Exhibit 99.1


                Key Technology Announces Cost Reduction Measures



    WALLA WALLA, Wash.--(BUSINESS WIRE)--Sept. 21, 2006--Key
Technology, Inc. (Nasdaq:KTEC) announced today the implementation of
several significant cost reduction actions aimed at bringing operating
expenses in line with the current business level.
    The Freshline Machines manufacturing and engineering operations in
Sydney, Australia will be closed effective September 30, 2006, and
integrated into existing operations in Walla Walla. Key Technology
will continue to maintain its sales and service offices in Sydney and
Melbourne, Australia for the full line of Key products in that
important geographic market. Key expects to incur total costs of
approximately $275,000 related to the closure of the Freshline
operations in Australia. The Company anticipates approximately
$260,000 of the total cost will be incurred in the fourth quarter of
fiscal 2006. Estimated annualized cost savings as a result of this
action are expected to approximate $600,000, although the full effect
of the savings are not expected to be realized in fiscal 2007.
    "The acquisition of Freshline in early 2005 added a product
offering that is complementary to our optical and vibratory lines and
consistent with our strategy to expand into the fresh-cut market,"
commented Gordon Wicher, Sr. Vice President, Americas and Asia. "The
fresh-cut industry is an important growth segment of the food industry
for Key Technology, and we will be an important player in this market
as it matures and adopts more automated processing technology. This
restructuring will allow us to significantly reduce our costs
associated with the business, without compromising our ability to
offer a broad line of processing solutions to the fresh-cut industry."
    The Company also announced that it will consolidate the majority
of its Medford, Oregon operations into its Walla Walla headquarters.
The Medford operation has been part of Key since the Company acquired
Advanced Machine Vision Corporation in July 2000. The manufacturing
activities of the business were relocated to Walla Walla at the time
of the acquisition, but since then the Company continued to maintain a
sales, service and engineering operation in Medford. Following the
consolidation, a small number of aftermarket and service personnel
will remain in Medford.
    "With these changes, our domestic research and development
activities will be consolidated into our headquarters in Walla Walla,
giving us greater efficiencies and lower costs," commented Ron
Burgess, Sr. Vice President and Chief Financial Officer.
    Key expects to incur a cost for consolidation of the Medford
operations of approximately $500,000, of which approximately $365,000
will be incurred in the current quarter. On an annualized basis, the
Company anticipates that the future benefit of this action will be
approximately $900,000 of cost reductions per year. Because the
consolidation is not anticipated to be completed until December 31,
2006, the estimated savings for fiscal 2007 will be somewhat less than
the estimated annual cost savings.
    The Company also announced that it has agreed in principle to sell
its 50% interest in InspX LLC, a jointly owned manufacturer of x-ray
inspection systems formed in 2004, to that entity. Under the terms of
the agreement, Key will receive $1.5 million in a combination of cash
and secured notes, plus rights to a contingent payment based upon
future performance of the business. The transaction, expected to close
early in the first quarter of fiscal 2007, is expected to result in a
nominal gain that will not materially impact fiscal 2007 results.

    About Key Technology, Inc.

    Key Technology, Inc., headquartered in Walla Walla, Washington, is
a worldwide leader in the design and manufacture of process automation
systems for the food processing and industrial markets. The Company's
products integrate electro-optical inspection and sorting, specialized
conveying and product preparation equipment, which allows processors
to improve quality, increase yield and reduce cost. Key has
manufacturing facilities in Washington, Oregon, and the Netherlands,
and worldwide sales and service coverage.
    This release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based on
management's current expectations or beliefs and are subject to a
number of factors and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements. The forward-looking statements in this release address
future financial and operating results.
    The following factors, among others, could cause actual results to
differ materially from those described in the forward-looking
statements:

    --  adverse economic conditions, particularly in the food
        processing industry, either globally or regionally, may
        adversely affect the Company's revenues;

    --  competition and advances in technology may adversely affect
        sales and prices;

    --  the Company's new products may not compete successfully in
        either existing or new markets;

    --  the limited availability and possible cost fluctuations of
        materials used in the Company's products could adversely
        affect the Company's gross profits;

    --  the inability to protect its intellectual property, especially
        as the Company expands geographically, may adversely affect
        the Company's competitive advantage;

    --  intellectual property-related litigation expenses and other
        costs resulting from infringement claims asserted against the
        Company or its customers by third parties may adversely affect
        the Company's results of operations and its customer
        relations; and

    --  inadequate internal controls over financial reporting could
        result in an inability to accurately report the Company's
        financial results.

    For a detailed discussion of these and other cautionary
statements, please refer to the Company's filings with the Securities
and Exchange Commission, particularly Item 1A, "Risk Factors," to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2005.



    CONTACT: Key Technology, Inc.
             Ron Burgess, 509-529-2161