1
                                         FILED PURSUANT TO RULE 424B1
                                         REGISTRATION STATEMENT NUMBER 33-64569
                                         
PROSPECTUS
 
                                1,750,000 SHARES
 
                           SILICON VALLEY GROUP, INC.
 
                            ------------------------
                                  COMMON STOCK
                                ($.01 PAR VALUE)
                            ------------------------
 
     This Prospectus relates to the public offering, which is not being
underwritten, of shares of the common stock ("Common Stock") of Silicon Valley
Group, Inc. (together with its consolidated subsidiaries, "Silicon Valley Group"
or the "Company") offered from time to time by the Selling Stockholder named
herein (the "Selling Stockholder") who will receive such shares upon exercise of
a warrant, expiring September 30, 1998. The exercise price of the warrant is
$13.625 per share and the warrant is subject to a net exercise provision which
permitted the holder to make a cashless exercise of the warrant based on the
closing price of the Common Stock. Such warrant was issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended, provided by Section 4(2) thereof. It is anticipated that the Selling
Stockholder will generally offer shares of Common Stock for sale at prevailing
prices in the over-the-counter market on the date of sale and in certain other
ways as described in "Plan of Distribution." The Company will receive no part of
the proceeds of sales made hereunder. All expenses of registration incurred in
connection with this offering are being borne by the Company, but all selling
and other expenses incurred by the Selling Stockholder will be borne by the
Selling Stockholder. None of the shares offered pursuant to this Prospectus have
been registered prior to the filing of the Registration Statement of which this
Prospectus is a part.
 
   
     The Common Stock of the Company is traded in the over-the-counter market on
the Nasdaq National Market. On May 14, 1996, the closing price of the Company's
Common Stock was $25.50 (Nasdaq Symbol: SVGI).
    
 
     SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
 
     The Selling Stockholder and any broker executing selling orders on behalf
of the Selling Stockholder may be deemed to be an "underwriter" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").
Commissions received by any such broker may be deemed to be underwriting
commissions under the Securities Act.
 
                            ------------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
     SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
       PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
        REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
                            ------------------------
 
   
                  The date of this Prospectus is May 15, 1996.
    
   2
 
     No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering described herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any Selling Stockholder. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, nor shall there be any sale of these
securities by any person in any jurisdiction in which it is unlawful for such
person to make such offer, solicitation or sale. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create an
implication that the information contained herein is correct as of any time
subsequent to the date hereof.
 
     The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of any
such person, a copy of any and all of the information that has been or may be
incorporated by reference in this Prospectus, other than exhibits to such
documents. Requests for such copies should be directed to the Company's Vice
President, Finance and Chief Financial Officer at 2240 Ringwood Avenue, San
Jose, California 95131. The Company's telephone number at that location is (408)
434-0500.
 
     The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the Public Reference Room of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and copies of such material can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549, at prescribed
rates. Information, as of particular dates, concerning directors and officers of
the Company, their remuneration, options granted to them, the principal holders
of securities of the Company, and any material interest of such persons in
transactions with the Company has been or will be disclosed in the proxy
statements to be distributed to stockholders of the Company and filed with the
Commission.
 
     This Prospectus contains information concerning the Company and sales of
its Common Stock by the Selling Stockholder but does not contain all the
information set forth in the Registration Statement on Form S-3 which the
Company has filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement"). The
Registration Statement, including various exhibits, may be inspected at the
Commission's office in Washington, D.C.
 
                                  RISK FACTORS
 
   
     In addition to reviewing the Company's Annual Report on Form 10-K for 1995,
the Company's Quarterly Reports on Form 10-Q for the periods ending December 31,
1995 and March 31, 1996, the other documents incorporated herein by reference
and the other information in this prospectus, the following factors should be
considered carefully in evaluating the Company and its business before
purchasing the Common Stock offered hereby:
    
 
          Prospective purchasers of Shares offered hereby should carefully
     consider the following risk factors in addition to the other information
     presented in this Prospectus.
 
   
     Cyclical Nature of the Semiconductor Industry.  The semiconductor industry
into which the Company sells its products is highly cyclical and has,
historically, experienced periodic downturns which have had a severe effect on
the semiconductor industry's demand for semiconductor processing equipment. In
recent months there have been indications of a potential slowdown in the
semiconductor industry growth rate. During the second quarter of fiscal 1996,
the Company recorded customer bookings (orders for the Company's products) at
its highest rate ever. However, as shipments increased, the Company's book to
bill ratio was lower than during the preceding quarters. Additionally, beginning
in the second fiscal quarter, certain customers have delayed scheduled shipment
dates on specific orders, primarily into early calendar 1997 and all within
twelve months of the date the Company was notified of the delay. However, there
can be no assurance that such dates will not be further rescheduled or the
orders canceled. Prior semiconductor downturns have
    
 
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resulted in significant reductions in the Company's net sales, gross margin and
net income. Moreover, the Company's operations as a whole will continue to be
dependent on the current and anticipated demand for integrated circuits and
products utilizing integrated circuits. Any future weakness in demand in the
semiconductor industry is likely to have an adverse effect on the Company's
business and results of operations. Further, the Company believes that it will
continue to rely on a limited number of major customers for a substantial
percentage of its net sales (three such customers accounted for 47% of the
Company's sales in fiscal 1995 and a similar trend exists thus far in fiscal
1996). The loss of a significant customer, a delay in shipment due to
rescheduling by a significant customer or any substantial reduction in orders by
a significant customer, including reductions in orders due to market, economic
or competitive conditions in the semiconductor industry, could adversely affect
the Company's business and results of operations.
    
 
   
     Uncertain Development of Market for Micrascan Products.  The development of
a market for the Company's Micrascan photolithography products will be highly
dependent on the continued trend towards finer line widths in integrated
circuits and the ability of lithograph manufacturers to keep pace with this
trend through either enhanced technologies or improved processes. The market for
the Company's Micrascan photolithography products has developed more slowly than
the Company anticipated at the time the Company acquired SVG Lithography
Systems, Inc. ("SVGL") in May 1990. From fiscal 1990 to fiscal 1993, SVGL sold
an aggregate of 26 Micrascan systems, 20 of which were sold to IBM, a minority
shareholder in SVGL, and three of which were sold to SEMATECH, Inc.
("SEMATECH"). In fiscal 1994 and fiscal 1995, SVGL shipped 19 Micrascan systems
to eight customers, of which 13 were shipped fiscal 1995. At March 31, 1996, the
backlog included orders for a total of 37 Mircrascan photolithography systems,
certain of which were for the current version of the system and others for the
next generation .25 micron product. In April 1996, a first-time Micrascan
customer withdrew its single unit order for .25 micron system, which it had
placed in the second quarter of fiscal 1996, thereby reducing backlog to 36
Micrascan photolithography systems. While such orders are encouraging, they are
not necessarily indicative of industry-wide acceptance of the Micrascan
technology. The Company and many industry observers initially believed that
I-Line steppers, the most advanced photolithography exposure equipment in
widespread production use at the time the Company acquired SVGL, could not be
modified to be capable of fabricating complex semiconductor devices with line
widths of less than 0.5 micron, such as 64 and 256 megabit dynamic random access
memories ("DRAMs"). Since 1990, however, stepper manufacturers have extended the
capability of their I-Line steppers to 0.5 micron or finer line widths. The
Company believes that, as a consequence, many manufacturers of complex devices
are likely to continue to use steppers for fabricating such devices. The Company
believes that as devices increase in size and complexity and require finer line
widths, the technical advantages of Micrascan systems as compared to steppers
will enable semiconductor manufacturers to achieve finer line widths, higher
yields and increased throughput. The Company believes, however, that these
larger and more complex devices will not be produced in volume until 1996 or
1997. It is possible that the demand for these larger and more complex devices,
and the fabrication equipment to manufacture them, may never develop or may
develop even later than 1997. The Company believes semiconductor manufacturers
will not require production equipment as advanced as Micrascan until at least
1996, and that substantial sales of the Company's Micrascan systems will not
begin until late 1996 or 1997, if at all. Stepper manufacturers have enhanced
their machines in the past, and in the future may further enhance their machines
to achieve finer line widths, sufficiently to erode Micrascan's expected yield,
throughput and line-width control advantages. If this occurs, demand for
Micrascan systems may not develop as the Company expects. SVGL had a marginal
profit for fiscal 1995, primarily due to its fourth quarter operating results.
However, SVGL was not profitable for the first half of fiscal 1995 nor during
fiscal 1994. Although SVGL was modestly profitable during the first half of
fiscal 1996, the Company believes that with the costs associated with the
continued development of the Micrascan technology, the expansion of SVGL's
manufacturing capacity and the additional manpower requirements related to the
expanded capacity, there can be no assurance that SVGL will be able to operate
profitability in the future. Failure of SVGL to achieve substantial sales of
Micrascan systems or a delay in achieving such sales could have a material
adverse effect on the Company's ability to continue to operate profitably.
    
 
     Fluctuations in Quarterly Operating Results.  The Company has, at times
during its existence, experienced quarterly fluctuations in its operating
results. Due to the relatively small number of systems sold during each fiscal
quarter and the relatively high revenue per system, production or shipping
delays or customer order
 
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rescheduling can significantly affect quarterly revenues and profitability. The
Company has experienced, and may again experience, quarters during which a
substantial portion of the Company's net sales are realized near the end of the
quarter. Accordingly, delays in shipments near the end of a quarter can cause
quarterly net sales to fall short of anticipated levels. Since most of the
Company's expenses are fixed in the short term, such shortfalls in net sales
could have a material adverse effect on the Company's business and results of
operations. The Company's operating results may also vary from quarter to
quarter based upon numerous factors including the timing of new product
introductions, product mix, levels of sales, the relative proportions of
domestic and international sales, activities of competitors, acquisitions,
international events and problems in obtaining materials or components on a
timely basis. In light of these factors and the cyclical nature of the
semiconductor industry, the Company expects to continue to experience
variability in quarterly operating results.
 
   
     Need to Increase Manufacturing Capacity.  The Company is currently
expanding the manufacturing capacity of SVGL to meet potential future demand for
its advanced lithography products. The Company believes that its ability to
supply systems in volume will be a major factor in customer decisions to commit
to the Micrascan technology. Accordingly, the Company must now commence facility
and capital improvements and the related staffing and administrative costs
necessary to meet expected shipment volumes in 1997 and 1998. From time to time,
the Company has experienced difficulty in ramping up production or effecting
transitions to new products and, consequently, has suffered delays in product
deliveries. There can be no assurance that the Company will not experience
manufacturing problems as a result of capacity constraints or ramping up
production by upgrading or expanding existing operations. These issues could
result in product delivery delays and a subsequent loss of future revenues. In
particular, the Company believes that protracted delays in delivering initial
quantities of Micrascan products to multiple customers could result in
semiconductor manufacturers electing to install competitive equipment in their
advanced fabrication facilities, which could preclude acceptance of the
Micrascan products on an industry-wide basis. In addition, the Company's
operating results could also be adversely affected by the increase in fixed
costs and operating expenses related to increases in production capacity if net
sales do not increase commensurately.
    
 
   
     Dependence on New Products and Processes; Importance of Timely Product
Introductions and Enhancements.  Semiconductor manufacturing equipment and
processes are subject to rapid technological change. The Company believes that
its future success will depend in part upon its ability to continue to enhance
its existing products and their process capabilities and to develop and
manufacture new advanced products with improved process capabilities that enable
semiconductor manufacturers to fabricate semiconductors more efficiently.
Failure to introduce new advanced products successfully in a timely manner could
result in loss of competitive position and reduced sales of existing products.
In particular, the Company believes that advanced logic devices and DRAMs will
require increasingly finer line widths. As a consequence, it is important to
develop and introduce a version of the Micrascan capable of exposing line widths
of .25 micron during the second half of calendar 1996. In addition, new product
introductions could contribute to quarterly fluctuations in operating results as
orders for new products commence and increase the potential for a decline in
orders of existing products, particularly if new products are delayed.
Furthermore, the inability to produce such products or failure to achieve market
acceptance could have a material adverse effect on the Company's business and
results of operations.
    
 
     Significant delays can occur between a product's introduction and the
commencement by the Company of volume production of such product. There can be
no assurance that the Company will be successful in the introduction and volume
production of new and enhanced products or that the Company will be able to
develop and introduce new and enhanced products and processes which satisfy a
broad range of customer needs and achieve market acceptance.
 
     Research and Development Funding; Certain Capital Commitments.  The Company
believes that in selecting a photolithography equipment manufacturer, customers
look for a long term product development strategy and the ability to fund that
development because photolithography exposure equipment can represent a
substantial portion of the equipment cost of a fabrication facility.
Semiconductor manufacturers may be unwilling to rely on a relatively small
supplier such as the Company for a critical element of the fabrication process
if the supplier does not have sufficient capital to implement its product
development strategy. The
 
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Company depends on external funding to assist in the high cost of development in
its photolithography operation. To that end, the Company and SEMATECH entered
into a series of agreements whereby SEMATECH agreed both to assist in funding
both the development of the Micrascan technology and the increase of SVGL's
manufacturing capability and capacity. The agreements with SEMATECH included the
sale of warrants to purchase the Company's Common Stock (the "Warrants") and,
based upon the Company achieving certain performance milestones, provide for
$22,000,000 of such funding through 1997, all of which the Company expects would
be an offset to its research and development expenditures. Subsequent to the
issuance of the Warrants, the net number of common shares into which they are
exercisable has been included in the shares used in earnings per share
computations. In April 1996, SEMATECH notified the Company that it would
exercise the Warrants through a net issuance provision contained in the
applicable agreement, which resulted in the issuance of 701,923 shares of Common
Stock with no further cash inflow to the Company. As of March 31, 1996, the
Company had recognized $18,480,000 of such SEMATECH funding. There are no
assurances that the Company will be able to attain the remaining SEMATECH
milestones or that SEMATECH will be capable of providing the agreed upon
funding. In the event that the Company does not receive the contracted SEMATECH
funding for any reason, it would be required to either curtail development of
photolithography products or make up the shortfall from its own funds or other
sources. If the Company were required to use its own funds, its research and
development expenses would increase significantly and its operating income would
be reduced correspondingly. Additionally, under the agreements with SEMATECH the
Company was obligated to fund, from its own resources, 120% of amounts received
from SEMATECH up to $36,000,000. Through the first quarter of fiscal 1996, the
Company had funded sufficient qualifying expenditures to fulfill its contractual
obligation.
    
 
     The Company anticipates that it will continue to make substantial research
and development expenditures, particularly in its photolithography products, in
order to remain competitive in the semiconductor equipment industry. If the
Company were not able to secure additional external funding or increase its
revenues to support such research and development expenditures, its new product
development and product enhancement efforts would be impaired, which would have
a material adverse effect on the Company's results of operations.
 
   
     In February 1995, the Company entered into an agreement with Intel
Corporation, Motorola Inc., and Texas Instruments Incorporated (the Investors)
related to the Company's Micrascan photolithography products under which the
Investors purchased an aggregate of $30,000,000 of the Company's newly issued
Series B Preferred Stock (which was subsequently converted to Common Stock) and
received certain rights to purchase future generations of the Company's
Micrascan products. In turn, the Company agreed to utilize the proceeds of the
transaction for research and development related to its Micrascan technology and
the expansion of its manufacturing capacity as well as working capital for its
Micrascan products. The agreement with the Investors also obligates the Company
to fund, during the five year period, ending February 2000, an amount such that
the total it funds under the agreements with both SEMATECH and the Investors is
not less than $25,000,000. Were the Company not to fulfill certain obligations
under the agreement, it could be required to repurchase the Common Stock held by
the Investors.
    
 
     In connection with the Company's acquisition of SVGL in 1990, SVGL received
an equity investment and research and development funding commitments for
Micrascan from International Business Machines ("IBM"). As a part of this
transaction, the Company agreed to make future payments to IBM based on the
ongoing operating results of SVGL. As part of a subsequent agreement with the
Investors, IBM was also granted certain rights to purchase initial quantities of
future generations of the Company's Micrascan products.
 
   
     Customer Concentration.  The Company relies on a limited number of
customers for a substantial percentage of its net sales. In fiscal 1994, Intel
Corporation, Motorola and SGS-Thompson represented 20%, 19% and 11%,
respectively, of sales and the Company's largest five customers represented 58%
of sales. In fiscal 1995, Intel, Motorola and SGS-Thompson represented 17%, 18%
and 12%, respectively, of sales and the Company's largest five customers
represented 60% of sales. A similar trend has continued in the first six months
of fiscal 1996. In fiscal 1994 and fiscal 1995, Intel represented 45% and 36%,
respectively, of Track Systems Division ("Track") sales. For the first six
months in fiscal 1996, Intel represented approximately 48%
    
 
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of Track sales. Track operations were responsible for a substantial portion of
the Company's profits in all periods. The loss of a significant customer (and in
particular the loss of Intel as a Track customer), a delay in shipment due to
customer rescheduling or any substantial reduction in orders by a significant
customer, including reductions in orders due to market, economic or competitive
conditions in the semiconductor industry, could adversely affect the Company's
business and the results of operations.
    
 
     Competition.  The semiconductor processing equipment industry is intensely
competitive. The Company faces substantial competition both in the United States
and other countries for all of its products. The trend toward consolidation in
the semiconductor processing equipment industry has made it increasingly
important to have the financial resources necessary to compete effectively
across a broad range of product offerings, to fund customer service and support
on a worldwide basis and to invest in both product and process research and
development. Significant competitive factors include product performance, price
and reliability, familiarity with each particular manufacturer's products,
established relationships between suppliers and customers, particulate
contamination control and product availability. While the Company believes that
outside Japan and the Pacific Rim it competes favorably with respect to most of
these factors it has occasionally been subject to intense price competition with
respect to particular orders and has had difficulty establishing new
relationships with certain customers who have long-standing relationships with
other suppliers. Certain of the Company's existing and potential competitors
have substantially greater name recognition, financial, engineering,
manufacturing and marketing resources and customer service and support
capabilities than the Company.
 
     In addition, Nikon, and to a lesser extent Canon, Inc. ("Canon") have long
established relationships as suppliers of photolithography equipment to most of
the semiconductor manufacturers. Although the Company has supplied Track and
Thermo equipment to many of these customers, it has not previously sold
meaningful quantities of Micrascan photolithography equipment to them. Due to
the Company's position in the photolithography market, an announcement of a new
product by any of these large competitors may cause customers to delay purchases
until the new product is introduced.
 
     The Company's competitors can be expected to continue to improve the design
and performance of their current products and processes and to introduce new
products and processes with improved price/performance characteristics. There
can be no assurance that the Company will be able to compete effectively in the
future. The Company faces substantial foreign and domestic competition,
including that from Tokyo Electron, Ltd. ("TEL") and DaiNippon Screen Mfg. Co.,
Ltd. in photoresist processing equipment and TEL and Kokusai Electric Co., Ltd.
in oxidation/diffusion and LPCVD equipment. SVGL competes with other suppliers
of photolithography exposure equipment, including manufacturers of steppers and
projection aligners. SVGL's Micralign products are generally not competitive
with steppers for fabrication of semiconductor devices with line widths smaller
than 1.25 micron. In marketing Micrascan systems, SVGL faces competition from
suppliers employing other technologies, principally I-Line and Deep UV steppers,
including Nikon Corp., Canon and ASM Lithography. Certain stepper manufacturers
have utilized techniques, such as the use of off-axis illumination and phase
shift mask technology, to extend the capabilities of steppers beyond their
previously estimated limits. Although the Company believes that its step and
scan system will compete favorably with steppers employing these techniques, the
status of the development of such techniques is uncertain and the Company
expects the competition from such stepper manufacturers to be intense.
Additionally, both Nikon and Canon have announced photolithography products
using step and scan technology and a Deep UV light source and Nikon has
indicated that it expects to deliver initial 0.25 micron production units in
mid-1996. Nikon, and to a lesser extent Canon, have long-established
relationships as suppliers of photolithography equipment to most of the
semiconductor manufacturers. While the Company has supplied Track and Thermco
equipment to many of these customers, it has not previously sold meaningful
quantities of Micrascan photolithography equipment to them. In addition, the
Company believes that other potential competitors, including ASM Lithography,
are developing step and scan technologies. There can be no assurance that the
Company will be able to compete effectively in the future. The Company believes
that the Japanese companies with which it competes have a competitive advantage
because their dominance of the Japanese and Pacific Rim semiconductor equipment
market provides them with the sales and technology base to compete more
effectively throughout the rest of the world. The Company is not engaged in any
collaborative effort with any Japanese or Pacific Rim semiconductor manufacturer
regarding process and
 
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equipment development. As a result, the Company may be at a competitive
disadvantage to the Japanese equipment suppliers which are engaged in such
collaborative efforts with the Japanese and Pacific Rim semiconductor
manufacturers. There can be no assurance that the Company will be able to
compete successfully in the future in Japan, the Pacific Rim or elsewhere in the
world or that competitive pressures will not adversely affect the Company's
results of operations.
 
     Currency Fluctuations.  Substantially all of the Company's manufacturing
costs currently are incurred in the U.S., while a number of the Company's
principal competitor's manufacturing costs are incurred in Japan. As a result, a
substantial increase in the value of the U.S. dollar relative to the Japanese
yen would put the Company at a competitive disadvantage, and would materially
and adversely effect the Company's business and results of operations.
 
   
     Importance of the Japanese and Pacific Rim Market.  The Company believes
that for SVGL to succeed in the long term, it must sell its Micrascan products
on a global basis. The Japanese and Pacific Rim markets (including fabrication
facilities operated outside these areas by Japanese and Pacific Rim
semiconductor manufacturers) represent a substantial portion of the overall
market for semiconductor equipment. To date, the Company has not been successful
in securing an adequate share of these markets. In many instances, Japanese and
Pacific Rim semiconductor manufacturers fabricate devices, such as DRAM's, with
potentially different economic cycles than those effecting the sales of devices
manufactured by the majority of the Company's US and European customers. Failure
to secure customers in these markets may limit the market share available to the
Company and may increase the Company's vulnerability to industry or geographic
downturns. The Company believes that its current customer base of semiconductor
manufacturers in the U.S. and Europe, and the Korean companies that have
purchased initial quantities of the product will order a sufficient number of
units to establish the Micrascan as a competitive technology. It is also
possible that Japanese manufacturers may follow. However, semiconductor
fabrication plants cost hundreds of millions of dollars, and the Company is
relatively new to the photolithography exposure business. Further, the Company
does not share the same level of financial resources as its competitors. As a
result major customers may be unwilling to purchase photolithography exposure
equipment, a critical element of the semiconductor fabrication process, from a
relatively small supplier such as the Company. A decision by such major
customers not to utilize the Micrasan would have a material adverse effect on
the Company.
    
 
     Termination of Canon Letter of Intent.  In April 1993, the Company entered
into a letter of intent with Canon, a major Japanese company, for the purpose of
establishing a worldwide strategic alliance based on SVGL's Micrascan
technology. The Company and Canon were unable to reach agreement and the letter
of intent expired on November 30, 1994. Although Canon is contractually
prohibited until April 2003 from manufacturing a specifically defined step and
scan photolithography machine or disclosing related information, Canon could
introduce a product that includes certain step and scan technology without
violating this prohibition. As a result of the expiration of the letter of
intent, the Company believes that Canon has accelerated its previously suspended
development of a step and scan photolithography product which will compete with
Micrascan.
 
     Patents and Licenses.  As is typical in the semiconductor equipment
industry, the Company has from time to time received, and may in the future
receive, communications form third parties asserting patents or copyrights on
certain of the Company's products and technologies. At least one of the
Company's customers has put the Company on notice that is has received a notice
of infringement from Jerome H. Lemelson, alleging that equipment used in the
manufacture of electronic devices infringes patents issued to Mr. Lemelson
relating to "machine vision" or "barcode reader" technologies. The customer has
put the Company on notice it intends to seek indemnification from the Company
for any damages and expenses resulting from this matter if found liable or if
the customer settles the claim. The Company cannot predict the outcome of this
or any other similar claim or its effect upon the Company, and there can be no
assurance that any such litigation or claim would not have a material adverse
effect upon the Company's financial condition or results of operation.
 
     Dependence on Key Employees.  The Company's future success is dependent
upon its ability to attract and retain qualified management, technical, sales
and support personnel. The competition for such personnel
 
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is intense. The loss of certain key people or the Company's inability to attract
and retain new key employees could materially adversely affect the Company's
business and results of operations.
 
     Dependence on Sole or Limited Source Suppliers.  Most raw materials and
components not produced by the Company are available from more than one
supplier. However, certain raw materials, components and subassemblies are
obtained from single sources or a limited group of suppliers. Although the
Company seeks to reduce its dependence on these sole and limited source
suppliers, and the Company has not experienced significant production delays due
to unavailability or delay in procurement of component parts or raw materials to
date, disruption or termination of certain of these sources could occur and such
disruptions could have at least a temporary adverse effect on the Company's
business and results of operations. Moreover, a prolonged inability to obtain
certain components could have a material adverse effect on the Company's
business and results of operations and could result in damage to customer
relationships.
 
     Volatility of Stock Price.  The public offering price of the Common Stock
offered hereby may not be indicative of prices that will prevail in the trading
market for the Common Stock. The stock market has from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. In addition, the market price of the
Company's Common Stock has been and is likely to be highly volatile. Factors
such as fluctuations in the Company's operating results, shortfalls in revenue
or earnings from levels expected by securities analysts, announcements of
technological innovations or new products by the Company or its competitors,
governmental regulation, developments with respect to patents or proprietary
rights and litigation relating thereto and general market conditions may have a
significant adverse effect on the market price of the Common Stock.
 
                                  THE COMPANY
 
     Silicon Valley Group, Inc. was incorporated in California in 1973 and
became a Delaware corporation in January 1987. The Company's principal executive
offices are located at 2240 Ringwood Avenue, San Jose, California 95131 and its
telephone number at that address is (408) 434-0500. The Common Stock of the
Company is traded on the Nasdaq National Market and is quoted under the symbol
"SVGI".
 
                              SELLING STOCKHOLDER
 
     The following table shows (i) the name of the Selling Stockholder, (ii) the
number of shares of Common Stock beneficially owned prior to the offering, (iii)
the number of shares of Common Stock to be sold by the Selling Stockholder
pursuant to this Prospectus and (iv) the number of shares beneficially owned
after the offering:
 


                                       SHARES BENEFICIALLY                             SHARES BENEFICIALLY
                                          OWNED PRIOR TO        SHARES TO BE SOLD        OWNED AFTER THE
                  NAME                    OFFERING(1)(2)        IN THE OFFERING(3)           OFFERING
    ---------------------------------  --------------------     ------------------     --------------------
                                                                              
    SEMATECH, Inc. ..................    1,750,000                1,750,000                 0

 
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(1) Based on shares beneficially owned at January 31, 1996.
 
(2) The Selling Stockholder will not own more than 1% of the outstanding shares
    of Common Stock of the Company following the sale of the shares offered
    hereby.
 
(3) The Selling Stockholder may offer up to such number of shares of Common
    Stock of the Company.
 
                              PLAN OF DISTRIBUTION
 
     Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholder (and, if they act as agent for the
purchaser of such shares, from such purchaser). Usual and customary brokerage
fees will be paid by the Selling Stockholder. Broker-dealers may agree with the
Selling Stockholder to sell a specified number of shares at a stipulated price
per share, and, to the extent such a broker-dealer is unable to do so acting as
agent for the Selling Stockholder, to purchase as principal any unsold
 
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shares at the price required to fulfill the broker-dealer commitment to the
Selling Stockholder. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above.
 
     The Company has advised the Selling Stockholder that the anti-manipulative
Rules 10b-6 and 10b-7 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), may apply to their sales in the market, has furnished the
Selling Stockholder with a copy of these Rules and has informed them of the need
for delivery of copies of this Prospectus. The Selling Stockholder may indemnify
any broker-dealer that participates in transactions involving the sale of the
shares against certain liabilities, including liabilities arising under the
Securities Act. Any commissions paid or any discounts or concessions allowed to
any such broker-dealers, and any profits received on the resale of such shares,
may be deemed to be underwriting discounts and commissions under the Securities
Act if any such broker-dealers purchase shares as principal.
 
     Upon notification by the Selling Stockholder to the Company that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(c) under the Securities Act setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the Selling Stockholder, the commissions paid or
discounts or concessions allowed by the Selling Stockholder to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this Prospectus.
 
     Any securities covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.
 
     There can be no assurance that the Selling Stockholder will sell any or all
of the shares of Common Stock offered hereunder.
 
     The Company has agreed to indemnify the Selling Stockholder, each of its
officers and directors and each person controlling the Selling Stockholder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse the Selling Stockholder, each of its officers
and directors and each person controlling the Selling Stockholder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with information furnished to the Company by
the Selling Stockholder or underwriter and stated to be specifically for use
therein.
 
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                     INFORMATION INCORPORATED BY REFERENCE
 
     There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Securities and Exchange
Commission:
 
   
          (1) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
     ended March 30, 1996, filed pursuant to Section 13 of the Act.
    
 
   
          (2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
     ended December 31, 1995, pursuant to Section 13 of the Exchange Act.
    
 
   
          (3) The Company's Annual Report on Form 10-K for the fiscal year ended
     September 30, 1995, filed pursuant to Section 13 of the Exchange Act.
    
 
   
          (4) The Company's Current Report on Form 8-K filed on March 2, 1995.
    
 
   
          (5) The Company's Registration Statement on Form 8-A filed with the
     Securities and Exchange Commission on November 23, 1983.
    
 
     All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, after the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Prospectus and
to be part hereof from the date of filing such documents.
 
                                 LEGAL MATTERS
 
     Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill
Road, Palo Alto, California 94304-1050, counsel to the Company, will render an
opinion to the effect that the Common Stock offered hereby is duly and validly
issued, fully paid and non-assessable. Larry W. Sonsini, a member of such firm,
is a director and Secretary of the Company and holds options to purchase 19,500
shares of the Company's Common Stock.
 
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