UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(MARK  ONE)

[X]     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR 15(D) OF THE SECURITIES
EXCHANGE  ACT  OF  1934
FOR  THE  QUARTERLY  PERIOD  ENDED  MARCH  31,  2000  OR

[  ]     TRANSITION  REPORT  PURSUANT  TO  SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE  ACT  OF  1934
FOR  THE  TRANSITION  PERIOD  FROM  ___  TO  ___

COMMISSION  FILE  NUMBER  0-17139

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

     CALIFORNIA     94-279080
     (State  or  other  jurisdiction  of     (I.R.S.  Employer
     incorporation  or  organization)     Identification  No.)

     1139  KARLSTAD  DRIVE,  SUNNYVALE,  CALIFORNIA     94089
     (Address  of  principal  executive  offices)     (Zip  code)

                                 (408) 747-7120
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
    (Former name, former address and former fiscal year, if changed since last
                                     report)

Indicate by check mark whether the registrant (1) has filed all reports required
to  be  filed  by  Sections  13  or 15(d) of the Securities Exchange Act of 1934
during  the  preceding  12  months  (or  for such 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  the  number  of  shares outstanding of each of the issuer's classes of
common  stock,  as  of  the  latest  practicable  date:

Common  shares  outstanding  at  May  8,  2000:           18,786,307
                                                    ----------------

<PAGE>

                         PART I.  FINANCIAL INFORMATION


ITEM  1.  FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>

                     GENUS, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (IN THOUSANDS, EXCEPT PER SHARE DATA)


                                                  THREE MONTHS ENDED
                                                       MARCH 31,
                                                ---------------------
                                                    2000       1999
                                                -----------  --------
<S>                                             <C>          <C>
Net sales. . . . . . . . . . . . . . . . . . .  $    12,277  $ 5,953
Costs and expenses:
 Cost of goods sold. . . . . . . . . . . . . .        6,812    3,604
 Research and development. . . . . . . . . . .        1,760    1,203
 Selling, general and administrative . . . . .        2,770    1,865
                                                -----------  --------
Income (loss) from operations. . . . . . . . .          935     (719)

Other income (expense), net. . . . . . . . . .          286      108
                                                -----------  --------
Income (loss) before income taxes. . . . . . .        1,221     (611)

Provision for income taxes . . . . . . . . . .          250        0
                                                -----------  --------
Net income (loss). . . . . . . . . . . . . . .  $       971  $  (611)
                                                ===========  ========

Net income (loss) per share-basic and diluted.  $      0.05  $ (0.03)
                                                ===========  ========

Shares used in per share calculation-basic . .       18,569   17,865
                                                ===========  ========
Shares used in per share calculation-diluted .       20,628   17,865
                                                ===========  ========

<FN>

   The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                              GENUS, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                           (IN THOUSANDS, EXCEPT SHARE DATA)


                                                   MARCH 31, 2000    DECEMBER 31, 1999
                                                  ----------------  -------------------
<S>                                               <C>               <C>
ASSETS
Current assets:
 Cash and cash equivalents . . . . . . . . . . .  $         8,653   $            6,739
 Accounts receivable (net allowance for doubtful
   accounts of $241 in 2000 and $241 in 1999 . .           12,878                7,629
 Inventories . . . . . . . . . . . . . . . . . .            7,628                7,266
 Other current assets. . . . . . . . . . . . . .              982                  883
                                                  ----------------  -------------------
   Total current assets. . . . . . . . . . . . .           30,141               22,517
 Property and equipment, net . . . . . . . . . .            5,249                4,894
 Other assets, net . . . . . . . . . . . . . . .              339                  333
                                                  ----------------  -------------------
   Total assets. . . . . . . . . . . . . . . . .  $        35,729   $           27,744
                                                  ================  ===================

LIABILITIES
Current liabilities:
 Short-term bank borrowings. . . . . . . . . . .  $         4,000   $                0
 Accounts payable. . . . . . . . . . . . . . . .            5,891                4,146
 Accrued expenses. . . . . . . . . . . . . . . .            4,721                4,220
                                                  ----------------  -------------------
   Total current liabilities . . . . . . . . . .           14,612                8,366
                                                  ----------------  -------------------

Contingencies (see notes)

SHAREHOLDERS' EQUITY
Preferred stock, no par value:
 Authorized 1,982,000 shares;
   Issued and outstanding, none. . . . . . . . .                0                    0
Common stock, no par value:
 Authorized 50,000,000 shares;
   Issued and outstanding 18,770,364 shares at
   March 31, 2000 and 18,469,000 shares at
   December 31, 1999 . . . . . . . . . . . . . .          101,789              101,042
 Accumulated deficit . . . . . . . . . . . . . .          (78,901)             (79,872)
 Accumulated other comprehensive loss. . . . . .           (1,771)              (1,792)
                                                  ----------------  -------------------
   Total shareholders' equity. . . . . . . . . .           21,117               19,378
                                                  ----------------  -------------------
                                                  $        35,729   $           27,744
                                                  ================  ===================

<FN>

       The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                               GENUS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                      (IN THOUSANDS)


                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                           ----------------------
                                                               2000        1999
                                                           ------------  --------
<S>                                                        <C>           <C>
Cash flows from operating activities:
 Net income (loss). . . . . . . . . . . . . . . . . . . .  $       971   $  (611)
 Adjustments to reconcile net income (loss) to
 net cash provided by (used in) operating activities:
   Depreciation and amortization. . . . . . . . . . . . .          414       371
   Stock compensation . . . . . . . . . . . . . . . . . .           82         0
   Provision for doubtful accounts. . . . . . . . . . . .            0        (1)
   Changes in assets and liabilities:
     Accounts receivable. . . . . . . . . . . . . . . . .       (5,249)    3,538
     Inventories. . . . . . . . . . . . . . . . . . . . .         (362)      139
     Accounts payable . . . . . . . . . . . . . . . . . .        1,745       628
     Accrued expenses . . . . . . . . . . . . . . . . . .          501      (859)
     Other, net . . . . . . . . . . . . . . . . . . . . .         (105)      103
                                                           ------------  --------
     Net cash provided by (used in) operating activities.       (2,003)    3,308
                                                           ------------  --------

Cash flows from investing activities:
 Acquisition of property and equipment. . . . . . . . . .         (769)     (174)
                                                           ------------  --------
     Net cash used in investing activities. . . . . . . .         (769)     (174)
                                                           ------------  --------

Cash flows from financing activities:
 Proceeds from issuance of common stock . . . . . . . . .          665         0
 Proceeds from short-term bank borrowings . . . . . . . .        4,000         0
 Payments of short-term bank borrowings . . . . . . . . .            0    (4,000)
 Payments of long-term debt . . . . . . . . . . . . . . .            0       (21)
                                                           ------------  --------
     Net cash provided by (used in) financing activities.        4,665    (4,021)
                                                           ------------  --------

Effect of exchange rate changes on cash . . . . . . . . .           21        20
                                                           ------------  --------

Net increase (decrease) in cash and cash equivalents. . .        1,914      (867)
Cash and cash equivalents, beginning of period. . . . . .        6,739     8,125
                                                           ------------  --------
Cash and cash equivalents, end of period. . . . . . . . .  $     8,653   $ 7,258
                                                           ============  ========

<FN>

        The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>

                          GENUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2000 (UNAUDITED)

     Basis  of  Presentation. The accompanying consolidated financial statements
have  been  prepared  in  accordance with SEC requirements for interim financial
statements.  These  financial  statements should be read in conjunction with the
consolidated  financial  statements  and notes thereto included in the Company's
1999  Annual  Report  on  Form  10-K.

     The  information  furnished  reflects  all  adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for  the  fair  statement  of financial position, results of operations and cash
flows for the interim periods. The results of operations for the interim periods
presented  are not necessarily indicative of results to be expected for the full
year.

     Net  Income (Loss) Per Share. 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).

Net  Income  (Loss)  Per  Share

     A  reconciliation of the numerator and denominator of basic and diluted net
income  (loss)  per  share  is as follows (in thousands, except per share data):

<TABLE>
<CAPTION>

                                                       THREE MONTHS ENDED
                                                            MARCH 31,
                                                     ----------------------
                                                         2000        1999
                                                     ------------  --------
<S>                                                  <C>           <C>
Numerator-basic:
 Net income (loss) available to common shareholders  $        971  $  (611)

Denominator-basic:
 Weighted average common stock outstanding. . . . .        18,569   17,865
                                                     ============  ========

Basic net income (loss) per share . . . . . . . . .  $       0.05  $ (0.03)
                                                     ============  ========


Numerator-diluted:
 Net income (loss) available to common shareholders  $        971  $  (611)

Denominator-diluted:
 Weighted average common stock outstanding. . . . .        18,569   17,865
 Effect of dilutive securities: stock options . . .         1,795        0
 Effect of dilutive securities: warrants. . . . . .           264        0
                                                     ------------  --------
                                                           20,628   17,865
                                                     ============  ========

Diluted net income (loss) per share . . . . . . . .  $       0.05  $ (0.03)
                                                     ============  ========

</TABLE>

<PAGE>

                          GENUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2000 (UNAUDITED)

     Stock  options  to  purchase approximately 2,284,690 shares of common stock
were  outstanding  during  the  three  months  ended March 31, 1999 but were not
included  in the computation of diluted loss per share because the Company had a
net  loss  for  the  three  months  ended  March  31,  1999.

    Warrants  to purchase 400,000 shares of common stock were outstanding during
the  three  months ended March 31, 1999 but were not included in the computation
of  diluted  loss  per  share  because  the Company had a net loss for the three
months  ended  March  31,  1999.

     Statement  of  Cash  Flow  Information  (amounts  in  thousands):

<TABLE>
<CAPTION>

                                                         THREE MONTHS ENDED
                                                              MARCH 31,
                                                         ------------------
                                                           2000       1999
                                                         ---------  -------
<S>                                                      <C>        <C>
Supplemental cash flow information:
 Cash paid during the period for:
   Interest . . . . . . . . . . . . . . . . . . . . . .  $       0  $    2
   Income taxes . . . . . . . . . . . . . . . . . . . .         68       0

 Non-cash financing activities:
   Conversion of 16,000 shares of convertible preferred
     stock to 640,000 shares of common stock. . . . . .          0     773

</TABLE>

     Line  of  Credit.  In November 1999, the Company entered into a $10 million
revolving line of credit with Venture Bank. Amounts available under the line are
based  on  80% of eligible accounts receivable, and borrowings under the line of
credit  are  secured  by  all  corporate  assets and bear interest at prime plus
0.25%.  The line of credit expires in November 2001. The line of credit contains
covenants  that  require  the  Company  to  maintain a minimum quick ratio and a
maximum  debt  to  tangible net equity ratio. In addition, the line requires the
Company  to  have annual profitability beginning in 2000 and a maximum quarterly
loss  of  $1 million with no two consecutive quarterly losses. Additionally, the
Company  is  prohibited  from  distributing  dividends.  The amount available to
borrow  at  March  31, 2000 was $4.8 million at a rate of 9.25%. The Company had
outstanding  borrowings  of  $4  million  on  March  31,  2000.

INVENTORIES
Inventories  comprise  the  following  (in  thousands):

<TABLE>
<CAPTION>

                                    MARCH 31,   DECEMBER 31,
                                      2000          1999
                                   ----------  -------------
<S>                                <C>         <C>
Raw materials and purchased parts  $    6,117  $       5,439
Work in process . . . . . . . . .       1,434          1,055
Finished goods. . . . . . . . . .          77            772
                                   ----------  -------------
                                   $    7,628  $       7,266
                                   ==========  =============

</TABLE>

<PAGE>

                          GENUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2000 (UNAUDITED)

ACCRUED  EXPENSES
Accrued  expenses  comprise  the  following  (in  thousands):

<TABLE>
<CAPTION>

                                          MARCH 31,   DECEMBER 31,
                                            2000          1999
                                         ----------  -------------
<S>                                      <C>         <C>
System installation and warranty. . . .  $    1,048  $         817
Accrued commissions and incentives. . .         619            364
Accrued compensation and related items.         624            872
Federal, state and foreign income taxes         804            622
Customer deposits . . . . . . . . . . .          82            420
Other                                         1,544          1,125
                                         ----------  -------------
                                         $    4,721  $       4,220
                                         ==========  =============

</TABLE>

LEGAL  PROCEEDINGS

     The  Company  has  been  named  as  a  defendant  in  a  claim involving an
automobile  accident  by a former employee of the Company, which resulted in the
death  of  an  individual.  General,  punitive,  and exemplary damages are being
sought  by  the  plaintiffs.  The  Company  believes  it is not at fault in this
matter,  and  has appointed legal council to defend the claim. While the outcome
of  this  matter is not presently determinable, management does not believe that
resolution  of  this matter will have a material adverse effect on the financial
position  or  results  of  operations  of  the  Company.

COMPREHENSIVE  INCOME

     Statement  of Financial Accounting Standards No. 130 (SFAS 130), "Reporting
Comprehensive  Income"  establishes  rules  for  the  reporting  and  display of
comprehensive  income  and  its  components.

     The  following  are  the  components  of  comprehensive  income  (loss) (in
thousands):

<TABLE>
<CAPTION>

                                           THREE MONTHS ENDED
                                                MARCH 31,
                                           ------------------
                                              2000      1999
                                           ----------  ------
<S>                                        <C>         <C>
Net income (loss) . . . . . . . . . . . .  $      971  $(611)
Foreign currency translation adjustments.          21     19
                                           ----------  ------
 Comprehensive income (loss). . . . . . .  $      992  $(592)
                                           ==========  ======

</TABLE>

     The  components  of  accumulated other comprehensive income, net of related
tax  are  as  follows  (in  thousands):

<TABLE>
<CAPTION>

                                     MARCH 31,    DECEMBER 31,
                                       2000           1999
                                    -----------  -------------
<S>                                 <C>          <C>
Cumulative translation adjustments  $   (1,771)  $     (1,792)
                                    ===========  =============

</TABLE>

<PAGE>

                          GENUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2000 (UNAUDITED)

RECENT  ACCOUNTING  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  established  a new model for
accounting  for derivative instruments and hedging activities. In July 1999, the
Financial  Accounting  Standards  Boards  issued  SFAS  No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date of
FASB Statement No. 133" (SFAS 133). SFAS 137 deferred the effective date of SFAS
133  until  the  first quarter beginning after June 15, 2000. The impact of SFAS
133  on  the  consolidated  financial  statements  has  not yet been determined.

     In  December  1999,  the SEC staff issued Staff Accounting Bulletin ("SAB")
No.  101,  "Revenue  Recognition." The SEC staff addresses several issues in SAB
No.  101,  including  the  timing  for  recognizing revenue derived from selling
arrangements  that  involve  contractual  customer  acceptance  provisions  and
installation  of  the  product  occurs after shipment and transfer of title. Our
existing  revenue  recognition  policy  is  to recognize revenue at the time the
customer  takes title to the product, generally at the time of shipment, because
we  have,  in  the past, routinely met our installation obligations and obtained
customer  acceptance.  Applying  the  requirements of SAB No. 101 to our present
selling  arrangements  for  the  sale  of semiconductor production equipment may
require  a  change  in  our  accounting  policy  for revenue recognition and the
deferral  of  the  recognition  of  revenue  from  such  equipment  sales  until
installation  is  complete  and  accepted  by the customer. The effect of such a
change,  if  any,  must  be  recognized  as  a  cumulative effect of a change in
accounting  no  later  than  the  quarter  ending  June 30, 2000. We believe the
effects  on liquidity, cash flow and financial position will not be material. At
the  current  time,  it  is not possible to determine the effect this change may
have  on  our  results of operations. However, should the Company be required to
record a cumulative effect of a change in accounting, it will result in a charge
to  net income (loss). We are also considering potential changes to our standard
contracts  for  equipment  sales that could mitigate the potential impact of SAB
No.  101  on  a  going  forward  basis.

     In  March  2000,  the  Financial Accounting Standards Board ("FASB") issued
FASB  Interpretation  No.  44  ("FIN  44")  Accounting  for Certain Transactions
involving  Stock  Compensation  an  interpretation of APB Opinion No. 25. FIN 44
clarifies  the  application of Opinion 25 for (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether a plan
qualifies  as  a noncompensatory plan, (c) the accounting consequence of various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for  an  exchange  of  stock  compensation awards in a business
combination.  FIN  44  is  effective July 1, 2000, but certain conclusions cover
specific  events that occur after either December 15, 1998, or January 12, 2000.
Management believes that the impact of FIN 44 will not have a material effect on
the  financial  position  or  results  of  operations  of  the  Company.

<PAGE>

ITEM  2. 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  in  this  report.

RESULTS  OF  OPERATIONS

     NET  SALES.  Net  sales  for  the  quarter  ended March 31, 2000 were $12.3
million  compared  to  net sales of $6.0 million for the corresponding period in
1999, and represented the highest sales volume since the fourth quarter of 1997,
when Genus was a two-product line company. Shipments included an ALD system to a
new customer, Infineon Technologies AG, and tungsten silicide systems to Samsung
Electronics,  Ltd. Samsung continued a program to upgrade their entire installed
base  of  Lynx2  systems  in  Korea  to the current generation high productivity
process  chamber.

     COST OF GOODS SOLD. Cost of goods sold for the quarter ended March 31, 2000
was  $6.8 million, compared with $3.6 million for the same period in 1999. Gross
profit for the quarter ended March 31, 2000 was $5.5 million, representing 44.5%
of  net  sales,  compared  with  $2.3  million  or  39.4%  of  net sales for the
corresponding period in 1999. The increase in gross margin percent was primarily
due  to  the  higher production volume, which resulted in improved absorption of
fixed operations and service overhead costs. Our gross profits have historically
been  affected  by  variations  in  average  selling  prices,  configuration
differences,  changes  in  the  mix  of product sales, unit shipment levels, the
level  of  foreign  sales  and  competitive  pricing  pressures.

     RESEARCH AND DEVELOPMENT. Research and development expenses for the quarter
ended  March  31,  2000  were  $1.8  million,  representing  14.3% of net sales,
compared with $1.2 million or 20.2% of net sales for the same period in 1999. We
have gradually increased research and development spending over the past year to
support  the  programs required to design and deliver new technology products to
the marketplace. A primary area of focus is the development of new ALD films for
advanced  dielectric  and barrier applications, as the industry migrates towards
smaller  geometries  and  thinner  films. We expect our research and development
spending  levels  to  increase  throughout  2000.

     SELLING,  GENERAL  AND  ADMINISTRATIVE. Selling, general and administrative
expenses were $2.8 million for the first quarter of 2000, or 22.5% of net sales,
compared with $1.9 million for the corresponding period of 1999, or 31.3% of net
sales.  This  was primarily attributed to higher sales expenses due to increased
sales activity and costs accrued for the company's profit sharing and management
bonus  plan.  We  expect  expenses  to  remain  at  these  levels going forward.

     OTHER INCOME (EXPENSE), NET. Other income for the first quarter of 2000 was
$286,000,  compared  to  $108,000  for  the  same  period  in 1999. Other income
consists  mainly  of  interest income and foreign currency exchange gains due to
the  strengthening  of  the  Korean  won  against  the  U.S.  dollar.

     PROVISION  FOR  INCOME TAXES. We had income taxes of $250,000 for the first
quarter  of  2000,  compared  to none in the corresponding period of 1999. Taxes
were  related  to  income  from  our  South  Korean  subsidiary.

LIQUIDITY  AND  CAPITAL  RESOURCES

     At  March  31,  2000,  our  cash and cash equivalents were $8.7 million, an
increase  of $1.9 million from cash and cash equivalents of $6.7 million held as
of  December  31,  1999.  At  March  31, 2000, our accounts receivable was $12.9
million, an increase of $5.3 million from accounts receivable of $7.6 million at
December 31, 1999. Most of the revenue recorded in the first quarter was shipped
in  March,  and  remained  in  accounts  receivable  at  quarter  end.

     Cash  used  in  operating  activities  totaled $2.0 million for the quarter
ended  March 31, 2000, and consisted of increases in accounts receivable of $5.2
million  and  inventory  of $362,000, and was partially offset by an increase in
accounts  payable  of  $1.7 million, net income of $971,000 and depreciation and
amortization of $414,000. Accounts receivable increased due to a majority of the
shipments  taking  place  late in the quarter, and were not due to be paid until
the  following  quarter.  The  accounts  payable  increase  was primarily due to
increased  levels  of  inventory purchasing activity to support first and second
quarter  production  requirements. Inventories increased due to the early timing
of shipments during the second quarter of 2000, requiring us to have most of the
material  in  stock  by  the end of March. Operating activities provided cash of
$3.3  million  for  the  quarter  ending March 31, 1999, primarily due to a $3.5
million  decrease  in  accounts  receivable,  an increase in accounts payable of
$628,000,  and  depreciation  and amortization of $371,000. Partially offsetting
this was a decrease in accrued expenses of $859,000, and a net loss of $611,000.

     Financing  activities  provided  cash of $4.7 million for the quarter ended
March  31,  2000,  and  included  the  short-term borrowing of $4.0 million, and
$665,000  received  from  the  issuance of common stock from our Incentive Stock
Option  Plan.  Financing  activities  used  cash of $4.0 million for the quarter
ending  March  31,  1999  for  the  repayment of our short-term bank borrowings.

     We  incurred  capital  expenditures of $769,000 for the quarter ended March
31,  2000.  These  expenditures  principally  related  to  the  acquisition  and
upgrading  of  machinery  and  equipment  for  our  research and development and
applications laboratories, and personal computer related equipment. We currently
anticipate  that additional capital expenditures will be funded through existing
working  capital  or  lease  financing.

     Our  primary source of funds at March 31, 2000 consisted of $8.7 million in
cash  and  cash  equivalents,  and $12.9 million of accounts receivable, most of
which  we  expect  to  collect  during  the  second  quarter  of  2000.

     In  November  1999,  we entered into a $10 million revolving line of credit
with Venture Bank. Amounts available under the line are based on 80% of eligible
accounts  receivable, and borrowings under the line are secured by all corporate
assets  and  bear  interest  at  prime plus 0.25%. The line of credit expires in
November 2001. The line of credit contains covenants that require us to maintain
a  minimum  quick  ratio  and  a  maximum  debt to tangible net equity ratio. In
addition,  the line of credit requires us to have annual profitability beginning
in  2000  and  a  maximum  quarterly  loss of $1 million with no two consecutive
quarterly  losses.  Additionally, we are prohibited from distributing dividends.
The  amount  available to borrow at March 31, 2000 was $4.8 million at a rate of
9.25%,  and  we  had  outstanding  borrowings  of  $4.0  million.

     We  believe  that  our existing working capital, as well as the $10 million
Venture  Bank  line  of credit, will be sufficient to satisfy our cash needs for
the  next  12  months.  There  can  be no assurance that any required additional
funding,  if  needed,  will  be available on terms attractive to us, which could
have  a material adverse affect on our 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  ACCOUNTING  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  established  a new model for
accounting  for derivative instruments and hedging activities. In July 1999, the
Financial  Accounting  Standards  Boards  issued  SFAS  No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date of
FASB Statement No. 133" (SFAS 133). SFAS 137 deferred the effective date of SFAS
133  until  the  first quarter beginning after June 15, 2000. The impact of SFAS
133  on  the  consolidated  financial  statements  has  not yet been determined.

     In  December  1999,  the SEC staff issued Staff Accounting Bulletin ("SAB")
No.  101,  "Revenue  Recognition." The SEC staff addresses several issues in SAB
No.  101,  including  the  timing  for  recognizing revenue derived from selling
arrangements  that  involve  contractual  customer  acceptance  provisions  and
installation  of  the  product  occurs after shipment and transfer of title. Our
existing  revenue  recognition  policy  is  to recognize revenue at the time the
customer  takes title to the product, generally at the time of shipment, because
we  have,  in  the past, routinely met our installation obligations and obtained
customer  acceptance.  Applying  the  requirements of SAB No. 101 to our present
selling  arrangements  for  the  sale  of semiconductor production equipment may
require  a  change  in  our  accounting  policy  for revenue recognition and the
deferral  of  the  recognition  of  revenue  from  such  equipment  sales  until
installation  is  complete  and  accepted  by the customer. The effect of such a
change,  if  any,  must  be  recognized  as  a  cumulative effect of a change in
accounting  no  later  than  the  quarter  ending  June 30, 2000. We believe the
effects  on liquidity, cash flow and financial position will not be material. At
the  current  time,  it  is not possible to determine the effect this change may
have  on  our  results of operations. However, should the Company be required to
record a cumulative effect of a change in accounting, it will result in a charge
to  net income (loss). We are also considering potential changes to our standard
contracts  for  equipment  sales that could mitigate the potential impact of SAB
No.  101  on  a  going  forward  basis.

     In  March  2000,  the  Financial Accounting Standards Board ("FASB") issued
FASB  Interpretation  No.  44  ("FIN  44")  Accounting  for Certain Transactions
involving  Stock  Compensation  an  interpretation of APB Opinion No. 25. FIN 44
clarifies  the  application of Opinion 25 for (a) the definition of employee for
purposes of applying Opinion 25, (b) the criteria for determining whether a plan
qualifies  as  a noncompensatory plan, (c) the accounting consequence of various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for  an  exchange  of  stock  compensation awards in a business
combination.  FIN  44  is  effective July 1, 2000, but certain conclusions cover
specific  events that occur after either December 15, 1998, or January 12, 2000.
Management believes that the impact of FIN 44 will not have a material effect on
the  financial  position  or  results  of  operations  of  the  Company.

<PAGE>

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.

WE  HAVE  EXPERIENCED  LOSSES  OVER THE LAST FEW YEARS AND WE MAY NOT BE ABLE TO
ACHIEVE  OR  SUSTAIN  PROFITABILITY

     We  have  experienced  losses  of  $1.6  million,  $29.5 million, and $19.3
million  for  1999,  1998  and 1997, respectively. While we recorded a profit of
$971,000  during the quarter ending March 31, 2000, we may not be able to attain
or  sustain  consistent future revenue growth on a quarterly or annual basis, or
achieve and maintain consistent profitability on a quarterly or annual basis. As
a  result,  our  business  could  be  materially  harmed.

SUBSTANTIALLY  ALL  OF OUR NET SALES COME FROM A SMALL NUMBER OF LARGE CUSTOMERS

     Historically,  we  have  relied  on  a  small  number  of  customers  for a
substantial  portion of our net sales. For example, Samsung Electronics Company,
Ltd.  and  Micron  Technology, Inc. accounted of 84% and 11% of our net sales in
1999  respectively.  During  the  first  quarter  of  2000,  Samsung Electronics
Company, Ltd. and Infineon Technologies AG. accounted for 76% and 22% of our net
sales.  In  addition,  Samsung Electronics Company, Ltd., and Micron Technology,
Inc.  represented  92%  of  accounts  receivable  at  December 31, 1999. Samsung
Electronics  Company,  Ltd.  and  Infineon  Technologies AG accounted for 92% of
accounts  receivable at March 31, 2000. The semiconductor manufacturing industry
generally  consists  of  a  limited  number of larger companies. We consequently
expect  that  a  significant  portion  of  our  future  product  sales  will  be
concentrated  within  a  limited  number  of  customers.

     None  of  our  customers  has  entered  into  a long-term agreement with us
requiring  them  to purchase our products. In addition, sales to these customers
may  decrease  in  the  future  when  they  complete their current semiconductor
equipment  purchasing  requirements.  If  any of our customers were to encounter
financial difficulties or become unable to continue to do business with us at or
near current levels, our business, results of operations and financial condition
would  be materially adversely affected. Customers may delay or cancel orders or
may  stop  doing  business  with  us  for  a  number  of  reasons  including:

-     customer  departures  from  historical  buying  patterns;

-     general  market  conditions;

-     economic  conditions;  or

-     competitive  conditions in the semiconductor industry or in the industries
that  manufacture  products  utilizing  integrated  circuits.

OUR  QUARTERLY  FINANCIAL  RESULTS FLUCTUATE SIGNIFICANTLY AND MAY FALL SHORT OF
ANTICIPATED  LEVELS,  WHICH  COULD  CAUSE  OUR  STOCK  PRICE  TO  DECLINE

     Our  net  sales  and  operating  results  may  fluctuate significantly from
quarter  to  quarter.  We  derive  our  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.  Our results of operations for a particular
quarter could be materially 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. At our current
revenue  level,  each  sale,  or  failure  to make a sale, could have a material
effect  on  us.  Our  lengthy sales cycle, coupled with our customers' competing
capital  budget  considerations,  make  the timing of customer orders uneven and
difficult  to  predict.  In  addition, our backlog at the beginning of a quarter
typically  does  not include all orders required to achieve our sales objectives
for that quarter. As a result, our net sales and operating results for a quarter
depend  on  us  shipping  orders  as  scheduled  during  that quarter as well as
obtaining  new  orders for systems to be shipped in that same quarter. Any delay
in  scheduled  shipments  or  in  shipments from new orders would materially and
adversely  affect  our operating results for that quarter, which could cause our
stock  price  to  decline.

     In December 1999, the SEC issued Staff Accounting Bulletin No. 101. SAB 101
summarizes  certain  of  the  SEC  staff's  views in applying generally accepted
accounting  principles  to revenue recognition in financial statements. Prior to
SAB 101, we generally recognized revenue upon shipment of a system. Applying the
requirements  of SAB 101 to the present selling arrangements we use for the sale
of  semiconductor  production  equipment  may require a change in our accounting
policy  for  revenue recognition and deferral of the recognition of revenue from
such  equipment  sales  until  installation  is  complete  and  accepted  by the
customer.  The  effect  of  such  a  change,  if  any,  must  be recognized as a
cumulative  effect  of  a  change in accounting no later than the quarter ending
June  30,  2000.  Although SAB 101 applies to every company within our industry,
there is a risk that our stock price may be materially and adversely impacted by
SAB  101  if we are required to transition from recognizing revenue at shipment,
to  customer  acceptance  of  a  system.

     Since  it is possible that there may be a shift in revenue recognition from
the  time of shipment to the time of acceptance by the customer, certain revenue
that  we  would  have  recognized  in the first and second quarters of 2000 upon
shipment  of  products may not be recognized until the products are accepted. We
cannot  assure  you  as to the timing of such acceptances. Any material delay in
receipt  of  acceptances  may  have  a material adverse effect on our results of
operations.

WE  ARE HIGHLY DEPENDENT ON OUR INTERNATIONAL SALES, PARTICULARLY SALES IN ASIAN
COUNTRIES,  AND  FACE  RISKS  BEYOND  OUR  CONTROL  OR  INFLUENCE

     Export  sales accounted for approximately 86%, 56% and 74% of our total net
sales  in  1999, 1998 and 1997, respectively, and accounted for 98% of our total
net  sales  during  the  quarter  ended  March  31, 2000. Net sales to our South
Korean-based  customer accounted for approximately 84%, 30% and 50% of total net
sales,  respectively, during the same year-end periods, and accounted for 76% of
our  total net sales during the quarter ended March 31, 2000. We anticipate that
international  sales,  including  sales to South Korea, will continue to account
for  a  significant portion of our net sales. As a result, a significant portion
of  our  net  sales  will  be  subject  to  certain  risks,  including:

-     unexpected  changes  in  law  or  regulatory  requirements;

-     exchange  rate  volatility;

-     tariffs  and  other  barriers;

-     political  and  economic  instability;

-     difficulties  in  accounts  receivable  collection;

-     extended  payment  terms;

-     difficulties  in  managing  distributors  or  representatives;

-     difficulties  in  staffing  our  subsidiaries;

-     difficulties  in  managing  foreign  subsidiary  operations;  and

-     potentially  adverse  tax  consequences.

     Our  foreign  sales are primarily denominated in U.S. dollars and we do not
engage  in  hedging  transactions. As a result, our foreign sales are subject to
the  risks  associated  with  unexpected  changes in exchange rates, which could
affect  the  price  of  our  products.

     In  the  past,  turmoil in the Asian financial markets resulted in dramatic
currency  devaluations,  stock  market declines, restriction of available credit
and general financial weakness. For example, prices fell dramatically in 1998 as
some  integrated  circuit manufacturers sold DRAMs at less than cost in order to
generate  cash.  Currency  devaluations  make  dollar-denominated goods, such as
ours,  more  expensive  for  international  customers.  In  addition,  difficult
economic  conditions  may  limit  capital  spending  by  our  customers.  These
circumstances may also affect the ability of our customers to meet their payment
obligations,  resulting in the cancellations or deferrals of existing orders and
the  limitation  of  additional orders. As a result of any or all these factors,
our  business,  financial  condition and results of operations may be materially
harmed.

OUR  SALES  REFLECT  THE  CYCLICALITY OF THE SEMICONDUCTOR INDUSTRY, WHICH COULD
CAUSE  OUR  OPERATING  RESULTS  TO FLUCTUATE SIGNIFICANTLY AND COULD CAUSE US TO
FAIL  TO  ACHIEVE  ANTICIPATED  SALES

     Our  business  depends  upon  the  capital  expenditures  of  semiconductor
manufacturers, which in turn depend on the current and anticipated market demand
for  integrated  circuits  and  products  utilizing  integrated  circuits.  The
semiconductor  industry  is  cyclical and experiences periodic downturns both of
which reduce the semiconductor industry's demand for semiconductor manufacturing
capital equipment. Semiconductor industry downturns have significantly decreased
our  revenues, operating margins and results of operations in the past. There is
a  risk that our revenues and operating results will be materially harmed by any
future  downturn  in  the  semiconductor  industry.

OUR  FUTURE  GROWTH  IS  DEPENDENT  ON  ACCEPTANCE  OF NEW THIN FILMS AND MARKET
ACCEPTANCE  OF  OUR  SYSTEMS  RELATING  TO  THOSE  THIN  FILMS

     We  believe  that  our  future  growth  will  depend in large part upon the
acceptance  of  our new thin films. As a result, we expect to continue to invest
in  research  and  development  in these new thin films and the systems that use
these  films.  There  can  be  no  assurance that the market will accept our new
products  or  that  we  will  be  able  to develop and introduce new products or
enhancements  to  our  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 our business, financial condition and results
of  operations.

     In  addition,  we  must  manage  product  transitions  successfully,  as
introductions  of  new products could harm sales of existing products. We derive
our  revenue  primarily  from  the sale of our tungsten silicide CVD systems. We
estimate  that the life cycle for these systems is three-to-five years. There is
a  risk  that  future technologies, processes or product developments may render
our  product  offerings obsolete and we may not be able to develop and introduce
new  products  or  enhancements  to  our  existing  products in a timely manner.

WE MAY NOT BE ABLE TO CONTINUE TO SUCCESSFULLY COMPETE IN THE HIGHLY COMPETITIVE
SEMICONDUCTOR  INDUSTRY  AGAINST  COMPETITORS  WITH  GREATER  RESOURCES

     The  semiconductor  manufacturing  capital  equipment  industry  is  highly
competitive.  We  face  substantial competition throughout the world. We believe
that  to  remain competitive, we will require significant financial resources in
order  to develop new products, offer a broader range of products, establish and
maintain  customer  service  centers  and  invest  in  research and development.

     Many  of  our existing and potential competitors have substantially greater
financial  resources,  more  extensive  engineering,  manufacturing,  marketing,
customer  service  capabilities  and  greater  name  recognition.  We expect our
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  our  competitors  enter  into  strategic  relationships  with  leading
semiconductor manufacturers covering thin film products similar to those sold by
us,  it  would  materially  adversely affect our ability to sell our products to
such  manufacturers.  In addition, to expand our sales we must often replace the
systems  of our competitors or sell new systems to customers of our competitors.
Our competitors may develop new or enhanced competitive products that will offer
price  or performance features that are superior to our systems. Our competitors
may  also  be  able  to respond more quickly to new or emerging technologies and
changes  in  customer  requirements,  or  to  devote  greater  resources  to the
development,  promotion  and  sale of their product lines. We may not be able to
maintain  or  expand  our  sales if competition increases and we are not able to
respond  effectively.

WE  MAY  NOT ACHIEVE ANTICIPATED REVENUE GROWTH IF WE ARE NOT SELECTED AS VENDOR
OF  CHOICE  FOR  NEW  OR  EXPANDED FABRICATION FACILITIES AND IF OUR SYSTEMS AND
PRODUCTS  DO  NOT  ACHIEVE  BROADER  MARKET  ACCEPTANCE

     Because  semiconductor  manufacturers must make a substantial investment to
install  and  integrate  capital  equipment  into  a  semiconductor  fabrication
facility,  these  manufacturers  will  tend  to  choose  semiconductor equipment
manufacturers  based  on  established  relationships,  product compatibility and
proven  financial  performance.

     Once  a  semiconductor  manufacturer  selects a particular vendor's capital
equipment,  the  manufacturer  generally relies for a significant period of time
upon  equipment  from  this  vendor  of  choice for the specific production line
application. In addition, the semiconductor manufacturer frequently will attempt
to  consolidate  its  other capital equipment requirements with the same vendor.
Accordingly,  we  may  face  narrow windows of opportunity to be selected as the
"vendor  of  choice"  by  potential new customers. It may be difficult for us to
sell  to  a  particular  customer  for  a  significant  period of time once that
customer  selects  a  competitor's  product,  and  we  may  not be successful in
obtaining  broader  acceptance of our systems and technology. If we are not able
to  achieve  broader  market acceptance of our systems and technology, we may be
unable  to  grow  our business and our operating results and financial condition
will  be  materially  adversely  affected.

OUR  LENGTHY  SALES  CYCLE INCREASES OUR COSTS AND REDUCES THE PREDICTABILITY OF
OUR  REVENUE

     Sales  of our systems depend upon the decision of a prospective customer to
increase  manufacturing capacity. That decision typically involves a significant
capital  commitment  by  our customers. Accordingly, the purchase of our systems
typically  involves  time-consuming  internal  procedures  associated  with  the
evaluation,  testing,  implementation  and introduction of new technologies into
our  customers'  manufacturing  facilities.  For  many  potential  customers, an
evaluation  as  to  whether  new semiconductor manufacturing equipment is needed
typically  occurs  infrequently.  Following  an evaluation by the customer as to
whether  our systems meet its qualification criteria, we have experienced in the
past  and  expect  to experience in the future delays in finalizing system sales
while  the  customer  evaluates  and  receives  approval for the purchase of our
systems  and  constructs  a  new  facility  or  expands  an  existing  facility.

     Due  to  these  factors,  our  systems typically have a lengthy sales cycle
during  which  we  may  expend substantial funds and management effort. The time
between  our  first  contact  with a customer and the customer placing its first
order  typically lasts from nine to twelve months and is often even longer. This
lengthy  sales  cycle makes it difficult to accurately forecast future sales and
may  cause  our  quarterly and annual revenue and operating results to fluctuate
significantly  from  period  to  period.  If anticipated sales from a particular
customer  are  not  realized  in  a  particular period due to this lengthy sales
cycle,  our  operating  results  may  be  adversely  affected.

WE ARE DEPENDENT ON OUR INTELLECTUAL PROPERTY AND RISK LOSS OF A VALUABLE ASSET,
REDUCED  MARKET  SHARE AND LITIGATION EXPENSE IF WE CANNOT ADEQUATELY PROTECT IT

     Our  success depends in part on our proprietary technology. There can be no
assurance  that  we  will  be able to protect our technology or that competitors
will  not be able to develop similar technology independently. We currently have
a number of United States and foreign patents and patent applications. There can
be  no  assurance  that  any  patents  issued  to  us  will  not  be challenged,
invalidated  or  circumvented or that the rights granted thereunder will provide
us  with  competitive  advantages.

     From  time  to  time,  we have received notices from third parties alleging
infringement  of  such parties' patent rights by our products. In such cases, it
is our policy to defend against the claims or negotiate licenses on commercially
reasonable  terms  where appropriate. However, no assurance can be given that we
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  our  business  and  financial  results.

WE  ARE  DEPENDENT  UPON  KEY  PERSONNEL  WHO ARE EMPLOYED AT WILL, WHO WOULD BE
DIFFICULT  TO  REPLACE  AND  WHOSE  LOSS  WOULD IMPEDE OUR DEVELOPMENT AND SALES

     We  are highly dependent on key personnel to manage our business, and their
knowledge  of  business,  management  skills  and  technical  expertise would be
difficult  to replace. Our success depends upon the efforts and abilities of Dr.
William  W.R.  Elder,  our  chairman  and chief executive officer, Dr. Thomas E.
Seidel,  our  chief  technology  officer, and other key managerial and technical
employees who would be difficult to replace. The loss of Dr. Elder or Dr. Seidel
or  other key employees could limit or delay our ability to develop new products
and  adapt  existing  products to our customers' evolving requirements and would
also  result  in  lost  sales and diversion of management resources. None of our
executive  officers  are  bound  by  a  written  employment  agreement,  and the
relationships  with  our  officers  are  at  will.

     Because  of  competition  for additional qualified personnel, we may not be
able to recruit or retain necessary personnel, which could impede development or
sales  of  our products. Our growth depends on our ability to attract and retain
qualified,  experienced  employees.  There  is  substantial  competition  for
experienced  engineering, technical, financial, sales and marketing personnel in
our  industry.  In  particular, we must attract and retain highly skilled design
and  process  engineers. Competition for such personnel is intense, particularly
in the San Francisco Bay Area where we are based. If we are unable to retain our
existing key personnel, or attract and retain additional qualified personnel, we
may  from  time  to time experience inadequate levels of staffing to develop and
market  our  products  and  perform services for our customers. As a result, our
growth  could  be  limited due to our lack of capacity to develop and market our
products  to  customers,  or  fail  to  meet  delivery commitments or experience
deterioration  in  service  levels  or  decreased  customer  satisfaction.

OUR FAILURE TO COMPLY WITH ENVIRONMENTAL REGULATIONS COULD RESULT IN SUBSTANTIAL
LIABILITY  TO  US

     We  are  subject  to  a variety of federal, state and local laws, rules and
regulations  relating  to  the  protection  of health and the environment. These
include  laws,  rules  and  regulations  governing  the use, storage, discharge,
release,  treatment  and  disposal  of  hazardous  chemicals  during  and  after
manufacturing,  research and development and sales demonstrations. If we fail to
comply  with  present  or future regulations, we could be subject to substantial
liability  for  clean  up efforts, property damage, personal injury and fines or
suspension or cessation of our operations. Restrictions on our ability to expand
or  continue  to  operate  our  present locations could be imposed upon us or we
could  be  required  to  acquire  costly  remediation  equipment  or incur other
significant  expenses.

WE  DEPEND  UPON  A  LIMITED  NUMBER  OF  SUPPLIERS  FOR  MANY  COMPONENTS  AND
SUBASSEMBLIES,  AND SUPPLY SHORTAGES OR THE LOSS OF THESE SUPPLIERS COULD RESULT
IN  INCREASED  COST  OR  DELAYS  IN  MANUFACTURE  AND  SALE  OF  OUR  PRODUCTS

     Certain  of  the components and sub-assemblies included in our products are
obtained  from  a single supplier or a limited group of suppliers. Disruption or
termination  of these sources could have an adverse effect on our operations. We
believe 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 our business, financial
condition  and  results  of  operations.

WE  DEPEND  UPON  SIX  DISTRIBUTORSHIPS  FOR  THE  SALE  OF OUR PRODUCTS AND ANY
DISRUPTION  IN  THESE  RELATIONSHIPS  WOULD  ADVERSELY  AFFECT  US

     We  currently  sell and support our thin film products through direct sales
and  customer  support  organizations in the U.S., Europe, South Korea and Japan
and  through six independent sales representatives and distributors in the U.S.,
Europe,  South  Korea,  Taiwan, China and Malaysia. We do not have any long-term
contracts  with  our  sales  representatives and distributors. Any disruption or
termination  of  our  existing  distributor  relationships could have an adverse
effect  on  our  business,  financial  condition  and  results  of  operations.

WE  ARE  ESTABLISHING A DIRECT SALES ORGANIZATION IN JAPAN WHICH COULD RESULT IN
LOST  SALES  OR  INCREASED  RISKS  TO  OUR  BUSINESS  IN  JAPAN

     As  part  of  our original strategy for penetrating the Japanese market, we
established  a distribution relationship with Innotech Corp. In 1998, we shifted
our  strategy  in  Japan  to  a  direct  sales  model.  We  have  terminated our
distribution  relationship  with  Innotech  and  are establishing our own direct
sales  force  in  Japan.  Although  we  intend to continue to invest significant
resources  in Japan, including the hiring of additional personnel to support our
direct sales effort, we may not be able to maintain or increase our sales to the
Japanese  semiconductor  industry.  We  may  miss  sales  opportunities  or lose
competitive  sales as we transition to this direct sales model, and our existing
Japanese  customers  and  potential  customers  may be unwilling to purchase our
systems  from  us  directly.

THE  PRICE  OF  OUR  COMMON STOCK HAS FLUCTUATED IN THE PAST AND MAY CONTINUE TO
FLUCTUATE  SIGNIFICANTLY IN THE FUTURE, WHICH MAY LEAD TO LOSSES BY INVESTORS OR
TO  SECURITIES  LITIGATION

     Our common stock has experienced substantial price volatility, particularly
as  a  result  of  quarter-to-quarter  variations in our, our competitors or our
customers  actual  or  anticipated  financial  results,  our  competitors or our
customers  announcements  of  technological  innovations,  revenue  recognition
policies,  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 we do
business,  may  adversely  effect  the  market  price  of  our  common  stock.

     In  the  past, securities class action litigation has often been instituted
against  a company following periods of volatility in the company's stock price.
This  type of litigation, if filed against us, could result in substantial costs
and  divert  our  management's  attention  and  resources.

YEAR  2000  COMPLICATIONS MAY DISRUPT OUR OPERATIONS BECAUSE, WHILE OUR UPGRADED
INTERNAL  SYSTEMS  ARE OPERATIONAL AND THE COST OF UPGRADES WAS NOT MATERIAL, WE
RELY  ON  EXTERNAL  SYSTEMS  THAT  MAY  NOT BE ADEQUATELY UPGRADED FOR YEAR 2000

     The  date  fields coded in many software products and computer systems need
to  be able to distinguish 21st century dates from 20th century dates, including
leap  year  calculations. The failure to be able to accurately distinguish these
dates  is  commonly  known  as  the  year  2000  problem.  While  we have yet to
experience  year  2000  problems,  the  computer software programs and operating
systems  used  in  our  internal  operations,  including  our financial, product
development, order management and manufacturing systems, could experience errors
or  interruptions  due  to  the  year  2000  problem. For example, a significant
failure  of  our  computer  integrated  manufacturing systems, which monitor and
control  factory  equipment,  could disrupt manufacturing operations and cause a
delay  in  completion and shipping of products. In addition, it is possible that
our  suppliers'  and  service  providers' failure to adequately address the year
2000  problem  could have an adverse effect on their operations, which, in turn,
could  have  an  adverse  impact  on  us.

FORWARD-LOOKING  STATEMENTS

     Some  of  the  information in this Quarterly Report on Form 10-Q and in the
documents  that  are  incorporated  by  reference,  including  the risk factors,
contains  forward-looking statements that involve risks and uncertainties. These
statements  relate to future events or our future financial performance. In many
cases, you can identify forward-looking statements by terminology such as "may,"
"will,"  "should,"  "expects,"  "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue," or the negative of these terms and other
comparable  terminology.  These  statements  are  only  predictions.  Our actual
results  could differ materially from those anticipated in these forward-looking
statements  as  a result of a number of factors, including the risks faced by us
described  above  and  elsewhere  in  this  Quarterly  Report  on  Form  10-Q.

     We  believe  it  is  important  to  communicate  our  expectations  to  our
shareholders. However, there may be events in the future that we are not able to
predict  accurately  or  over  which we have no control. The risk factors listed
above, as well as any cautionary language in this Quarterly Report on Form 10-Q,
provide  examples  of  risks, uncertainties and events that may cause our actual
results  to  differ  materially  from  the  expectations  we  describe  in  our
forward-looking  statements.

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     We  face  exposure to adverse movements in foreign currency exchange rates.
These  exposures may change over time as our business practices evolve and could
seriously  harm  our  financial  results. All of our international sales, except
spare  parts  and  service  sales  made  by  our  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  our  products more
expensive and, therefore, reduce the demand for our products. Reduced demand for
our  products  could  materially  adversely  affect  our  business,  results  of
operations  and  financial  condition.

     At  any time, fluctuations in interest rates could affect interest earnings
on  our cash, cash equivalents or increase any interest expense owed on the line
of  credit  facility. We believe that the effect, if any, of reasonably possible
near  term  changes  in  interest  rates  on  our financial position, results of
operations  and  cash  flows  would  not be material. Currently, we do not hedge
these  interest  rates  exposures.

<PAGE>

                           PART II.  OTHER INFORMATION


ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     Exhibits

The  Exhibits  listed  on the accompanying "Index to Exhibits" are filed as part
hereof,  or  incorporated  by  reference  into,  the  report.

(b)     Report  on  Form  8-K

The  Company  was  not  required  to file a Form 8-K during the first quarter of
2000.

<PAGE>

                                   GENUS, INC.
                                   SIGNATURES


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






Date:  May  12,  2000                GENUS,  INC.




                                         /s/  William  W.R.  Elder
                                     ----------------------------------
                                      William  W.R.  Elder,  President,
                                 Chief  Executive  Officer  and  Chairman




                                        /s/  Kenneth  Schwanda
                                     ----------------------------------
                                             Kenneth  Schwanda
                                        Chief  Financial  Officer
                                  (Principal  Financial  and  Principal
                                           Accounting  Officer)

<PAGE>

<TABLE>
<CAPTION>

          GENUS, INC.
       INDEX TO EXHIBITS


EXHIBIT NO.       DESCRIPTION
-----------       -----------
<S>               <C>
   27.1           Financial Data Schedule

</TABLE>