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BY EDGAR

August 17, 2007

Brian Cascio

Accounting Branch Chief

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549-6010

Re:                               Axcelis
Technologies, Inc.

Form 10-K for the fiscal year ended December 31, 2006

Form 10-Q for the quarterly period ended March 31, 2007

File No. 000-30941

Dear Mr. Cascio:

The following
responds to your letter of July 20, 2007, to the undersigned regarding the
Forms 10-K and 10-Q referred to above filed by Axcelis Technologies, Inc. (the “Company”).

For
convenience, each of your comments is restated below, followed by our response.

Form 10-K for the fiscal
year ended December 31, 2006

Consolidated Statements
of Operations, page F-2

1.                                       We
see that you separately disclose revenue generated from sales of systems,
services and royalties.  In future
filings, please revise your income statement to also separately disclose the
related costs of generating those revenues.
Refer to Article 5-03(b)(1) and (2) of Regulation S-X.  As a related matter, the gross profit for
systems, services and royalties should be separately discussed in the results
of operations section of MD&A.

The Company operates in one business segment, which is
the manufacture of capital equipment for the semiconductor manufacturing
industry. Our primary revenue driver is system sales. We view revenues from
spare parts, equipment upgrades and maintenance services as a derivative of
system sales and do not view these revenues as a separate business.
Accordingly, we built our financial systems consistent with this view and we do
not track these costs in a format that would enable us to report them
separately. For instance, certain shared costs of systems, services and
royalties such as variances, material scrap, training and valuation reserves
cannot be attributed to specific cost of revenue categories. Therefore, we have
no practical manner in which to allocate such costs in way that would provide
more meaningful financial information to our investors.

Consolidated Balance
Sheets, page F-3

2.                                       In
future filings, please revise to clearly label your long term debt as “convertible
subordinated debt,” as described in the footnotes to your financial statements.

We will provide
the requested disclosure in future filings.

Notes to
Consolidated Financial Statements

Note 2.  Significant Accounting Policies, page F-6

Revenue
Recognition, page F-8

3.                                       Please
tell us and revise future filings to clearly disclose your accounting policy
for recognizing revenue from royalty arrangements.  Please note that it should be evident from
your disclosure that the royalty revenue is from a related party.

The Company’s accounting policy for recognizing
revenue from royalty arrangements is as follows:

Royalty revenue is primarily earned under the terms of
our license agreement with SEN. Royalty revenue is recorded at the time SEN
notifies the Company that royalties have been earned.

We will describe this policy in future filings.

Form 10-Q for the
quarterly period ended March 31, 2007

Consolidated Statement of
Cash Flows, page 5

4.                                       We
see that you currently present the cash dividend from SEN within operating
activities in your consolidated statement of cash flows.  Please tell us why you should not record the
dividend as a component of net cash provided by investing activities.  We reference paragraph 16(b) of SFAS 95 which
states that returns of investment in equity instruments are generally recorded
as investing activities.

In 2006, the Company and
Sumitomo Heavy Industries agreed upon an annual dividend relating to SEN’s
fiscal year ended March 31, 2006. The two shareholders instructed SEN to
dividend 40% of SEN’s net earnings for that year. On January 31, 2007, the
Company received a payment of approximately $5.7 million representing its 50%
share of the dividend.

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Paragraph 16(b) of SFAS
95 states “returns of investment in equity instruments are generally recorded
as investing activities”.  In this
situation, the Company believes that the cash received from SEN represents a
return on investment, rather than return of investment. The
Company holds this position as the intent of the dividend payment was to
distribute a portion of SEN’s net earnings to the shareholders. Further
clarification is provided in Example 1 of Appendix C of Statement 95.  The example illustrates that a dividend
received from an affiliate, as well as undistributed earnings of an affiliate,
are classified as operating activities in the statement of cash flows.

Because the cash payment
received from SEN was a dividend payment and not a return of the company’s
original investment in the joint venture, the Company’s position is
classification of the cash receipt within operating activities is appropriate.

In connection
with this letter, as requested, the Company acknowledges that (i) the Company
is responsible for the adequacy and accuracy of the disclosure in the filings;
(ii) staff comments or changes to disclosure in response to staff comments
do not foreclose the Commission from taking any action with respect to the
filing; and (iii) 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.

Please direct
any questions or further comments regarding this letter to me at the above
address or contact me directly by telephone at (978) 787 - 4110 or by email at
Stephen.Bassett@axcelis.com.

  Sincerely,

  /s/ STEPHEN G.
  BASSETT

  Stephen G. Bassett

  Executive Vice President and

  Chief Financial Officer

cc:                                 Kristin
Lochhead

Securities and Exchange Commission

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