  prior  to  the  expiration  of  the  basic  lease  terms.

NOTE  8.  LEASE  COMMITMENTS

     The  Company  leases certain of its facilities and various office equipment
under  operating  leases  expiring  through 2002. The Company is responsible for
property  taxes, insurance and maintenance under the facility leases. Certain of
these leases contain renewal options. The Company subleases approximately 40,000
square feet of its facility to two other companies. One company began subleasing
in  April  1998  and  the  other  company  began  subleasing  in  December 1998.

     At December 31, 1998, minimum lease payments required under these operating
leases  are  as  follows:

<TABLE>
<CAPTION>

<S>                        <C>
  1999                     $   714
  2000                         757
  2001                         772
  2002                         579
                           -------
                           $ 2,822
                           =======
</TABLE>

     Rent  expense  for  1998,  1997 and 1996 was $1,169 (net of sublease income
of  $146), $2,215 and $2,218 respectively.  There was no sublease income in 1997
and  1996.

     At  December  31,  1998,  sublease  receipts  are  expected  as  follows:

<TABLE>
<CAPTION>

<S>                        <C>
  1999                     $   793
  2000                         625
  2001                         625
  2002                         521
                           -------
                           $ 2,564
                           =======
</TABLE>

NOTE  9.  CAPITAL  STOCK

Net  Income  (Loss)  Per  Share

     A  reconciliation  of  the  numerator  and denominator of basic and diluted
income  (loss)  per  share  is  as  follows:

<TABLE>
<CAPTION>

                                                  YEARS  ENDED  DECEMBER  31,
                                                ------------------------------

                                                  1998       1997       1996
                                                ---------  ---------  --------
<S>                                             <C>        <C>        <C>
  Numerator-Basic:
    Net income (loss)                           $(27,600)  $(19,336)  $(9,205)
    Deemed dividends on preferred stock           (1,903)         0         0 
                                                ---------  ---------  --------
      Net income (loss) available to common
        shareholders                            $(29,503)  $(19,336)  $(9,205)
                                                =========  =========  ========
  Denominator-Basic:
    Weighted average common stock outstanding     17,248     16,860    16,423 
                                                =========  =========  ========
  Basic net income (loss) per share             $  (1.71)  $  (1.15)  $ (0.56)
                                                =========  =========  ========

  Numerator-Diluted:
    Net income (loss)                           $(27,600)  $(19,336)  $(9,205)
    Deemed dividends on preferred stock           (1,903)         0         0 
                                                ---------  ---------  --------
      Net income (loss) available to common
        shareholders                            $(29,503)  $(19,336)  $(9,205)
                                                =========  =========  ========
  Denominator-Diluted:
    Weighted average common stock outstanding     17,248     16,860    16,423 
                                                =========  =========  ========
  Diluted net income (loss) per share           $  (1.71)  $  (1.15)  $ (0.56)
                                                =========  =========  ========
</TABLE>

     Stock options to purchase 2,289,000 shares of common stock were outstanding
in 1998 on a weighted average basis, but were not included in the computation of
diluted  loss  per share because the Company has a net loss for 1998. A total of
16,000  shares  of  Series  B  Convertible  Preferred Stock and warrants for the
purchase of 400,000 shares of common stock were outstanding at December 31, 1998
but  were  not included in the computation of diluted loss per share because the
Company  has  a  net  loss  for  1998.

     Stock options to purchase 1,979,000 shares of common stock were outstanding
in 1997 on a weighted average basis, but were not included in the computation of
diluted  loss  per  share  because  the  Company  has  a  net  loss  for  1997.

     Stock options to purchase 1,838,000 shares of common stock were outstanding
in 1996 on a weighted average basis, but were not included in the computation of
diluted  loss  per  share  because  the  Company  has  a  net  loss  for  1996.

Private  Placement  of  Convertible  Preferred  Stock

     In  February  1998, the Company issued an aggregate of 100,000 shares of 6%
Series  A  Convertible  Preferred  Stock  (the "Series A Stock") and warrants to
purchase  an  aggregate  of up to 400,000 shares of its common stock, all for an
aggregate purchase price of $5,000 in cash. In 1998, the Company recorded deemed
dividends  on preferred stock of approximately $1,903, reflecting the beneficial
conversion  feature,  which  is the difference between the proceeds allocated to
the  Series A Stock and the fair value of the Series A Stock (assuming immediate
conversion)  upon  issuance,  and  the  accrual  of  the  6%  dividends thereon.

     In June 1998, 2,000 shares of the Series A Stock were converted into common
stock  of  the Company. This conversion was accounted for at book value. In July
1998,  the  Company redeemed 70,000 shares of the outstanding Series A Stock for
$4,725  in  cash (the "Redemption"), and the remaining 28,000 shares of Series A
Stock  were  exchanged  for  28,000  shares  of  Redeemable Series B Convertible
Preferred  Stock  (the "Series B Stock") by the existing holders of the Series A
Stock  (the  "Exchange").  The  Redemption  and  Exchange  were accounted for by
comparing  the  fair value of the Series B Stock and the $4,725 in cash with the
carrying  amount  of  the Series A Stock redeemed and with the fair value of the
Series  A  Stock  converted  (pursuant  to  the original conversion terms of the
Series  A  Stock);  there  was  no  material  difference  between these amounts.

     In  November 1998, the Company redeemed 12,000 shares of the Series B Stock
for  approximately  $600  in  cash.  As  of December 31, 1998, there were 16,000
shares  of  Series  B Stock outstanding, all of which were converted into common
stock  of  the  Company  in  February  1999.

Warrants

     In  connection  with the issuance of the Series A Stock, the Company issued
warrants  for 400,000 shares of the Company's common stock to the holders of the
Series A Stock. The warrants are exercisable at any time until February 2001 for
300,000  shares  of  common  stock at a price of $3.67 per share and for 100,000
shares  at  a  price  of  $4.50  per  share.

Rights  and  Privileges  of  Series  B  Convertible  Preferred  Stock

     Conversion  Rights.  Each  share  of  the  Series B Stock was issued with a
stated  value  of  $50  (the  "Stated Value"). Each holder of shares of Series B
Stock  has  the right at any time, and from time-to-time, to convert some or all
such  shares into cash at the Stated Value or common stock at a conversion price
of  $1.25  per  share.

     Dividends.  Series  B  Stock  accrues  a dividend at a rate per share (as a
percentage  of  the  Stated Value per share) of 6% per annum, payable in cash or
shares  of  common  stock  at the option of the Company. The shares must be held
until  February  12,  1999  to  receive  this  dividend.

     Redemption. The Series B Stock may be redeemed at the option of the Company
on  or after July 30, 2003 at a redemption price equal to the product of (i) the
average  of  the  closing  bid  prices  for  the  five  trading days immediately
preceding  (a)  July  30,  2003 or (b) the date of payment by the Company of the
redemption  price,  which  ever  is  greater,  and  (ii)  the  conversion  ratio
applicable  to  the  Series  B  Stock  calculated on July 30, 2003. Each selling
security  holder may require the Company at any time to redeem all of its shares
of the Series B Stock at a redemption price equal to the stated value per share.
In  addition,  the  Series  B Stock may be redeemed at the option of the selling
security  holder upon the occurrence of certain triggering events at a price per
share  equal  to  the  product  of  (i)  the  average  closing bid prices of the
Company's  common  stock for the five trading days immediately preceding (a) the
date  of  the  triggering  event  or  (b)  the  date  of payment in full of such
redemption  price,  which  ever is greater, and (ii) the conversion ratio on the
date  of  the  triggering  event.

     Liquidation  Rights.  In  the  event  of  the  dissolution,  liquidation or
winding-up  of the Company, whether voluntary or involuntary, the holders of the
Series  B  Stock  will be entitled to receive before any payment or distribution
will  be  made  on  the  common  stock  of the Company, out of the assets of the
Company  available  for distribution to shareholders, the Stated Value per share
of Series B Stock and all accrued and unpaid dividends to and including the date
of  payment  thereof.  Upon the payment in full of all amounts due to holders of
the  Series  B  Stock,  then the holders of the common stock of the Company will
receive,  ratably,  all  remaining  assets  of the Company legally available for
distribution.  If  the  assets  of the Company available for distribution to the
holders  of the Series B Stock are insufficient to permit payment in full of the
amounts  payable  as  aforesaid  to  the  holders  of  Series  B Stock upon such
liquidation,  dissolution  or winding-up, whether voluntary or involuntary, then
all  such  assets  of  the  Company  will be distributed to the exclusion of the
holders  of  shares of common stock ratably among the holders of Series B Stock.

     A sale, conveyance or disposition of all or substantially all of the assets
of  the Company or the effectuation by the Company of a transaction or series of
related  transactions  in which more than 50% of the voting power of the Company
is  disposed  of,  or  a consolidation or merger of the Company with or into any
other  company or companies shall not be deemed to be a liquidation, dissolution
or  winding-up  of  the  Company for the purposes of the liquidation rights that
would be available to the holders of Series B Stock, but instead will be subject
to  the  conversion  provisions  outlined  above.

Stock  Option  Plan

     The Company has a 1991 Incentive Stock Option Plan (the "Plan") under which
the  Board  of Directors may issue incentive and nonstatutory stock options. The
Plan  expires  ten  years  after  adoption  and  the Board of Directors have the
authority  to  determine  to whom options will be granted, the number of shares,
the term and exercise price. The options are exercisable at times and increments
as  specified  by  the  Board  of  Directors, and expire five years from date of
grant.  These  options  generally vest over a three-year period. At December 31,
1998,  the  Company  had  reserved 3,653,006 shares of common stock for issuance
under  the  Plan. A total of 329,006 shares remained available for future grants
at  December 31, 1998. At December 31, 1996, 492,729 options were exercisable at
a  weighted  average  exercise  price  of  $5.56.  At December 31, 1997, 789,670
options  were  exercisable  at  a  weighted  average exercise price of $6.50. At
December  31,  1998,  573,484  options  were  exercisable  at a weighted average
exercise  price  of  $3.094.

     Activity  under  the  Plan  is  set  forth  in  the  table  below:

<TABLE>
<CAPTION>

                                WEIGHTED
                               OUTSTANDING     AVERAGE
                                 SHARES     OPTIONS PRICE    EXERCISE
                               (IN 000's)     PER SHARE        TOTAL    PRICE
                               ---------  ----------------  ---------  ------
<S>                             <C>       <C>                <C>       <C>
Balance, January 1, 1996          1,586   $ 1.75 to $15.63   $ 9,947   $ 6.27
  Granted                         1,027     5.94 to   8.38     6,705     6.53
  Exercised                        (310)    1.75 to   8.63    (1,125)    3.63
  Terminated                       (213)    2.75 to  15.63    (1,776)    8.34
                                --------  ----------------  ---------  ------
Balance, December 31, 1996        2,090     1.75 to   8.63    13,751     6.58
  Granted                           537     3.88 to   6.94     2,707     5.04
  Exercised                        (124)    1.75 to   6.13      (364)    2.94
  Terminated                       (652)    2.25 to   8.63    (4,473)    6.86
                                --------  ----------------  ---------  ------
Balance, December 31, 1997        1,851     2.25 to   8.63    11,621     6.28
  Granted                         3,764     0.88 to   3.21     8,500     2.26
  Exercised                          (5)    2.87 to   2.87       (14)    2.87
  Terminated                     (3,309)    1.63 to   8.63   (15,600)    4.71
                                --------  ----------------  ---------  ------
Balance, December 31, 1998        2,301   $ 0.88 to $ 8.00   $ 4,507   $ 1.96
                                ========  ================  =========  ======
</TABLE>

Employee  Stock  Purchase  Plan

     The  Company  has  reserved a total of 2,050,000 shares of common stock for
issuance under a qualified stock purchase plan, which provides substantially all
Company employees with the right to acquire shares of the Company's common stock
through  payroll deductions. Under the plan, the Company's employees, subject to
certain  restrictions,  may purchase shares of common stock at the lesser of 85%
of fair market value at either the beginning of each two-year offering period or
the  end  of each six-month purchase period within the two-year offering period.
At  December  31,  1998,  1,889,608  shares  have  been  issued  under the plan.

Common  Stock  Purchase  Rights

     In  July 1990, the Company distributed a dividend to shareholders comprised
of  a  right  to  purchase  one  share  of  common  stock  (a  "Right") for each
outstanding  share of common stock of the Company they hold. These rights do not
become  exercisable  or  transferable  apart  from  the  common  stock until the
Distribution  Date  which  is  either  the tenth day after a person or group (a)
acquires  beneficial  ownership  of 20% or more of the Company's common stock or
(b) announces a tender or exchange offer, the consummation of which would result
in  ownership by a person or group of 30% or more of the Company's common stock.
After the Distribution Date, each Right will entitle the holder to purchase from
the  Company  one  share  of  common  stock  at  a  price  of  $28.00 per share.

     If  the  Company  is  acquired  in  a  merger or other business combination
transaction,  or  if 50% or more of its consolidated assets or earnings power is
sold,  each Right will entitle the holder to purchase at the exercise price that
number  of shares of the acquiring company having a then current market value of
two  times the exercise price of the Right. In the event that the Company is the
surviving  corporation  in  a  merger  and  the  Company's  common stock remains
outstanding,  or  in  the  event  that  an  acquiring  party  engages in certain
self-dealing  transactions,  each  Right  not  owned by the acquiring party will
entitle  the  holder  to purchase at the exercise price that number of shares of
the  Company's  common stock having a then current market value of two times the
exercise  price  of the Right. The Rights are redeemable at the Company's option
for  $.01  per  Right  prior  to  becoming  exercisable,  may  be amended at the
Company's  option  on  or  prior  to the Distribution Date and expire on July 3,
2000.

Stock  Compensation

     The  Company  has elected to follow Accounting Principles Board Opinion No.
25,  "Accounting  for  Stock  Issued  to  Employees"  ("APB  25")  and  related
interpretations  in  accounting  for  its  employee stock options. Under APB 25,
because  the  exercise  price  of  the Company's stock options equals the market
price  of  the underlying stock on the date of grant, no compensation expense is
recognized.

     Pro forma information regarding net income (loss) and net income (loss) per
share  is  presented  in  accordance  with  Statement  of  Financial  Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), which
requires  that the information be determined as if the Company had accounted for
its  employee  stock-based  compensation  plans  under  the  fair  value  method
prescribed  by  SFAS  123.

     The  fair value of these options was estimated at the date of grant using a
Black-Scholes  single  option  pricing model with the following weighted average
assumptions  for  1998,  1997  and  1996:

<TABLE>
<CAPTION>

                                1998       1997        1996
                             ---------   ---------   ---------
<S>                          <C>         <C>         <C>
  Risk free interest rates      5.335%      6.220%      6.070%
  Expected life              3.3 years   3.5 years   3.5 years
  Expected volatility            61.4%       77.7%       77.7%
  Expected dividend yield           0%          0%          0%
</TABLE>

     The  weighted  average fair value of options granted in 1998, 1997 and 1996
was  $1.60,  $2.92  and  $3.81,  respectively.

     Under the 1989 Employee Stock Purchase Plan, the Company does not recognize
compensation  cost related to employee purchase rights under the Plan. To comply
with  the  pro  forma  reporting  requirements of SFAS 123, compensation cost is
estimated  for  the  fair  value  of  the  employees'  purchase rights using the
Black-Scholes  model  with the following assumptions for those rights granted in
1998,  1997  and  1996.

<TABLE>
<CAPTION>

                                1998       1997        1996
                             ---------   ---------   ---------
<S>                          <C>         <C>         <C>
  Risk free interest rates      5.415%      5.630%      5.340%
  Expected life              0.5 years   0.5 years   0.5 years
  Expected volatility            61.4%       77.7%       77.7%
  Expected dividend yield           0%          0%          0%
</TABLE>

     The  weighted  average fair value of those purchase rights granted in 1998,
1997  and  1996  was  $0.48,  $1.80  and  $3.26,  respectively.

     Had compensation cost for the Company's stock-based compensation plans been
determined  based  on  the  fair value at the grant dates for awards under those
plans  consistent  with  the method of SFAS 123, the Company's net income (loss)
and  basic and diluted net income (loss) per share would have been the pro forma
amounts  indicated  below:

<TABLE>
<CAPTION>

                                                    1998       1997       1996
                                                  ---------  ---------  ---------
<S>                                               <C>        <C>        <C>
  Pro forma net income (loss) available to
    common shareholders                           $(32,830)  $(21,537)  $(12,053)
  Pro forma net income (loss) per share-basic     $  (1.88)  $  (1.28)  $  (0.73)
  Pro forma net income (loss) per share-diluted   $  (1.88)  $  (1.28)  $  (0.73)
</TABLE>

     The  above pro forma effects on net income (loss) may not be representative
of  the effects on future results as options granted typically vest over several
years  and  additional  option  grants  are expected to be made in future years.

     The  options  outstanding and currently exercisable by exercise price under
the  option  plan  at  December  31,  1998  are  as  follows:

<TABLE>
<CAPTION>

                      OPTIONS  OUTSTANDING               OPTIONS  EXERCISABLE
            ---------------------------------------  ---------------------------

                            WEIGHTED
 RANGE OF                AVG. REMAINING   WEIGHTED
 EXERCISE     NUMBER      CONTRACTUAL   AVG. EXERCISE   NUMBER     WEIGHTED AVG.
  PRICES    OUTSTANDING      LIFE           PRICE    OUTSTANDING  EXERCISE PRICE
----------  -----------  -------------  -----------  ----------  ---------------
<S>           <C>            <C>             <C>          <C>          <C>
0.88-$1.25      729,500      4.45            $ 0.93        12,500      $ 0.88
1.31-$1.63      741,500      4.27            $ 1.62             0      $ 0.00
2.03-$3.03      778,140       3.25           $ 2.98       523,816      $ 3.03
3.22-$8.00       52,250       2.91           $ 4.84        37,168      $ 4.73
              ---------                                   -------            
0.88-$8.00    2,301,390       3.95           $ 1.94       573,484      $ 3.09
              =========                                   =======
</TABLE>

Option  Repricing

     On  January  28,  1998  the  Board  of  Directors  offered  employees  the
opportunity  to  reprice  outstanding  stock options as of February 9, 1998. The
repriced  options,  both  vested and unvested, are precluded from exercise for a
period of one year from the repricing date. Approximately 1,544,750 options with
original exercise prices ranging from $3.88 to $8.63 were repriced at $3.03, the
fair  market  value  as  of  February  9,  1998.

NOTE  10.  EMPLOYEE  BENEFIT  PLAN

     During  1988, the Company adopted the Genus, Inc. 401(k) Plan (the "Benefit
Plan") to provide retirement and incidental benefits for eligible employees. The
Benefit  Plan  provides  for Company contributions as determined by the Board of
Directors  that  may  not  exceed  6%  of the annual aggregate salaries of those
employees  eligible  for participation. In 1998, 1997 and 1996, the Company made
$62,  $92  and  $87,  respectively,  in  contributions  to  the  Benefit  Plan.

NOTE  11.  SPECIAL  CHARGE

     In  1998,  the  Company  recorded a special charge of approximately $12,707
(Note  15).  Included  in  this  special  charge are personnel charges of $1,746
associated  with  the  Company's  reduction  in  workforce  as well as $5,400 in
inventory  write-downs,  and  $1,113  in  leasehold  improvement  write-offs. In
addition,  this  charge included $1,402 for expenses associated with the closing
of  several  sales offices and transaction losses as a result of the sale of the
ion  implant  products  to  Varian and $1,053 for legal, accounting, and banking
fees  associated  with  the  Varian  transaction.  Finally,  the  special charge
included  a $1,993 write-off of ion implant inventory that is currently a matter
of dispute with Varian in connection with the Asset Sale. The Company and Varian
are  in  the  process  of resolving the dispute through arbitration to determine
whether  the  Company  or  Varian  has  rights  to  the one ion implant sale and
related  inventory.  If  and  when the Company prevails in the arbitration,  any
adjustments  to  the  Company's  financial  statements  as a result of this gain
contingency  will  be  made in the quarter in which the decision is rendered and
the  collection  from  the  end  customer of the amount in question is probable.
The  Company  is  not  conceding  any  rights  to  the  disputed  sale.

     At  December  31, 1998, the following cash components of the special charge
remain  unpaid:  $300  in  payroll costs associated with the reduction in force,
$220  in  foreign  subsidiary  closing costs, and $720 in transaction costs. The
Company  expects  these  amounts  to be paid by the end of the second quarter of
1999.

     During  1996,  the  Company  incurred special charges of $5,890 relating to
$860  in  payroll  costs  associated with two reductions in workforce, $3,332 in
inventory write-downs, $1,253 in demonstration equipment write-downs and $445 in
capitalized  software  and  other  write-downs.

NOTE  12.  OTHER  INCOME  (EXPENSE),  NET

     Other  income  (expense),  net,  comprises  the  following:

<TABLE>
<CAPTION>

                        YEARS ENDED DECEMBER 31,
                        ------------------------

                         1998     1997     1996
                        ------  --------  ------
<S>                     <C>     <C>       <C>
  Interest income       $  77   $   156   $ 334 
  Interest expense       (186)     (445)   (210)
  Foreign exchange        301    (1,107)      0 
  Other, net             (278)       33     (71)
                        ------  --------  ------
                        $ (86)  $(1,363)  $  53 
                        ======  ========  ======
</TABLE>

NOTE  13.  INCOME  TAXES

     Income  tax  expense  (benefit) for the years ended December 31, 1998, 1997
and  1996  consists  of  the  following:

<TABLE>
<CAPTION>

                  1998    1997      1996
                  -----  -------  --------
<S>               <C>    <C>      <C>
  Federal:
    Current       $   0  $     0  $     0 
    Deferred          0   14,004   (2,343)
                  -----  -------  --------
                      0   14,004   (2,343)
  State:
    Current           1        0        0 
    Deferred          0      840     (191)
                  -----  -------  --------
                      1      840     (191)
  Foreign:
    Current           0        0      334 
                  -----  -------  --------
                  $   1  $14,844  $(2,200)
                  =====  =======  ========
</TABLE>

     The  Company's  effective  tax  rate for the years ended December 31, 1998,
1997  and  1996  differs  from  the  U.S.  federal  statutory income tax rate as
follows:

<TABLE>
<CAPTION>

                                           1998   1997   1996
                                           -----  -----  -----
<S>                                        <C>    <C>    <C>
  Federal income tax at statutory rate     (35)%  (34)%  (35)%
  Change in valuation allowance              0    372     13
  Foreign income taxes                       0      0      3
  Other                                      0     (8)     0
  Net operating loss not benefited          35      0      0
                                           -----  -----  -----
                                             0%   330%   (19)%
                                           =====  =====  =====
</TABLE>

     The  components  of  the  net  deferred  tax  asset comprise the following:

<TABLE>
<CAPTION>

                                                    1998       1997       1996
                                                  ---------  ---------  --------
<S>                                               <C>        <C>        <C>
  Deferred tax assets (liabilities):
    Net operating loss carryforwards              $ 26,079   $ 13,097   $ 9,447 
    Tax credit carryforwards                         1,950      1,867     1,288 
    Inventory, accounts receivable and other
      reserves                                       2,100        401     1,835 
    Non-deductible accrued expenses                  1,100      1,152     1,264 
    Other reserves                                       0          0     1,245 
    Depreciation and amortization                    1,411        215      (235)
    Valuation allowance                            (32,640)   (16,732)        0 
                                                  ---------  ---------  --------
  Net deferred tax assets                         $      0   $      0   $14,844 
                                                  =========  =========  ========
</TABLE>

     Temporary  differences  represent  the  cumulative  taxable  or  deductible
amounts  recorded in the financial statements in different years than recognized
in  the  tax  returns.

     At  December  31,  1998,  the  Company  had  the  following  income  tax
carryforwards  available:

<TABLE>
<CAPTION>

                                     TAX REPORTING   EXPIRATION DATES
                                     --------------  ----------------
<S>                                  <C>             <C>
  U.S. regular tax operating losses  $       74,287         2006-2013
  U.S. business tax credits          $        1,953         2003-2010
  State net operating losses         $       21,981         1999-2004
</TABLE>

     Utilization  of  the  net operating losses and credits may be subject to an
annual  limitation  due  to  the  ownership  change  limitations provided by the
Internal  Revenue  Code  and similar state provisions. The annual limitation may
result  in the expiration of net operating loss carryforwards and credits before
utilization.

NOTE  14.  SEGMENT  INFORMATION

     Effective  for 1998, the Company adopted the Financial Accounting Standards
Board's  Statement  of  Financial  Accounting  Standards  No.  131 ("SFAS 131"),
"Disclosures  about  Segments  of  an  Enterprise  and  Related  Information."
Management  of  the  Company  has  identified  its  operating  segments based on
differences  in  products and services.  The Company's operations have consisted
of  thin  film  and MeV ion implantation product lines. The Company sold its MeV
ion implantation product line to Varian in July 1998. The Company has aggregated
its  two  operating  segments  for  financial  reporting  purposes  because  its
operating  segments  have similar long-term economic characteristics and because
the  products  and  services,  production processes, types of customers, and the
methods  used  to  distribute  the  products  and  provide  the  services of the
operating  segments  are similar. All reportable segment information is equal to
the  financial  information  reported  in  the  Company's consolidated financial
statements  and  notes  thereto.

     The  Company is engaged in the design, manufacture, marketing and servicing
of advanced thin film deposition systems used in the semiconductor manufacturing
industry. The Company's sales are primarily generated from CVD WSiX systems. The
Company's  CVD  system is designed for the deposition of WSiX to create multiple
interconnect  layers on ICs. This product is primarily used in the manufacturing
of  DRAMs.

     Net  sales  from thin film products and services accounted for 35%, 32% and
38%  of  the Company's net sales for 1998, 1997 and 1996. Net sales from MeV ion
implantation  products  and  services  accounted  for  65%, 68%, and 62 % of the
Company's  net  sales  in  1998,  1997  and  1996.

Export  Sales

     For reporting purposes,  export sales are determined by the location of the
parent  company of the Company's customer,  regardless of where the delivery was
made  by  the  Company.

     Export  sales  for  1998, 1997 and 1996 represented 56%, 74% and 84% of net
sales,  respectively.  Sales  to South Korea for 1998, 1997 and 1996 represented
30%,  50%  and 59% of net sales, respectively. Sales to Japan for 1998, 1997 and
1996  represented  14%,  21%  and  19%  of  net  sales,  respectively.

Domestic  and  Foreign  Operations

     Revenues,  for the Company's foreign and domestic operations for 1998, 1997
and  1996  are  as  follows:

<TABLE>
<CAPTION>

                                          1998       1997      1996
                                        ---------  --------  ---------
<S>                                     <C>        <C>       <C>      
  Sales to unaffiliated customers:
    Domestic operations                 $ 27,303   $73,182   $ 80,827 
    Foreign operations                     5,128    11,104      1,682 
                                        ---------  --------  ---------
                                        $ 32,431   $84,286   $ 82,509 
                                        =========  ========  =========
</TABLE>

     The  Company did not hold any material long-lived assets in countries other
than  the  United  States  at  December  31,  1998,  1997  or  1996.

Major  Customers

     In 1998, three customers, Samsung Electronics Company, Ltd., Advanced Micro
Devices  and  Micron  Technology,  Inc.,  accounted  for  28%,  15%  and  12%,
respectively,  of  net  sales.  In  1998,  three  customers, Samsung Electronics
Company,  Ltd.,  M/A  Com  and  SGS  Thomson  accounted  for  68%,  8%  and  5%,
respectively  of the Company's CVD net sales and three customers, Advanced Micro
Devices,  Micron  Technology,  Inc.  and  Atmel  accounted for 21%, 18% and 14%,
respectively,  of  the  Company's  ion  implantation net sales. In 1997, Samsung
Electronics  Company,  Ltd.  and Innotech Corporation accounted for 47% and 17%,
respectively,  of net sales. In 1996, these same two customers accounted for 53%
and  18%,  respectively,  of  net  sales.

NOTE  15.  INTERIM  FINANCIAL  INFORMATION  (UNAUDITED)

<TABLE>
<CAPTION>

                                            1998  QUARTERS  ENDED
                              --------------------------------------------------

                              MARCH 31    JUNE 30   SEPTEMBER 30   * DECEMBER 31
                              ---------  ---------  -------------  -------------
<S>                          <C>          <C>         <C>             <C>
Net sales                    $  7,238     $ 10,270    $   9,804       $  5,119
Gross profit                      297          546        3,915          3,472
Net income (loss) available
  to common shareholders       (9,243)     (21,603)          40          1,301
Net income (loss) per
  share-basic and diluted       (0.54)       (1.26)        0.00           0.07
</TABLE>

<TABLE>
<CAPTION>

                                            1997  QUARTERS  ENDED
                              --------------------------------------------------

                              MARCH 31    JUNE 30   SEPTEMBER 30  ** DECEMBER 31
                              ---------  ---------  -------------  -------------
<S>                          <C>          <C>         <C>            <C>
Net sales                    $  19,681    $ 19,351    $  24,375      $  20,879 
Gross profit                     7,368       7,811        8,351          5,994 
Net income (loss)                  181         296          512        (20,325)
Net income (loss) per
  share-basic and diluted         0.01        0.02         0.03          (1.20)
</TABLE>

     *  The  fourth quarter of 1998 was the first quarter that was entirely thin
film  business.  Sales  were  lower  than  the  previous quarter, which included
shipments  from  the  ion  implant  product line that was sold to Varian in July
1998.  Gross profit of $3,472 included inventory reserve reversals of $1,423 and
warranty  reserve  reversals  of  $200.  The  Company  also  reversed  excess
restructuring  reserves  of $509, resulting in a net profit of $1,301. Exclusive
of  these  non-recurring  adjustments, the Company incurred an operating loss of
$831.

     **  During  the  fourth  quarter  of  1997,  delays  in  shipments to Asian
customers  resulted  in  lower  sales.  In  addition, the Company incurred a net
charge  of  $2,930  for  bad  debt  expense.  The lower sales, coupled with this
write-off, resulted in an operating loss of $4,930 for the fourth quarter. Other
income  (loss)  for  the quarter included $1,107 in foreign exchange losses as a
result  of  the  effect  of  the  devaluation  of the Korean won on intercompany
transactions.  In  addition,  based  on  the  weight  of  available  evidence as
prescribed  by  SFAS 109, management determined that it was more likely than not
that  the net deferred tax asset at December 31, 1997 would not be realized and,
therefore,  provided  a  full  valuation  allowance against the net deferred tax
asset  during  the  fourth  quarter  of  1997.



                        REPORT OF INDEPENDENT ACCOUNTANTS


To  the  Board  of  Directors  and  Shareholders:

     In  our  opinion,  the  accompanying  consolidated  balance  sheets and the
related  consolidated  statements of operations and comprehensive income (loss),
shareholders'  equity  and cash flows, present fairly, in all material respects,
the  financial  position  of Genus, Inc. and its subsidiaries (the "Company") at
December 31, 1998 and December 31, 1997, and the results of their operations and
their  cash  flows  for each of the three years in the period ended December 31,
1998,  in  conformity  with  generally  accepted  accounting  principles.  These
financial  statements  are  the  responsibility of the Company's management; our
responsibility  is  to express an opinion on these financial statements based on
our  audits.  We  conducted  our  audits  of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit  to obtain reasonable assurance about whether the financial statements are
free  of  material  misstatement.  An audit includes examining, on a test basis,
evidence  supporting  the  amounts  and disclosures in the financial statements,
assessing  the  accounting  principles  used  and  significant estimates made by
management,  and  evaluating  the  overall  financial statement presentation. We
believe  that  our  audits  provide a reasonable basis for the opinion expressed
above.


/s/  PRICEWATERHOUSECOOPERS  LLP
--------------------------------
PricewaterhouseCoopers  LLP

San  Jose,  California
February  3,  1999


ITEM  9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
FINANCIAL  DISCLOSURE

     None.


                                    PART III

     Certain information required by Part III is omitted from this Annual Report
on  Form  10-K  in  that  the  Registrant will file a definitive proxy statement
within 120 days after the end of the fiscal year covered by this Report pursuant
to  Regulation  14A  relating  to  the  Registrant's  1999  Annual  Meeting  of
Shareholders  (the  "Proxy  Statement")  to be held on May 19, 1999, and certain
information  included  therein  is  incorporated  herein  by  reference.

ITEM  10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The directors and executive officers of the Company, who are elected by and
serve  at  the discretion of the Board of Directors, and their ages at March 31,
1999,  are  as  follows:

<TABLE>
<CAPTION>

NAME                     AGE                            POSITION
-----------------------  ---  --------------------------------------------------
<S>                      <C>  <C>
William W.R. Elder        60  Chairman of the Board, President and Chief
                              Executive Officer
Thomas E. Seidel, Ph.D.   63  Executive Vice President, Chief Technical Officer
Kenneth Schwanda          41  Vice President, Finance, Chief Financial Officer
Jeff Farrell              51  Vice President, Engineering
Michael Mitchell          36  Director, Operations and Facilities
Mario M. Rosati           52  Secretary and Director
Todd S. Myhre             53  Director
G. Frederick Forsyth      55  Director
</TABLE>

     Except  as  set  forth  below,  all  of  the  executive  officers have been
associated  with  the Company in their present or other capacities for more than
the past five years. Officers are elected annually by the Board of Directors and
serve  at  the  discretion of the Board. There are no family relationships among
executive  officers  of  the  Company.

     Mr.  Elder,  a  founder  of  the  Company,  is  the  Chairman of the Board,
President and Chief Executive Officer of the Company. From October 1996 to April
1998,  he  served  only  as  Chairman of the Board. From April 1990 to September
1996, he was Chairman of the Board, President and Chief Executive Officer of the
Company.  From  November  1981 to April 1990, he was President and a director of
the  Company.

     Dr.  Seidel  joined  the  Company in January 1996 and is the Executive Vice
President  and Chief Technical Officer of the Company. From July 1988 to January
1996,  Dr.  Seidel  was  associated  with  SEMATECH,  a  semiconductor-industry
consortium,  in  various  senior  management  positions,  most recently as Chief
Technologist  and  Director  of  Strategic  Technology.

     Mr. Schwanda has been Vice President of Finance and Chief Financial Officer
of  the Company since February 1999. Mr. Schwanda joined the Company in December
1992 and has held various financial management positions, most currently as Vice
President  of  Finance.  Mr.  Schwanda  began his professional career in 1979 at
Harris  Corporation,  a  global communications company, where he held accounting
and  finance  positions.

     Mr.  Farrell  joined the Company in March 1996 and is the Vice President of
Engineering  for  the  Company.  From August 1979 to March 1996, Mr. Farrell was
employed  by  Advanced Micro Devices, a semiconductor manufacturer in Sunnyvale,
California.

     Mr. Mitchell has been Director of Operations and Facilities for the Company
since  November  1997. Mr. Mitchell joined the Company in June 1995 and has held
various management positions, most currently as Operations Manager. From 1985 to
1995,  Mr.  Mitchell  was  a  Second  Lieutenant in the United States Air Force.

     Mr.  Rosati has been Secretary of the Company since May 1996 and a director
of  the  Company  since  the  Company's inception in November 1981. He is also a
director  of  Aehr Test Systems, a manufacturer of semiconductor test equipment;
CATS  Software Inc., a supplier of client/server software products for financial
risk  management;  Meridian  Data,  Inc.,  a developer of compact disc-read only
memory  (CD-ROM) and compact disc-recordable (CD-R) systems and related software
for  both  networks  and  personal  computers; Ross Systems, Inc., a supplier of
enterprise-wide  business  systems  and related services to companies installing
open  systems/client  server  software  products;  and  Sanmina  Corporation, an
electronics  manufacturer  of  multilayered  printed  circuit  boards, backplane
assemblies,  subassemblies, and printed circuit board assemblies. He is a member
of  Wilson  Sonsini  Goodrich  &  Rosati,  P.C., general counsel to the Company.

     Mr. Myhre has served as a director of the Company since January 1994. Since
April  1998,  and  from  September 1995 to January 1996, Mr. Myhre has served as
President  and  Chief Executive Officer of GameTech International, an electronic
gaming  manufacturer.  From  September  1995  to  March  1998,  Mr. Myhre was an
international business consultant. From January 1993 to August 1993, from August
1993  to December 1993 and from January 1994 to August 1995, Mr. Myhre served as
Vice  President  and  Chief  Financial Officer of the Company, as Executive Vice
President  and  Chief  Operating  Officer  of the Company and as President and a
director  of  the  Company,  respectively.

     Mr.  Forsyth  has been a director of the Company since February 1996. Since
August 1997, Mr. Forsyth has served as President, Professional Products Division
of Iomega, Inc. From June 1989 to February 1997, Mr. Forsyth was associated with
Apple  Computer,  Inc.,  a  personal  computer  manufacturer,  in various senior
management  positions,  most  recently  as  Senior  Vice  President  and General
Manager,  Macintosh  Product  Group.

ITEM  11.  EXECUTIVE  COMPENSATION

     The  information  required by this Item is incorporated by reference to the
Company's  Proxy  Statement.

ITEM  12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

     The  information  required by this Item is incorporated by reference to the
Company's  Proxy  Statement.

ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  information  required by this Item is incorporated by reference to the
Company's  Proxy  Statement.


                                     PART IV

ITEM  14.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULE  AND  REPORTS  ON  FORM 8-K

(a)  The  following  documents  are  filed  as  a  part  of  this  Report:

1.   Financial  Statements.

     Consolidated  Balance  Sheets-December  31,  1998  and  1997

     Consolidated Statements of Operations and Comprehensive Income (Loss)-Years
     Ended  December  31,  1998,  1997  and  1996

     Consolidated  Statements  of  Shareholders' Equity-Years Ended December 31,
     1998,  1997  and  1996

     Consolidated  Statements  of Cash Flows-Years Ended December 31, 1998, 1997
     and  1996

     Notes  to  Consolidated  Financial  Statements

     Report  of  Independent  Accountants

2.   Financial  Statement Schedule. The following financial statement schedule
     of  Genus, Inc. for the years ended December 31, 1998, 1997 and 1996 is
     filed as part  of  this Report and should be read in conjunction with the
     Consolidated Financial  Statements  of  Genus,  Inc.

                                                  PAGE
                                                  ----
          Report  of  Independent  Accountants     43
     II-  Valuation  and  Qualifying  Accounts     44

     Schedules  not  listed  above  have  been  omitted  because  they  are  not
     applicable  or  are  not  required  or  the  information required to be set
     forth therein is included in the Consolidated Financial Statements or Notes
     thereto.

3.   Exhibits.  The  Exhibits  listed  on  the  accompanying  Index  to Exhibits
     immediately  following  the  financial statement schedule are filed as part
     of,  or  incorporated  by  reference  into,  this  Report.

4.   Reports  on  Form 8-K.  No  reports  on  Form 8-K were filed by the Company
     during  the fourth  quarter  ended  December  31,  1998.



        REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE


To  the  Board  of  Directors  of  Genus,  Inc.  and  Subsidiary:

     Our  audits  of  the  consolidated  financial statements referred to in our
report  dated February 3, 1999 appearing on page 39 of the 1998 Annual Report on
Form  10-K  of  Genus,  Inc.  and  Subsidiaries  also  included  an audit of the
financial  statement schedule listed in Item 14(a)(2) of this Form 10-K.  In our
opinion,  this  financial  statement  schedule  presents fairly, in all material
respects,  the  information  set forth therein when read in conjunction with the
related  consolidated  financial  statements.


/s/  PRICEWATERHOUSECOOPERS  LLP
--------------------------------
PricewaterhouseCoopers  LLP

San  Jose,  California
February  3,  1999


                                                                    SCHEDULE  II

<TABLE>
<CAPTION>

                                GENUS, INC.

                      VALUATION AND QUALIFYING ACCOUNTS
            FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
                           (DOLLARS IN THOUSANDS)

                                  BALANCE AT   CHARGED TO
                                 BEGINNING OF   COSTS AND  BALANCE AT   END OF
DESCRIPTION                        PERIOD       EXPENSES   DEDUCTIONS   PERIOD
---------------------------       ----------  -----------  ----------  ---------
COLUMN A                           COLUMN B     COLUMN C    COLUMN D    COLUMN E
---------------------------       ----------  -----------  ----------  ---------
<S>                               <C>          <C>         <C>          <C>
1996
Allowance for doubtful accounts   $   250       $    0       $    0      $   250
Inventory reserves                  3,271        4,603        1,338        6,536
Product warranty and
  installation accruals             4,318        4,022        3,456        4,884
Valuation allowance on deferred
  taxes                                 0            0            0            0

1997
Allowance for doubtful accounts       250        2,930        2,083        1,097
Inventory reserves                  6,536          910        2,040        5,406
Product warranty and installation
  accruals                          4,884        3,620        4,754        3,750
Valuation allowance on deferred
  taxes                                 0       16,732            0       16,732

1998
Allowance for doubtful accounts     1,097        1,670        2,267          500
Inventory reserves                  5,406        5,150        6,787        3,770
Product warranty and installation
  accruals                          3,750         (143)       3,024          583
Valuation allowance on deferred
  taxes                            16,732       15,908            0       32,640
</TABLE>

                                   GENUS, INC.
                           ANNUAL REPORT ON FORM 10-K
                          YEAR ENDED DECEMBER 31, 1998

                                INDEX TO EXHIBITS

EXHIBIT
NO.      DESCRIPTION
---      -----------
2.1      Asset  Purchase  Agreement,  dated  April  15, 1998, by and between
         Varian  Associates,  Inc.  and  Registrant  and  exhibits  thereto (15)
3.1      Amended  and  Restated  Articles  of Incorporation of Registrant as
         filed  June  6,  1997  (11)
3.2      By-laws  of  Registrant,  as  amended  (13)
4.1      Common Shares Rights Agreement, dated as of April 27, 1990, between
         Registrant  and  Bank  of  America,  N.T. and S.A., as Rights Agent (4)
4.2      Convertible  Preferred  Stock Purchase Agreement, dated February 2,
         1998,  among  the  Registrant  and  the  Investors  (14)
4.3      Registration  Rights  Agreement,  dated February 2, 1998, among the
         Registrant  and  the  Investors  (14)
4.4      Certificate  of Determination of Rights, Preferences and Privileges
         of  Series  A  Convertible  Preferred  Stock  (14)
4.5      Certificate  of Determination of Rights, Preferences and Privileges
         of  Series  B  Convertible  Preferred  Stock  (17)
4.6      Redemption  and  Exchange Agreement, dated July 16, 1998, among the
         Registrant  and  the  Investors  (17)
10.1     Lease,  dated  December  6, 1985, for Registrant's facilities at 4
         Mulliken  Way, Newburyport, Massachusetts, and amendment and extension
         of lease,  dated  March  17,  1987  (1)
10.2     Assignment of Lease, dated April 1986, for Registrant's facilities
         at  Unit  11A,  Melbourn  Science  Park,  Melbourn, Hertz, England (1)
10.3     Registrant's  1989  Employee  Stock  Purchase Plan, as amended (5)
10.4     Registrant's  1991  Incentive  Stock  Option Plan, as amended (10)
10.5     International  Distributor  Agreement,  dated  November  23, 1987,
         between  General  Ionex  Corporation  and  Innotech  Corporation  (1)
10.6     Distributor/Representative  Agreement,  dated  August  1,  1984,
         between Registrant and Aju Exim (formerly Spirox Holding Co./You One
         Co. Ltd.) (1)
10.7     Exclusive  Sales  and  Service  Representative  Agreement,  dated
         October  1,  1989,  between  Registrant  and AVBA Engineering Ltd. (3)
10.8     Exclusive  Sales and Service Representative Agreement, dated as of
         April  1,  1990,  between  Registrant  and  Indosale  PVT  Ltd.  (3)
10.9     License Agreement, dated November 23, 1987, between Registrant and
         Eaton  Corporation  (1)
10.10    Exclusive  Sales  and Service Representative Agreement, dated May 1, 
         1989,  between  Registrant  and  Spirox  Taiwan,  Ltd.  (2)
10.11    Lease,  dated  April  7, 1992, between Registrant and The John A.
         and  Susan  R. Sobrato 1979 Revocable Trust for property at 1139
         Karlstad  Drive,  Sunnyvale,  California  (6)
10.12    Asset  Purchase Agreement, dated May 28, 1992, by and between the
         Registrant  and  Advantage  Production  Technology,  Inc.  (7)
10.13    License  and  Distribution  Agreement,  dated  September 8, 1992,
         between  the  Registrant  and  Sumitomo  Mutual  Industries,  Ltd.  (8)
10.14    Lease  Agreement, dated October 1995, for Registrant's facilities
         at  Lot  62,  Four Stanley Tucker Drive, Newburyport, Massachusetts (9)
10.15    International Distributor Agreement, dated July 18, 1997, between
         Registrant  and  Macrotron  Systems  GmbH  (12)
10.16    Credit  Agreement,  dated August 18, 1997, between Registrant and
         Sumitomo  Bank  of  California  (12)
10.17    Settlement  Agreement  and  Mutual Release, dated April 20, 1998,
         between  Registrant  and James  T.  Healy  (16)
10.18    Form  of  Change  of  Control  Severance  Agreement  (16)
10.19    Settlement  Agreement  and Mutual Release, dated January 1998, between
         the  Registrant  and  John  Aldeborgh  (18)
10.20    Settlement  Agreement  and Mutual Release, dated May 1998, between the
         Registrant  and  Mary  Bobel  (18)
10.21    Settlement  Agreement  and Mutual Release, dated May 1998, between the
         Registrant  and  Fred  Heslet
21.1     Subsidiaries  of  Registrant
23.1     Consent  of  Independent  Accountants
27.1     Financial  Data  Schedule

(1)     Incorporated  by  reference  to  the  exhibit  filed  with  Registrant's
Registration  Statement  on  Form  S-1 (No. 33-23861) filed August 18, 1988, and
amended  on  September 21, 1988, October 5, 1988, November 3, 1988, November 10,
1988,  and  December  15,  1988,  which  Registration Statement became effective
November  10,  1988.

(2)     Incorporated  by  reference  to  the exhibit filed with the Registrant's
Registration  Statement  on  Form  S-1 (No. 33-28755) filed on May 17, 1989, and
amended  May  24,  1989,  which  Registration Statement became effective May 24,
1989.

(3)     Incorporated  by  reference  to  the exhibit filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year  ended  December  31,  1989.

(4)     Incorporated  by  reference  to  the exhibit filed with the Registrant's
Quarterly  Report  on  Form  10-Q  for  the  quarter  ended  September 30, 1990.

(5)     Incorporated  by  reference  to  the exhibit filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year  ended  December  31,  1990.

(6)     Incorporated  by  reference  to  the exhibit filed with the Registrant's
Quarterly  Report  on  Form  10-Q  for  the  quarter  ended  June  30,  1992.

(7)     Incorporated  by  reference  to  the exhibit filed with the Registrant's
Report  on  Form  8-K  dated  June  12,  1992.

(8)     Incorporated  by  reference  to  the exhibit filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year  ended  December  21,  1992.

(9)     Incorporated  by  reference  to  the exhibit filed with the Registrant's
Annual  Report  on  Form  10-K  for  the  year  ended  December  31,  1995.

(10)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Quarterly  Report  on  Form  10-Q  for  the  quarter  ended  March  31,  1997.

(11)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Quarterly  Report  on  Form  10-Q  for  the  quarter  ended  June  30,  1997.

(12)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Quarterly  Report  on  Form  10-Q  for  the  quarter  ended  September 30, 1997.

(13)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Quarterly  Report  on  Form  10-Q  for  the  quarter  ended  September 30, 1998.

(14)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Current  Report  on  Form  8-K  dated  February  12,  1998.

(15)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Current  Report  on  Form  8-K  dated  April  15,  1998.

(16)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Annual  Report  on  Form  10-K/A  for  the  year  ended  December  31,  1997.

(17)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Current  Report  on  Form  8-K  dated  July  29,  1998.

(18)     Incorporated  by  reference  to the exhibit filed with the Registrant's
Quarterly  Report  on  Form  10-Q/A  for  the  quarter  ended  June  30,  1998.



SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) 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,  in the City of
Sunnyvale,  State  of  California,  on  the  29th  day  of  March  1999.

     GENUS,  INC.


     By:     /s/Kenneth  Schwanda
             --------------------
             Kenneth  Schwanda
             Vice  President,  Finance
             Chief  Financial  Officer

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
Report  has  been  signed  below  by  the  following  persons  on  behalf of the
Registrant  and  in  the  capacities  and  on  the  dates  indicated.

     NAME                               TITLE                       DATE
-----------------------   --------------------------------    ---------------

/s/William  W.R.  Elder   Chairman of the Board, President    March  29,  1999
-----------------------     and Chief Executive Officer
   William  W.R.  Elder

/s/Kenneth  Schwanda          Vice  President,  Finance       March  29,  1999
--------------------          Chief Financial Officer
   Kenneth  Schwanda

/s/G.  Frederick  Forsyth            Director                 March  29,  1999
-------------------------
   G.  Frederick  Forsyth

/s/Todd  S.  Myhre                   Director                 March  29,  1999
------------------
   Todd  S.  Myhre

/s/Mario  M.  Rosati                 Director                 March  29,  1999
--------------------
  Mario  M.  Rosati