AG Associates Responds to Unusual Trading Activity

Business Wire, Jan 26, 1996

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 26, 1996--AG Associates (NASDAQ:AGAI) has been informed that there is unusual trading activity in its stock traded on the NASDAQ National Market and, accordingly, has elected to make this released in order to dispell any misunderstandings or rumors in the market place.

After discussions with representatives in the market, the Company believes that this unusual trading activity may be related to its filing of a Form 10-Q today that disclosed, among other things, a new customer development. However, the Company did not issue a press release concerning this development, since the effects that might result from this development are not expected to materialize in the short-term and may be mitigated, in the interim, by many factors. The disclosure set forth in the Company's Form 10-Q for its first fiscal quarter of 1996 is as follows:

In January 1996, a strategic customer notified the Company that it had selected a competitor to the Company as its primary supplier of rapid thermal processing equipment ("RTP") for its next generation integrated circuits utilizing linewidths of 0.25 micron. This customer represented 29 percent of net sales in fiscal 1995 and 39 percent in the first quarter of fiscal 1996. The Company believes that the equipment for 0.25 micron production will not be shipped before the latter part of calendar 1997. This decision will not affect net sales to this customer for fiscal 1996. The Company expects increasing competition from this competitor, which has substantially greater resources than the Company, particularly in the sale of RTP systems designed for 0.25 micron applications. The Company anticipates that several integrated circuit manufacturers will be evaluating RTP equipment for 0.25 micron applications within the next 12 to 18 months. Although the Company's current products address some 0.25 micron applications, it is currently pursuing development of its next-generation product that is designed to address a full range of 0.25 and 0.18 micron applications. The Company does not anticipate that its next-generation product will be available before the first quarter of calendar 1997. It is possible that the Company's development schedule may result in the loss of future orders to this competitor.

The Company's existing backlog shippable to this customer is unaffected by this decision and the Company believes its current products remain competitive for 0.35 micro applications. As a result, the Company does not expect any material adverse effect on net sales in fiscal 1996.

The matters discussed above are forward-looking statements that involve risks and uncertainties, including the timely availability and acceptance of new products, the impact of competitive products and pricing, the management of new product introductions and other risks detailed in the Company's 1995 Form 10-K and the first quarter fiscal 1996 Form 10-Q. Actual results may differ materially from any forward-looking statements due to these risks and uncertainties.

AG Associates is a global company and the world's largest supplier of rapid thermal processors (RTP). The company offers process and demonstration services in San Jose, California and Japan. Founded in 1981, AG Associates is traded on the NASDAQ National Market Systems under the symbol AGAI.

CONTACT: AG Associates

Susan Salvesen, 408/935-2004