AG Associates Sues Applied Materials for Additional Patent Infringement.

SAN JOSE, Calif.--(BUSINESS WIRE)--March 17, 1998--AG Associates (NASDAQ:AGAI), the pioneer and a leading supplier of advanced, single-wafer rapid thermal processing (RTP) equipment used in the manufacture of integrated circuits (ICs), today announced it has filed amended counter claims against Applied Materials, Inc. (Santa Clara, Calif.) in the U.S. District Court for the Northern District of California (San Jose) for the infringement of several patents held by AG Associates, bringing the total number of patents allegedly infringed upon by Applied Materials to four.

According to AG Associates, the patents pertain to processes and hardware used during the semiconductor manufacturing cycle. Specifically, the company alleges that Applied Materials infringes on U.S. Patent No. 5,156,820, entitled, "Reaction Chamber with Controlled Radiant Energy Heating and Distributed Reactant Flow" concerning radiantly heated reaction chambers; U.S. Patent No. 5,324,684, entitled, "Gas Phase Doping of Semiconductor Material in a Cold-Wall Radiantly Heated Reactor Under Reduced Pressure" concerning gas phase doping methods; and U.S. Patent No. 5,002,630, entitled, "Method for High Temperature Thermal Processing with Reduced Convective Heat Loss" concerning high temperature thermal processing with minimal heat loss.

AG Associates states that Applied Materials infringes upon these patents with the manufacture, use and sale of its RTP Centura(tm), Epi Centura(tm) and Polycide Centura(tm) systems, which utilize these patented technologies to perform doped polysilicon deposition, epitaxial silicon deposition, formation and gas phase doping of hemispherical grain silicon (HSG) and silicon nitride deposition. AG Associates' counter claims seek damages and injunctions against the further manufacture, use and sale of these systems.

Applied Materials initiated the lawsuit against AG Associates in May 1997. In November of the same year, AG Associates filed a counter claim against Applied Materials for infringement of U.S. Patent No. 4,331,485, entitled Method for Heat Treating Semiconductor Material Using High Intensity CW Lamps issued to Chairman and Chief Executive Officer Dr. Arnon Gat. In the counter claim, AG Associates alleges that Applied Materials infringes upon the patent with the manufacture, use and sale of its RTP Centura system, which utilizes this patented technology to heat wafers in the manufacture of ICs.

Commenting on the most recently filed counter claims, Gat said, "AG Associates continues to vigorously defend its position and protect the intellectual properties we have amassed over the last 17 years. We have decided to take further legal action against Applied Materials to protect the enormous investments we and our shareholders have made in AG Associates. As the pioneer of RTP, we firmly believe that healthy competition validates our market strategy and accelerates the adoption of this enabling technology; however, we do not condone Applied Materials' practice of using their aggressive legal tactics to manipulate the marketplace or AG Associates."

Except for historical information, the matters discussed in this news release, including the Company's plans to assert its patent claims, are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially from those projected, including the uncertainties of ongoing negotiations, unpredictability of litigation and other risks detailed from time to time in the Company's SEC reports. The Company assumes no obligation to update the forward-looking information in this release.

AG Associates is a leading supplier of rapid thermal processing equipment to the worldwide semiconductor industry. Founded in 1981, AG Associates is headquartered in San Jose, Calif., and maintains customer service and support centers in the United States, Europe and Far East to support its global customer base. The company's common stock trades on the Nasdaq Stock Market under the symbol AGAI. For more information on the company, visit AG Associates at: http://www.agassociates.com on the World Wide Web.

CONTACT: AG Associates, Inc.

Cheri Salazar, 408/935-2249

or

MCA, Inc.

Marie Labrie, 650/968-8900