October 11, 2005

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Annual Report on Form 10-K for fiscal year ended September 30, 2004

File No. 0-11412

Ladies and Gentlemen:

Below, in question and answer format, please find our responses to your follow-up questions and comments dated September 19, 2005.

Form 10-K or the Fiscal Year Ended September 30, 2004

Consolidated Financial Statements

Note. 1. Summary of Significant Accounting Policies, page 41

Revenue Recognition, page 41

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 2 of 13

price between the two units of accounting. The portion of the selling price allocated to the installation unit of accounting is the portion of the selling price that is contingent upon completion of the installation, i.e. the holdback. As a result, the revenue associated with the installation unit of accounting is generally significantly greater than the fair value and cost of the installation unit of accounting. Depending on the timing of the installation work, the costs incurred can range from zero, at the date of shipment to the date installation commences, to generally between five and twenty percent of the total deferred revenue. Often, all of the costs and activities of installation for equipment sales occur in the same period that the installation unit of accounting meets the criteria for revenue recognition. For these reasons, we believe the cumulative cost of installation on deferred installation units of accounting is not material and therefore we do not separately track them by project.

Also contributing to the decline in the deferred gross margin as of June 30, 2005 was the deferral of all the revenue attributable to a new product delivered during that quarter with a $0.7 million selling price. That order shipped near the end of June 2005 and the related equipment and installation units of accounting did not meet the criteria for revenue recognition as of the end of the quarter. Therefore, all of the revenue (both product and installation) and all related direct costs incurred for that system were deferred. Because this order had no profit in it, the deferred costs equaled the deferred revenue, i.e. had 0% deferred gross margin, greatly reducing the overall deferred gross margin.

In EITF 00-21 the task force agreed not to provide guidance on Issue 4, accounting for direct costs in an arrangement with multiple deliverables. In SAB Topic 13 we also find no guidance that indicates that we should defer a consistent amount of revenue and costs for sales that have not met the revenue recognition criteria. The remainder of our response to this comment No. 1 is devoted to describing how we apply the existing guidance to the recognition of revenues and how we are complying with Staff Accounting Bulletin 104.

Approximately fifty percent of our revenue is comprised of equipment (furnaces, automated loaders and lapping/polishing machines) sales and the remainder is derived from the sale of parts, upgrades and services. Multiple deliverables, installation services and equipment, are included in nearly all our equipment sales contracts. In accordance with Staff Accounting Bulletin Topic 13.1, we first make a “determination of the units of accounting within our arrangements by reference to the applicable accounting literature”, EITF 00-21, prior to the application of the guidance in SAB Topic 13. Our equipment sales and the related installation meet the criteria for separate units of accounting in paragraph 9 of EITF 00-21, as follows:

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 3 of 13

Next, we allocate the total contract price to the equipment and installation units of accounting, according to paragraph 12 of EITF 00-21, which is based upon the relative fair value of the two units of accounting. However, in accordance with paragraph 14 of EITF 00-21, the amount allocable to the delivered equipment is lesser of the amount otherwise allocable and the non-contingent amount. For us, this means that the delivered equipment is allocated the contract price less the holdback, i.e. the amount contingent upon installation. This has the effect of allocating the contingent amount entirely to the installation unit of accounting. Since the contingent portion of the selling price allocated to the installation unit of accounting is 10-30% of the contract price, the revenue of that unit of accounting is significantly higher than the related fair value and costs. Furthermore, since many of our equipment orders ship near the end of the quarter or the customer is not immediately ready for installation to take place, there often are no or very little costs of installation incurred before the end of the period in which the equipment is delivered. Under these circumstances, there are no costs incurred related to the deferred revenue attributed to the installation unit of accounting to defer, resulting in deferred gross margin of up to 100%.

Next, we make a determination of whether the delivered equipment meets the criteria for revenue recognition, as follows. Section A.1. of Staff Accounting Bulletins Topic 13: Revenue Recognition states, “The staff believes that revenue generally is realized or realizable and earned when all of the following criteria are met:

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 4 of 13

After delivery of a product or performance of a service, if uncertainty exists about customer acceptance, revenue should not be recognized until acceptance occurs. When such contractual customer acceptance provisions exist, the staff generally believes that the seller should not recognize revenue until customer acceptance occurs or the acceptance provisions lapse. However, the interpretive response to Question 1, states that formal customer sign-off is not always necessary to recognize revenue provided that the seller objectively demonstrates that the criteria specified in the acceptance provisions are satisfied.

Interpretative response (a) to Question 1 of SAB Topic 13A3.b, Customer Acceptance, concludes that “in arrangements where products are delivered for trial or evaluation purposes, revenue should not be recognized until the earlier of when acceptance occurs or the acceptance provisions lapse”. In the rare situations that we enter into an arrangement that is for a trial or evaluation unit, we defer all revenue and costs unless and until we obtain an unconditional purchase order for the unit, generally at the end of the trial period or the contingency has been resolved.

That interpretative response continues that, “In contrast, other arrangements do not purport to be for trial or evaluation purposes. In these instances, the seller delivers a specified product pursuant to a customer’s order, establishes payment terms, and transfers title to the delivered product to the customer. However, customer acceptance provisions may be included in the arrangement to give the purchaser the ability to ensure the delivered product meets the criteria set forth in its order.” The latter describes the arrangements that we have with our customers. Customer contract provisions are included to ensure our customers that we will complete the installation. These acceptance provisions are evaluated in accordance with (b), (c) and (d), below.

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 5 of 13

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 6 of 13

The above analysis provides a sound foundation for our deferral and recognition of the equipment revenue. However, the installation and customer sign-off often occur in a period subsequent to the period in which the equipment is delivered. In other words, the installation services have not been delivered or completed. Therefore, revenue attributable to the installation unit of accounting is always deferred until the installation is complete and accepted, as this is not considered inconsequential or perfunctory in relation to the installation unit of accounting. We have also considered whether there are any remaining performance obligations that might affect our recognition of revenue, as follows:

SAB Topic 13A3.c. Inconsequential or perfunctory performance obligations

“Question 1

Does the failure to complete all activities related to a unit of accounting preclude recognition of revenue for that unit of accounting?

Interpretive Response:

No. Assuming all other recognition criteria are met, revenue for the unit of accounting may be recognized in its entirety if the seller’s remaining obligation is inconsequential or perfunctory.”

“A seller should substantially complete or fulfill the terms specified in the arrangement related to the unit of accounting at issue in order for delivery or performance to have occurred. When applying the substantially complete notion, the staff believes that only inconsequential or perfunctory actions may remain incomplete such that the failure to complete the actions would not result in the customer receiving a refund or rejecting the delivered products or services performed to date. (emphasis added) In addition, the seller should have a demonstrated history of completing the remaining tasks in a timely manner and reliably estimating the remaining costs. If revenue is recognized upon substantial completion of the terms specified in the arrangement related to the unit of accounting at issue, all related costs of performance or delivery should be accrued.”

We have no remaining performance requirements related to the equipment unit of accounting, because we have already demonstrated with the acceptance of at least two similar pieces of equipment that the delivered equipment meets the customer’s acceptance specification. Most of our equipment sales contracts include a contingent payment for completion of the installation and acceptance, i.e. the holdback. However, that payment is allocated to the installation unit of accounting as explained above. Only the non-contingent portion of the selling price is allocated to the equipment unit of accounting. Also, the technology on which the equipment and its processes are based is extremely mature. For this reason the contingent portion of the selling price is really to assure the customer of timely completion of

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 7 of 13

a professional installation. This is evidenced by the fact that in the twenty years Amtech has been in the equipment business, it has had equipment returned only once.

Because our arrangements make the last payment by the customer, which is a stated percentage of the contract price, contingent upon completion of the installation, the customer likely would not pay for (i.e. will reject) any of the installation services performed until completion and acceptance. Therefore, until the requirements for the payment of the holdback are satisfied, failure to complete the installation would generally result in the customer rejecting any partially performed installation services included in the installation unit of accounting. However, even if the customer were to withhold the final payment, that would have no effect on the non-contingent payments allocated to the equipment unit of accounting. Nonetheless, all of the revenue allocated to the installation unit of accounting is contingent and therefore not considered inconsequential or perfunctory and is deferred.

The interpretative response to question 2 of SAB Topic 13A3.c concludes with, “The staff also considers the following factors, which are not all-inclusive, to be indicators that a remaining performance obligation is substantive rather than inconsequential or perfunctory:

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 8 of 13

“Registrants’ determinations of whether remaining obligations are inconsequential or perfunctory should be consistently applied.”

Because the timing of payment of a portion of the sales price, generally equal to the 10-30% of the contract price that is allocated to the installation unit of accounting in accordance with paragraphs 12 and 14 of EITF 00-21, is coincident with completing the installation, we defer that amount until completion and acceptance. Our determinations of whether the remaining obligations are inconsequential or perfunctory are consistently applied.

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 9 of 13

The interpretive response to SAB Topic 13A3.c Question 3 indicates that even if our equipment and installation service were determined to be one unit of accounting, the accounting result would be the same, i.e. deferral of the contingent portion of the selling price.

“Facts:

Consider a unit of accounting that includes both equipment and installation because the two deliverables do not meet the separation criteria under 00-21EITF Issue 00-21. This may be because the equipment does not have value to the customer on a standalone basis, there is no objective and reliable evidence of fair value for the installation or there is a general right of return when the installation is not considered probable and in control of the vendor.

Question:

In this situation, must all revenue be deferred until installation is performed?

Interpretive Response:

Yes, if installation is essential to the functionality of the equipment. Examples of indicators that installation is essential to the functionality of equipment include:

Conversely, examples of indicators that installation is not essential to the functionality of the equipment include:

“If it is determined that the undelivered service is not essential to the functionality of the delivered product but a portion of the contract fee is not payable until the undelivered service is delivered, the staff would not consider that obligation to be inconsequential or perfunctory. Generally, the portion of the contract price that is withheld or refundable should be deferred until the outstanding service is delivered because that portion would not be realized or realizable.”

While the equipment and installation are separate units of accounting, as indicated above, the staff’s position as stated above indicates that the

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 10 of 13

accounting for revenue recognition would be the same even if the equipment and installation services were one unit of accounting, which is to defer the contingent portion of the contract price.

In future filings we will clearly disclose the underlying reasons for changes in the amount of revenue and costs deferred.

Controls and Procedures, page 57

Form 8-K dated September 27, 2004

Unaudited Pro Forma Condensed Combined Financial Information

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 11 of 13

We allocated the $3.2 million cash purchase price plus the value of the small amount of assumed liabilities (1.3(a)(i) and (iii) of the asset purchase agreement, respectively) to all of the assets, excluding only the “consigned inventory” which has its own purchase price, the Inventory Payment as described in 1.3(b) and capped in 1.3(a)(ii).

The inventory is primarily comprised of purchased parts, which is to be valued at replacement cost, according to guidance in paragraph 37(c)(3) of SFAS 141. The purchase price was allocated to the inventory based upon the seller’s cost, which we believe approximates replacement cost and fair value. We excluded from this allocation $970,000 of the slowest moving inventory, as it is substantively like consignment inventory, because we do not pay for it until and unless we sell it or otherwise consume it in our operations within five (5) years.

As would be expected with consigned inventory, the asset purchase agreement requires that we give a quarterly accounting for the inventory. An excerpt from the asset purchase agreement spells out the terms for the contingent payments, i.e. “Inventory Payment”, as follows:

“1.3(b) Inventory Payments

(i) On the twentieth day of each February, May, August and November following the Closing (each a Payment and Accounting Date) and ending on the first Payment and Accounting Date following the five year anniversary of the Closing Date, the Buyer shall deliver to the Seller a detailed accounting in the form attached hereto as Exhibit 1.3(b) (the Inventory Accounting) of each item of Inventory consumed or otherwise used by the Buyer (the Consumed Inventory) during the immediately preceding calendar quarter and Sellers cost thereof (Sellers Cost of Consumed Inventory). The Inventory Accounting shall be certified by the Buyers chief financial officer as being true and accurate in all respects. For purposes of calculating Sellers Cost of Consumed Inventory, the unit cost set forth on Schedule 1.1(a)(i) shall govern. Commencing with the Payment and Accounting Date on which the aggregate Sellers Cost of Consumed Inventory shall have exceeded two million two hundred seventy thousand five hundred forty one dollars ($2,270,541.00), the Buyer shall pay to the Seller by wire transfer of immediately available funds to an account designated by the Seller an amount equal to the Sellers Cost of Consumed Inventory in excess of the sum of (x) two million two hundred seventy thousand five hundred forty one dollars ($2,270,541.00) and (y) any amounts previously paid to the Seller, if any, by operation of this Section 1.3(b). The aggregate payments pursuant to this Section 1.3(b)(i) shall not exceed the Inventory Cap. The Buyer shall consume an item available in Inventory prior to consuming that same item from another inventory source. To the extent the Buyer shall consume or use any specific item of inventory in lieu of a specific item of Inventory at a time when that specific item of Inventory is available for consumption and use, the Buyer shall be deemed to have consumed Inventory for purposes of calculating the amounts payable hereunder.”

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 12 of 13

As generally the case with consigned inventory, we do not pay for unusable inventory, as our agreement includes the following terms:

“1.3(b)(ii) Should any specific items of Inventory be found to be unusable (Unusable Inventory) through no fault of the Buyer (e.g., design changes following Closing or Buyer breakage), the Buyer shall provide a list of such Unusable Inventory items and associated costs to the Seller on the next Payment and Accounting Date, and, at the written request of the Seller, deliver at the Sellers cost such items of Unusable Inventory to the Seller together with a written explanation as to why such items are unusable. To the extent the Seller agrees that such items of Inventory are Unusable Inventory in the exercise of its reasonable judgment, the Sellers cost thereof (based on the unit cost set forth on Schedule 1.1(a)(i)) shall not be included in the Sellers Cost of Consumed Inventory and shall be applied to reduce the Inventory Cap.”

However, as with consigned inventory, we have agreed to insure the seller’s interest in the inventory, as indicated in the following excerpt from the agreement:

“(iii) The Buyer shall insure the Inventory against theft and casualty in amounts at least equal to Sellers cost. Upon the occurrence of any theft of or casualty to the Inventory, the Buyer shall pay to the Seller all insurance proceeds and any deductible related thereto in respect of such theft or casualty immediately upon receipt of such proceeds.”

Also, the seller has retained the right to inspect the inventory, as is common with consigned inventory, and as provided in the following portion of our agreement:

(iv) For purposes of verifying the Inventory Accounting and the amounts due and payable pursuant to this Section 1.3(c), the Seller and its representatives shall have the right to inspect the Inventory and the Buyers books and records related thereto, including sales records, upon reasonable prior notice.

As indicated in section 1.3(b)(i) of the agreement, our last “Inventory Payment” will be due in August 2010, i.e. “following the five year anniversary of the Closing Date”. Thereafter, we have no further obligation to make Inventory Payments, the assumption being that any inventory that could not be sold or consumed in production during that time it is of no value. This is the same as having a right to return the inventory, if we are unable to use it within five years from the close of the transaction. For the above reasons, we believe contingent payments made, if any, should be treated as payment for the purchase of consigned inventory. This accounting treatment is in “sync” or complements the Staff’s position in Staff Accounting Bulletin Topic 13A2 in its interpretive response to Question 2 related to there being persuasive evidence of an arrangement, which states in part:

“The staff believes that the presence of one or more of the following characteristics in a transaction precludes revenue recognition even if title to the product has passed to the buyer:

1. The buyer has the right to return the product and: (Which we do.)

Mary Beth Breslin, Attorney-Advisor

Division of Corporation Finance

United States Securities and Exchange Commission

October 11, 2005

Page 13 of 13

The transaction with the above characteristics is in essence one of consigned inventory, which is the accounting treatment we believe is appropriate in our transaction. The existence of the contingent payments, which are based upon our future consumption of the inventory acquired, is analogous to our holding the slowest moving $970,000 of acquired inventory on a consignment basis. As stated above, we excluded from the purchase price allocation $970,000 of the slowest moving, or “consigned inventory”. So, as with the purchase of consigned inventory, we believe the charge for any contingent payment(s) should be to inventory purchases (i.e. cost of sales).

Paragraph 27 of SFAS 141 states, “In general, the issuance of additional securities or distribution of other consideration at resolution of contingencies based upon earnings shall result in an additional element of costs of an acquired entity. (emphasis added)” The contingent use of this inventory has no direct relationship to earnings, because the sale of inventory does not always result in profit. The use of such inventory would not necessarily result in a direct proportionate increase in sales, because mark-ups vary. Also, with or without the seller’s excess inventory, we would expect to have approximately the same revenue and earnings, because we would buy the inventory items we needed directly from the vendors at approximately the same cost. It is only the seller that gains anything through the sale of this excess inventory. Therefore, we do not believe that purchases of the seller’s excess inventory, when and as needed, which has essentially been consigned to us, should be treated as an additional element of cost of the acquired entity.

In any event, we do not expect any contingent Inventory Payments to be made, as evidenced by the fact that in addition to the exclusion of $970,000 of the inventory from the purchase price allocation, we wrote off an additional $0.3 million of inventory during the first quarter following the acquisition.

We believe we have responded fully to your comments and questions and will be following up with the reviewer in the next several days after he or she has had an opportunity to assess our responses. Since we are in the process of closing fiscal 2005, we would appreciate the certainty that you can provide with a timely reply. If you have any questions, please contact the undersigned, cell (602) 684-3087 or (480) 967-5146 extension 17.

Best regards,

Amtech Systems, Inc.

Robert T. Hass, CPA

Vice President-Finance/CFO