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CORRESP
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July 8, 2005

Division of Corporate Finance

US Securities and Exchange
Commission

FAX No. 202 551-3662

Attention: Angela Crane

Re:          Ibis
Technology Corporation (the “Company”)

Response to
SEC Comment Letter 6/28/2005

SEC File No.
000-23150

The Company hereby
provides the following responses to your comments and questions regarding the
above-referenced comment letter related to our 10K filing for the year ended
December 31, 2004 and for our 10Q filing for the quarter ending March 31, 2005.

Form 10K
for the year ended December 31, 2004:

Liquidity
and Capital Resources, Page 30

  Commission
  Comment 1:

  “We note that you engaged in “cost savings measures” which included
  the layoff of employees and the discontinuance of the wafer manufacturing
  business. Please expand MD&A in future filings to make quantified
  disclosure about anticipated and actual cost savings derived from your cost
  saving measures during the period presented. Your disclosures should fully
  conform to the guidance set forth in the Question under “Disclosures” to SAB
  TOPIC 5-P. Refer to the next to last paragraph to the referenced Question.”

Company
Response 1:  We have reviewed SAB Topic 5-P and will
conform future MD&A disclosure to said guidance.

  SEC
  Comment 2:

  “We see that in June of 2003, you entered into an agreement with a
  financing agent to obtain payment for products on an expedited basis. Please
  tell us more about this agreement and how it impacted your results from
  operations and revenue recognition.”

Company
Response 2:  The agreement with the financing agent entered
into in 2003 was with another division of IBM, the customer for the wafer
product for which payment was obtained. Once wafers were accepted at the
customer’s receiving location the invoices were forwarded to this financing
division who expedited payment to the Company in 15 days or less. The normal
terms granted the Company were net 30 days. There was an interest cost for this
based on the prime rate in effect at the time of the transaction. The

result was the Company received
the amount invoiced less this charge.  At
the time we received the payment, the Company cleared the accounts receivable
for the full amount of the invoice and charged to interest expense the
difference. There was no issue regarding revenue recognition as the customer
had accepted the product shipped.

Note 5.  Inventories, page 45

  Commission
  Comment 3:

  “We note that you transferred equipment from property and equipment
  to inventory in 2004. Tell us more about your accounting for this transfer and
  demonstrate that your accounting complies with GAAP. Also, confirm that the
  inventory is stated at the lower of cost or market in accordance with ARB
  43.”

Company
Response 3:  :  The equipment in
question was originally used in production of our wafer product and was the
current version of the equipment normally sold to our customers. As a
production tool this equipment was being depreciated during the time it was
used in production. Once no longer required for production, the machine was
transferred to equipment inventory at its net book value of $1.945 million. The
remaining Inventory balance of $5.6 million at year end was purchased parts for
the manufacture of similar equipment. We have subsequently sold this tool to
our customer SUMCO for $6.0 million and will recognize revenue on the unit upon
final customer acceptance anticipated later this year. All inventory is valued
at the lower of cost or market in accordance with Generally Accepted Accounting
Principles and Ibis’ policy and procedures regarding inventory.

(9)
Accrued Liabilities, page 49

  Commission
  Comment 4:

  “Please revise future filings to provide the disclosures required by
  paragraph 14 of FIN 45. Alternatively, tell us why you believe such
  disclosures are not required.”

Company
Response 4:  We will revise future filings to include a
tabular reconciliation of changes in warranty liability for the reporting
period, with an adjoining discussion of product warranty policy and methodology
used in its calculation.

(17)
Discontinued Operation, page 53

  SEC
  Comment 5:

  “We note that you recorded $11.1 million
  impairment charge related to wafer manufacturing inventory and fixed assets
  in 2003. For assets write-downs, you should provide all of the disclosures
  required by SFAS 144, as applicable. Specifically, tell us and disclose in
  future filings the following: (i) the original and adjusted cost basis of the
  assets; (ii) the method utilized for determining their fair value; (iii) the
  expected nature

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  and timing for the disposal of these assets; and (iv) the expected
  proceeds from their disposal.”

Company
Response 5:
(i) The impairment charge of $11.1 million was composed of $10.9 for property
and equipment and $.2 million for inventory related to the Company’s smaller
size wafer manufacturing business. The property and equipment had an acquired
value of $22.2 million with accumulated depreciation of $10.7 million, which
provides a net book value of $11.5 million. An impairment charge of $10.9
reduced this to a carrying value of $.6 million.  (ii) This remaining value was determined based
on an estimate of future values calculated from expected cash flows of the
smaller size wafer material and equipment. The remaining balances were written
off in the 3rd quarter of 2004 when we discontinued the wafer
manufacturing operation. (iii) We have physically scrapped the majority of the
equipment included in the assets upon which the impairment charge was based on
discontinuance of the wafer operation, where this equipment was used. Any such
items that were sold prior to, or that we sell after the discontinued
operations period expires (July 1, 2004 — June 30, 2005) were or will be
recorded as miscellaneous income and expense and classified as Other Income on
our Statement of Operations in the period that they were/are sold. Such items
that were sold or scrapped during the time we recorded discontinued operations
on our Statement of Operations were recorded net of their cost as miscellaneous
income or expense and were classified as discontinued operations on our
Statement of Operations in the period the event took place. (iv) We are
continuing to attempt to sell at nominal values several remaining pieces of
equipment that third parties have indicated interest in.

  SEC
  Comment 6:

  “Refer to your disposal of your wafer manufacturing business. Explain
  the nature of any significant costs allocated to discontinued operations.
  Indicate the basis for the allocation and state whether any of these costs
  were expected to be recurring. Refer to SFAS 144 in your response.”

Company
Response 6:  Costs associated with discontinued operations
are as follows:  The loss from
discontinued operations was $5.3 million. Of this amount $3.2 million was the
loss (sales less costs) incurred in the first seven months of 2004 related to
the wafer operations component of the business as specified by SFAS 144. The
remaining $2.1 million was shown as loss on disposal of assets associated with
that component. Of this amount, $.9 million was from inventory disposal and write-off,
$0.9 million was the “net” write-off and disposal of assets after sales and
scrap amount recovered, and $0.1 million was for severance expense associated
with the wafer manufacturing business. The remaining $0.2 million was a
provision for California sales tax expense estimated and accrued based on a CA
sales tax audit conducted during the first quarter of 2005.  The estimated sales tax was provided by
California based on the sale of wafer product that had previously occurred in that
state, and therefore was attributed 100% to discontinued operations. None of
these costs are expected to be recurring.

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Form 10Q
for the Quarter ended March 31, 2005:

Part 1 –
Items 4, page 21

  Commission
  Comment 7:

  “We note your disclosure that management has
  concluded that your disclosure controls and procedures are “adequate and
  effective to ensure that material information relating to the company was
  made known to them by others within the company, particularly during the
  period in which this Quarterly Report on Form 10-Q was prepared.” Please
  address the following in your future filings:

  •      Revise to eliminate the
  term “adequate” as it is not defined under Rule 13a-15(e).

  •      Revise the language that
  appears after the word “effective” so that it is substantially similar in all
  material respects to the language that appears in the entire two-sentence
  definition of “disclosure controls and procedures” set forth in Rule 13a-15(e).”

Company
Response 7:  Regarding future disclosure by management of
disclosure controls and procedures related to Rule 13a-15(e), the Company will
revise our language so that it conforms with the two sentence definition of
disclosure controls and procedures of that rule.

In connection
with our response to your comment letter, the Company acknowledges it is
responsible for the adequacy and accuracy of the disclosure in our filing; that
staff comments or changes in disclosure related to those comments do not
foreclose the SEC from taking action with respect to the filing; and that the
Company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.

  Sincerely,

  IBIS
  TECHNOLOGY CORPORATION

  /s/ William
  J Schmidt

  William J
  Schmidt

  Chief
  Financial Officer

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