IBIS TECHNOLOGY CORP, 424B5, 1999-08-03

IBIS TECHNOLOGY CORP
424B5, 1999-08-03
SEMICONDUCTORS & RELATED DEVICES

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<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-82497

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 26, 1999)

1,000,000 SHARES

[LOGO]

COMMON STOCK

We are selling 1,000,000 shares of common stock. Our common stock is traded
on the Nasdaq National Market under the symbol IBIS. On August 2, 1999, the last
reported sales price for our common stock was $28.875.

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 4
OF THE PROSPECTUS.

<TABLE>
<S> <C> <C>
PER
SHARE TOTAL
---------- -------------
Public offering price.................................................................. $27.0000 $27,000,000

Underwriting discounts................................................................. $ 1.2825 $ 1,282,500

Proceeds, before expenses, to Ibis Technology.......................................... $25.7175 $25,717,500
</TABLE>

Delivery of the shares of common stock will be made on or about August 6,
1999, against payment in immediately available funds.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

SOUNDVIEW TECHNOLOGY GROUP

Prospectus Supplement dated August 3, 1999
<PAGE>
IN THIS PROSPECTUS SUPPLEMENT, "WE", "US", AND "OUR" REFER TO IBIS
TECHNOLOGY CORPORATION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Prospectus Supplement Page
- ------------------------------------- -----
<S> <C>
Prospectus Supplement Summary........ S-3
Use of Proceeds...................... S-5
Price Range of Common Stock.......... S-5
Capitalization....................... S-6
Dilution............................. S-6
Selected Financial Data.............. S-7
Business............................. S-8
Management........................... S-12
Forward Looking Statements........... S-14
Underwriting......................... S-14
Legal Matters........................ S-15
Experts.............................. S-15
Prospectus Page
- ------------------------------------- ---
The Company.......................... 3
Risk Factors......................... 4
Where to Find More Information....... 11
Incorporation of Documents by
Reference.......................... 11
Forward Looking Statements........... 12
Use of Proceeds...................... 12
Dividend Policy...................... 12
Plan of Distribution................. 12
Description of Securities............ 14
Legal Matters........................ 14
Experts.............................. 14
</TABLE>

------------------------

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT, THE PROSPECTUS OR THE DOCUMENTS INCORPORATED BY REFERENCE. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS
PROSPECTUS SUPPLEMENT MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE
SECURITIES. THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT MAY ONLY BE ACCURATE
AS OF THE DATE OF THIS PROSPECTUS SUPPLEMENT.

S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY

THIS SUMMARY IS QUALIFIED BY MORE DETAILED INFORMATION APPEARING IN OTHER
SECTIONS OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS AND THE DOCUMENTS
INCORPORATED BY REFERENCE. THE OTHER INFORMATION IS IMPORTANT, SO PLEASE READ
THIS ENTIRE PROSPECTUS SUPPLEMENT, THE PROSPECTUS AND THE DOCUMENTS INCORPORATED
BY REFERENCE CAREFULLY. YOU MUST ALSO CONSULT THE MORE DETAILED FINANCIAL
STATEMENTS, AND NOTES TO FINANCIAL STATEMENTS, INCORPORATED BY REFERENCE IN THE
PROSPECTUS. THE PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT CONTAIN
FORWARD-LOOKING STATEMENTS AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS
DESCRIBED IN THE PROSPECTUS.

THE COMPANY

Ibis Technology Corporation develops, manufactures and markets SIMOX-SOI
implantation equipment and wafers for the worldwide semiconductor industry.
SIMOX, which stands for Separation by IMplantation of OXygen, is a form of
silicon-on-insulator, or SOI, technology that creates an insulating barrier
below the top surface of a silicon wafer. Our proprietary Ibis 1000 oxygen
implanter produces SIMOX-SOI wafers by implanting oxygen atoms just below the
surface of a silicon wafer to create a very thin layer of silicon dioxide
between the thin operating region of the transistor at the surface and the
underlying silicon itself. The layer of silicon dioxide acts as an insulator for
the devices etched on the surface of the silicon wafer and reduces the
electrical current leakage which otherwise slows chip performance and increases
the loss of power during circuit operation. Through this process, our customers
can produce integrated circuits which we believe offer significant advantages
over circuits constructed on conventional silicon wafers, which advantages
include:

- improved microprocessing speed,

- reduced power consumption, and

- higher temperature operation.

These characteristics make SIMOX-SOI wafers, and the finished integrated
circuits, well-suited for many commercial applications, including:

- servers and workstations,

- portable and desktop computers,

- wireless communications devices, such as laptop computers, personal
digital assistants and mobile phones,

- integrated optical components, and

- automotive electronics.

Ibis was incorporated in Massachusetts on October 7, 1987 and commenced
operations in January 1988. Our executive offices are located at 32 Cherry Hill
Drive, Danvers, Massachusetts 01923 and our telephone number is (978) 777-4247.

S-3
<PAGE>
RECENT DEVELOPMENTS

On July 23, 1999, we publicly disseminated a press release announcing our
results for the second quarter and first half of 1999.

Our revenues for the second quarter ended June 30, 1999 were $5,107,000,
slightly less than the $5,304,000 reported in the comparable quarter for 1998.
For the first half of 1999, total revenues increased 37 percent to $9,555,000
from $7,001,000 reported for the first six months of 1998. The increase in
revenues for the first six months was due primarily to revenue derived from the
recognition of revenue from the sale of Ibis 1000 implanters and a 31 percent
increase in wafer product sales.

Net income for the second quarter of 1999 was $248,000 or $0.03 per share,
compared to $86,000, or $0.01 per share, in the comparable period for 1998. For
the six months ended June 30, 1999, net income was $494,000, or $0.07 per share,
compared to a net loss of $823,000, or $0.12 per share, in the comparable period
a year ago.

THE OFFERING

The number of shares to be outstanding after the offering excludes 837,479
shares of common stock reserved for issuance upon exercise of options and
warrants outstanding as of June 30, 1999 with a weighted average exercise price
of $9.01 per share.

<TABLE>
<S> <C>
Shares we are offering....................... 1,000,000 shares

Shares to be outstanding after the 8,004,081 shares
offering...................................

Use of proceeds.............................. To fund research and development, capital
expenditures, working capital and for other
general corporate purposes.

Nasdaq National Market symbol................ IBIS
</TABLE>

S-4
<PAGE>
USE OF PROCEEDS

We estimate our net proceeds from the offering to be $25,538,000. We
currently intend to use the net proceeds from the sale of our common stock to
fund research and development, capital expenditures, working capital and for
other general corporate purposes. Depending on our circumstances at the time the
net proceeds of this offering become available, if at all, we may use these net
proceeds for purposes other than those described above.

PRICE RANGE OF COMMON STOCK

Our common stock began trading on May 20, 1994 on the Nasdaq SmallCap Market
and on the Boston Stock Exchange. Prior to May 20, 1994, there was no public
market for our common stock or any of our other securities. On April 4, 1996, we
commenced trading on the Nasdaq National Market System. Our common stock is
traded under the symbol "IBIS". The following table sets forth, for 1997 and
1998 and for the first three quarters to date for 1999, the high and low sale
prices for the common stock as reported by the Nasdaq National Market System.

1997:

First Quarter................................................................................ $ 8.13 $ 5.13
Second Quarter............................................................................... $ 11.88 $ 5.13
Third Quarter................................................................................ $ 12.88 $ 8.50
Fourth Quarter............................................................................... $ 14.63 $ 7.00

1998:

First Quarter................................................................................ $ 11.88 $ 7.25
Second Quarter............................................................................... $ 13.56 $ 9.38
Third Quarter................................................................................ $ 13.75 $ 7.69
Fourth Quarter............................................................................... $ 11.69 $ 9.13

1999:

First Quarter................................................................................ $ 19.63 $ 9.88
Second Quarter............................................................................... $ 33.50 $ 17.25
Third Quarter (through August 2, 1999)....................................................... $ 37.13 $ 28.88
</TABLE>

S-5
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization as of March 31, 1999:

- on an actual basis, and

- to reflect our receipt of the estimated net proceeds from the sale of
1,000,000 shares of common stock.
<TABLE>
<CAPTION>
MARCH 31, 1999
-----------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
---------- -----------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, less current portion..................................................... $ 37 $ 37
---------- -----------
Stockholders' equity:
Preferred Stock, undesignated, $.01 par value; 2,000,000 shares authorized,
no shares issued or outstanding...................................................... -- --
Common Stock, $.008 par value; 20,000,000 shares authorized; shares issued and
outstanding: 6,924,443 actual; 7,924,443 as adjusted................................. 55 63
Additional paid-in capital............................................................... 36,906 62,436
Accumulated deficit...................................................................... (15,810) (15,810)
---------- -----------
Total stockholders' equity........................................................... 21,151 46,688
---------- -----------
Total capitalization................................................................. $ 21,188 $ 46,726
---------- -----------
---------- -----------
</TABLE>

The numbers in this table exclude 901,493 shares of common stock reserved
for issuance upon the exercise of options and warrants outstanding as of March
31, 1999, which have a weighted average exercise price of $8.54 per share.

DILUTION

Our net tangible book value as of March 31, 1999 was $21 million, or $3.04
per share of common stock. Net tangible book value per share represents the
amount of total tangible assets less total liabilities, divided by the number of
shares of common stock outstanding. Assuming the sale by us of 1,000,000 shares
of common stock offered in this offering at a public offering price of $27.00
per share and the application of the estimated net proceeds from this offering,
our pro forma net tangible book value as of March 31, 1999 would have been $47
million, or $5.88 per share of common stock. This represents an immediate
increase in pro forma net tangible book value of $2.84 per share to our existing
stockholders and an immediate dilution in pro forma net tangible book value of
$21.12 per share to new investors. The following table illustrates the per share
dilution:

<TABLE>
<S> <C> <C>
Public offering price per share......................................................... $ 27.00
Net tangible book value per share as of March 31, 1999..................... $ 3.04
Pro forma increase attributable to new investors........................... 2.84
---------
Pro forma net tangible book value per share after the offering.......................... 5.88
---------
Pro forma dilution per share to new investors........................................... $ 21.12
---------
</TABLE>

S-6
<PAGE>
SELECTED FINANCIAL DATA

The following selected financial data presented for, and as of the end of,
each of the years in the three-year period ended December 31, 1998 are derived
from our audited financial statements. The selected financial data as of March
31, 1999 and for the three months ended March 31, 1998 and 1999 are derived from
our unaudited financial statements, which, in the opinion of management, include
all normal recurring adjustments necessary for a fair presentation of the
financial position and results of operations for the unaudited periods. The data
set forth below should be read in conjunction with our financial statements,
related notes and other financial information incorporated by reference into the
prospectus. The historical results are not necessarily indicative of the
operating results to be expected in the future.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------

<CAPTION>
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Product sales............................................... $ 4,766 $ 3,389 $ 3,149 $ 1,007 $ 1,300
Contract and other revenue.................................. 887 3,285 1,284 490 358
Equipment revenue........................................... 3,800 -- 11,033 200 2,790
--------- --------- --------- --------- ---------
Total revenue........................................... 9,453 6,674 15,466 1,697 4,448
--------- --------- --------- --------- ---------
Cost of product sales....................................... 4,042 4,827 4,581 1,313 1,246
Cost of contract and other revenue.......................... 320 2,454 1,079 366 122
Cost of equipment revenue................................... 2,625 -- 7,244 125 1,954
--------- --------- --------- --------- ---------
Total cost of revenue................................... 6,987 7,281 12,904 1,804 3,322
--------- --------- --------- --------- ---------
Gross profit (loss)..................................... 2,466 (607) 2,562 (107) 1,126
--------- --------- --------- --------- ---------
Operating expenses:
General and administrative................................ 1,423 1,724 1,823 444 435
Marketing and selling..................................... 515 466 470 115 207
Research and development.................................. 1,477 1,435 1,972 382 386
--------- --------- --------- --------- ---------
Total operating expenses................................ 3,415 3,625 4,265 941 1,028
--------- --------- --------- --------- ---------
Income (loss) from operations............................. (949) (4,232) (1,703) (1,048) 98
--------- --------- --------- --------- ---------
Total other income (expense)................................ 110 296 538 140 149
--------- --------- --------- --------- ---------
Income (loss) before income taxes........................... (839) (3,936) (1,165) (908) 247
Income tax expense.......................................... (1) (1) (1) (1) (1)
--------- --------- --------- --------- ---------
Net income (loss)........................................... $ (840) $ (3,937) $ (1,166) $ (909) $ 246
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income (loss) per common share
- basic................................................. $ (.18) $ (.69) $ (.17) $ (.14) $ .04
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
- diluted............................................... $ (.18) $ (.69) $ (.17) $ (.14) $ .03
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average common shares outstanding
- basic................................................. 4,722 5,710 6,760 6,671 6,878
- diluted............................................... 4,722 5,710 6,760 6,671 7,199
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
------------------------------- --------------------
<S> <C> <C> <C> <C> <C>
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................................ $ 8,068 $ 17,249 $ 16,831 $ 11,844 $ 17,384
Total assets............................................... 19,542 24,918 24,307 24,771 26,618
Long-term debt, less current portion....................... 973 499 40 369 37
Total liabilities.......................................... 5,178 4,161 3,698 4,373 5,467
Stockholders' equity....................................... 14,364 20,757 20,609 20,398 21,151
</TABLE>

We have computed net earnings (loss) per share on the basis described for
net earnings (loss) per common share in Note 2(g) of Notes to Financial
Statements in our Annual Report on Form 10-K for the year ended December 31,
1998.

S-7
<PAGE>
BUSINESS

COMPANY OVERVIEW

We develop, manufacture and market SIMOX-SOI implantation equipment and
wafers for the worldwide semiconductor industry. SIMOX, which stands for
Separation by IMplantation of OXygen, is a form of silicon-on-insulator, or SOI,
technology that creates a thin insulating layer in a silicon wafer. By isolating
a very thin top layer of silicon, which acts as the base for fabricating the
semiconductor integrated circuit of a chip, from a major part of the silicon
substrate, SOI processes allow integrated circuits to have higher frequency
operation and reduced power consumption. These characteristics make SOI wafers
well-suited for making integrated circuits that are used in many commercial
applications, including servers and workstations, portable and desktop
computers, wireless communications devices, optical components and automotive
electronics.

We manufacture and sell the oxygen implanters that are used to create
SIMOX-SOI wafers, as well as the SIMOX-SOI wafers themselves. Our implanter, the
Ibis 1000, is used by IBM, which is producing integrated circuits both for its
own products and for future customer applications. Some of our SIMOX-SOI wafer
customers include: Bookham Technology, Fujitsu, Honeywell, IBM, Mitsubishi,
Motorola and Sharp. We also maintain strategic alliances with some of the
world's leading semiconductor companies.

SOI: silicon-on-insulator is a
semiconductor manufacturing
technology in which an insulating
layer is created in a silicon wafer.

SIMOX: Separation by
IMplantation of OXygen is an SOI
technique whereby oxygen is
implanted below the top surface of
a silicon wafer.

WAFER: the round disk of silicon
that is used as a base, or substrate,
upon which integrated circuits are
fabricated.

INTEGRATED CIRCUITS: or
chips, are thousands or millions of
transistors fabricated on a small
piece of silicon.

INDUSTRY OVERVIEW

For many years, the semiconductor industry has succeeded in achieving, with
remarkable regularity, dramatic improvements in the size, performance and cost
of integrated circuits. These improvements have been made possible through
continuing advances in chip design, through the use of different processing
techniques and, more recently, by using different conductive materials on the
silicon wafers. It is becoming more and more difficult to improve the
performance of a chip through feature size reduction, which means shrinking the
size of a chip's transistors and interconnecting circuitry. Therefore, making
chips that are smaller and faster and that consume less power is increasingly
being accomplished by using new techniques to isolate or enhance the basic
building block of an integrated circuit--the transistor. Among these new
techniques is silicon-on-insulator, or SOI.

SOI is a technique whereby a layer of insulating material, silicon dioxide,
is sandwiched between a layer of silicon and the underlying silicon that makes
up the rest of the wafer substrate. In integrated circuit production, the
transistors are fabricated on the surface of the top silicon layer. Isolating
the top layer, and, therefore, the transistors, from the rest of the silicon
substrate reduces the electrical current leakage that would otherwise slow chip
performance and increase the loss of power during circuit operation.

THE SOI ADVANTAGE

[GRAPHIC]

S-8
<PAGE>
The key advantages of SOI are the increase in operating performance and the
decrease in power consumption. IBM has found SOI technology to improve
performance by 25% to 35%--the equivalent of approximately two years of chip
design advances on conventional silicon. Decreased power consumption--shown to
be as much as 25% to 85% less--is a key benefit of SOI that makes the technology
well-suited for portable device applications such as laptop computers, personal
digital assistants and mobile phones. SOI-based devices can also operate at
higher temperatures than conventional silicon, which is particularly critical in
applications where the environment is harsh, such as in automotive electronics.

There are several methods for creating SOI wafers. The two most commercially
available methods are SIMOX and bonded wafer techniques. In SIMOX, the
insulating layer is achieved by implanting oxygen atoms just below the surface
of the silicon wafer using an oxygen implanter such as the Ibis 1000. Then, the
wafer is heated at high temperature, or annealed, so that the implanted oxygen
becomes a uniform insulating layer of silicon dioxide. In the bonding technique,
an oxide layer is grown on the surface of each of two silicon wafers. The wafers
are then bonded together to form the sandwich of silicon-oxide-silicon. Then one
of the wafers must be split so that a very thin silicon layer remains as the
base for the transistors of a chip.

THE SIMOX PROCESS

[GRAPHIC]

<TABLE>
<S> <C>
First, we implant a layer Then we heat at high temperature, or
of oxygen ions anneal, to make the buried insulating
layer uniform
</TABLE>

Of the two technologies, we believe the SIMOX method has cost and quality
advantages over the bonded technique, in part because of the fewer number of
steps required compared to the bonded process. SIMOX's lower cost is a key
advantage over bonded wafers, given that chip manufacturers wish to minimize the
premium paid for an SOI wafer versus a conventional silicon wafer. Currently,
SIMOX wafers are about three to six times the cost of conventional silicon
wafers. However, we expect the difference in price between SIMOX and silicon
wafers to decrease as production volume ramps up and the industry continues the
trend towards thinner insulating layers.

Due to the dramatic increases in performance yielded by SOI wafers, IBM has
publicly stated that it will utilize SOI in its next generation PowerPC
microprocessors. IBM is presently using SIMOX technology.

OUR PRODUCTS

We develop, manufacture and market SIMOX-SOI implantation equipment and
wafers for the worldwide semiconductor industry. In 1998, oxygen implantation
equipment accounted for 71% of our revenue and SIMOX-SOI wafers accounted for
20%.

IBIS 1000--OUR PROPRIETARY OXYGEN IMPLANTER. Since 1989, we have spent more
than $16 million to develop our proprietary oxygen implanter, the Ibis 1000, and
advanced proprietary processing technologies that enable us to produce SIMOX-SOI
wafers capable of meeting the requirements of high volume commercial
applications. In 1996, we began selling our Ibis 1000 implanters to
semiconductor manufacturers and in 1998 we experienced a significant increase in
this aspect of our business. Our Ibis 1000 implanter incorporates our
proprietary beam scanning system and technology that facilitates the
presentation of wafers to ion beams. The Ibis 1000 currently handles four, five,
six and eight inch wafers, operates under vacuum lock and uses cassette loading
and automated wafer handling. At present, each

S-9
<PAGE>
Ibis 1000 can produce between 5,000 and 24,000 wafers per year depending on the
wafer size and the type of wafer product produced. Our technology roadmap
includes the development of the next-generation oxygen implanter which will
include 12-inch, or 300 millimeter, wafer size capability and enhancements to
increase throughput, reduce production costs, improve user interface, and
simplify the assembly, shipping and installation of the machine at customer
sites. In addition, because we have complete production capability to produce
and test SIMOX-SOI wafers, we have a significant advantage in enhancing the
quality and reliability of the Ibis 1000 and in improving manufacturing
efficiencies.

SIMOX-SOI WAFERS. High quality SIMOX-SOI wafers are created by using our
proprietary Ibis 1000 oxygen implanter. In addition to the two Ibis 1000
implanters used for SIMOX-SOI wafer production at Ibis, we own and operate
advanced wafer metrology and process equipment and clean room facilities. We
believe that our ability to produce SIMOX-SOI wafers provides us with immediate
feedback on the quality of our wafers and greater opportunities to enhance
quality and reliability of our oxygen implantation equipment and improve
manufacturing efficiency. In addition, this ability can facilitate new process
and product development and enables us to be more responsive to customer
requirements. Our SIMOX-SOI wafer production capabilities have allowed us to
establish a SIMOX-SOI wafer and equipment business serving leading semiconductor
companies and develop leading edge SIMOX-SOI wafer products, such as our
Advantox-Registered Trademark- product line. Our Advantox-Registered Trademark-
products have a thinner buried insulating layer which reduces the time required
in the implanter, thus reducing the cost of each wafer and increasing the output
of the Ibis 1000. This should eventually allow us to reduce the incremental cost
of our Advantox-Registered Trademark- products to one to two times conventional
silicon. We believe that this will expand the number of applications to which
SIMOX-SOI will be applied, specifically high-volume, low cost portable
electronics.

OUR STRATEGY

We seek to become the world leader in SIMOX-SOI technology with the quality,
cost and size required for mainstream commercial applications. Our objective is
to make our SIMOX-SOI wafers the preferred advanced materials substrate for
mainstream commercial applications. Key elements of our strategy for achieving
this objective include:

CAPITALIZING ON A FUNDAMENTAL TREND IN SEMICONDUCTOR MANUFACTURING.
Semiconductor manufacturers face an increasing demand for faster speed, less
power consumption, minimum soft error and smaller chip size. These manufacturers
prefer to satisfy the demand with minimal additions or modifications to their
existing equipment base. SIMOX-SOI technology is a leading alternative to
address this need. We plan to focus on our key customers in the semiconductor
industry who we expect to lead the way in the adoption of SIMOX-SOI technology.
We plan to continue to focus a majority of our technical and marketing resources
on these key customers and continue with our joint development activities with
all of our customers.

PURSUING STRATEGIC MARKETING, MANUFACTURING AND DISTRIBUTION ALLIANCES. We
intend to continue to pursue relationships through which third parties could
distribute some of our products or could assist us in research and development
activities. As evidence of this strategy, we have entered into business
development agreements or strategic alliances with Mitsubishi Materials Silicon,
Motorola and Okmetic of Finland, a key European silicon supplier. In addition,
we are pursuing the possibility of forming strategic partnerships with
semiconductor capital equipment manufacturers, silicon wafer manufacturers and
suppliers of components for our machines. We also intend to pursue partnerships
which could give us the right to complementary technology and/or products.

ENHANCING AND EXTENDING CURRENT PRODUCT OFFERINGS. We intend to use our
technical expertise to expand our core product functionality, add products to
our existing product line and further advance our process technology. We intend
to capitalize on the technology embodied in the Ibis 1000 for our next
generation oxygen implanter, which will include 300mm wafer size capability and
enhancements to

S-10
<PAGE>
increase throughput and reduce production costs. In addition, we plan to
continue to improve existing, and develop additional,
SIMOX-Advantox-Registered Trademark- products.

INCREASING OUR SIMOX-SOI WAFER AND IMPLANTATION EQUIPMENT MANUFACTURING
CAPACITY. We recently expanded our Class 10 clean room facility by 32% and
increased our Ibis 1000 implanter manufacturing area by approximately 42%. We
are currently building an additional Ibis 1000 implanter for internal wafer
production. We intend to bring additional implanters on-line at Ibis and further
expand our clean room facility, as required by demand. In addition, we are
looking at options for additional space, which will be added as the demand for
our oxygen implanters requires it.

MARKETING, SALES AND CUSTOMERS

We focus our direct selling efforts on the world's leading semiconductor
manufacturers, most of which are presently our customers. Our sales personnel
together with strategic partners, our senior management and engineering and
scientific personnel interact with the research and development, manufacturing,
purchasing and marketing departments of our customers. Our objective in these
broad-based sales efforts is to promote the adoption of SIMOX-SOI technology on
an industry-wide basis.

Overseas, we rely on our direct sales force, together with the use of
strategic partners, to market our products. We have a strategic alliance with
Mitsubishi Materials, under which Mitsubishi markets and sells our SIMOX-SOI
wafers in Japan and the Pacific Rim. The recent purchase by Mitsubishi Materials
Silicon of an Ibis 1000 oxygen implanter will establish SIMOX-SOI manufacturing
capability in Japan to service this marketplace. We have also targeted Europe as
an area of focus for our products. In April 1998, we entered into a strategic
alliance with Okmetic. Under the terms of this agreement, Okmetic will market
our SIMOX-SOI wafers in Europe, excluding the United Kingdom.

Set forth below is a list of some of our customers who have purchased our
Ibis 1000 oxygen implanter machines and/or our SIMOX-SOI wafers, either directly
from us or through a partner of ours:

<TABLE>
<S> <C>
IBIS 1000 Customers
- ------------------------------

IBM
Mitsubishi Materials Silicon

Wafer Customers of Ours Wafer Customers of Our Partners
- ------------------------------ --------------------------------

Advanced Micro Devices Fujitsu
Allied Signal Matsushita
Bookham Technology Mitsubishi Electric
Digital NEC
Honeywell Oki Electric
Intel Sony
IBM TSMC
Motorola Toshiba
Philips Semiconductor
Samsung
Sandia
Sharp
Texas Instruments
</TABLE>

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<PAGE>
MANAGEMENT

The following table sets forth certain information regarding our executive
officers and directors as of June 30, 1999:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Richard Hodgson...................................... 82 Chairman of the Board of Directors
Martin J. Reid....................................... 58 President, Chief Executive Officer and Director
Debra L. Nelson, C.P.A............................... 35 Chief Financial Officer, Treasurer and Clerk
Angelo V. Alioto..................................... 52 Vice President of Sales and Marketing
Julian G. Blake, Ph.D................................ 54 Vice President of Engineering
Bernhard F. Cordts III, Ph.D......................... 47 Vice President of Wafer Technology
Robert P. Dolan...................................... 39 Vice President of Wafer Manufacturing
Dimitri Antoniadis, Ph.D............................. 52 Director
Robert L. Gable...................................... 68 Director
Leslie B. Lewis...................................... 58 Director
Donald F. McGuinness................................. 66 Director
Lamberto Raffaelli................................... 49 Director
Peter H. Rose, Ph.D.................................. 74 Director
Geoffrey Ryding, Ph.D................................ 57 Director
</TABLE>

RICHARD HODGSON was elected as Chairman of the Board of Ibis in December
1993 and has served as a director since May 1992. From 1980 to 1998, Mr. Hodgson
served as a director of McCowan Associates, an investment management company
located in New York City. Mr. Hodgson was a founder of Intel Corporation, a
publicly traded corporation, where he continues to serve on the Board of
Directors as a Director Emeritus. He is also a director of I-Stat Corporation
and Accent Color Sciences, both of which are publicly held, as well as several
privately held high technology companies.

MARTIN J. REID joined Ibis in December 1997 as President and Chief Executive
Officer and as a director. From 1991 to 1996, Mr. Reid was President and Chief
Executive Officer of Alpha Industries, a publicly held manufacturer of a broad
range of Gallium Arsenide products and silicon integrated circuits for the
semiconductor industry. He served as a director of Alpha Industries from 1985 to
January 1998 and of Secure Technology from 1997 to August 1998 and is currently
a director of Asahi America, a publicly held company. Since February 1999, Mr.
Reid has also served as a director of Arcom, Inc., a privately held company.

DEBRA L. NELSON returned to Ibis in February 1998 as Chief Financial
Officer, Treasurer and Clerk. From November 1996 to January 1998 Ms. Nelson was
Chief Financial Officer of Rockport Trade Systems, Inc. Ms. Nelson originally
joined Ibis in January 1990 and became the Controller in May 1992 and its
Treasurer and Clerk in December 1993.

ANGELO V. ALIOTO joined Ibis in 1990 as a Regional Sales Manager, became
Worldwide Sales Manager in 1991 and was appointed Vice President of Sales in
December 1993 and Vice President of Marketing in January 1996.

JULIAN G. BLAKE, PH.D. joined Ibis in 1998 as Director of Technology. In
February 1999, he was appointed Vice President of Engineering. From 1983 to
1998, Dr. Blake was Technical Director at the Flat Panel Division and Chief
Scientist at the Semiconductor Equipment Operations of Eaton Corporation, a
publicly held company.

S-12
<PAGE>
BERNHARD F. CORDTS, III, PH.D. joined Ibis in 1988 as Process Development
Manager. In January 1997, he was appointed Vice President of Wafer Technology.

ROBERT P. DOLAN, joined Ibis in 1988 as Production Manager. In January 1997,
he was appointed Vice President of Wafer Manufacturing.

DIMITRI ANTONIADIS, PH.D. was appointed to the Board of Directors in 1996.
He is a Professor of Electrical Engineering at Massachusetts Institute of
Technology (MIT) and has been a member of its faculty since 1978.

ROBERT L. GABLE was appointed to the Board of Directors in 1997. He has been
a director and advisor (November 1998--present), Chairman (June 1990--July 1998)
and Chief Executive Officer (June 1990--October 1997) of Unitrode Corporation, a
publicly held company. Mr. Gable is also a director of New England Business
Service, Inc., a publicly held company.

LESLIE B. LEWIS was appointed to the Board of Directors in 1998. Since 1985,
he has been President of Asahi America, Inc., a publicly held company. He has
been Chief Executive Officer of Asahi since 1989 and Chairman since 1996.

DONALD F. MCGUINNESS was appointed to the Board of Directors in 1996. He has
been the Chairman (1988--present) and President and Chief Executive Officer
(1988--January 1999) of Electronic Designs, Inc., a publicly held company. He is
also a director of Cabletron Systems, Inc., a publicly held company.

LAMBERTO RAFFAELLI was appointed to the Board of Directors in 1998. Since
1994, he has been President and Chief Executive Officer of Arcom, Inc., a
privately held company.

PETER H. ROSE, PH.D. was appointed to the Board of Directors in 1988. He has
been Vice President of Research at Orion Equipment, Inc. since 1998. In July
1993, Dr. Rose founded and became Chairman of Krytek Corporation, a manufacturer
of aerosol cleaning equipment for the semiconductor industry. He is a director
of Ion Implant Services, Niton Corporation, Orion Equipment, Inc. and Epion
Corporation, all of which are privately held companies.

GEOFFREY RYDING, PH.D. joined Ibis in May 1992 as President and Chief
Operating Officer and as a director. In December 1993, he was appointed as Ibis'
Chief Executive Officer. He resigned as President and Chief Executive Officer
effective December 1, 1997. He has been a director of Orion Equipment, Inc., a
privately held company, since August 1997 and President of Orion since January
1998.

S-13
<PAGE>
FORWARD LOOKING STATEMENTS

We caution you that this prospectus supplement contains 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 statements are based
on management's beliefs and assumptions and on information currently available
to management. Forward-looking statements include the information concerning
possible or assumed future results of operations and embody statements in which
we use words such as "expect," "anticipate," "intend," "plan," "believe,"
"estimate," or similar expressions.

Forward-looking statements necessarily involve risks and uncertainties,
including those set forth in the Risk Factors section in the prospectus. Our
actual results could differ materially from those anticipated in the
forward-looking statements. The factors set forth in the Risk Factors section
and other cautionary statements made in this prospectus supplement and the
prospectus should be read and understood as being applicable to all related
forward-looking statements wherever they appear in this prospectus supplement.

UNDERWRITING

Upon the terms and subject to the conditions set forth in an underwriting
agreement, SoundView Technology Group, Inc. has agreed to purchase from us an
aggregate of 1,000,000 shares of common stock.

The underwriting agreement provides that the obligation of the underwriter
to purchase shares of common stock is subject to the approval of certain legal
matters by counsel and to certain other conditions. If any of the shares of
common stock are purchased by the underwriter pursuant to the underwriting
agreement, all such shares of common stock must be so purchased.

We have agreed to indemnify the underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, and to contribute to
payments that the underwriter may be required to make in this respect.

The underwriter proposes to offer the shares of common stock directly to the
public at the public offering price on the cover page of this prospectus
supplement and to certain dealers at that price less a concession not to exceed
$.77 per share. The underwriter may allow, and these dealers may reallow, a
concession not to exceed $.10 per share to certain other dealers. The
underwriter does not intend to confirm any shares to any accounts over which it
exercises discretionary control.

The offering of the shares by this prospectus supplement is made for
delivery when, as and if accepted by the underwriter and subject to prior sale
and to withdrawal, cancellation or modification of the offering without notice.
The underwriter reserves the right to reject an order for the purchase of shares
in whole or in part.

Ibis and all of our directors and executive officers have agreed not to, for
a period of 90 days after the date of this prospectus supplement, without the
prior written consent of SoundView Technology Group, Inc. with certain
limitations and exceptions, directly or indirectly, offer, sell, contract to
sell, grant any option to purchase or otherwise dispose of any shares of common
stock or any securities convertible into or exercisable or exchangeable for
common stock or, in any manner, transfer all or a portion of the economic
consequences associated with the ownership of the common stock.

In connection with this offering, the underwriter and other persons
participating in this offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the common stock.

Specifically, the underwriter may over-allot in connection with this
offering, creating a short position in common stock for its own account. To
cover a short position or to stabilize the price of the common stock, the
underwriter may bid for, and purchase, shares of common stock in the open
market. The underwriter may also impose a penalty bid whereby it may reclaim
selling concessions allowed to a

S-14
<PAGE>
dealer for distributing common stock in this offering, if the underwriter
repurchases previously distributed common stock in transactions to cover its
short position, in stabilization transactions or otherwise. Finally, the
underwriter may bid for, and purchase, shares of common stock in market making
transactions. These activities may stabilize or maintain the market price of the
common stock above market levels that may otherwise prevail. The underwriter is
not required to engage in these activities and may stop any of these activities
at any time without notice.

In connection with this offering, the underwriter and other selling group
members or their affiliates may engage in passive market making transactions in
the common stock on the Nasdaq National Market in accordance with Rule 103 of
Regulation M under the Exchange Act. Rule 103 permits passive market making
during the period when Regulation M would otherwise prohibit market making
activity by the participants in this offering. Passive market making consists of
displaying bids on the Nasdaq National Market limited by the bid prices of
independent market makers and making purchases limited by such prices and
effected in response to order flow. Rule 103 limits the net purchases by a
passive market maker on each day to a specified percentage of the passive market
maker's average daily trading volume in the common stock during a specified
period. The passive market maker must stop its passive market making
transactions for the rest of that day when such limit is reached.

LEGAL MATTERS

Certain legal matters in connection with the legality of the common stock
offered hereby will be passed upon for us by Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., Boston, Massachusetts. Certain legal matters in connection with
this offering will be passed upon for SoundView Technology Group, Inc. by Latham
& Watkins, Washington, D.C.

EXPERTS

The balance sheets of the Company as of December 31, 1998 and 1997 and the
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1998, and related schedule, have
been incorporated by reference in the Prospectus and Registration Statement, in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of that firm as experts
in accounting and auditing.

S-15
<PAGE>
IBIS TECHNOLOGY CORPORATION

2,000,000 SHARES OF COMMON STOCK

- We have registered up to 2,000,000 shares of our common stock for sale to
the public.

- We may offer the shares through agents that we designate from time to time
or to or through underwriters or dealers. If any agents or underwriters
are involved in the sale of the shares, their names and any applicable
purchase price, fee, commission or discount arrangement between them will
be set forth in a supplement to this prospectus. No shares may be sold
without delivery of the applicable prospectus supplement.

THIS INVESTMENT INVOLVES
A HIGH DEGREE OF RISK.
SEE "RISK FACTORS"
BEGINNING ON PAGE 4.

Our common stock trades on the Nasdaq National Market under the symbol
"IBIS."

On July 22, 1999, the closing sale price of one share of our common stock as
quoted on the NASDAQ National Market was $32.50.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

JULY 26, 1999
<PAGE>
IN THIS PROSPECTUS, "WE", "US", AND "OUR" REFER TO IBIS TECHNOLOGY
CORPORATION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PROSPECTUS PAGE
- ----------------------------------------- -----
<S> <C>
The Company.............................. 3
Risk Factors............................. 4
Where to Find More Information........... 11
Incorporation of Documents by 11
Reference..............................
Forward Looking Statements............... 12
Use of Proceeds.......................... 12
Dividend Policy.......................... 12
Plan of Distribution..................... 12
Description of Securities................ 14
Legal Matters............................ 14
Experts.................................. 14
</TABLE>

------------------------

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR THE
DOCUMENTS INCORPORATED BY REFERENCE. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE
YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS MAY ONLY BE USED WHERE
IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS PROSPECTUS MAY
ONLY BE ACCURATE AS OF THE DATE OF THIS PROSPECTUS.

2
<PAGE>
YOU MUST ALSO CONSULT THE MORE DETAILED FINANCIAL STATEMENTS, AND NOTES TO
FINANCIAL STATEMENTS, INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THIS
PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS AND ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF
CERTAIN OF THE RISK FACTORS AS OUTLINED IN THIS PROSPECTUS.

THE COMPANY

- improved microprocessing speed,

- reduced power consumption, and

- higher temperature operation.

These characteristics make SIMOX-SOI wafers, and the finished integrated
circuits, well-suited for many commercial applications, including:

- servers and workstations,

- portable and desktop computers,

- wireless communications devices, such as laptop computers, personal
digital assistants and mobile phones,

- integrated optical components, and

- automotive electronics.

3
<PAGE>
RISK FACTORS

INVESTING IN OUR COMMON STOCK IS VERY RISKY. YOU SHOULD CAREFULLY CONSIDER
THE FOLLOWING FACTORS, IN ADDITION TO OTHER INFORMATION IN THIS PROSPECTUS.

THE COMMERCIAL MARKET FOR SIMOX-SOI TECHNOLOGY IS STILL DEVELOPING AND MAY
NEVER FULLY DEVELOP. The sources of our revenue have shifted from primarily
research and development contracts and sales of SIMOX-SOI wafers for military
applications to primarily sales of SIMOX-SOI wafers for commercial applications
and sales and support of oxygen implantation equipment. To date, most customers
who have purchased our SIMOX-SOI wafers in the commercial field have done so for
the purpose of characterizing and evaluating the wafers and developing
prototypes. We are aware of five commercial manufacturers that are using
SIMOX-SOI wafers in low volume production for a limited number of products. The
performance advantages of SIMOX-SOI wafers may never be realized commercially
and a commercial market for SIMOX-SOI wafers may never fully develop. A
significant difference of opinion exists between major semiconductor
manufacturers as to the relative advantages of SIMOX technology. The failure of
IBM Corporation to adopt SIMOX-SOI technology would adversely affect, and may
prevent, the widespread adoption of this technology by others.

WE RELY HEAVILY ON SALES TO CERTAIN SIGNIFICANT CUSTOMERS. We derive a
large portion of our sales from certain significant customers. The loss of one
or more of these major customers and our failure to obtain other sources of
revenue could have a material adverse impact on our business. The following
table sets forth, in thousands of dollars, the amount of revenue derived from
our significant customers during the fiscal years ended 1996, 1997 and 1998 and
the first quarter of 1999, as well as the percent of our revenue represented by
these customers' purchases:
<TABLE>
<CAPTION>
CUSTOMER 1996 PERCENT 1997 PERCENT 1998 PERCENT
- --------------------------------------------------- --------- ------------- --------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
IBM................................................ $ 5,768 61% $ 538 8% $ 7,905 51%
Mitsubishi......................................... 400 4% 581 9% 4,419 29%
Motorola........................................... 534 6% 856 13% 607 4%

<CAPTION>
CUSTOMER 1999* PERCENT
- --------------------------------------------------- --------- -------------
<S> <C> <C>
IBM................................................ $ 2,820 63%
Mitsubishi......................................... 650 15%
Motorola........................................... 203 5%
</TABLE>

- ------------------------

* First quarter

The increases in sales to IBM in 1996 and 1998 and to Mitsubishi in 1998
resulted primarily from the sale of a total of four units of Ibis 1000 oxygen
implanter equipment at a sale price of approximately $4,000,000 each.

COMPETITORS AND COMPETING TECHNOLOGIES MAY RENDER SOME OR ALL OF OUR
PRODUCTS OR FUTURE PRODUCTS NONCOMPETITIVE OR OBSOLETE. The semiconductor
industry is highly competitive and has been characterized by rapid and
significant technological advances. A number of established semiconductor and
materials manufacturers, including certain of our customers, have expended
significant resources in developing improved wafer substrates. Our competitors
or others, many of which have substantially greater financial, technical and
other resources than we do, may succeed in developing technologies and products
that are equal to or more effective than any which we are developing, which
would render our technology obsolete or noncompetitive. In addition to
competition from other manufacturers of SIMOX-SOI wafers, we face competition
from manufacturers using bulk silicon and epitaxial wafer technology, compound
materials technology such as silicon-germanium, gallium-arsenide and indium
phosphide and SOI technology other than SIMOX technology. Although we believe
that SIMOX-SOI wafers offer integrated circuit performance advantages,
semiconductor manufacturers may develop improvements to existing bulk silicon or
epitaxial wafer technology, and competing compound materials or SOI technologies
may be more successfully developed, which would eliminate or diminish the
performance advantages of SIMOX-SOI wafers. Although we are aware of only one
other company manufacturing oxygen implant equipment, other major semiconductor
implant equipment manufacturers could develop a less expensive oxygen implanter
with superior technology. Our ability to compete

4
<PAGE>
with other manufacturers of semiconductor implanters, SIMOX wafers and
manufacturers of competing SOI wafers, as well as with bulk silicon, epitaxial
and compound materials wafer manufacturers, will depend on numerous factors
within and outside our control, including:

- the success and timing of our product introductions and those of our
competitors,

- product distribution,

- customer support,

- sufficiency of funding available to us, and

- the price, quality and performance of competing products and technologies.

SINCE TECHNOLOGY IN THE SEMICONDUCTOR INDUSTRY RAPIDLY CHANGES, WE MUST
CONTINUALLY IMPROVE EXISTING PRODUCTS, DESIGN AND SELL NEW PRODUCTS AND MANAGE
THE COSTS OF RESEARCH AND DEVELOPMENT IN ORDER TO COMPETE EFFECTIVELY. We
compete in markets characterized by rapid technological change, evolving
industry standards and continuous improvements in products and required customer
specifications. Due to the constant changes in our markets, our future success
depends on our ability to improve our manufacturing processes, tools and
products. For example, our oxygen implanter must remain competitive on the basis
of cost of ownership, process performance and evolving customer needs. To remain
competitive we must continually introduce oxygen implanters with higher
capacity, better production yields and the ability to process larger wafer
sizes.

The commercialization of new products involves substantial expenditures in
research and development, production and marketing. We may be unable to
successfully design or manufacture these new products and may have difficulty
penetrating new markets.

Because it is generally not possible to predict the amount of time required
and the costs involved in achieving certain research, development and
engineering objectives, actual development costs may exceed budgeted amounts and
estimated product development schedules may be extended. Our business may be
materially and adversely affected if:

- We are unable to improve our existing products on a timely basis,

- Our new products are not introduced on a timely basis,

- We incur budget overruns or delays in our research and development
efforts, or

- Our new products experience reliability or quality problems.

OUR SIMOX-SOI WAFER PRODUCTS ARE DIFFICULT TO MANUFACTURE AND SMALL
MANUFACTURING DEFECTS CAN ADVERSELY AFFECT OUR CUSTOMERS' AND OUR OWN PRODUCTION
YIELDS AND OUR OPERATING RESULTS. The manufacture of our SIMOX-SOI wafers is a
highly complex and precise process. SIMOX-SOI wafer production requires a
tightly controlled, clean environment. Very small impurities in our
manufacturing materials or process, contamination of the manufacturing
environment and/or equipment failures can cause a large percentage of wafers to
be rejected or can adversely affect our customers' manufacturing yields of their
integrated circuits. Our customers or we may experience problems in achieving an
acceptable yield in the manufacture of SIMOX-SOI wafers, and the risk of
encountering difficulties increases as we transition to new manufacturing
methods or more exacting customer specifications. In the past, we have
experienced difficulties in meeting evolving customer specifications which have
led to delayed SIMOX-SOI wafer shipments and/or increased production costs.

THE MANUFACTURING AND CUSTOMER QUALIFICATION PROCESS FOR OUR IMPLANTERS IS
COMPLEX, LENGTHY AND COSTLY. In the semiconductor industry customers regularly
require equipment manufacturers to qualify the equipment at the customer's site.
The time required to customer qualify an implanter at a customer's site is very
difficult to predict because the qualification process for each of our
implanters is

5
<PAGE>
complex, lengthy and costly. The manufacturing and qualification process for
each implanter requires us to construct and customer qualify the machine at our
premises, disassemble the machine for transportation, and reassemble and
requalify it at the customer's premises. During this qualification period, we
invest significant resources and dedicate substantial production and technical
personnel to achieve acceptance of the implanter. Each customer will not accept
the implanter until it has successfully produced wafers to exact specifications
at the customer's premises. Even very small differences in the customer's
environment or initially imperceptible changes that may occur to the implanter
during the transportation to and reassembly of the implanter at the customer's
site can cause a large percentage of wafers produced by the implanter to be
rejected, which would delay the acceptance of the implanter by the customer.
Historically we have experienced delays in achieving customer acceptance. Delays
or difficulties in our manufacturing and qualification process could increase
manufacturing and warranty costs and adversely affect our relationships with our
customers. Historically it takes approximately nine months to build, ship and
obtain customer acceptance of our Ibis 1000 implanters at our site.

SINCE WE USE THE PERCENTAGE OF COMPLETION METHOD FOR RECOGNIZING REVENUE ON
THE SALE OF OUR OXYGEN IMPLANTER EQUIPMENT, WE MAY HAVE TO REVERSE REVENUE THAT
HAS BEEN RECOGNIZED. When we receive a contract or purchase order from a
customer for equipment, we recognize revenue using the percentage of completion
method, which means that as we complete each milestone in the manufacture of the
equipment, another portion of the sale price of the equipment is recorded as
revenue and the corresponding costs are recorded. If we commit a material breach
or default on the contract and do not cure such breach or event of default, the
customer may terminate the contract. If that happens we would be required to
reimburse all monies paid by the customer and reverse the revenue recognized to
date, which could have a material adverse effect on our business.

WE HAVE ONLY RECEIVED ORDERS FOR A SMALL QUANTITY OF OUR OXYGEN IMPLANTER
EQUIPMENT. Over a period of four years we have only received purchase orders
for a total of six oxygen implanters at an average sale price of approximately
$4,000,000 each. We do not expect to be able to sell more than a limited number
of implanters in the near future. The delay in the manufacture or delivery of
one unit would have a material adverse effect on our quarterly or annual results
of operations.

THE LOSS OF KEY MEMBERS OF OUR SCIENTIFIC AND MANAGEMENT STAFF COULD DELAY
AND MAY PREVENT THE ACHIEVEMENT OF OUR RESEARCH, DEVELOPMENT AND BUSINESS
OBJECTIVES. Our Chief Executive Officer, Martin J. Reid, and approximately four
current officers and key members of our scientific staff are responsible for
areas such as product development and improvements, and process improvements
research, which are important to our specialized scientific business. The loss
of, and failure to promptly replace, any member of this group could
significantly delay and may prevent the achievement of our research, development
and business objectives. While we have entered into an employment agreement with
our Chief Executive Officer, under certain circumstances he may be able to
terminate his employment with us. Furthermore, although our employees are
subject to certain confidentiality and non-competition obligations, our key
personnel may become employed by a competitor.

OUR STOCK PRICE HAS BEEN AND IS LIKELY TO CONTINUE TO BE VOLATILE. During
1998 our stock price has ranged from a high of $13.75 to a low of $7.25 and from
January 1, 1999 to June 30, 1999 our stock price has ranged from a high of
$33.50 to a low of $9.88. Factors contributing to such volatility include:

- quarter-to-quarter variations in our revenues and earnings,

- difficulty in forecasting future results,

- announcements or introductions of technological innovations,

- new products or new prices for us or our competitors, customers or
suppliers,

- the timing of receipt of orders from major customers,

6
<PAGE>
- product mix,

- product obsolescence,

- shifts in customer demand,

- our ability to manufacture and ship products on a cost-effective and
timely basis,

- our development and introduction of new production Ibis 1000 implanters,

- market acceptance of new and enhanced versions of our products or
implanters,

- the cyclical nature of the semiconductor industry,

- the evolving and unpredictable nature of the markets for the products
incorporating our SIMOX-SOI wafers,

- the amount of research and development expenses associated with new or
enhanced products or implanters, and

- the availability of government funding.

WE HAVE SIGNIFICANT LOSSES AND MAY NEVER BE ABLE TO SUSTAIN
PROFITABILITY. We have experienced net losses of $840,116 for 1996, $3,937,456
for 1997 and $1,165,960 for 1998 and at March 31, 1999 we had an accumulated
deficit of $15,809,908. Net losses may continue for the foreseeable future.
Although we have had profitable quarters from time to time, we may not be able
to achieve sustained profitability.

WE MAY NOT BE ABLE TO SUCCESSFULLY PRODUCE OUR PRODUCTS ON A
LARGE-SCALE. We have limited manufacturing experience and have only
manufactured limited quantities of SIMOX-SOI wafers and Ibis 1000 oxygen
implanters for low volume production. To be successful, our products must be
manufactured in commercial quantities, at acceptable costs. We may not be able
to make the transition to high volume commercial production successfully. Future
production in commercial quantities may create technical and financial
challenges for us. We currently use two Ibis 1000 oxygen implanters for the
production of wafers, one of which was funded by Motorola Corporation and must
first be used to serve Motorola's production requirements until the agreement
expires on December 31, 2000. We are currently constructing one additional Ibis
1000 implanter for internal wafer production and will construct additional
implanters as we need additional capacity to meet demand. Any difficulty or
delay in constructing additional Ibis 1000 implanters could have a material
adverse effect on our business.

WE MAY NOT BE ABLE TO USE ALL OF OUR EXISTING OR FUTURE MANUFACTURING
CAPACITY AT A PROFITABLE LEVEL. We have spent, and expect to continue to spend,
large amounts of money to upgrade and increase our wafer fabrication, assembly
and test manufacturing capacity. Because a significant portion of our expenses
is fixed, if we end up not needing this capacity and capability for any of a
variety of reasons, including inadequate demand or a significant shift in the
mix of product orders making our existing capacity and capability inadequate or
in excess of our actual needs, our fixed costs per wafer produced will increase,
which would adversely affect us. At times we may also have the capacity to
produce more oxygen implantation machines than we have orders for at such times.
During such idle time we would continue to be responsible for the fixed costs
for maintaining personnel and space for such production, which could have a
material adverse effect on our business.

WE MAY NOT SUCCESSFULLY FORM OR MAINTAIN DESIRABLE STRATEGIC ALLIANCES. We
may need to form alliances with strategic partners for the manufacturing,
marketing and distribution of our products. We may enter into these strategic
alliances to satisfy customer demand and to address possible customer concerns
regarding our being a sole source supplier. The limited number of reliable
sources of supply other than Ibis may adversely affect or delay the integration
of SIMOX-SOI wafers in mainstream

7
<PAGE>
commercial applications. In July 1994, we entered into a business development
agreement with Mitsubishi Materials, under which Mitsubishi markets and sells
our SIMOX-SOI wafers in Japan. In September 1995 we entered into a strategic
business development agreement with Motorola Corporation to fund capacity
expansion. We may not be successful in maintaining such alliances or in forming
and maintaining other alliances, including satisfying our contractual
obligations with our strategic partners, and our partners may not devote
adequate resources to manufacture, market and distribute these products
successfully or may attempt to compete with us.

WE MAY HAVE DIFFICULTY OBTAINING THE MATERIALS AND COMPONENTS NEEDED TO
PRODUCE OUR PRODUCTS. Due to the increasing demand in the semiconductor
industry for silicon wafers, we may not be able to purchase an adequate supply
of such silicon wafers for manufacture of our products at or near current
prices, if at all. Any shortages in the availability of silicon wafers or a
significant increase in the price of silicon wafers could have a material
adverse effect on our business. We manufacture our Ibis 1000 oxygen implanters
from standard components and from components manufactured in-house or by other
vendors according to our design specifications. Although we have not experienced
any significant production delays due to the unavailability of or delay in
obtaining our component parts or raw materials to date, a disruption or
termination of certain of our vendors may occur. Any such disruption or
termination could have a material adverse effect on our business.

WE MAY NEED SUBSTANTIAL ADDITIONAL CAPITAL IN THE FUTURE. We have invested,
and intend to continue to invest, in facilities and state-of-the-art equipment
in order to increase our research, development and manufacturing capabilities.
Changes in technology or sales growth beyond currently established capabilities
would require further investment. As a result, we expect that we may need to
raise substantial additional capital in the future in order to finance expansion
of our manufacturing capacity and our research and development programs.
Additional capital may not be available on acceptable terms, if at all. We have
previously financed our working capital requirements through:

- debt and equity financings, including warrant and option exercises,

- equipment lines of credit,

- a working capital line of credit,

- a term loan,

- sale-leaseback arrangements,

- collaborative relationships,

- wafer product and equipment sales, and

- government contracts.

WE MAY NOT BE ABLE TO PROTECT OUR PATENTS AND PROPRIETARY TECHNOLOGY. Our
ability to compete effectively with other companies will depend, in part, on our
ability to maintain the proprietary nature of our technology. Although we have
been awarded or have filed applications for a number of patents in the United
States and foreign countries, those patents may not provide meaningful
protection, or pending patents may not be issued. Our competitors in both the
United States and foreign countries, many of which have substantially greater
resources and have made substantial investments in competing technologies, may
have or may obtain patents that will prevent, limit or interfere with our
ability to make and sell our products or intentionally infringe on our patents.
The defense and prosecution of patent suits is both costly and time-consuming,
even if the outcome is favorable to us. In addition, there is an inherent
unpredictability regarding obtaining and enforcing patents. An adverse outcome
in the defense of a patent suit could:

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- subject us to significant liabilities to third parties,

- require disputed rights to be licensed from third parties, or

- require us to cease selling our products.

We also rely in large part on unpatented proprietary technology and others,
including strategic partners, may independently develop the same or similar
technology or otherwise obtain access to our proprietary technology. To protect
our rights in these areas, we currently require all of our employees to enter
into confidentiality agreements. However, these agreements may not provide
meaningful protection for our trade secrets, know-how or other proprietary
information in the event of any unauthorized use, misappropriation or disclosure
of such trade secrets, know-how or other proprietary information.

Others may claim that our technology infringes on their proprietary rights.
Any infringement claims, even if without merit, can be time consuming and
expensive to defend and may divert management's attention and resources. If
successful, they could also require us to enter into costly royalty or licensing
agreements. A successful claim of product infringement against us and our
inability to license the infringed or similar technology could adversely affect
our business.

SALES OF SHARES ELIGIBLE FOR FUTURE SALE MAY REDUCE THE MARKET PRICE OF OUR
STOCK. Sales of substantial amounts of our common stock in the public markets
could have an adverse effect on the price of our common stock. As of June 30,
1999 we had 7,004,081 shares of common stock outstanding, of which 6,725,278
shares are freely tradable without restriction or further registration under the
Securities Act of 1933. All of the remaining 278,803 shares of common stock are
or will become eligible for sale under Rules 144, 144(k) and 701 or pursuant to
our registration statement on Form S-8. The holders of up to approximately
142,146 shares of common stock and warrants exercisable into 39,655 shares of
common stock are entitled to certain registration rights with respect to their
shares. If these holders, by exercising their registration rights, cause their
shares to be registered and sold in the public market, the sales may have an
adverse effect on the price for our common stock.

IF WE DO NOT COMPLY WITH ALL APPLICABLE ENVIRONMENTAL REGULATIONS, WE COULD
BE SUBJECT TO FINES AND OTHER SANCTIONS. We are subject to a variety of
federal, state and local environmental regulations related to the storage,
treatment, discharge or disposal of chemicals used in our operations and
exposure of our personnel to occupational hazards. Although we believe that we
have all permits necessary to conduct our business, the failure to comply with
present or future regulations could result in fines being imposed on us,
suspension of production or a cessation of operations. Our future activities may
result in our being subject to additional regulations. Such regulations could
require us to acquire significant equipment or to incur other substantial
expenses to comply with regulations. Our failure to control the use of, or to
restrict adequately the discharge of, hazardous substances or properly control
other occupational hazards could subject us to substantial financial
liabilities.

CERTAIN ANTI-TAKEOVER PROVISIONS IN OUR CHARTER COULD REDUCE THE VALUE OF
OUR COMMON STOCK. Our restated articles of organization and restated by-laws
contain certain provisions that may make it more difficult for a third party to
acquire, or discourage acquisition bids for Ibis. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of our common stock.

WE MAY ISSUE SHARES OF PREFERRED STOCK. We have reserved for issuance up to
2,000,000 shares of preferred stock. Shares of our preferred stock may be issued
in the future without further stockholder approval and upon such terms and
conditions, and having such rights, privileges and preferences, as our board of
directors may determine. The rights of the holders of common stock will be
subject to, and may be adversely affected by, the rights of the holders of any
preferred stock that may

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be issued in the future. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire, or discouraging a third party from acquiring, a majority
of our outstanding voting stock. We have no present plans to issue any shares of
preferred stock.

IF WE ISSUE ADDITIONAL SHARES OF EQUITY SECURITIES, THE VALUE OF THOSE
SHARES OF COMMON STOCK THEN OUTSTANDING MAY BE DILUTED. To the extent that we
raise additional capital by issuing equity securities at a price or a value per
share less than the then current price per share of common stock, the value of
the shares of common stock then outstanding will be diluted or reduced. At
present we have a substantial number of shares of common stock that are issuable
upon the exercise of outstanding warrants and stock options.

OUR COMPUTER SYSTEM COULD FAIL WHEN THE YEAR CHANGES TO 2000. We have
evaluated our internal software and products for Year 2000 concerns and, based
on it, we believe that our principal information systems and products either
currently correctly define the year 2000 or will be upgraded to be Year 2000
compliant and thus, the impact of the Year 2000 issue will have no material
effect on our business. To the extent that our assessment is completed and
non-compliant systems operated by us or by third parties are not identified, the
Year 2000 issue could have a material adverse effect on our operations. We could
experience delays in the manufacturing of wafers or the building of equipment.
The severity of these possible problems would depend on the nature of the
problem and how quickly it could be corrected or an alternate implemented, which
is unknown at this time.

Based on currently available information, we do not believe that the Year
2000 issue will have a material effect on our internal information systems or
operations. In the future, however, we may identify non-compliant systems or
other problems related to the Year 2000 issue which may have a material adverse
effect on our business. In addition, a supplier or another third party may not
be Year 2000 compliant on a timely basis, which could have a material adverse
effect on our business.

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WHERE TO FIND MORE INFORMATION

We are a public company and file annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any document we file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of these documents by writing to the SEC and paying a copying
fee. Please call the SEC at 1-800-SEC-0330 for more information about the public
reference room operations. Our SEC filings are also available at the SEC's web
site at "http://www.sec.gov." In addition, you can read and copy our SEC filings
at the office of the National Association of Securities Dealers, Inc. at 1735 K
Street, Washington, DC 20006.

This prospectus is only part of a Registration Statement on Form S-3 that we
have filed with the SEC under the Securities Act of 1933 and therefore omits
certain information contained in the Registration Statement. We have also filed
exhibits and schedules with the Registration Statement that are excluded from
this prospectus, and you should refer to the applicable exhibit or schedule for
a complete description of any statement referring to any contract or other
document. You may inspect a copy of the Registration Statement, including the
exhibits and schedules, without charge, at the public reference room or obtain a
copy from the SEC upon payment of the fees prescribed by the SEC.

INCORPORATION OF DOCUMENTS BY REFERENCE

The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus and information we file later with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
we terminate the offering of our shares of common stock. The documents we are
incorporating by reference are:

- Annual Report on Form 10-K for the year ended December 31, 1998, filed on
March 28, 1999;

- Definitive Proxy Statement, filed on April 9, 1999;

- Current Report on Form 8-K, filed on January 29, 1999;

- Current Report on Form 8-K, filed on February 26, 1999;

- Current Report on Form 8-K, filed on May 6, 1999;

- Current Report on Form 8-K, filed on July 23, 1999;

- Quarterly Report on Form 10-Q, for the quarter ended March 31, 1999, filed
on May 11, 1999; and

- The description of the common stock contained in our Registration
Statement on Form 8-A (File No. 1-13078) filed with the SEC on May 6,
1994, including any amendments or reports filed for the purpose of
updating such description.

You may request a copy of these filings at no cost by writing or telephoning
our chief financial officer at the following address and number:

Ibis Technology Corporation
32 Cherry Hill Drive
Danvers, Massachusetts 01923
(978) 777-4247

This prospectus is part of a Registration Statement we filed with the SEC.
You should rely on the information incorporated by reference provided in this
prospectus and the Registration Statement.

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FORWARD LOOKING STATEMENTS

We also caution you that this prospectus contains 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 statements are based on
management's beliefs and assumptions and on information currently available to
management. Forward-looking statements include the information concerning
possible or assumed future results of operations and embody statements in which
we use words such as "expect," "anticipate," "intend," "plan," "believe,"
"estimate," or similar expressions.

Forward-looking statements necessarily involve risks and uncertainties,
including those set forth in the Risk Factors section and elsewhere in this
prospectus. Our actual results could differ materially from those anticipated in
the forward-looking statements. The factors set forth in the Risk Factors
sections and other cautionary statements made in this prospectus should be read
and understood as being applicable to all related forward-looking statements
wherever they appear in this prospectus.

USE OF PROCEEDS

We currently intend to use the net proceeds from the sale of our common
stock to fund research and development, capital expenditures, working capital
and for other general corporate purposes. Depending on our circumstances at the
time any or all of the net proceeds from such sales become available, if at all,
we reserve the right to use such net proceeds for purposes other than those set
forth above.

DIVIDEND POLICY

We have never declared or paid dividends on our common stock. We presently
intend to retain earnings for use in our business and therefore we do not intend
to declare or pay such dividends in the foreseeable future.

PLAN OF DISTRIBUTION

Any of the shares being offered under this prospectus may be sold in any one
or more of the following ways from time to time:

- through agents,

- to or through underwriters,

- through dealers, and

- directly by us to purchasers.

The distribution of the shares may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.

Offers to purchase shares may be solicited by agents designated by us from
time to time. Any agent involved in the offer or sale of the shares under this
prospectus will be named, and any commissions payable by us to these agents will
be set forth, in a related prospectus supplement. Unless otherwise indicated in
a prospectus supplement, any agent will be acting on a reasonable best efforts
basis for the period of its appointment. Any agent may be deemed to be an
underwriter, as that term is defined in the Securities Act, of the shares so
offered and sold.

If shares are sold by means of an underwritten offering, we will execute an
underwriting agreement with an underwriter or underwriters at the time an
agreement for such sale is reached, and the names of the specific managing
underwriter or underwriters, as well as any other underwriters, the respective
amounts underwritten and the terms of the transaction, including commissions,
discounts and any other

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compensation of the underwriters and dealers, if any, will be set forth in a
related prospectus supplement. That prospectus supplement and this prospectus
will be used by the underwriters to make resales of the shares. If underwriters
are used in the sale of any shares in connection with this prospectus, those
shares will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices determined by
the underwriters and us at the time of sale. Shares may be offered to the public
either through underwriting syndicates represented by managing underwriters or
directly by one or more underwriters. If any underwriter or underwriters are
used in the sale of shares, unless otherwise indicated in a related prospectus
supplement, the underwriting agreement will provide that the obligations of the
underwriters are subject to some conditions precedent and that the underwriters
with respect to a sale of these shares will be obligated to purchase all such
shares if any are purchased.

We may grant to the underwriters options to purchase additional shares, to
cover over-allotments, if any, at the public offering price, with additional
underwriting commissions or discounts, as may be set forth in a related
prospectus supplement. If we grant any over-allotment option, the terms of that
over-allotment option will be set forth in the prospectus supplement for these
shares.

If a dealer is utilized in the sale of the shares in respect of which this
prospectus is delivered, we will sell these shares to the dealer as principal.
The dealer may then resell such shares to the public at varying prices to be
determined by such dealer at the time of resale. Any such dealer may be deemed
to be an underwriter, as such term is defined in the Securities Act, of the
shares so offered and sold. The name of the dealer and the terms of transaction
will be set forth in the prospectus supplement relating to those offers and
sales.

Offers to purchase shares may be solicited directly by us and those sales
may be made by us directly to institutional investors or others, who may be
deemed to be underwriters within the meaning of the Securities Act with respect
to any resale of those shares. The terms of any sales of this type will be
described in the prospectus supplement.

If so indicated in a related prospectus supplement, we may authorize agents
and underwriters to solicit offers by certain institutions to purchase shares
from us at the public offering price set forth in a related prospectus
supplement as part of delayed delivery contracts providing for payment and
delivery on the date or dates stated in a related prospectus supplement. Such
delayed delivery contracts will be subject to only those conditions set forth in
a related prospectus supplement. A commission indicated in a related prospectus
supplement will be paid to underwriters and agents soliciting purchases of
shares pursuant to delayed delivery contracts accepted by us.

Agents, underwriters and dealers may be entitled under relevant agreements
with us to indemnification by us against some liabilities, including liabilities
under the Securities Act, or to contributions with respect to payments which
such agents, underwriters and dealers may be required to make in respect
thereof.

Agents, underwriters and dealers may be customers of, engage in transactions
with, or perform services for, us in the ordinary course of our business.

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DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 20,000,000 shares of common stock,
par value $.008 per share, and 2,000,000 shares of preferred stock, par value
$.01 per share.

COMMON STOCK

As of June 30, 1999, there were 7,004,081 shares of common stock
outstanding, held of record by approximately 126 stockholders. The holders of
common stock are entitled to one vote per share on all matters to be voted upon
by the stockholders. Subject to preferences that may be applicable to any then
outstanding preferred stock, the holders of common stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by our
board of directors out of funds legally available therefor. In the event of our
liquidation, dissolution or winding up, the holders of common stock are entitled
to share ratably in assets remaining after payment of liabilities and the
liquidation preferences of any then outstanding shares of preferred stock. The
holders of common stock have no preemptive rights nor rights to convert their
common stock into any other securities and are not subject to future calls or
assessments by us. There are no redemption or sinking fund provisions applicable
to the common stock. All outstanding shares of common stock are fully paid and
non-assessable, and the shares of common stock to be issued upon completion of
any offering will be fully paid and non-assessable.

LEGAL MATTERS

Certain legal matters in connection with the legality of the common stock
offered hereby will be passed upon for us by Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., Boston, Massachusetts.

EXPERTS

The balance sheets of the Company as of December 31, 1998 and 1997 and the
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1998, and related schedule, have
been incorporated by reference in this Prospectus and Registration Statement, in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of that firm as experts
in accounting and auditing.

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