Photon Dynamics Announces Order From Plastic Logic

SAN JOSE, CA, Jan 15 (MARKET WIRE) --
Photon Dynamics, Inc. (NASDAQ: PHTN), a global supplier utilizing advanced
machine vision technology to provide market leading Liquid Crystal Display yield
enhancement systems and high performance digital imaging systems for defense,
surveillance, industrial inspection and medical imaging applications, today
announced that it has received an order for its market leading
ArrayChecker(TM) flat panel display test and ArraySaver(TM) repair system from
Plastic Logic Limited for their new flexible electronic paper display
manufacturing facility in Dresden, Germany. Plastic Logic is the leading
developer in plastic electronics manufacturing for flexible active matrix
displays. The Dresden facility is a production factory for manufacturing
flexible, active-matrix displays.

Jeff Hawthorne, president and chief executive officer of Photon Dynamics,
commented, "We are pleased to be part of the equipment lineup used for the
production of this exciting new technology. This order validates the
extendibility of our test technology to address new display technologies and
applications. Photon Dynamics has been used by every generation LCD factory
and this continues our tradition of being selected by the leaders in the display
industry as they pioneer new products." Wendell Blonigan, chief operating
officer
of Photon Dynamics, added, "The flexibility of our VIOS sensor based
ArrayChecker test equipment, real time auto focus ArraySaver repair technology
and the breadth of experience in our applications group allowed us to rapidly
address Plastic Logic's needs."

Plastic Logics new factory uses revolutionary process techniques to
streamline the manufacturing process and allows the use of low cost, flexible
substrates. Simon Jones, vice president of Product Development at Plastic
Logic, said, "The flexible market is transitioning from research to
production. Plastic Logic is going to lead in this transition and needs to
have world class manufacturing efficiency. Yield management is essential
tothat, and Photon Dynamics is the standard for yield optimization."

Dr. John Mills, Plastic Logic's chief operating officer, concluded, "Take
anywhere, read anywhere displays are wanted by people everywhere. The way to
make that a reality is through new processing techniques with high quality
manufacturing. Photon Dynamics will help us make that a reality."

About Photon Dynamics, Inc.

Photon Dynamics, Inc. 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 (NASDAQ: PHTN), visit
its
website at www.photondynamics.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of
1995

Certain statements in this press release are 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; that the technical advantages of flexible substrates will be
commercially viable, that research technology can be commercially proven,
that the purchase order will not be cancelled or delayed and that we can
successfully meet the specifications and demands of the commercial
application, 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, 2006 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.

Contacts:

Corporation:
Photon Dynamics, Inc.
So-Yeon Jeong
Vice President, Investor Relations and Marketing Communications
(408) 360-3084
Email Contact

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