For more information, contact:

Advanced Energy Reports Second Quarter 2005 Results

Gross Margin and Operating Margin Improvements Continue

FORT COLLINS, Colo., July 28—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today reported financial results for the second quarter ended June 30, 2005.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030825/AEISLOGO)

For the 2005 second quarter, sales were $87.4 million, up 1.4 percent compared to first quarter 2005 sales of $86.1 million and down 19.7 percent from second quarter 2004 sales of $108.9 million. Gross margin was 36.7 percent of sales in the second quarter of 2005 compared to 33.8 percent in the first quarter of 2005 and 34.0 percent in the second quarter of 2004.

Net income for the second quarter was $5.9 million, or $0.18 cents per diluted share. Income from continuing operations was $3.3 million, or $0.10 per diluted share, compared to net income of $734,000, or $0.02 per diluted share in the first quarter of 2005 and net income of $4.5 million or $0.13 per diluted share in the second quarter of 2004. Included in the second quarter 2005 income from continuing operations is a $1.1 million, or $0.03 per diluted share, after-tax gain from the sale of certain marketable securities.

During the quarter, the Company sold its EMCO industrial flow product line resulting in income from discontinued operations of $2.6 million, or $0.08 per diluted share.

Revenue for the six months ended June 30, 2005 was $173.5 million versus $213.4 million for the first six months of 2004. Income from continuing operations for the 2005 six-month period was $4.0 million, or $0.12 per diluted share, compared to net income for the 2004 six-month period of $11.4 million, or $0.35 per diluted share.

Doug Schatz, chairman, president and chief executive officer of Advanced Energy, said, "The second quarter results continue to demonstrate the significant improvements we have made to our operating model. Gross margin improved nearly three percentage points from the first quarter as we continue to realize benefits from our China manufacturing, localized supply chain programs and improvements resulting from the global restructuring actions. Operating income increased approximately 60 percent compared to the first quarter of 2005 on slightly increased sequential sales, and was 6.2 percent of sales compared to 3.9 percent in the first quarter of 2005. In 2005, we have improved the balance sheet by generating cash from operations of over $30 million and by reducing inventory by approximately $14 million."

Mr. Schatz continued, "We have a renewed focus on profitable opportunities centered on our core technologies and have realigned our manufacturing infrastructure to benefit from lower-cost regions while maintaining product launch expertise at key sites. The manufacturing transition is in its final stages, and currently over 75 percent of our power product and mass flow control manufacturing volume is shipping from our Shenzhen, China location. We believe our China manufacturing facility provides us with a highly differentiated competitive position that enables us to better serve our global customer base with our high quality, innovative products."

"Our customers continue to take a cautious view of the near-term demand environment based on the anticipated timing of end user orders, and we anticipate third quarter revenue in the $81 million to $86 million range, the upper end of which is essentially flat with the second quarter if we adjust for the sale of EMCO. We anticipate earnings per share in the range of $0.05 to $0.09 based on continued financial performance improvement," said Mr. Schatz.

Second Quarter Conference Call

Management will host a conference call today, Thursday, July 28, 2005 at 5:00 pm Eastern time to discuss Advanced Energy's financial results. You may access this conference call by dialing 888-713-4717. International callers may access the call by dialing 706-679-7720. For a replay of this teleconference, please call 706-645-9291, and enter the pass code 7356654. The replay will be available through Thursday, August 4, 2005. There will also be a webcast available at www.advanced-energy.com.

About Advanced Energy

Advanced Energy is a global leader in the development and support of technologies critical to high-technology manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, compact discs, digital video discs, architectural glass, and other advanced product applications.

Leveraging a diverse product portfolio and technology leadership, Advanced Energy creates solutions that maximize process impact, improve productivity and lower the cost of ownership for its customers. This portfolio includes a comprehensive line of technology solutions in power, flow, thermal management, and plasma and ion beam sources for original equipment manufacturers (OEMs) and end-users around the world.

Advanced Energy operates in regional centers in North America, Asia and Europe and offers global sales and support through direct offices, representatives and distributors. Founded in 1981, Advanced Energy is a publicly held company traded on the Nasdaq National Market under the symbol AEIS. For more information, please visit our corporate website: www.advanced-energy.com.

Safe Harbor Statement

This press release contains certain forward-looking statements, including the company's expectations with respect to Advanced Energy's financial results for the third quarter of 2005. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: the volatility and cyclicality of the semiconductor, semiconductor capital equipment and flat panel display industries, Advanced Energy's ongoing ability to develop new products in a highly competitive industry characterized by increasingly rapid technological changes, the Company's successful completion of key initiatives such as the worldwide manufacturing realignment and the shift to Asian-based suppliers, and other risks described in Advanced Energy's Form 10-K, Forms 10-Q and other reports and statements, as filed with the Securities and Exchange Commission. These reports and statements are available on the SEC's website at www.sec.gov . Copies may also be obtained from Advanced Energy's website at www.advanced-energy.com or by contacting Advanced Energy's investor relations at 970-221-4670. The company assumes no obligation to update the information in this press release.

     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
     (in thousands, except per share data)

                                   Three Months Ended       Six Months Ended
                                   June 30,      March 31,      June 30,
                                2005      2004     2005      2005      2004

     Sales                     $87,386  $108,869  $86,140  $173,526  $213,356
     Cost of sales              55,338    71,907   57,065   112,403   137,980
     Gross profit               32,048    36,962   29,075    61,123    75,376

     Operating expenses:
      Research and
       development              11,016    12,809   11,015    22,031    26,219
      Selling, general and
       administrative           13,993    14,087   12,901    26,894    27,891
      Amortization of
       intangible assets           518     1,125      547     1,065     2,295
      Restructuring charges      1,068       187    1,262     2,330       407
        Total operating
         expenses               26,595    28,208   25,725    52,320    56,812

     Income from operations      5,453     8,754    3,350     8,803    18,564

     Other expense, net           (719)   (2,417)  (2,087)   (2,806)   (3,572)
     Income from continuing
      operations before income
      taxes                      4,734     6,337    1,263     5,997    14,992
     Provision for income
      taxes                     (1,430)   (1,867)    (529)   (1,959)   (3,598)
      Income from continuing
      operations                 3,304     4,470      734     4,038   $11,394

     Gain on sale of
      discontinued assets        2,645        --       --     2,645       $--
     Provision for income
      taxes                         --        --       --        --        --

     Income from discontinued
      operations                 2,645        --       --     2,645        --

     Net Income                 $5,949    $4,470     $734    $6,683   $11,394

     Net income per basic
      share
      Income from continuing
       operations                $0.10     $0.14    $0.02     $0.12     $0.35
      Income from discontinued
       operations                 0.08        --       --      0.08        --
      Basic earnings per share   $0.18     $0.14    $0.02     $0.20     $0.35

     Net income per diluted
      share
      Income from continuing
       operations                $0.10     $0.13    $0.02     $0.12     $0.34
      Income from discontinued
       operations                 0.08        --       --      0.08        --
      Diluted earnings per
       share                     $0.18     $0.13    $0.02     $0.20     $0.34

     Basic weighted-average
      common shares
      outstanding               32,797    32,644   32,755    32,776    32,612

      Diluted weighted-average
       common shares
       outstanding              33,094    33,187   32,878    32,986    33,435



     CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
     (in thousands)

                                                  June 30,        December 31,
                                                    2005              2004

     ASSETS

     Current assets:
      Cash and cash equivalents                   $67,216           $38,404
      Marketable securities, available for sale    70,571            69,578
      Accounts receivable, net                     67,089            72,053
      Inventories, net                             59,021            73,224
      Other current assets                          2,774             6,140
     Total current assets                         266,671           259,399

     Property and equipment, net                   41,814            44,746

     Deposits and other                             4,219             6,468
     Goodwill and intangibles, net                 72,838            80,308
     Demonstration and customer service
      equipment, net                                3,306             2,968
     Deferred debt issuance costs, net              1,536             2,086
     Deferred income tax assets, net                  849                --

     Total assets                                $391,233          $395,975


     LIABILITIES AND STOCKHOLDERS' EQUITY

     Current liabilities:
      Trade accounts payable                      $21,163           $17,683
      Other accrued expenses                       25,587            28,615
      Current portion of capital leases and
       senior borrowings                            2,721             3,726
      Accrued interest payable on convertible
       subordinated notes                           2,460             2,460
     Total current liabilities                     51,931            52,484

     Long-term liabilities:
      Capital leases and senior borrowings          3,280             4,679
      Deferred income tax liabilities, net             --             3,709
      Convertible subordinated notes payable      187,718           187,718
      Other long-term liabilities                   2,169             2,407
     Total long-term liabilities                  193,167           198,513

     Total liabilities                            245,098           250,997

     Stockholders' equity                         146,135           144,978
     Total liabilities and stockholders' equity  $391,233          $395,975



     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
     (in thousands)

                                                    Six Months Ended June 30,
                                                     2005              2004

     NET CASH PROVIDED BY (USED IN) OPERATING
      ACTIVITIES                                   $32,423            $(271)

     NET CASH (USED IN) PROVIDED BY INVESTING
      ACTIVITIES                                       (24)           4,117

     NET CASH USED IN FINANCING ACTIVITIES          (1,663)          (4,814)

     EFFECT OF CURRENCY TRANSLATION ON CASH         (1,924)             (46)
     INCREASE (DECREASE) IN CASH AND CASH
      EQUIVALENTS                                   28,812           (1,014)
     CASH AND EQUIVALENTS, beginning of period      38,404           41,522
     CASH AND EQUIVALENTS, end of period           $67,216          $40,508