PHTN Photon Dynamics (MM)

SAN JOSE, Calif., May 1 /PRNewswire-FirstCall/ Photon Dynamics, Inc. (NASDAQ:PHTN), today announced it entered a manufacturing agreement with C Sun Manufacturing Ltd. in Taiwan. Under the terms of the agreement, C Sun will manufacture earlier generation ArraySaver(TM) repair systems. The ArraySaver product line is Photon Dynamics' market leading LCD array repair system which utilizes multiple wavelength laser technology to repair defects in flat panel displays during and after array fabrication. Shipments from their Taiwan facility is expected to begin in the June 2008 quarter. "This agreement reinforces our ongoing effort to execute our flexible business model and margin improvement initiatives," commented Jeff Hawthorne, president and CEO of Photon Dynamics. "C Sun's ability to produce cost effective platforms for our earlier generation array repair systems should improve our margins. The outsource manufacturing agreement allows us to address the LCD equipment capital spending ramp up period without increasing the fixed cost." About Photon Dynamics, Inc. Photon Dynamics, Inc. (NASDAQ:PHTN) is a global supplier utilizing advanced machine vision technology for market leading liquid crystal display (LCD) flat panel display test and repair systems and for high performance digital imaging systems for defense, surveillance, industrial inspection and medical imaging applications. For more information about Photon Dynamics, visit its website at http://www.photondynamics.com/. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as PDI or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements in this release that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. These forward-looking statements are based on current expectations on the date of this press release and involve a number of uncertainties and risks including but not limited to: cancellation or delay of the purchase order by customer which would resulting termination of our exclusive supply relationship, and those risks and uncertainties described in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the caption "Factors Affecting Operating Results" in Photon Dynamics' Annual Report on Form 10-K for the year ended September 30, 2007 and the Quarterly Report on Form 10-Q for the quarter ended December 31, 2007 as filed with the Securities and Exchange Commission. As a result, actual results may differ substantially from expectations. Photon Dynamics undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise. DATASOURCE: Photon Dynamics, Inc. CONTACT: So-Yeon Jeong, Vice President, Investor Relations and Marketing Communications of Photon Dynamics, Inc., +1-408-360-3084, Web site: http://www.photondynamics.com/

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