UNITED
STATES





SECURITIES
AND EXCHANGE COMMISSION





WASHINGTON,
D.C. 20549





FORM
10-K




/x/ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007.Or/
      /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.Commission
      File No. 0-25662ANADIGICS,
      Inc.(Exact
      name of registrant as specified in its charter)Delaware
            22-2582106(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)141
      Mt. Bethel Road, Warren, New Jersey
            07059(Address
      of principal executive offices)
            (Zip
      Code)(908)
      668-5000(Registrant's
      telephone number, including area
code)





Securities
registered pursuant to Section 12(b) of the Act: None





Securities
registered pursuant to Section 12(g) of the Act:


Common
Stock, $0.01 par value





The above
securities are registered on the NASDAQ Global Market





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes / / No /X/





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes / / No /X/





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes /X/ No / /





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated in Part III of this Form 10-K or any amendment to this Form 10-K.
/X/





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check
one):


Large
accelerated filer /X/ Accelerated filer / / Non-accelerated filer /
/





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes / / No /X/





The
aggregate market value of the voting common equity held by non-affiliates of the
registrant as of June 30, 2007 was approximately $799 million, based upon the
closing sales price of the registrant’s common equity as quoted on the NASDAQ
Global Market on such date.





The
number of shares outstanding of the registrant's common stock as of February 15,
2008 was 62,573,762 (excluding 113,761 shares held in treasury).





Documents
incorporated by reference: Definitive proxy statement for the registrant’s 2008
annual meeting of shareholders (Part III).










TABLE OF
CONTENTS




PART
      IItem
      1:
              BusinessItem
      1A:
              Risk FactorsItem
      1B:
              Unresolved Staff CommentsItem
      2:
              PropertiesItem
      3:
              Legal ProceedingsItem
      4:
              Submission of Matters to a Vote of Security
      HoldersPART
      IIItem
      5:
              Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity SecuritiesItem
      6:
              Selected Financial DataItem
      7:
              Management’s
      Discussion and Analysis of Financial Condition andResults
      of OperationsItem
      7A:
              Quantitative and Qualitative Disclosures About Market
      RiskItem
      8:
              Financial Statements and Supplementary
    DataItem
      9:
              Changes in and Disagreements with Accountants on Accounting
      and Financial DisclosureItem
      9A:
              Controls and ProceduresItem
      9B:
              Other InformationPART
      IIIItem
      10:
              Directors, Executive Officers and Corporate
      GovernanceItem
      11:
              Executive CompensationItem
      12:
              Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder MattersItem
      13:
              Certain Relationships and Related Transactions and Director
      IndependenceItem
      14:
              Principal Accounting Fees and
  ServicesPART
      IVItem
      15:
              Exhibits, Financial Statement
  Schedules





PART
I





ITEM 1. BUSINESS.





Overview




ANADIGICS,
Inc. (“we” or the “Company”) is a leading provider of semiconductor solutions in
the rapidly growing broadband wireless and wireline communications
markets.  Our products include power amplifiers (PAs), tuner
integrated circuits, active splitters, line amplifiers and other components,
which can be sold individually or packaged as integrated radio frequency (RF)
and front end modules.  We believe that we are uniquely positioned to
capitalize on the rapidly-growing voice, data and video segments of the
broadband wireless and wireline communications markets.  We offer
third generation (3G) products that use the Wideband Code-Division Multiple
Access (W-CDMA) and Enhanced Data Rates for Global System for Mobile
Communication Evolution (EDGE) standards and combinations of W-CDMA and EDGE
platforms (WEDGE), beyond third generation (3.5G) products that use the High
Speed Packet Access (HSPA, inclusive of downlink and uplink) and Evolution Data
Optimized (EVDO) standards, fourth generation (4G) products for Worldwide
Interoperability for Microwave Access (WiMAX) inclusive of WiBRO systems,
Wireless Fidelity (WiFi) products that use the 802.11 a/b/g and 802.11 n
(Multiple Input Multiple Output (MIMO)) standards, cable television (CATV) cable
modem and set-top box products, CATV infrastructure products and
Fiber-To-The-Premises (FTTP) products.




Our business
strategy focuses on developing RF front end solutions and partnering with
industry-leading wireless chipset providers to incorporate our solutions into
their reference designs.  Our integrated solutions enable our
customers to improve RF performance, power efficiency, reliability,
time-to-market and the integration of chip components into single packages,
while reducing the size, weight and cost of their products.  We have
established longstanding relationships with several of the industry-leading
chipset suppliers and tier-one customers.  For example, our
relationships with Qualcomm Incorporated (Qualcomm), Intel Corporation (Intel),
Cisco Systems Inc (Cisco) and Motorola, Inc. (Motorola) have enabled us to
develop RF products used in 3G, 3.5G, 4G WiMAX, WiFi and CATV products and to be
the primary supplier with respect to such partners and
customers.  Other leading chipset suppliers and tier-one customers
with whom we are engaged include Beceem Communications, Inc (Beceem), Broadcom
Corp. (Broadcom), High Tech Computer Corp. (HTC), Huawei Technologies Co., Ltd.
(Huawei), KYOCERA Corporation (Kyocera), LG Electronics Inc. (LG Electronics),
Marvell Technology Group Ltd. (Marvell), Murata Manufacturing Co., Ltd.
(Murata), Novatel Wireless, Inc. (Novatel), NXP B.V. (NXP), Palm, Inc. (Palm),
Research In Motion Limited (RIM), Samsung Electronics Co., Ltd. (Samsung),
Sierra Wireless, Inc. (Sierra Wireless), Texas Instruments Incorporated (Texas
Instruments) and ZTE Corporation (ZTE).




We were
incorporated in Delaware in 1984. Our corporate headquarters are located at 141
Mt. Bethel Road, Warren, New Jersey 07059, and our telephone number at that
address is 908-668-5000.





Current Trends and
Developments




We
believe our business is benefiting from three key factors: (1) high growth in
the markets for 3G, 3.5G, 4G WiMAX, WiFi and CATV products, (2) an increased
dollar content of our solutions within the products in these end markets, and
(3) greater financial leverage in our business model derived from increased
utilization of our production capacity and our high-margin product
mix.  We believe that the combination of these three factors has
enabled us to outpace the overall end product unit growth in the broadband
wireless and wireline communications markets.  For example, additional
PAs with higher performance levels and integration are required in 3G and 3.5G
wireless handsets as compared to prior standards.  The complexity of
3G, 3.5G and 4G designs coupled with our selection in several leading reference
designs allows us to capitalize on the growth in the 3G, 3.5G and 4G markets. In
the WiFi market, our business is benefiting from both the continued unit growth
in the overall WiFi market as well as the growing adoption of the 802.11 a/b/g
standards and the 802.11 n MIMO standard, which commonly use multiple PAs with
each chipset.  We are experiencing growth in our CATV set-top box
business, comprised of semiconductor tuners and active splitters, as a result of
the increasing popularity of cable set-top boxes that incorporate enhanced
functionality such as digital video recorders (DVRs) and high definition
television (HDTV) reception.  In addition, we believe that a new
generation of cable modems based on the Data Over Cable Service Interface
Specification 3.0 (DOCSIS-3.0) standard will increase the addressable market for
our semiconductor tuners and upstream amplifiers.  We believe our
infrastructure business will continue to benefit from the adoption of 1 GHz CATV
products from Cisco, driven by system upgrades from the existing 870 MHz
standard in the U.S., from increased demand in the European and Chinese markets
for such CATV products, and from optical network amplifiers used in FTTP systems
such as Verizon Communication Inc.’s (Verizon) FiOS.




We continue
to focus on leveraging our technological and manufacturing advantages to remain
a leading supplier of semiconductor solutions for broadband wireless and
wireline communications.  We believe our patented InGaP-plus technology, which
combines the bipolar technology of a PA (HBT PA) with the surface device
technology of an RF active switch (pHEMT) on the same die, provides us with a
competitive advantage in the marketplace.  Additionally, we believe
our InGaP-plus process
and design technologies such as High Efficiency at Low Power (HELP) provide a
competitive advantage by enabling us to provide PAs that consume less battery
power and extend talk time for products in the 3G, 3.5G and 4G
markets.




Our primary
fabrication facility (fab), a state-of-the-art six-inch diameter Gallium
Arsenide (GaAs) fab located at our corporate headquarters in Warren, New Jersey,
has been operational since 1999.  The increased utilization of our
fab’s manufacturing capacity has increased our gross margins, which has provided
us with improved financial leverage.  We are actively exploring future
sources of additional manufacturing capacity including the construction of a
manufacturing facility in China, as well as pursuing relationships with
foundries.  Unlike traditional CMOS silicon fabs that have short
technology lifecycles and require frequent capital investments, GaAs fabs are
more similar to analog fabs that have long lifecycles and do not become quickly
outdated.  Our six-inch wafer fab allows us to produce more than twice
the RF die per wafer compared with the four-inch wafer fabs still used by some
of our competitors.




On April 2,
2007, the Company sold the majority of the operating assets of Telcom Devices
Inc. (Telcom, a wholly-owned subsidiary of the Company) to GTRAN Camarillo, Inc.
in exchange for $500 and effectively ceased Telcom’s operations. Accordingly,
the financial results, position and cash flow of Telcom have been classified as
 discontinued operations  in the accompanying financial statements for
all periods presented.





In early
2007, the Company signed an agreement with the Kunshan New and Hi-Tech
Industrial Development Zone (KSND) in China to jointly construct a wafer
fabrication facility. The agreement requires the Company to invest approximately
$50 million over a ten-year period, inclusive of $16.7 million due by January
31, 2010.




On
September 5, 2007, the Company purchased certain assets and assumed certain
related obligations of the radio frequency group (RF group) of Fairchild
Semiconductor. In addition, the Company hired 23 employees of the RF group’s
staff.





Industry
Background




Wireless 3G
Market




Growth in the
unit shipments of wireless handsets that use the 2.5G EDGE and 3G standards is
expected to significantly outpace the growth in the overall number of wireless
handset unit shipments in the next several years.  According to Allied
Business Intelligence (ABI), the number of wireless handsets manufactured to
these new technological standards is expected to grow from 431.5 million units
shipped in 2006 to 944.5 million units by 2010, representing a 21.7 %compound
annual growth rate, as compared to the overall number of wireless handsets
manufactured , which is expected to grow from 992.2 million units in 2006 to
1,466.8 million units in 2010, representing a compound annual growth rate of
10.3% during the same period. As a qualified PA supplier on several leading
Qualcomm reference designs for the HSPA and the EVDO standards, we believe we
are well positioned to benefit from the transition to 3G and 3.5G.




Traditionally, a
single PA supported a chipset contained in a wireless
handset.  However, the adoption of 3G and 3.5G technologies and the
deployment of 3G and 3.5G networks by telecommunications carriers have led to
wireless handset designs that use multiple PAs capable of working with both
older frequencies and newer multiple W-CDMA frequencies.  These
wireless handsets also require PAs with higher power performance specifications
and levels of integration.




The key
drivers of growth in the wireless handset market are:





·
            Deployment
      of 3G and 3.5G networks and
services.




·
            New
      subscribers in emerging markets.




·
            Availability
      of new features and functionality driving
  replacements.




·
            Convergence
      of voice, data and video services.




The wireless
capabilities of wireless handsets are provided primarily by a semiconductor
chipset.  The key components of a wireless chipset are typically a PA,
transceiver and baseband.  The PA boosts the transmit signal, thereby
providing the necessary range and data throughput.  As additional
features and functionality are incorporated into wireless handsets to leverage
the 3G and 3.5G broadband networks that enable streaming voice, data and video
services, increasing demands are placed on the wireless handset battery, thereby
reducing battery life.  The high-performance PA is a critical
component in the chipset as it directly impacts battery life and, consequently,
available talk time.  We believe our differentiated InGaP-plus process and design
technologies such as HELP provide a competitive advantage by enabling us to
provide PAs that consume less battery power and extend talk time.  The
adoption of 3G and 3.5G networks with HSPA standards for voice and multimedia is
a positive catalyst for our 3G and 3.5G products.  3G and 3.5G
networks not only enable data and multimedia applications, but also provide for
a lower cost per subscriber, and as a result are being quickly adopted by
network service providers.




In addition
to wireless handsets and data cards, 3G and 3.5G capabilities are also
increasingly being embedded within notebook computers produced by companies such
as Dell Inc. and Hewlett Packard, Inc.  We are a leading participant
in this market through the use of our technologies in the reference designs of
Novatel, Option N.V., Sierra Wireless and other providers in this growing
market.





4G WiMAX Market




The 4G WiMAX
standard has gained momentum, as Clearwire Corporation and Sprint Nextel Corp.
have committed to launch mobile WiMAX systems in the U.S. and a number of
chipset developers and equipment manufacturers, including Beceem Communications,
Sequans Communications, Intel, Samsung and Motorola, have engaged in product
development to support these systems.  According to IDC, worldwide
shipments of semiconductor chipsets for WiMAX products will grow from 2.5
million in 2007 to almost 41 million in 2010, representing a 152% compounded
annual growth rate over that period of time.  We currently ship WiMAX
PAs for point-to-point connectivity to customers such as Airspan Network, Inc.
and Alvarion, Ltd., based on Beceem and Intel reference designs, as well as
WiBRO (a WiMAX standard) PAs for mobile solutions to Samsung.  We
believe that our relationships with these and other leading WiMAX equipment and
chipset vendors, including those listed above, have positioned us to be one of
the market-leading providers of PAs in the point-to-point and mobile WiMAX
markets.





Wireless Fidelity
(WiFi)




As with
wireless handsets, the wireless capabilities of WiFi, or wireless LAN (WLAN),
networking products are provided primarily by a semiconductor
chipset.  A WiFi chipset typically contains a PA, radio transceiver
and a digital media access controller.  The PA boosts the transmit
signal, thereby improving the range and data
throughput.  Traditionally, either a single-band or multi-band PA
supported each WiFi chipset depending on the complexity of the
system.  In 2007, WiFi products for mobile computing expanded into
MIMO architectures which had two major impacts on the power amplifier
space:  (i) For every WiFi chipset in a MIMO system, as many as three
single or multi-band power amplifiers are required and (ii) with the increase in
functionality combined with requirements for smaller product size, it has become
more common for power amplifiers to be embedded in front end modules (FEM) and
front end integrated circuits (FEIC).




With the
802.11n Draft 2.0 approval in March 2007, the expansion of WiFi products into
the MIMO realm was strong throughout 2007 and looks to continue through
2008.  MIMO technology offers substantial growth opportunities in the
WiFi.  With two or three multi-band power amplifiers required for each
MIMO-enabled notebook computer, the growth rate of power amplifier demand now
outpaces the WiFi chipset by two to three times.  The worldwide unit
shipments of multi-band power amplifiers as stand alone devices or embedded in
FEMs for 802.11n systems are expected to have a 97.9% compound annual growth
rate from 2007 to 2010 according to Strategy Analytics.  We offer a
strong portfolio of differentiated products in this high-growth
market.  For example, we are currently the primary supplier to Intel,
the leading manufacturer of WiFi chipsets for the notebook computer market, and
expect to benefit from both the unit growth and increased PA content in
dual-band 802.11n MIMO WiFi systems.




Not only are
WiFi attach rates in notebook computers increasing to record numbers, but WiFi
functionality is now being embedded in other consumer electronic devices such as
cameras, printers, audio devices, mobile phones and gaming
consoles.  We are currently designed into a variety of wireless access
points, and printers along side WiFi chipsets from Broadcom and have two
market-leading FEIC products that are used along side WiFi chipsets from Marvell
in industry-leading smart phone applications. We will continue to actively
engage in discussions to be included in the next-generation reference designs of
these and other leading WiFi chipset providers for all
applications.





Cable Set-Top Box and Cable Modem
Markets




The markets
for CATV set-top boxes and cable modems are being shaped by several key
trends.  Set-top boxes are incorporating advanced functionality, to
leverage the convergence of voice, data and video services over the broadband
network, such as DVR, HDTV, wireless internet access, interactive services, home
networking and gaming.  These new features are driving demand for both
new and replacement set-top boxes.   As a long-term supplier to
Cisco and Motorola, we believe that we are well positioned to benefit from these
trends.  We also believe that the rollouts of DTV in China and parts
of Europe, and Verizon’s FiOS in the U.S., are contributing to sustained demand
for digital set-top boxes.




We also
believe that as the cable modem market transitions to the new DOCSIS 3.0
standard it will provide an additional opportunity for our semiconductor tuners
and upstream amplifiers.  In-Stat predicts that worldwide shipments of
DOCSIS 3.0 certified cable modems will increase from 1.8 million units in 2008
to over 16 million units in 2010, representing a 200% compounded annual growth
rate over that period of time.  The DOCSIS 3.0 standard uses multiple
channels simultaneously to provide wider bandwidth and higher data throughput,
and we believe that we are well positioned with new products to support this
market opportunity.





CATV Infrastructure and
FTTP




We are a
leading supplier of 12V and 24V line amplifier radio frequency integrated
circuit (RFIC) amplifiers and drop amplifiers to the CATV infrastructure
market.  This market is experiencing growth globally as a result of
increasing CATV infrastructure bandwidth requirements, the need of cable service
providers to offer converged voice, data and video services over their broadband
networks, and the increased deployment of CATV fiber nodes.  We are
participating in the upgrade in infrastructure bandwidth to 1 GHz through our
collaboration with Cisco, and as a result of the rollout of digital cable in
China and parts of Europe.  Historically, we have enjoyed long product
life cycles in these markets.  Additionally, we are providing optical
network RF amplifiers in the FTTP market for use in systems such as Verizon’s
FiOS, for which deployments continue throughout the U.S.





Our Strategy




Our objective
is to be the leading supplier of RF semiconductor solutions to enable broadband
delivery in the wireless and wireline communications markets.  The key
elements of our strategy include:





·
            Pursue growth opportunities in
      selected broadband wireless and wireline
      markets.  We believe that the technologies we have
      developed are most suited for providing semiconductor solutions for the
      broadband wireless and wireline communications markets.  We also
      believe that the growing convergence of voice, data and video services has
      created opportunities for further implementation of our
      solutions.  We intend to focus on these opportunities by
      continuing to develop solutions for (1) 3G, 3.5G, WEDGE, HSPA and WiMAX
      and other 4G standards, (2) WiFi 802.11 a/b/g and 802.11 n, and (3) CATV
      DVR set-top boxes, DOCSIS-3.0 cable modems and CATV and FTTP
      infrastructure amplifiers.




·
            Focus on gross margin
      expansion.We seek to increase our gross margins
      and profitability by focusing on those products and markets where we
      currently enjoy a leading market position and have strong technological
      leadership.  We intend to focus on supplying products in the
      following markets for this purpose:  (1) 3G, 3.5G, WEDGE, HSPA
      and WiMAX and other 4G standards, (2) WiFi 802.11 a/b/g and 802.11 n, and
      (3) CATV DVR set-top box, DOCSIS-3.0 cable modems and CATV and FTTP
      infrastructure amplifiers.




·
            Expand existing relationships
      with industry leaders.Because only a few
      wireless chipset providers lead the wireless handset market, selection in
      these companies’ reference designs is critical to driving component sales
      to wireless handset manufacturers.  We have been selected in
      reference designs at Broadcom, NXP and Qualcomm, three of the leading
      advanced generation chipset providers, and by leaders in the cable modem
      and WiMAX/WiBRO market, such as Texas Instruments and Intel and Samsung.
      We believe that expanding our relationships with these companies will
      continue to contribute to future growth and market share
      gains.




·
            Focus on tier-one
      customers.Our customers include tier-one
      manufacturers in our target markets, such as Cisco, Intel, LG Electronics,
      Motorola and Samsung.  We believe that as industry leaders these
      companies will benefit from the positive trends in their respective
      markets.  We intend to continue to focus on building customer
      relationships with these market leaders, as well as to expand our tier-one
      customer base.




·
            Continue to focus on the RF
      front end.In the wireless handset and WiFi
      markets, we intend to remain primarily focused on developing solutions in
      the RF front end.  By remaining focused on the RF front end we
      will leverage our efficient use of research and development spending and
      our high degree of business compatibility with our chipset
      partners.




·
            Expand business in
      Asia.We believe that sales to wireless OEMs and
      ODMs in Asian markets represent a significant growth opportunity for our
      business.  These manufacturers represent global tier-one
      suppliers such as LG Electronics and Samsung, ODMs and leading Asian
      wireless manufacturers such as HTC, Huawei and ZTE.  Not only do
      these manufacturers export their products to North America, South America
      and Europe, but they also use our products in their growing domestic
      markets.  Asian handset manufacturers tend to more closely
      follow the reference designs of leading wireless chipset
      providers.  As a result, we intend to leverage our selection in
      the reference designs of Broadcom, NXP and Qualcomm to further penetrate
      the growing Asian market.




·
            Leverage our RF design,
      differentiated leading-edge technology and manufacturing
      capabilities.We intend to use our RF design and
      manufacturing capabilities to continue to develop products with high
      performance, power efficiency and reliability, while reducing their size,
      weight and cost.  We expect to continue to apply our patented
      InGaP-plustechnology
      to achieve a high level of integration in our products and reduce our
      costs of production.  In addition, we will focus on increasing
      the capacity of our six-inch wafer fab, which allows us to produce more
      than twice the RF die per wafer compared with the four-inch wafer fabs
      still used by some of our
competitors.






Products




We classify
our revenues based upon the end application of the product in which our
integrated circuits are used.  For the years ended December 31, 2005,
2006 and 2007, wireless accounted for approximately 51%, 55% and 56%,
respectively, of our total net sales, while broadband accounted for
approximately 49%, 45% and 44%, respectively, of our total net
sales.





Wireless




Our Wireless
product line includes power amplifier modules for CDMA/EVDO, GSM/EDGE, WCDMA,
HSPA and other wireless technologies for mobile handsets and PC datacards. The
following table sets forth information regarding our principal products in the
wireless mobile handset and datacard market:





Product
            ApplicationHandset
      and Datacard Products
            Many
      handset and datacard platforms require more than one Power Amplifier to
      enable roaming and multiband operation.Power
      Amplifier (PA)
            Used
      in RF transmit chain of wireless handset, PC datacard or embedded module
      to amplify uplink signal to base station.Single-band
      PA Module
            Frequency-optimized
      InGaP PA used in CDMA, WCDMA, and HSPA equipment to enable operation in
      one band.Multi-band
      PA Modules (Dual, quad, penta)
            Multiple
      InGaP PA’s and other components in a single package. Used in multiple
      technologies to enable operation in multiple bands or function in
      multi-mode platforms.HELPTM
      PA Module   (multiple versions)
            ANADIGICS
      proprietary High Efficiency at Low Power PA design reduces average PA
      power consumption by 50-75% in CDMA, W-CDMA, and HSPA
      equipment.ZeroICTM
      PA Module
            Unique
      InGaP PA design for specific Qualcomm CDMA platforms includes switched RF
      path with zero current consumption to conserve battery life at lower power
      levels.Front
      End Module
            Includes
      one or more InGaP PA’s with other RF components such couplers, transmit
      filters, duplexers and antenna switches in a single package for simplified
      RF designs.





Broadband




Our Broadband
product line encompasses video and data telecommunications systems, primarily
consisting of CATV, WiFi, WiMAX and FTTP applications.





The
following table outlines our principal CATV products and their
applications:





Product
            ApplicationCATV Set-Top Box and Cable
      Modem ProductsTuner
      Upconverters and
              Downconverters
            Used
      to perform signal amplification and frequency conversion in
      double-conversion video and data tuners.Active
      Splitters
            Used
      to split an incoming signal to feed multiple tuners.Integrated
      Tuners
            Used
      to integrate tuner upconverters, downconverters and synthesizers in a
      single package.Upstream
      Amplifiers
            Used
      to amplify and control the level of signals in the return
      path.





Product
            ApplicationCATV Infrastructure
      ProductsLine
      Amplifiers
            Used
      to distribute RF signals from headends to subscribers.Drop
      Amplifiers
            Used
      to amplify RF signals at individual subscriber
  locations.Optical
      Network RF Amplifiers
            Used
      to amplify RF signals for FTTP and
FiOS.





The
following table sets forth information regarding our principal products in the
WiFi market:





Product
            ApplicationWiFi
      Products2.4
      GHz (802.11 b/g) PAs and Front-End ICs
            Used
      in wireless network interface cards (NIC), embedded notebook computers
      (mini-PCI) and access point (AP) applications to boost the transmit signal
      for increased range and data throughput.5
      GHz (802.11 a) PAs
            Used
      in wireless rich-media applications, such as streaming audio/video, to
      boost the transmit signal for increased range and data
      throughput.Dual
      Band (802.11 a/b/g) PAs and Front-End ICs
            Used
      in wireless network systems that require seamless transition between
      frequencies to mitigate interference and congestion.MIMO
      (802.11 n) PAs
            Used
      in multimedia applications for higher data throughput and greater WiFi
      coverage.





The
following table sets forth information regarding our principal products in the
WiMAX market:





Product
            ApplicationWiMAX
      ProductsMobile
      WiMAX PAs
            PA
      modules used for mobility applications.Fixed
      Point WiMAX PAs
            PA
      modules used for point-to-point CPE
  applications.





Marketing, Sales, Distribution and
Customer Support




We primarily
sell our products to our direct customers worldwide and have developed close
working relationships with leading companies in the broadband wireless and
wireline communications markets.  Additionally, we selectively use
independent manufacturers’ representatives and distributors to complement our
direct sales and customer support efforts.  In certain geographies
such as Asia, we increasingly use value-added distributors such as Richardson
Electronics Ltd. (Richardson Electronics), Long Trump Co, Ltd., Takachiho Koheki
Co., Ltd. and World Peace Group, one of the largest distribution companies in
Asia.  Many of our customers are serviced through Richardson
Electronics in the United States, Europe and Korea, while World Peace Group and
Long Trump primarily focus on China and Taiwan.  Additionally,
Takachiho serves our Japanese customers.  Our relationships with our
distributors enable them to maintain local practices regarding inventories and
payment terms while supporting our growth in Asia.  Working with
distributors like World Peace Group, who had a vast sales network, provides us
access to tier-one customers in Asia.  We believe this is critical to
our objective of expanding our customer base, especially as we expand our
product portfolio.




We believe
that the technical nature of our products and markets demands an extraordinary
commitment to building and maintaining close relationships with our
customers.  Our sales and marketing staff, which is assisted by our
technical staff and senior management, visit prospective and existing customers
worldwide on a regular basis.  Our design and applications engineering
staff actively communicate with customers during all phases of design and
production.  We have highly specialized field application engineering
teams near our customers in Korea, Taiwan and China, as well as a system
application team in Denmark, which is located near key European handset OEM’s
and chipset providers.  We believe that these contacts are vital to
the development of close, long-term working relationships with our customers,
and in obtaining regular forecasts, market updates and information regarding
technical and market trends.




We believe
that reference-design manufacturers in the broadband wireless and wireline
communications markets will play an ever-increasing role in the future of these
markets.  Therefore, we believe it is essential that we maintain
strong relationships in partnering with these companies to penetrate these
market opportunities.





Process Technology, Manufacturing,
Assembly and Testing




We design,
develop and manufacture RFICs primarily using GaAs compound semiconductor
substrates with various process technologies, Metal Semiconductor Field Effect
Transistors (MESFET), Pseudomorphic High Electron Mobility Transistors (pHEMT),
and Heterojunction Bipolar Transistors (HBT).  Our patented
technology, which utilizes InGaP-plus, combines InGaP HBT and
pHEMT processes on a single substrate, enabling us to integrate the PA function
and the RF active switch function on the same die.




Manufacturing




We fabricate
substantially all of our ICs in our six-inch diameter GaAs wafer fab in Warren,
New Jersey. The Warren fab was first certified as ISO 9001 compliant in December
1993.  Since that time, we have updated our compliance to the ISO
9001:2000 upgrade of this standard.  In 2004, we also received ISO
14001 certification.




As part of
our business plans, we are actively exploring future sources of additional
manufacturing capacity including construction of a facility in China, as well as
pursuing relationships with foundries.




Assembly




Fabricated
GaAs wafers are shipped to contractors in Asia for packaging into standard
plastic lead frame-based packaging or modules.




Since the
processes cannot be easily or economically integrated onto a single die,
multi-chip modules that combine multiple die within a single package have taken
hold, enabling the selection of the optimal process technology for each IC
within the package.  This provides enhanced integration at the
sub-system level.  These solutions generate significant size
reductions in wireless handset component circuitry.




Modules allow
our customers to get their product to market more rapidly at a lower overall end
product cost due largely to the reduced parts count and reduction in required
engineering effort.  We believe we are well positioned to address the
shift toward more complex multi-chip modules because we possess both extensive
process breadth (a key advantage, as modules typically incorporate numerous
process technologies) and a large portfolio of RF expertise (e.g., PAs, switches,
transceivers, filters, and discretes).




Final
Test




After
assembly, packaged ICs are tested prior to shipment to our
customers.  We outsource most of our production RF testing operations,
which are performed near our module assembly contractors in
Asia.  This adds considerable efficiencies to the device manufacturing
process in reducing product cycle times and manufacturing costs and supports our
initiative to reduce manufacturing costs.





Raw Materials




GaAs wafers,
HBT/pHEMT epitaxial wafers, passive components, other raw materials, and
equipment used in the production of our ICs are available from a limited number
of sources.  See “Risk Factors—Sources for certain components,
materials and equipment are limited, which could result in delays or reductions
in product shipments.”





Research and
Development




We have made
significant investments in our proprietary processes, including product design
and wafer fabrication, which we believe gives us a competitive
advantage.  Research and development expenses were $29.3 million,
$35.1 million and $46.5 million in 2005, 2006 and 2007, respectively. We
continue to focus our research and development on PAs and front end modules for
EDGE, CDMA, EVDO, W-CDMA, HSPA in the wireless handset and infrastructure
markets, and on semiconductor tuners, active splitters, WiFi Pas and Front-End
ICs, WiMAX PAs, CATV infrastructure amplifiers and FTTP amplifiers in the
broadband market.




Our wireless
PA capability has expanded from plastic-packaged GaAs RFIC products to RF
modules incorporating multiple technologies.  This capability is
critical to encapsulating RF intellectual property and know-how into a module
that may be used to shrink the time-to-market for wireless handset
manufacturers.




Module
integration capability required extending our design tools in several
dimensions.  Electromagnetic simulation of laminate substrates to
design embedded passive components and model parasitic effects were added to our
RF design tool set.  In addition, the ability to simulate at the
module level was greatly enhanced through our partnership with a leading
manufacturer of electronic design automation tools.




Additionally,
several silicon CMOS components were developed to support our PA module and
other products.  We do not intend to manufacture this technology
in-house, as we believe there will be adequate external foundry capacity
available.  See “Risk Factors—Sources for certain components,
materials and equipment are limited, which could result in delays or reductions
in product shipments.”





Customers




Sales to
Intel and Samsung accounted for 22% and 13%, respectively, of total net sales
during 2007.  Sales to Huawei, Cisco, World Peace Group and LG each
accounted for 10% of total net sales for the same period.  No other
customer accounted for 10% or more of total net sales during
2007.  See “Risk Factors—We depend on a small number of customers; a
loss of or a decrease in purchases and/or change in purchasing patterns by one
of these customers would materially and adversely affect our revenues and our
ability to forecast revenue.”





Employees




As of
December 31, 2007, we had 625 employees, including 8 employees in Denmark, 7 of
whom were members of the Danish Engineering Union.  We believe our
labor relations to be good and we have never experienced a work
stoppage.





Competition




We compete
with U.S. and international semiconductor and integrated circuit manufacturers
of all sizes.  Our key competitors are Avago Technologies Limited,
Microtune,Inc., RF Micro Devices, Inc. (RFMD), SiGe Semiconductor, Inc.,
Skyworks Solutions, Inc. and TriQuint Semiconductor, Inc.
(Triquint).




Many of our
competitors have significantly greater financial, technical, manufacturing and
marketing resources than we do.  Increased competition could adversely
affect our revenue and profitability through price reductions or reduced demand
for our products.  See “Risk Factors—We face intense competition,
which could result in a decrease in our products’ prices and
sales.”





Patents, Licenses and Proprietary
Rights




It is our
practice to seek U.S. patent and copyright protection on our products and
developments where appropriate and to protect our valuable technology under U.S.
laws affording protection for trade secrets and for semiconductor chip
designs.  We own 59 U.S. patents and have 15 pending U.S. patent
applications.  The U.S. patents were issued between 1991 and 2007 and
will expire between 2010 and 2025.




We rely
primarily upon trade secrets, technical know-how and other unpatented
proprietary information relating to our product development and manufacturing
activities. To protect our trade secrets, technical know-how and other
proprietary information, our employees are required to enter into agreements
providing for maintenance of confidentiality and the assignment of rights to
inventions made by them while in our employ.  We have also entered
into non-disclosure agreements to protect our confidential information delivered
to third parties in conjunction with possible corporate collaborations and for
other purposes.  See “Risk Factors—We may not be successful in
protecting our intellectual property rights or in avoiding claims that we
infringe on the intellectual property rights of others.”





Environmental
Matters




Our
operations are subject to federal, state and local environmental laws,
regulations and ordinances that govern activities or operations that may have
adverse effects on human health or the environment.  These laws,
regulations or ordinances may impose liability for the cost of remediating, and
for certain damages resulting from, sites of past releases of hazardous
materials.  We believe that we currently conduct, and have conducted,
our activities and operations in substantial compliance with applicable
environmental laws and regulations, and that costs arising from existing
environmental laws and regulations will not have a material adverse effect on
our results of operations.  We cannot assure you, however, that such
environmental laws and regulations will not become more stringent in the future
or that we will not incur significant costs in the future in order to comply
with these laws and regulations.  See “Risk Factors—We are subject to
stringent environmental laws and regulations both domestically and
abroad.”




Available
Information




Copies of our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of
charge through our website (www.anadigics.com) as
soon as reasonably practicable after we electronically file the material with,
or furnish it to, the Securities and Exchange Commission.








*************************************************************************************




ITEM 1A. RISK FACTORS





CERTAIN
STATEMENTS IN THIS REPORT ARE FORWARD-LOOKING STATEMENTS (AS THAT TERM IS
DEFINED IN THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED) THAT INVOLVE RISKS
AND UNCERTAINTIES. THESE FORWARD-LOOKING STATEMENTS CAN GENERALLY BE IDENTIFIED
AS SUCH BECAUSE THE CONTEXT OF THE STATEMENT WILL INCLUDE WORDS SUCH AS WE
"BELIEVE", "ANTICIPATE", "EXPECT" OR WORDS OF SIMILAR IMPORT. SIMILARLY,
STATEMENTS THAT DESCRIBE OUR FUTURE PLANS, OBJECTIVES, ESTIMATES OR GOALS ARE
FORWARD-LOOKING STATEMENTS. THE CAUTIONARY STATEMENTS MADE IN THIS REPORT SHOULD
BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS WHEREVER
THEY APPEAR IN THIS REPORT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
AND DEVELOPMENTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY
THE FORWARD-LOOKING STATEMENTS PRESENTED HEREIN INCLUDE THE RISK FACTORS
DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.





IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS REPORT, THE FOLLOWING RISK
FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE
COMPANY AND IN ANALYZING OUR FORWARD-LOOKING STATEMENTS.





Risks Related to
ANADIGICS




Our customers’ demand has outpaced
our current manufacturing capacity.  In the event that we are unable
to satisfy demand from any one of our customers or our customers in the
aggregate, we may not be viewed as a dependable high volume supplier and our
customers may source their demand elsewhere.





The Company
has had significant growth in revenues over the past two years whereby demand
has exceeded our available capacity.   While the Company has made
capital investments to expand equipment capacity in its primary fab in Warren,
NJ and is constructing a facility in China and pursuing foundry relationships,
we may not be able to add capacity at a sustainable pace with the growth of the
market or with the growth of our customer’s. In the event we continue to be
unable to meet our customers’ demand, we may be considered an undependable
supplier and our customers may seek alternate suppliers.  If our
customers seek alternate suppliers, our operating results could be adversely
affected, as we may be unable to find alternative sources of
revenue.





We have experienced losses in the
past, and may experience losses in the future.





We have
incurred substantial operating and net losses in the
past.    While we had positive operating results during
calendar year 2007, we may experience future losses as a result of downturns in
the economy or as a result of market factors beyond our
control.  Additionally, we compete in an industry with limited
visibility into customer’s forecasts beyond just a few
quarters.   If economic conditions worsen or there is an abrupt
change in our customer’s business or markets, our business, financial condition
and results of operations will likely be materially and adversely
affected.





We depend on a small number of
customers; a loss of or a decrease in purchases and/or change in purchasing
patterns by one of these customers could materially and adversely affect our
revenues and our ability to forecast revenue.




We receive a
significant portion of our revenues from a few significant customers and their
subcontractors.  Sales to Intel and Samsung accounted for 22% and 13%,
respectively, of total net sales during 2007.  Sales to Huawei, Cisco,
World Peace Group and LG each accounted for 10% of total net sales for the same
period.  Sales to our greater than 10% customers have exceeded 35% of
total net sales in each of the last three fiscal years, and in 2007 accounted
for 75% of total net sales.  Our financial condition and results of
operations have been materially and adversely affected in the past by the
failure of anticipated orders to be realized and by deferrals or cancellations
of orders as a result of changes in customer requirements.  If we were
to lose any of our major customers, or if sales to these customers were to
decrease materially, our financial condition and results of operations could be
materially and adversely affected.





Sources for certain components,
materials and equipment are limited, which could result in delays or reductions
in product shipments.




We do not
manufacture any of the starting wafers, packaging or passive components used in
the production of our gallium arsenide integrated circuits.  Wafers,
packaging and passive components are available from a limited number of sources.
To the extent that we are unable to obtain these wafers, packaging or passive
components in the required quantities, as has occurred from time to time in the
past, we could experience delays or reductions in product shipments, which could
materially and adversely affect our financial condition and results of
operations.




We depend on
a limited number of vendors to supply the equipment used in our manufacturing
processes.  When demand for semiconductor manufacturing equipment is
high, lead times for delivery of such equipment can be
substantial.  We cannot assure you that we would not lose potential
sales if required manufacturing equipment is unavailable and, as a result, we
are unable to maintain or increase our production levels.  A delay for
any reason in increasing capacity would limit our ability to increase sales
volumes, which could harm our relationships with customers.





We may face interruptions in our
manufacturing processes.




Our
manufacturing operations are complex and subject to disruption, including for
causes beyond our control.  The fabrication of integrated circuits is
an extremely complex and precise process consisting of multiple
steps.  It requires production in a highly controlled, clean
environment.  Minor impurities, contamination of the clean room
environment, errors in any step of the fabrication process, defects in the masks
used to print circuits on a wafer, defects in equipment or materials, human
error, or a number of other factors can cause a substantial interruption in our
manufacturing processes.




Additionally,
our operations may be affected by lengthy or recurring disruptions of operations
at any of our production facilities or those of our
subcontractors.  These disruptions may include electrical power
outages, fire, earthquakes, flooding, international conflicts, war, acts of
terrorism, or other natural or man-made disasters.  Disruptions of our
manufacturing operations could cause significant delays in our shipments unless
and until we are able to shift the manufacturing of such products from an
affected facility to another facility or the disruption is
remedied.  Furthermore, many of our customers require that they
qualify a new manufacturing source before they will accept products from such
source.  This qualification process may be expensive and time
consuming.  In the event of such delays, we cannot assure you that the
required alternative capacity, particularly wafer production capacity, would be
available on a timely basis or at all.  Even if alternative
manufacturing capacity or assembly and test capacity is available, we may not be
able to obtain it on favorable terms, which could result in higher costs and/or
a loss of customers.  We may be unable to obtain sufficient
manufacturing capacity to meet demand, either at our own facilities or through
external manufacturing.




Due to the
highly specialized nature of the gallium arsenide integrated circuit
manufacturing process, in the event of a disruption at the Warren, New Jersey
semiconductor wafer fab, alternative gallium arsenide production capacity would
not be readily available from third-party sources.  Any disruptions
could have a material adverse effect on our business, financial condition and
results of operations.





The variability of our manufacturing
yields may affect our gross margins.




Our
manufacturing yields vary significantly among products, depending on the
complexity of a particular integrated circuit’s design and our experience in
manufacturing that type of integrated circuit.  We have experienced
difficulties in achieving planned yields in the past, particularly in
pre-production and upon initial commencement of full production volumes, which
have adversely affected our gross margins.




Regardless of
the process technology used, the fabrication of integrated circuits is a highly
complex and precise process.  Problems in the fabrication process can
cause a substantial percentage of wafers to be rejected or numerous integrated
circuits on each wafer to be nonfunctional, thereby reducing
yields.  These difficulties can include:





·
            defects
      in masks, which are used to transfer circuit patterns onto our
      wafers;




·
            impurities
      in the materials used;




·
            operator
      errors;




·
            contamination
      of the manufacturing environment;
and




·
            equipment
      failure.




Many of
our manufacturing costs are fixed and average selling prices for our products
tend to decline over time.  Therefore, it is critical for us to
increase the number of shippable integrated circuits per wafer and increase the
production volume of wafers in order to maintain or improve our results of
operations.  Yield decreases can result in substantially higher unit
costs, which could materially and adversely affect our financial condition and
results of operations and have done so in the past.  We cannot assure
you that we will not suffer periodic yield problems, particularly during the
early production of new products or introduction of new process
technologies.  If any new yield problems were to arise or any existing
yield problems were to continue, our financial condition and results of
operations could be materially and adversely affected.





Our dependence on foreign
semiconductor assembly and test operations contractors could lead to delays in
or reductions of product shipments.





We do not
assemble or test all of our integrated circuits or multi-chip
modules.  Instead, we provide the integrated circuit die and, in some
cases, packaging and other components to assembly and test vendors located
primarily in Asia.  We are dependent upon a few foreign semiconductor
assembly and test subcontractors.  If we are unable to obtain
sufficient high quality and timely assembly or test service, if we experience
delays in transferring our production between assembly or test locations or if
means of transportation to these locations are interrupted, we would experience
delays or reductions in product shipment, and/or reduced product yields, which
could materially and adversely affect our financial condition and results of
operations.





We face intense competition, which
could result in a decrease in our products’ prices and
sales.





The
markets for our products are intensely competitive and are characterized by
rapid technological change.  We compete with U.S. and international
semiconductor and integrated circuit (IC) manufacturers of all sizes, some of
whom have significantly greater financial, technical, manufacturing and
marketing resources than we do.  We currently face significant
competition in our markets and expect that intense price and product competition
will continue.  This competition has resulted in, and is expected to
continue to result in, declining average selling prices for our products and
increased challenges in maintaining or increasing market share.  We
believe that the principal competitive factors for suppliers in our markets
include, among others:





·
            time-to-market;




·
            timely
      new product innovation;




·
            product
      quality, reliability and
performance;




·
            product
      price;




·
            features
      available in products;




·
            compliance
      with industry standards;




·
            strategic
      relationships with leading reference design providers and customers;
      and




·
            access
      to and protection of intellectual
property.




Certain of
our competitors may be able to adapt more quickly than we can to new or emerging
technologies and changes in customer requirements or may be able to devote
greater resources to the development, promotion and sale of their products than
we can.




Current and
potential competitors have established or may in the future establish, financial
or strategic relationships among themselves or with customers, distributors,
reference design providers or other third parties with whom we have or may in
the future have relationships.  If our competitors are able to
strengthen existing, or establish new, relationships with these third parties
they may rapidly acquire market share at our expense.  We cannot
assure you that we will be able to compete successfully against current and
potential competitors.  Increased competition could result in pricing
pressures, decreased gross margins and loss of market share and may materially
and adversely affect our financial condition and results of
operations.





We will need to keep pace with rapid
product and process development and technological changes as well as product
cost reductions to be competitive.




The markets
for our products are characterized by rapid changes in both product and process
technologies based on the continuous demand for product enhancements, higher
levels of integration, decreased size and reduced power
consumption.  Because the continuous evolution of these technologies
and frequent introduction of new products and enhancements have generally
resulted in short product life cycles for our products, we believe that our
future success will depend, in part, upon our ability to continue to improve the
efficiency of our products and process technologies and rapidly develop new
products and process technologies.  The successful development of our
products is highly complex and depends on numerous factors, including our
ability to anticipate customer and market requirements and changes in technology
and industry standards, our ability to differentiate our products from offerings
of our competitors, and our ability to protect, develop or otherwise obtain
adequate intellectual property for our new products.  If a competing
technology emerges that is, or is perceived to be, superior to our existing
technology and we are unable to develop and/or implement the new technology
successfully or to develop and implement a competitive and economically
acceptable alternative technology, our financial condition and results of
operations could be materially and adversely affected.  This
implementation may require us to modify the manufacturing process for our
products, design new products to more stringent standards, and redesign some
existing products, which may prove difficult for us and result in sub-optimal
manufacturing yields, delays in product deliveries and increased expenses. We
will need to make substantial investments to develop these enhancements and
technologies, and we cannot assure investors that we will have funds available
for these investments or that these enhancements and technologies will be
successful.





Our gallium arsenide semiconductors
may cease to be competitive with silicon
alternatives.




Among our
product portfolio, we manufacture and sell gallium arsenide semiconductor
devices and components, principally PAs and switches, which tend to be more
expensive than their silicon counterparts.  The cost differential is
due to higher costs of raw materials for gallium arsenide and higher unit costs
associated with smaller sized wafers and lower production volumes.  We
expect the cost of producing gallium arsenide devices will continue for the
foreseeable future to exceed the costs of producing their silicon
counterparts.  In addition, silicon semiconductor technologies are
widely-used process technologies for certain integrated circuits and these
technologies continue to improve in performance.  Therefore, to remain
competitive, we must offer gallium arsenide products that provide superior
performance over their silicon-based counterparts.  If we do not
continue to offer products that provide sufficiently superior performance to
justify their higher cost, our financial condition and results of operations
could be materially and adversely affected.  We cannot assure you that
there will continue to be products and markets that require the performance
attributes of gallium arsenide solutions.





If we fail to sell a high volume of
products, our operating results may be harmed.




Because large
portions of our manufacturing costs are relatively fixed, our manufacturing
volumes are critical to our operating results.  If we fail to achieve
acceptable manufacturing volumes or experience product shipment delays, our
results of operations could be harmed.  During periods of decreased
demand, our high fixed manufacturing costs negatively affect our results of
operations.  We base our expense levels in part on our expectations of
future orders and these expense levels are predominantly fixed in the short
term.  If we receive fewer customer orders than expected or if our
customers delay or cancel orders, we may not be able to reduce our manufacturing
costs in the short term and our operating results may be harmed.





The short life cycles of some of our
products may leave us with obsolete or excess
inventories.




The life
cycles of some of our products depend heavily upon the life cycles of the end
products into which our products are designed.  For example, we
estimate that current life cycles for wireless handsets, and in turn our
wireless products, are approximately 9 to 12 months.  Products with
short life cycles require us to manage production and inventory levels
closely.  We cannot assure you that obsolete or excess inventories,
which may result from unanticipated changes in the estimated total demand for
our products and/or the estimated life cycles of the end products into which our
products are designed, will not result in significant charges that will
negatively affect our operating profit and net income.





Our results of operations can vary
significantly due to the cyclical nature of the semiconductor industry and our
end markets.




The
semiconductor industry and our end markets have been cyclical, seasonal and
subject to significant downturns.  In past years, the industry has
experienced periods marked by market weaknesses that created lower order demand,
production overcapacity, high inventory levels, and accelerated declines in
average selling prices for our products.  These factors negatively
affected our financial condition and results of operations during these periods
and may negatively affect our financial condition and results of operations in
the future.




Our results
of operations also may be subject to significant quarterly and annual
fluctuations.  These fluctuations are due to a number of factors, many
of which are beyond our control, including, among others:





·
            changes
      in end-user demand for the products manufactured and sold by our
      customers;




·
            the
      effects of competitive pricing pressures, including decreases in average
      selling prices of our products;




·
            industry
      production capacity levels and fluctuations in industry manufacturing
      yields;




·
            levels
      of inventory in our end markets;




·
            availability
      and cost of products from our
suppliers;




·
            the
      gain or loss of significant
customers;




·
            our
      ability to develop, introduce and market new products and technologies on
      a timely basis;




·
            new
      product and technology introductions by
  competitors;




·
            changes
      in the mix of products produced and
sold;




·
            market
      acceptance of our products and our customers;
  and




·
            intellectual
      property disputes.




As a result,
we may experience substantial period-to-period fluctuations in future operating
results.  Investors should not rely on our results of operations for
any previous period as an indicator of what results may be for any future
period.  Failure of our operating results to meet the expectations of
analysts or investors could materially and adversely affect the price of our
common stock.





Our products may experience
significant declines in unit prices.




In each of
the markets where we compete, prices of established products tend to decline
significantly over time and in some cases rapidly.  Accordingly, in
order to remain competitive, we believe that we must continue to develop product
enhancements and new technologies that will either slow the price declines of
our products or reduce the cost of producing and delivering our
products.  If we fail to do so, our financial condition and results of
operations could be materially and adversely affected.





Our marketable securities’ liquidity
and valuation could be affected by disruption in financial
markets.




We maintain
significant investments in financial instruments including corporate debt
obligations, auction rate securities and government-related obligations, which
included $37.5 million carrying value of auction rate securities at December 31,
2007. These investments and their availability as liquid investments are
supported by actively trading financial markets. Financial markets can
temporarily or permanently have an imbalance of buyers and sellers that can
impact valuations and liquidity. Auction rate markets were imbalanced in late
2007 and early 2008 and may continue to be imbalanced. Such imbalances could
negatively impact the fair value of our investments, requiring a charge against
income as occurred in 2007, our access to cash and the liquidity of our
marketable securities. We can not assure you that our marketable securities
could be sold for their carrying value or in our required time frame to support
our intermediate term cashflow and liquidity needs.





We face a risk that capital needed
for our business will not be available when we need
it.




In the
future, we may need to access sources of financing to fund our
growth.  Taking into consideration our cash balance as of December 31,
2007, including marketable securities, of $176.8 million, we believe that our
existing sources of liquidity, together with cash expected to be generated from
operations, will be sufficient to fund our research and development, capital
expenditures, working capital requirements, interest payment obligations under
our $38.0 million in outstanding convertible senior unsecured notes due October
2009 and other financing requirements for at least the next twelve
months.




However,
there is no assurance that the capital required to fund these expenditures will
be available in the future.  Conditions existing in the U.S. capital
markets, as well as the then current condition of our company, will affect our
ability to raise capital, as well as the terms of any financing.  We
may not be able to raise enough capital to meet our capital needs on a timely
basis or at all.  Failure to obtain capital when required could have a
material adverse affect on us.




In addition,
any strategic investments and acquisitions that we may make to help us grow our
business may require additional capital.  We cannot assure you that
the capital required to fund these investments and acquisitions will be
available in the future.





Our success depends on our ability
to attract and retain qualified personnel.




A small
number of key executive officers manage our business.  Their departure
could have a material adverse effect on our operations.  We believe
that our future success will also depend in large part on our continued ability
to attract and retain highly qualified manufacturing personnel, technical sales
and marketing personnel, design and application engineers, as well as senior
management.  We believe that there is, and will continue to be,
intense competition for qualified personnel in the semiconductor industry as the
emerging broadband wireless and wireline communications markets develop, and we
cannot assure you that we will be successful in retaining our key personnel or
in attracting and retaining highly qualified manufacturing personnel, technical
sales and marketing personnel, design and application engineers, as well as
senior management.  The loss of the services of one or more of our key
employees or our inability to attract, retain and motivate qualified personnel
could have a material effect on our ability to operate our business. We do not
presently maintain key-man life insurance for any of our key executive
officers.





We are subject to risks due to our
international customer base and our subcontracting
operations.




Sales to
customers located outside the United States and Canada (based on shipping
addresses and not on the locations of ultimate end users) accounted for 63%, 62%
and 71% of our net sales for the years ended December 31, 2005, 2006 and 2007,
respectively.  We expect that international sales will continue to
represent a significant portion of our net sales.  In addition,
independent third parties located in Asia supply a substantial portion of the
starting wafers and packaging components that we use in the production of
gallium arsenide integrated circuits, and assemble and test nearly all of our
products.




Due to our
reliance on international sales and on foreign suppliers, assemblers and test
houses, we are subject to risks of conducting business outside of the United
States, including primarily those arising from local economic and political
conditions, international health epidemics, natural disasters, restrictive
governmental actions (e.g., exchange controls,
duties, etc.), limitation of protecting intellectual property rights in foreign
jurisdictions and potential acts of terrorism.





We are subject to stringent
environmental laws and regulations both domestically and
abroad.




We are
subject to a variety of federal, state, local and foreign laws and regulations
governing the protection of the environment.  These environmental laws
and regulations include those related to the use, storage, handling, discharge
and disposal of toxic or otherwise hazardous materials used in or resulting from
our manufacturing processes.  Failure to comply with environmental
laws and regulations could subject us to substantial liability or force us to
significantly change our manufacturing operations.  In addition, under
some of these laws and regulations, we could be held financially responsible for
remedial measures if our properties are contaminated, even if we did not cause
the contamination.  Although we are aware of contamination resulting
from historical third-party operations at one of our facilities, a prior owner
of such facility has been performing, and paying for the costs associated with,
remediation of this property pursuant to an agreement with the state
environmental regulatory authority.  However, we cannot assure you
that such prior owner will continue to do so or that we will not incur any
material costs or liabilities associated with compliance with environmental laws
in the future.





We may not be successful in
protecting our intellectual property rights or in avoiding claims that we
infringe on the intellectual property rights of
others.




Our success
depends in part on our ability to obtain patents and
copyrights.  Despite our efforts to protect our intellectual property,
unauthorized third parties may violate our patents or copyrights.  In
addition to intellectual property that we have patented and copyrighted, we also
rely on trade secrets, technical know-how and other non-patented proprietary
information relating to our product development and manufacturing activities,
which we seek to protect, in part, by entering into confidentiality agreements
with our collaborators and employees.  We cannot assure you that these
agreements will not be breached, that we would have adequate remedies for any
breach or that our trade secrets and proprietary know-how will not otherwise
become known or independently discovered by others.




We seek to
operate without infringing on the intellectual property rights of third
parties.  As is typical in the semiconductor industry, we have been
notified, and may be notified in the future, that we may be infringing on
certain patents and/or other intellectual property rights of other
parties.  We cannot assure you that we will not be subject to
litigation to defend our products or processes against claims of patent
infringement or other intellectual property claims.  Any such
litigation could result in substantial costs and diversion of our
resources.  If we infringe on the intellectual property rights of
others, we cannot assure investors that we would be able to obtain any required
licenses on commercially reasonable terms and we may be required to pay
substantial damages, including treble damages, and cease production of our work
product or use of one or more manufacturing processes.  Even if we are
ultimately successful, patent litigation can be time consuming, disruptive to
management and expensive.  If any of the foregoing were to occur, our
financial condition and results of operations could be materially adversely
affected.





We may pursue selective acquisitions
and alliances and the management and integration of additional operations could
be expensive and could divert management time and acquisitions may dilute the
ownership of our stockholders.




Our ability
to complete acquisitions or alliances is dependent upon, and may be limited to,
the availability of suitable candidates and capital.  In addition,
acquisitions and alliances involve risks that could materially adversely affect
our financial condition and results of operations, including the management time
that may be diverted from operations in order to pursue and complete such
transactions and difficulties in integrating and managing the additional
operations and personnel of acquired companies.  We cannot assure you
that we will be able to obtain the capital necessary to consummate acquisitions
or alliances on satisfactory terms, if at all.  Further, any
businesses that we acquire will likely have their own capital needs, which may
be significant, which we could be called upon to satisfy independent of the
acquisition price.  Future acquisitions or alliances could result in
additional debt, costs and contingent liabilities, all of which could materially
adversely affect our financial condition and results of
operations.  Any additional debt could subject us to substantial and
burdensome covenants.  The growth that may result from future
acquisitions or alliances may place significant strains on our resources,
systems and management.  If we are unable to effectively manage such
growth by implementing systems, expanding our infrastructure and hiring,
training and managing employees, our financial condition and results of
operations could be materially adversely affected.  In addition, if we
issue additional shares of our common stock in order to acquire another
business, our stockholders’ interest in us, or the combined company, could be
materially diluted.





We have had significant volatility
in our stock price and it may fluctuate in the future.  Therefore, you
may be unable to sell shares of our common stock at or above the price you paid
for such shares.




The trading
price of our common stock has and may continue to fluctuate
significantly.  Such fluctuations may be influenced by many factors,
including:





·
            our
      operating results and prospects;




·
            the
      operating results and prospects of our major
  customers;




·
            announcements
      by our competitors;




·
            the
      depth and liquidity of the market for our common
  stock;




·
            investor
      perception of us and the industry in which we
  operate;




·
            changes
      in our earnings estimates or buy/sell recommendations by analysts covering
      our stock;




·
            general
      financial and other market conditions;
and




·
            domestic
      and international economic
conditions.




Public stock
markets have experienced extreme price and trading volume volatility,
particularly in the technology sectors of the market.  This volatility
significantly affected and may in the future affect the market prices of
securities of many technology companies for reasons frequently unrelated to or
disproportionately impacted by the operating performance of these
companies.  These broad market fluctuations may materially and
adversely affect the market price of our common stock.




In
addition, fluctuations in our stock price and our price-to-earnings multiple may
have made our stock attractive to momentum, hedge or day-trading investors who
often shift funds into and out of stocks rapidly, exacerbating price
fluctuations in either direction, particularly when viewed on a quarterly
basis.





Certain provisions in our amended
and restated certificate of incorporation, our amended and restated bylaws and
our stockholders’ rights agreement and of Delaware law could deter, delay or
prevent a third party from acquiring us and that could deprive you of an
opportunity to obtain a takeover premium for our common
stock.




Our amended
and restated certificate of incorporation, our amended and restated bylaws and
Delaware law contain provisions that could have the effect of making it more
difficult for a third party to acquire us, or of discouraging a third party from
attempting to acquire control of us.  See “Description of Capital
Stock.”  In addition, we have a stockholders’ rights agreement that
under certain circumstances would significantly impair the ability of third
parties to acquire control of us without prior approval of our board of
directors.




Together, our
amended and restated certificate of incorporation, our amended and restated
by-laws, certain provisions of Delaware law and our stockholders’ rights
agreement may discourage transactions that otherwise could provide for the
payment of a premium over prevailing market prices for our common stock and
could also limit the price that investors may be willing to pay in the future
for our common stock.





ITEM 1B. UNRESOLVED STAFF COMMENTS




Not
applicable.





ITEM 2. PROPERTIES.




Our executive
offices and primary fabrication facility are located at 141 Mt. Bethel Road,
Warren, New Jersey 07059. We currently lease space in several buildings in
Warren, New Jersey, located within the industrial complex. Approximately 150,000
square feet of manufacturing and office space is occupied in a building located
at 141 Mt. Bethel Road in Warren, New Jersey under a twenty-year lease expiring
on December 31, 2016.  We occupy another 37,500 square feet of office
space in a nearby building under a three-year lease expiring on October 31,
2010.




We also lease
approximately 39,200 square feet in aggregate of office space in the following
locations: Atlanta, Georgia; Tyngsboro, Massachusetts; Richardson, Texas;
Taipei, Taiwan; Aalborg, Denmark; China; and South Korea under lease agreements
with remaining terms ranging from four to twenty five months that can be
extended, at our option.





ITEM 3. LEGAL PROCEEDINGS.




We are a
party to ordinary course litigation arising out of the operation of our
business. We believe that the ultimate resolution of such litigation should not
have a material adverse effect on our financial condition or results of
operations.





ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY
HOLDERS.




No matters
were submitted to a vote of the Company’s security holders during the fourth
quarter of 2007.








PART II





ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.




Our $0.01 par
value Common Stock, (“Common Stock”) has been quoted on the NASDAQ Global Market
under the symbol "ANAD" since the commencement of trading on April 21, 1995
following our initial public offering of our Common Stock. The following table
sets forth for the periods indicated the high and low sale prices for our Common
Stock.








High
            
            
            LowCalendar
      2007Fourth
      Quarter
            
            $
            19.53
            
            
            $
            9.83Third
      Quarter
            
            
            18.60
            
            
            
            12.80Second
      Quarter
            
            
            14.36
            
            
            
            10.31First
      Quarter
            
            
            13.71
            
            
            
            8.39Calendar
      2006Fourth
      Quarter
            
            $
            10.38
            
            
            $
            6.80Third
      Quarter
            
            
            8.60
            
            
            
            5.03Second
      Quarter
            
            
            9.26
            
            
            
            6.08First
      Quarter
            
            
            8.24
            
            
            
            5.35




As of
December 31, 2007, there were 61,094,040 shares of Common Stock outstanding
(excluding Treasury) and 710 holders of record of the Common Stock.




We have never
paid cash dividends on our capital stock. We currently anticipate that we will
retain available funds for use in the operation and expansion of our business,
and do not anticipate paying any cash dividends in the foreseeable
future.




See also “Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters” under Part III, Item 12 of this report.





ITEM 6. SELECTED FINANCIAL DATA.




The selected
financial data set forth below should be read in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", and our financial statements, related notes and other financial
information included herein. The selected consolidated financial data set forth
below as of December 31, 2006 and 2007 and for the years ended December 31,
2005, 2006, and 2007 have been derived from our audited financial statements
included herein. The selected consolidated financial data set forth below as of
December 31, 2003, 2004 and 2005 and for the years ended December 31, 2003 and
2004 have been derived from our audited financial statements as adjusted for
discontinued operations that are not included herein or incorporated by
reference herein. Our historical results are not necessarily indicative of the
results that may be expected for any future period.





(amounts
      in thousands, except for per share amounts)
            
            2003
            
            
            2004
            
            
            2005
            
            
            2006
            
            
            2007RESULTS
      OF OPERATIONSNet
      sales
            
            $
            71,782
            
            
            $
            86,904
            
            
            $
            103,871
            
            
            $
            166,442
            
            
            $
            230,556Gross
      profit
            
            
            2,831
            
            
            
            13,246
            
            
            
            21,736
            
            
            
            50,231
            
            
            
            78,788Operating
      (loss) income from continuing operations
            
            
            (50,149
            )
            
            
            (41,352
            )
            
            
            (27,950
            )
            
            
            (8,483
            )
            
            
            2,078(Loss)
      income before income taxes
            
            
            (50,585
            )
            
            
            (42,614
            )
            
            
            (30,466
            )
            
            
            (7,870
            )
            
            
            6,916Net
      (loss) income from continuing operations
            
            
            (50,203
            )
            
            
            (42,614
            )
            
            
            (30,466
            )
            
            
            (7,870
            )
            
            
            6,916(Loss)
      earnings per share from continuing operations:Basic
            
            $
            (1.63
            )
            
            $
            (1.32
            )
            
            $
            (0.90
            )
            
            $
            (0.18
            )
            
            $
            0.13Diluted
            
            $
            (1.63
            )
            
            $
            (1.32
            )
            
            $
            (0.90
            )
            
            $
            (0.18
            )
            
            $
            0.12BALANCE
      SHEET DATA:Total
      cash and marketable securities
            
            $
            121,630
            
            
            $
            104,051
            
            
            $
            86,357
            
            
            $
            83,482
            
            
            $
            176,812Total
      assets
            
            
            207,898
            
            
            
            185,895
            
            
            
            168,273
            
            
            
            182,602
            
            
            
            333,461Total
      capital lease obligations
            
            
            90
            
            
            
            18
            
            
            
            2,032
            
            
            
            1,775
            
            
            
            -Long-term
      debt, including current portion
            
            
            66,700
            
            
            
            84,700
            
            
            
            84,700
            
            
            
            38,000
            
            
            
            38,000Total
      stockholders’ equity
            
            
            121,046
            
            
            
            84,615
            
            
            
            58,135
            
            
            
            115,760
            
            
            
            250,106







ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.





OVERVIEW




We are a
leading provider of semiconductor solutions in the rapidly growing broadband
wireless and wireline communications markets.  Our products include
power amplifiers, tuner integrated circuits, active splitters, line amplifiers
and other components, which can be sold individually or packaged as integrated
radio frequency and front end modules.  We believe that we are
uniquely positioned to capitalize on the rapidly-growing voice, data and video
segments of the broadband wireless and wireline communications
markets.  We offer 3G products that use the W-CDMA, EDGE and WEDGE
standards, 3.5G products that use HSPA and EVDO standards, 4G products for WIMAX
systems, WiFi products that use the 802.11 a/b/g and 802.11 n MIMO standards,
CATV cable modem and set-top box products, CATV infrastructure products and FTTP
products.




Our business
strategy focuses on developing RF front end solutions and partnering with
industry-leading wireless chipset providers to incorporate our solutions into
their reference designs.  Our integrated solutions enable our
customers to improve RF performance, power efficiency, reliability,
time-to-market and the integration of chip components into single packages,
while reducing the size, weight and cost of their products.  We have
established longstanding relationships with several of the industry-leading
chipset suppliers and tier-one customers.  For example, our
relationships with Qualcomm, Intel, Cisco and Motorola have enabled us to
develop RF products used in 3G, 3.5G, 4G WiMAX, WiFi and CATV products and to be
the primary supplier with respect to such partners and
customers.  Other leading chipset suppliers and tier-one customers
with whom we are engaged include Beceem, Broadcom, HTC, Huawei, Kyocera, LG
Electronics, Marvell, Murata, Novatel, NXP, Palm, RIM, Samsung, Sierra Wireless,
Texas Instruments and ZTE.





We continue
to focus on leveraging our technological and manufacturing advantages to remain
a leading supplier of semiconductor solutions for broadband wireless and
wireline communications.  We believe our patented InGaP-plus technology, which
combines the bipolar technology of a PA (HBT PA) with the surface device
technology of an RF active switch (pHEMT) on the same die, provides us with a
competitive advantage in the marketplace.  Additionally, we believe
our InGaP-plus process
and design technologies such as HELP provide a competitive advantage by enabling
us to provide PAs that consume less battery power and extend talk time for
products in the 3G, 3.5G and 4G markets.





Our primary
fab, a state-of-the-art six-inch diameter GaAs fab located at our corporate
headquarters in Warren, New Jersey, has been operational since
1999.  The increased utilization of our fab’s manufacturing capacity
has increased our gross margins, which has provided us with greater financial
leverage.  We are actively exploring future sources of additional
manufacturing capacity including the construction of a manufacturing facility in
China, as well as pursuing relationships with foundries.  Unlike
traditional CMOS silicon fabs that have short technology lifecycles and require
frequent capital investments, GaAs fabs are more similar to analog fabs that
have long lifecycles and do not become quickly outdated.  Our six-inch
wafer fab allows us to produce more than twice the RF die per wafer compared
with the four-inch wafer fabs still used by some of our
competitors.




We
experienced net sales growth of approximately 20%, 60% and 39% during 2005, 2006
and 2007, respectively, as our Broadband and Wireless businesses benefited from
unit growth, a better pricing environment and acceptance of new product
developments with increased RF content and functionality. The sales growth and
leverage of our fixed manufacturing expense base, led to gross margin increases
and resulted in current year profitability.




On April 2,
2007, we sold the majority of the operating assets of Telcom Devices Inc.
(Telcom, a wholly-owned subsidiary of the Company) to GTRAN Camarillo, Inc. in
exchange for $500 and effectively ceased Telcom’s operations. Accordingly, the
financial results, position and cashflow of Telcom have been classified as
discontinued operations in the accompanying financial statements for all periods
presented.  On September 5, 2007, we purchased certain assets and
assumed certain related obligations of the radio frequency group of Fairchild
Semiconductor (RF group). The RF group staff of 23 accepted employment with the
Company. In early 2007, we signed an agreement with KSND in China to jointly
construct a wafer fabrication facility.




We believe
our markets are, and will continue to remain, competitive, which could result in
continued quarterly volatility in our net sales. This competition has resulted
in, and is expected over the long-term to continue to result in competitive or
declining average selling prices for our products and increased challenges in
maintaining or increasing market share.




We have only
one reportable segment. For financial information related to such segment and
certain geographic areas, see Note 6 to the accompanying consolidated financial
statements.





CRITICAL
ACCOUNTING POLICIES & SIGNIFICANT ESTIMATES





GENERAL




We believe
the following accounting policies are critical to our business operations and
the understanding of our results of operations. Such accounting policies may
require management to exercise a higher degree of judgment and make estimates
used in the preparation of our consolidated financial statements.





REVENUE
RECOGNITION




Revenue from
product sales is recognized when the title, risk and rewards of product
ownership are transferred to the customer, price and terms are fixed, no
significant vendor obligation exists and collection of the resulting receivable
is reasonably assured. We sell to certain distributors who are granted rights of
return and exchange and certain price protection. Revenue is appropriately
reserved for the portion of shipments subject to return, exchange or price
protection until such rights expire. We charge customers for the costs of
certain contractually-committed inventories that remain at the end of a
product's life. Such amounts are recognized as cancellation revenue when cash is
received. The value of the inventory related to cancellation revenue may, in
some instances, have been reserved during prior periods in accordance with our
inventory obsolescence policy.





ALLOWANCE
FOR DOUBTFUL ACCOUNTS




We maintain
an allowance for doubtful accounts for estimated losses resulting from our
customers' failure to make payments. If the financial condition of our customers
were to erode, making them unable to make payments, additional allowances may be
required.





WARRANTY
COSTS




We
provide for potential warranty claims by recording a current charge to income.
We estimate potential claims by examining historical returns and other
information deemed critical and provide for an amount which we believe will
cover future warranty obligations for products sold. The accrued liability for
warranty costs is included in accrued liabilities in the consolidated balance
sheets.





STOCK-BASED
COMPENSATION




Effective
January 1, 2006, we account for stock-based compensation costs in accordance
with Financial Accounting Standards Board Statement No. 123R Share Based Payment
(FAS 123R), which requires the measurement and recognition of compensation
expense for all stock-based payment awards made to our employees and directors.
Under the fair value recognition provisions of FAS 123R, stock based
compensation cost is measured at the grant date based on the fair value of the
award and is recognized as expense over the requisite service period which in
most cases is the vesting period. Determining the fair value of stock-based
awards at the grant date requires considerable judgement, including estimating
expected volatility, expected term and risk-free interest rate. Our expected
volatility is a combination of both Company and peer company historical
volatility. The expected term of the stock options is based on several factors
including historical observations of employee exercise patterns and expectations
of employee exercise behavior in the future giving consideration to the
contractual terms of the stock-based awards. The risk free interest rate
assumption is based on the yield at the time of grant of a U.S. Treasury
security with an equivalent remaining term. If factors change and we employ
different assumptions, stock-based compensation expense may differ significantly
from what we have recorded in the past.





MARKETABLE
SECURITIES





Available-for-sale
securities are stated at fair value, as determined by quoted market prices, or
as needed, broker-dealer valuation models, with unrealized gains and losses
reported in other accumulated comprehensive income or loss. Unrealized losses
are reviewed by management and those considered other than temporary are
recorded as a charge to income.





INVENTORY




Inventories
are valued at the lower of cost or market ("LCM"), using the first-in, first-out
method. In addition to LCM limitations, we reserve against inventory items for
estimated obsolescence or unmarketable inventory. Our reserve for excess and
obsolete inventory is primarily based upon forecasted short-term demand for the
product and any change to the reserve arising from forecast revisions is
reflected in cost of sales in the period the revision is made.





LONG-LIVED
ASSETS




Long-lived
assets include fixed assets, goodwill and other intangible assets. We regularly
review these assets for indicators of impairment and assess the carrying value
of the assets against market values. When an impairment exists, we record an
expense to the extent that the carrying value exceeds fair market
value.





Goodwill and
intangibles impairment


We have
intangible assets related to goodwill and other acquired intangibles.
Significant judgements are involved in the determination of the estimated useful
lives for our other intangibles and whether the goodwill or other intangible
assets are impaired. In assessing the recoverability of goodwill and other
intangibles, we must make assumptions regarding estimated future cash flows and
other factors to determine the fair value of the respective assets.





Impairment of
long-lived assets


We record
impairment losses on long-lived assets used in operations when events and
circumstances indicate that the undiscounted cash flows estimated to be
generated by these assets is less than the carrying amounts of those assets.
Long-lived assets held for sale are reported at the lower of cost or fair value
less costs to sell. Management considers sensitivities to capacity, utilization
and technological developments in making its assumptions.





DEFERRED
TAXES




We record a
valuation allowance to reduce deferred tax assets when it is more likely than
not that some portion of the amount may not be realized. During 2001, we
determined that it was no longer more likely than not that we would be able to
realize all or part of our net deferred tax asset in the future, and an
adjustment to provide a valuation allowance against the deferred tax asset was
charged to income. We continue to maintain a full valuation allowance on our
deferred tax assets.




While we have
considered future taxable income and ongoing prudent and feasible tax planning
strategies in assessing the need for the valuation allowance, in the event we
were to determine that we would be able to realize our deferred tax assets in
the future, an adjustment to the deferred tax asset would increase income in the
period such determination was made.





RESULTS
OF OPERATIONS




The following
table sets forth statements of operations data as a percentage of net sales for
the periods indicated:





2005
            
            
            2006
            
            
            2007Net
      sales
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %Cost
      of sales
            
            
            79.1
            
            
            
            69.8
            
            
            
            65.8Gross
      profit
            
            
            20.9
            
            
            
            30.2
            
            
            
            34.2Research
      and development expense
            
            
            28.2
            
            
            
            21.1
            
            
            
            20.2Selling
      and administrative expenses
            
            
            19.7
            
            
            
            14.2
            
            
            
            13.1Restructuring
      and other charges
            
            
            (0.1
            )
            
            
            -
            
            
            
            -Operating
      (loss) income
            
            
            (26.9
            )
            
            
            (5.1
            )
            
            
            0.9Interest
      income
            
            
            2.4
            
            
            
            3.3
            
            
            
            3.5Interest
      expense
            
            
            (4.8
            )
            
            
            (2.9
            )
            
            
            (1.1
            )Other
      income
            
            
            -
            
            
            
            -
            
            
            
            (0.3
            )(Loss)
      income from continuing operations
            
            
            (29.3
            %)
            
            
            (4.7
            %)
            
            
            3.0
            %Loss
      from discontinued operations
            
            
            (0.8
            %)
            
            
            (0.6
            %)
            
            
            (0.4
            %)Net
      (loss) income
            
            
            (30.1
            %)
            
            
            (5.3
            %)
            
            
            2.6
            %





2007
COMPARED TO 2006




NET SALES.
Net sales for the year ended December 31, 2007 increased 38.5% to $230.6
million, compared to net sales for the year ended December 31, 2006 of $166.4
million. The net sales improvement was primarily due to increased demand for
wireless third generation technologies (or 3G) consisting of CDMA EVDO, EDGE,
WEDGE, and W-CDMA power amplifiers used in wireless handsets and hand-held
devices and increased demand for broadband products such as WLAN power
amplifiers used in wireless personal computer access and RF integrated circuits
used in cable and broadband applications.




Specifically,
net sales for the year ended December 31, 2007 for the Company’s wireless
products increased 41.4% to $129.0 million compared to net sales for the year
ended December 31, 2006 of $91.3 million.  The net sales improvement
was primarily due to increased demand for power amplifiers for 3G applications
of $54.1 million or 85.6%, which was partially offset by lower net sales in
power amplifiers for GSM of $16.4 million or 62.3%, which resulted from the
Company’s shift in market focus to 3G technologies.




Specifically,
net sales for the year ended December 31, 2007 for the Company’s broadband
products increased to $101.5 million or 35.0% compared to net sales for the year
ended December 31, 2006 of $75.2 million.   The net sales
improvement was primarily due to increased demand for power amplifiers for WiFi
applications of $18.7 million or 52.6% and integrated circuits used in cable and
infrastructure applications of $7.6 million or 19.9%.




Geographically, net
sales in Asia increased 67.4% to $153.4 million from $91.6 million in
2006.  The increase was primarily driven by the increased demand for
our WLAN and 3G products.




GROSS MARGIN.
Gross margin for 2007 improved to 34.2% of net sales, compared with 30.2% of net
sales in the prior year. The improvement in gross margin was primarily due to
the product mix of 3G technologies and WiFi applications further supported by
improved cost absorption generated through increased production
volumes.




RESEARCH
& DEVELOPMENT. Company sponsored research and development expenses increased
32.8% during 2007 to $46.5 million from $35.1 million during
2006.  The increase was primarily due to an expansion and focus in
R&D efforts on new product development, which required increased staffing
costs.   Additionally, on September 5, 2007 we purchased the RF
group from Fairchild Semiconductor, which included the hiring a staff of 23
employees.  Non-cash stock based compensation expense accounted for an
increase of $2.6 million in 2007 over 2006.




SELLING AND
ADMINISTRATIVE. Selling and administrative expenses increased 27.5% during 2007
to $30.2 million from $23.7 million in 2006. The increase was primarily due to
increased sales and marketing efforts focused on addressing existing and
potential market opportunities in 3G, WiFi and broadband.  Non-cash
stock based compensation expense accounted for an increase of $2.9 million in
2007 over 2006.




INTEREST
INCOME. Interest income increased 47.9% to $8.0 million during 2007 from $5.4
million in 2006. The increase was primarily due to higher average funds invested
as a result of our underwritten public offering of 8.6 million shares of common
stock in March of 2007 (the “March 2007 Offering”) and higher interest
rates.




INTEREST
EXPENSE. Interest expense decreased to $2.5 million in 2007 from $4.8 million in
2006. In 2007, interest expense arose from obligations under our 5% Convertible
Senior Notes due in 2009 (“2009 Notes”) whereas in 2006 our 5% Convertible
Senior Notes due in 2006 (“2006 Notes”) was also outstanding.  In
November 2006, we repaid the remaining $46.7 million aggregate principal amount
outstanding of our 2006 Notes.




LOSS FROM
DISCONTINUED OPERATIONS. Loss from discontinued operations was $1.0 million
compared with $1.0 million in 2006. The loss from discontinued operations in
2007 included $0.5 million loss on the sale of Telcom upon its sale at the close
of the first quarter of 2007.




OTHER INCOME
(EXPENSE).  Other expense was $0.7 million in 2007, for which, $1.0
million was recorded for an other than temporary decline in value on certain
auction rate securities held by the Company.   This was partly
offset by gains on foreign currency transactions.





2006
COMPARED TO 2005




NET SALES.
Net sales during 2006 increased 60.2% to $166.4 million, compared to $103.9
million for 2005. The net sales improvement was primarily due to new demand from
the market’s evolution to third generation (EDGE, WEDGE and W-CDMA) PAs, an
increase in demand for our traditional CDMA and GSM technologies used in
wireless handsets and hand-held devices, and increased demand for broadband
products such as WLAN PAs, used in wireless personal computer access and RFICs,
used in infrastructure applications.




Sales during
2006 of RFICs used for cellular and personal communication system applications
increased 71.8% during 2006 to $91.3 million from $53.2 million in 2005. This
increase in sales of integrated circuits for wireless applications for the year
ended December 31, 2006 compared with 2005 was primarily due to increased demand
for our 3G, CDMA and GSM PAs amounting to $23.3 million, $9.7 million and $5.8
million, respectively.




Specifically,
net sales of RFICs used for broadband applications increased 48.2% to $75.1
million in 2006 from $50.7 million in 2005. This increase in sales was primarily
due to an increase in demand for infrastructure products and increased average
selling prices for WLAN products accounting for increases in sales of $5.6
million and $17.4 million, respectively. Sales of WLAN PAs benefited from the
market transition from 802.11b/g PAs to 802.11a/b/g PAs that have a higher
selling price for the increased functionality.




GROSS MARGIN.
Gross margin for 2006 improved to 30.2% of net sales, compared with 20.9% of net
sales in the prior year. The increase in gross margin from the prior year is the
result of the increase in net sales and production volumes with the consequent
absorption of fixed costs.





RESEARCH
& DEVELOPMENT. Company sponsored research and development expenses increased
19.6% during 2006 to $35.1 million from $29.3 million during 2005 primarily due
to accelerated customer demand for new product development, which led to
increased staffing and costs in addition to increased stock-based compensation
of $2.1 million.




SELLING AND
ADMINISTRATIVE. Selling and administrative expenses increased 15.5% during 2006
to $23.7 million from $20.5 million in 2005. The increase was primarily due to
increased stock-based compensation of $2.3 million.




RESTRUCTURING
AND OTHER CHARGES. During 2005, we settled an exit obligation for certain
redundant leasehold premises resulting in a savings of $0.1 million against a
previously recorded restructuring charge.





INTEREST
INCOME.Interest income
increased 120.6% to $5.4 million during 2006 from $2.5 million in 2005. The
increase was primarily due to higher average funds invested as a result of our
underwritten public offering of 10.4 million shares of common stock in March of
2006 (the “March 2006 Offering”) and higher interest rates.




INTEREST
EXPENSE. Interest expense decreased to $4.8 million in 2006 from $5.0 million in
2005. Interest expense arose from obligations under our 5% Convertible Senior
Notes due in 2006 (“2006 Notes”) and our 5%Convertible Senior Notes due in 2009
(“2009 Notes”).  In November 2006, we repaid the remaining $46.7
million aggregate principal amount outstanding of our 2006 Notes.




LOSS FROM
DISCONTINUED OPERATIONS. Loss from discontinued operations was $1.0 million
compared with $0.8 million in 2005. The loss increased primarily due to lower
gross profit from a decrease in revenue from $4.4 million to $3.4
million.





LIQUIDITY
AND SOURCES OF CAPITAL




At December
31, 2007 we had $57.8 million of cash and cash equivalents on hand and $119.0
million in marketable securities. We had $38.0 million aggregate principal
amount of our 2009 Notes outstanding as of December 31, 2007.




Operations
generated $16.8 million in cash during 2007. Investing activities used $84.0
million of cash during 2007, consisting principally of purchases of equipment of
$32.5 million and net purchases of marketable securities of $49.6 million.
Financing activities provided $111.3 million of cash in 2007, primarily
consisting of proceeds received from the issuance of stock, principally from the
March 2007 Offering as well as stock option exercises.





At December
31, 2007, the Company had unconditional purchase obligations of approximately
$20.3 million, of which $17.6 million relates to capital equipment purchase
requirements primarily over the first half of 2008.  Such capital
purchase requirements will serve to increase the installed equipment capacity of
the Company's manufacturing operations in response to increases in customer
demand for the Company's products. In early 2007, the Company signed an
agreement with KSND in China to jointly construct a wafer fabrication facility.
The agreement requires the Company to invest approximately $50.0 million over a
ten-year period, inclusive of $16.7 million required by January 31, 2010, of
which approximately $3.5 million has been funded as of December 31, 2007. In the
event we decide unilaterally not to proceed with the agreement with KSND, our
maximum obligation under the agreement with KSND is to pay KSND $16.7
million.





We believe
that our existing sources of capital, including our existing cash and marketable
securities, will be adequate to satisfy operational needs and anticipated
capital needs for at least the next twelve months. Our anticipated capital needs
may include acquisitions of complimentary businesses or technologies,
investments in other companies or repurchases of our outstanding debt or equity.
Subject to liquidity considerations of our auction rate securities as discussed
more fully in Item 7A, we may elect to finance all or part of our future capital
requirements through additional equity or debt financing. There can be no
assurance that such additional financing would be available on satisfactory
terms. Our ability to pay principal and interest on our $38.0 million in
outstanding convertible senior unsecured notes, which are due in October of
2009, and our other debt and to fund our planned capital expenditures depends on
our future operating performance.




The table
below summarizes required cash payments as of December 31, 2007:





CONTRACTUAL
      OBLIGATIONS
            
            PAYMENTS
      DUE BY PERIOD (in thousands)Total
            
            
            Less
      than 1 year
            
            
            1 –
      3 years
            
            
            4 -
      5 years
            
            
            After
      5 yearsLong-term
      debt plus the interest payable with respect thereto
            
            $
            41,404
            
            
            $
            1,900
            
            
            $
            39,504
            
            
            $
            -
            
            
            $
            -Operating
      leases
            
            
            19,629
            
            
            
            2,686
            
            
            
            4,685
            
            
            
            3,862
            
            
            
            8,396Unconditional
      purchase obligations
            
            
            20,327
            
            
            
            20,327
            
            
            
            -
            
            
            
            -
            
            
            
            -China
      funding commitment
            
            
            46,500
            
            
            
            8,000
            
            
            
            5,200
            
            
            
            -
            
            
            
            33,300Total
      contractual cash obligations
            
            $
            127,860
            *
            
            $
            32,913
            
            
            $
            49,389
            
            
            $
            3,862
            
            
            $
            41,696





* If by
January 31, 2010, we decide not to proceed with the construction of the KSND
fabrication facility, our maximum obligation under the KSND agreement would be
$16.7 million reduced by payments made to the date of cancellation.





IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS




In June 2006,
the Financial Accounting Standards Board (FASB) issued Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement
No. 109” (“FIN 48”), which clarifies the accounting and disclosure for
uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity
in practice associated with certain aspects of the recognition and measurement
related to accounting for income taxes. As of January 1, 2007, the Company
adopted FIN 48 which did not have a material impact on its consolidated
financial statements.




In September
2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (FAS
157) which defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles and expands disclosures about fair
value measurements. FAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. The Company has not yet determined the impact FAS 157 may have on
our results from operations or financial position.





In February,
2007, the FASB issued FASB Statement No. 159 “The Fair Value Option for
Financial Assets and Financial Liabilities” (FAS 159), which permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. FAS 159 is effective for fiscal years
beginning after November 15, 2007. The Company has not yet determined the impact
FAS 159 may have on our results of operations or financial
position.





In
June 2007, the FASB’s Emerging Issues Task Force reached a consensus on
EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for
Goods or Services to Be Used in Future Research and Development Activities”
(EITF 07-3) that would require nonrefundable advance payments made by the
Company for future R&D activities to be capitalized and recognized as an
expense as the goods or services are received by the Company. EITF 07-3 is
effective with respect to new arrangements entered into beginning
January 1, 2008. The Company has not yet determined the impact EITF 07-3
may have on its results of operations or financial position.




In
December 2007, the FASB issued FASB Statement No. 141R, “Business
Combinations,” (FAS 141R) which changes how business acquisitions are
accounted.  FAS 141R requires the acquiring entity in a business
combination to recognize all (and only) the assets acquired and liabilities
assumed in the transaction and establishes the acquisition-date fair value as
the measurement objective for all assets acquired and liabilities assumed in a
business combination.  Certain provisions of this standard will, among
other things, impact the determination of acquisition-date fair value of
consideration paid in a business combination (including contingent
consideration); exclude transaction costs from acquisition accounting; and
change accounting practices for acquired contingencies, acquisition-related
restructuring costs, in-process research and development, indemnification
assets, and tax benefits.  FAS 141R is effective for financial statements
issued for fiscal years beginning after December 15, 2008.  The
Company has not yet determined the impact FAS 141R may have on its results of
operations or financial position.




In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51,” (FAS 160) which establishes new standards governing the accounting
for and reporting of noncontrolling interests (NCIs) in partially owned
consolidated subsidiaries and the loss of control of subsidiaries.  Certain
provisions of this standard indicate, among other things, that NCIs (previously
referred to as minority interests) be treated as a separate component of equity,
not as a liability; that increases and decrease in the parent’s ownership
interest that leave control intact be treated as equity transactions, rather
than as step acquisitions or dilution gains or losses; and that losses of a
partially owned consolidated subsidiary be allocated to the NCI even when such
allocation might result in a deficit balance. This standard also requires
changes to certain presentation and disclosure requirements. FAS 160 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. The provisions of the standard are to be applied to all NCIs
prospectively, except for the presentation and disclosure requirements, which
are to be applied retrospectively to all periods presented. The Company has not
yet determined the impact FAS 160 may have on its results of operations or
financial position.





ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




We are
exposed to changes in interest rates primarily from our investments in certain
available-for-sale securities. Our available-for-sale securities consist
primarily of fixed income investments, including corporate bonds, commercial
paper and Federal, state, municipal, and government-sponsored enterprises
securities. We continually monitor our exposure to changes in interest rates and
the credit ratings of issuers with respect to our available-for-sale securities.
Accordingly, we believe that the effects of changes in interest rates and the
credit ratings of these issuers are limited and would not have a material impact
on our financial condition or results of operations. However, it is possible
that we would be at risk if interest rates or the credit ratings of these
issuers were to change in an unfavorable direction. The magnitude of any gain or
loss would be a function of the difference between the fixed rate of the
financial instrument and the market rate and our financial condition and results
of operations could be materially affected.





At December
31, 2007, we held marketable securities with an estimated fair value of $119.0
million. Our primary interest rate exposure results from changes in short-term
interest rates. We do not purchase financial instruments for trading or
speculative purposes. All of our marketable securities are classified as
available-for-sale securities. The following table provides information about
our marketable securities at December 31, 2007:





Estimated
      Principal Amount and Weighted Average Stated Rate by Expected Maturity
      Value
            
            
            Fair
      Value($’s
      000)
            
            2007
            
            
            2008
            
            
            2009
            
            
            Total
            
            
            ($’s
      000)Principal
            
            $
            103,923
            
            
            $
            15,243
            
            
            
            -
            
            
            $
            119,166
            
            
            $
            119,026Weighted
      Average Stated Rates
            
            
            4.72
            %
            
            
            5.39
            %
            
            
            -
            
            
            
            4.81
            %
            
            
            -




The stated
rates of interest expressed in the above table may not approximate the actual
yield of the securities which we currently hold since we have purchased some of
our marketable securities at other than face value. Additionally, some of the
securities represented in the above table may be called or redeemed, at the
option of the issuer, prior to their expected due dates. If such early
redemptions occur, we may reinvest the proceeds realized on such calls or
redemptions in marketable securities with stated rates of interest or yields
that are lower than those of our current holdings, which would affect both
future cash interest streams and future earnings. In addition to investments in
marketable securities, we invest some of our cash in money market funds in order
to keep cash available to fund operations and to hold cash pending investments
in marketable securities. Fluctuations in short term interest rates will affect
the yield on monies invested in such money market funds. Such fluctuations can
have an impact on our future cash interest streams and future earnings, but the
impact of such fluctuations are not expected to be material.




All of our
investment securities are classified as available-for-sale and therefore
reported on our balance sheet at market value. As of December 31, 2007, our
short-term investments included $37.5 million of auction rate securities issued
primarily by state and municipal authorities. Our auction rate securities are
debt instruments with a long-term maturity and with an interest rate that is
reset in short intervals through auctions. The recent conditions in the global
credit markets have prevented some investors from liquidating their holdings of
auction rate securities because the amount of securities submitted for sale has
exceeded the amount of purchase orders for such securities. If there is
insufficient demand for the securities at the time of an auction, the auction
may not be completed and the interest rates may be reset to predetermined higher
rates. When auctions for these securities fail, the investments may not be
readily convertible to cash until a future auction of these investments is
successful or they are redeemed or mature. If the credit ratings of the security
issuers deteriorate and any decline in market value is determined to be
other-than-temporary, we would be required to adjust the carrying value of the
investment through an impairment charge. To date, we have not experienced any
realized gains or losses on our investment portfolio but have recognized an
other than temporary impairment approximating $1.0 million.




In
mid-February, 2008, we were informed that there was insufficient demand at
auctions for certain of our auction rate securities. As a result, certain of
these securities are currently not liquid and the interest rates on such
securities have been reset to predetermined higher
rates.  Insufficient demand for certain auction rate securities may
continue.





We may not be
able to access cash by selling auction rate securities for which there is
insufficient demand without the loss of principal until a future auction for
these investments is successful, they are redeemed by their issuer or they
mature. If we are unable to sell these securities in the market or they are not
redeemed, then we may be required to hold them to maturity. We do not have a
need to access these funds for operational purposes for the foreseeable future.
We will continue to monitor and evaluate these investments on an ongoing basis
for impairment or for a short term to a long term reclassification. Based on our
ability to access our cash and other short-term investments, our expected
operating cash flows, and our other sources of cash, we do not anticipate that
the potential illiquidity of these investments will affect our ability to
execute our current business plan.





Our 2009
Notes are convertible and bear a fixed rate of interest of 5%. A change in
interest rates on long-term debt is assumed to impact fair value but not
earnings or cash flow because the interest rate is fixed. At December 31, 2007,
the fair value of our outstanding convertible notes, estimated based upon dealer
quotes, was approximately $89.5 million.





ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.




Report of Independent Registered
Public Accounting Firm





The Board
of Directors and Stockholders


ANADIGICS,
Inc.




We have
audited the accompanying consolidated balance sheet of ANADIGICS, Inc. as of
December 31, 2007, and the related consolidated statements of operations,
comprehensive income, stockholders' equity, and cash flows for the year ended
December 31, 2007. Our audit also included the financial statement schedule
listed in the Index at Item 15(a). These financial statements and schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our
audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provide a reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ANADIGICS, Inc. at
December 31, 2007, and the consolidated results of its operations and its cash
flows for the year ended December 31, 2007, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), ANADIGICS, Inc.’s internal control over
financial reporting as of December 31, 2007, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 29, 2008
expressed an unqualified opinion thereon.





/s/ Ernst & Young
LLP








MetroPark,
New Jersey


February
29, 2008














Report of Independent Registered
Public Accounting Firm




To the
Board of Directors and Stockholders


ANADIGICS,
Inc.




We have
audited the accompanying consolidated balance sheet of ANADIGICS, Inc. as of
December 31, 2006, and the related consolidated statements of operations,
comprehensive loss, stockholders' equity and cash flows for each of the years in
the two year period then ended. Our audits also included the consolidated
financial statement schedule for the years ended December 31, 2006 and 2005
listed in the Index at Item 15(a). These consolidated financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and schedule
based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. Our audits included
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of ANADIGICS, Inc. as of
December 31, 2006, and their consolidated results of operations and cash flows
for each of the years in the two year period then ended, in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, the related consolidated financial statement schedule for the
years ended December 31, 2006 and 2005, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.





As
discussed in note 12 to the consolidated financial statements, ANADIGICS, Inc.
adopted Statement of Financial Accounts Standards No. 123(R), “Share-Based
Payment” effective January 1, 2006.











/s/ J.H.
Cohn LLP








Roseland,
New Jersey


February
27, 2007











ANADIGICS,
INC.


CONSOLIDATED
BALANCE SHEETS


(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




December
      31,2006
            
            
            2007ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            $
            13,706
            
            
            $
            57,786Marketable
      securities
            
            
            60,892
            
            
            
            103,778Accounts
      receivable, net of allowance for doubtful accounts of $923 and $924 at
      2006 and 2007, respectively
            
            
            26,707
            
            
            
            45,664Inventories
            
            
            20,219
            
            
            
            23,989Prepaid
      expenses and other current assets
            
            
            2,114
            
            
            
            3,277Assets
      of discontinued operations
            
            
            1,429
            
            
            
            -Total
      current assets
            
            
            125,067
            
            
            
            234,494Marketable
      securities
            
            
            8,884
            
            
            
            15,248Plant
      and equipmentEquipment
      and furniture
            
            
            139,569
            
            
            
            165,333Leasehold
      improvements
            
            
            38,199
            
            
            
            38,638Projects
      in process
            
            
            4,975
            
            
            
            23,180182,743
            
            
            
            227,151Less
      accumulated depreciation and amortization
            
            
            141,484
            
            
            
            151,02241,259
            
            
            
            76,129Goodwill
      and other intangibles, less accumulated amortization of $439 and $536 at
      2006 and 2007, respectively
            
            
            5,929
            
            
            
            6,524Other
      assets
            
            
            1,463
            
            
            
            1,066$
            182,602
            
            
            $
            333,461LIABILITIES
      AND STOCKHOLDERS EQUITYCurrent
      liabilities:Accounts
      payable
            
            $
            17,879
            
            
            $
            34,184Accrued
      liabilities
            
            
            5,588
            
            
            
            7,928Current
      maturities of capital lease obligations
            
            
            312
            
            
            
            -Liabilities
      of discontinued operations
            
            
            252
            
            
            
            -Total
      current liabilities
            
            
            24,031
            
            
            
            42,112Other
      long-term liabilities
            
            
            3,348
            
            
            
            3,243Long-term
      debt
            
            
            38,000
            
            
            
            38,000Capital
      lease obligations, less current portion
            
            
            1,463
            
            
            
            -Commitments
      and contingenciesStockholders’
      equityPreferred
      stock, $0.01 par value, 5,000 shares authorized, none issued or
      outstandingCommon
      stock, convertible, non-voting, $0.01 par value, 1,000 shares authorized,
      none issued or outstandingCommon
      stock, $0.01 par value, 144,000 shares authorized at December 31, 2006 and
      2007, and 49,200 and 61,292 issued at December 31, 2006 and 2007,
      respectively
            
            
            492
            
            
            
            613Additional
      paid-in capital
            
            
            413,672
            
            
            
            541,940Accumulated
      deficit
            
            
            (298,046
            )
            
            
            (292,095
            )Accumulated
      other comprehensive loss
            
            
            (100
            )
            
            
            (94
            )Treasury
      stock at cost: 114 shares
            
            
            (258
            )
            
            
            (258
            )Total
      stockholders’ equity
            
            
            115,760
            
            
            
            250,106$
            182,602
            
            
            $
            333,461







See
accompanying notes.











ANADIGICS,
INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS


(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





YEAR ENDED DECEMBER
      31,2005
            
            
            2006
            
            
            2007Net
      sales
            
            $
            103,871
            
            
            $
            166,442
            
            
            $
            230,556Cost
      of sales
            
            
            82,135
            
            
            
            116,211
            
            
            
            151,768Gross
      profit
            
            
            21,736
            
            
            
            50,231
            
            
            
            78,788Research
      and development expenses
            
            
            29,320
            
            
            
            35,054
            
            
            
            46,539Selling
      and administrative expenses
            
            
            20,486
            
            
            
            23,660
            
            
            
            30,171Restructuring
      and other charges
            
            
            (120
            )
            
            
            -
            
            
            
            -49,686
            
            
            
            58,714
            
            
            
            76,710Operating
      (loss) income
            
            
            (27,950
            )
            
            
            (8,483
            )
            
            
            2,078Interest
      income
            
            
            2,463
            
            
            
            5,433
            
            
            
            8,035Interest
      expense
            
            
            (4,997
            )
            
            
            (4,816
            )
            
            
            (2,463
            )Other
      income (expense)
            
            
            18
            
            
            
            (4
            )
            
            
            (734
            )(Loss)
      income from continuing operations
            
            $
            (30,466
            )
            
            $
            (7,870
            )
            
            $
            6,916Loss
      from discontinued operations
            
            
            (767
            )
            
            
            (980
            )
            
            
            (965
            )Net
      (loss) income
            
            $
            (31,233
            )
            
            $
            (8,850
            )
            
            $
            5,951Basic
      (loss) earnings per share:(Loss)
      income from continuing operations
            
            $
            (0.90
            )
            
            $
            (0.18
            )
            
            $
            0.13Loss
      from discontinued operations
            
            
            (0.02
            )
            
            
            (0.02
            )
            
            
            (0.02
            )Net
      (loss) income
            
            $
            (0.92
            )
            
            $
            (0.20
            )
            
            $
            0.11Diluted
      (loss) earnings per share:(Loss)
      income from continuing operations
            
            $
            (0.90
            )
            
            $
            (0.18
            )
            
            $
            0.12Loss
      from discontinued operations
            
            
            (0.02
            )
            
            
            (0.02
            )
            
            
            (0.02
            )Net
      (loss) income
            
            $
            (0.92
            )
            
            $
            (0.20
            )
            
            $
            0.10Weighted
      average common shares outstanding used in computing (loss) earnings per
      share:Basic
            
            
            34,012
            
            
            
            43,814
            
            
            
            55,189Diluted
            
            
            34,012
            
            
            
            43,814
            
            
            
            58,621








CONSOLIDATED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME


(AMOUNTS
IN THOUSANDS)





Year Ended December
      31,2005
            
            
            2006
            
            
            2007Net
      (loss) income
            
            $
            (31,233
            )
            
            $
            (8,850
            )
            
            $
            5,951Other
      comprehensive income (loss)Unrealized
      gain (loss) on marketable securities
            
            
            242
            
            
            
            207
            
            
            
            (948
            )Foreign
      currency translation adjustment
            
            
            (72
            )
            
            
            9
            
            
            
            (8
            )Reclassification
      adjustment:Net
      recognized loss on marketable securities previously included in other
      comprehensive income
            
            
            -
            
            
            
            -
            
            
            
            962Comprehensive
      (loss) income
            
            $
            (31,063
            )
            
            $
            (8,634
            )
            
            $
            5,957







See
accompanying notes.









ANADIGICS,
INC.


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY


(AMOUNTS
IN THOUSANDS)




Common
      Stock Shares
            
            
            Common
      Stock Amount
            
            
            Treasury
      Stock Shares
            
            
            Treasury
      Stock Amount
            
            
            Additional
      Paid-In Capital
            
            
            Accumulated
      Deficit
            
            
            Accumulated
      Other Comprehensive Income (loss)
            
            
            Total
      Stockholders’ EquityBalance,
      December 31, 2004
            
            
            33,072
            
            
            $
            331
            
            
            
            -
            
            
            $
            -
            
            
            $
            342,733
            
            
            $
            (257,963
            )
            
            $
            (486
            )
            
            $
            84,615Stock
      options exercised
            
            
            417
            
            
            
            4
            
            
            
            
            
            
            
            
            
            
            
            1,160
            
            
            
            
            
            
            
            
            
            
            
            1,164Shares
      issued under employee stock purchase plan
            
            
            328
            
            
            
            3
            
            
            
            
            
            
            
            
            
            
            
            1,025
            
            
            
            
            
            
            
            
            
            
            
            1,028Treasury
      share purchase
            
            
            
            
            
            
            
            
            
            
            (114
            )
            
            
            (258
            )
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (258
            )Restricted
      stock grant, net of forfeitures
            
            
            1,190
            
            
            
            12
            
            
            
            
            
            
            
            
            
            
            
            (12
            )
            
            
            
            
            
            
            
            
            
            
            -Amortization
      of stock-based compensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,649
            
            
            
            
            
            
            
            
            
            
            
            2,649Other
      comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            170
            
            
            
            170Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (31,233
            )
            
            
            
            
            
            
            (31,233
            )Balance,
      December 31, 2005
            
            
            35,007
            
            
            $
            350
            
            
            
            (114
            )
            
            $
            (258
            )
            
            $
            347,555
            
            
            $
            (289,196
            )
            
            $
            (316
            )
            
            $
            58,135Stock
      options exercised
            
            
            983
            
            
            
            10
            
            
            
            
            
            
            
            
            
            
            
            3,778
            
            
            
            
            
            
            
            
            
            
            
            3,788Shares
      issued under employee stock purchase plan
            
            
            187
            
            
            
            2
            
            
            
            
            
            
            
            
            
            
            
            1,005
            
            
            
            
            
            
            
            
            
            
            
            1,007Issuance
      of common stock in public offering, net of costs
            
            
            10,446
            
            
            
            104
            
            
            
            
            
            
            
            
            
            
            
            53,006
            
            
            
            
            
            
            
            
            
            
            
            53,110Restricted
      stock grant, net of forfeitures
            
            
            2,577
            
            
            
            26
            
            
            
            
            
            
            
            
            
            
            
            (26
            )
            
            
            
            
            
            
            
            
            
            
            -Amortization
      of stock-based compensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            8,354
            
            
            
            
            
            
            
            
            
            
            
            8,354Other
      comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            216
            
            
            
            216Net
      loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (8,850
            )
            
            
            
            
            
            
            (8,850
            )Balance,
      December 31, 2006
            
            
            49,200
            
            
            $
            492
            
            
            
            (114
            )
            
            $
            (258
            )
            
            $
            413,672
            
            
            $
            (298,046
            )
            
            $
            (100
            )
            
            $
            115,760Stock
      options exercised
            
            
            2,135
            
            
            
            22
            
            
            
            
            
            
            
            
            
            
            
            12,217
            
            
            
            
            
            
            
            
            
            
            
            12,239Shares
      issued under employee stock purchase plan
            
            
            236
            
            
            
            2
            
            
            
            
            
            
            
            
            
            
            
            1,872
            
            
            
            
            
            
            
            
            
            
            
            1,874Issuance
      of common stock in public offering, net of costs
            
            
            8,625
            
            
            
            86
            
            
            
            
            
            
            
            
            
            
            
            98,869
            
            
            
            
            
            
            
            
            
            
            
            98,955Restricted
      stock grant, net of forfeitures
            
            
            1,096
            
            
            
            11
            
            
            
            
            
            
            
            
            
            
            
            (11
            )
            
            
            
            
            
            
            
            
            
            
            -Amortization
      of stock-based compensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            15,321
            
            
            
            
            
            
            
            
            
            
            
            15,321Other
      comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6
            
            
            
            6Net
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,951
            
            
            
            
            
            
            
            5,951Balance,
      December 31, 2007
            
            
            61,292
            
            
            $
            613
            
            
            
            (114
            )
            
            $
            (258
            )
            
            $
            541,940
            
            
            $
            (292,095
            )
            
            $
            (94
            )
            
            $
            250,106





See
accompanying notes.













ANADIGICS,
INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(AMOUNTS
IN THOUSANDS)




YEAR ENDED DECEMBER
      31,2005
            
            
            2006
            
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      (loss) income
            
            $
            (31,233
            )
            
            $
            (8,850
            )
            
            $
            5,951Adjustments
      to reconcile net (loss) income to net cash (used in) provided by operating
      activities:Loss
      from discontinued operations
            
            
            767
            
            
            
            980
            
            
            
            965Depreciation
            
            
            10,321
            
            
            
            7,700
            
            
            
            9,547Amortization
            
            
            1,703
            
            
            
            1,809
            
            
            
            738Stock-based
      compensation
            
            
            2,553
            
            
            
            8,169
            
            
            
            15,276Amortization
      of premium (discount) on marketable securities
            
            
            1,189
            
            
            
            163
            
            
            
            (550
            )Recognized
      marketable securities impairment and other
            
            
            -
            
            
            
            -
            
            
            
            962(Gain)
      loss on sale of equipment
            
            
            (1
            )
            
            
            7
            
            
            
            (9
            )Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            (7,609
            )
            
            
            (9,009
            )
            
            
            (18,957
            )Inventory
            
            
            (1,479
            )
            
            
            (4,805
            )
            
            
            (3,770
            )Prepaid
      expenses and other assets
            
            
            1,101
            
            
            
            (184
            )
            
            
            (1,233
            )Accounts
      payable
            
            
            7,468
            
            
            
            2,542
            
            
            
            5,922Accrued
      and other liabilities
            
            
            (1,212
            )
            
            
            957
            
            
            
            1,984Net
      cash (used) provided by operating activities
            
            
            (16,432
            )
            
            
            (521
            )
            
            
            16,826CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of plant and equipment
            
            
            (2,262
            )
            
            
            (13,374
            )
            
            
            (32,506
            )Purchases
      of marketable securities
            
            
            (64,098
            )
            
            
            (227,150
            )
            
            
            (267,357
            )Proceeds
      from sales of marketable securities
            
            
            81,565
            
            
            
            231,884
            
            
            
            217,709Purchase
      of RF group assets
            
            
            -
            
            
            
            -
            
            
            
            (2,415
            )Proceeds
      from sale of equipment
            
            
            53
            
            
            
            28
            
            
            
            30Proceeds
      from sale of discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            500Net
      cash provided (used) by investing activities
            
            
            15,258
            
            
            
            (8,612
            )
            
            
            (84,039
            )CASH
      FLOWS FROM FINANCING ACTIVITIESPayment
      of obligations under capital leases
            
            
            (40
            )
            
            
            (257
            )
            
            
            (1,775
            )Repayment
      of Convertible notes
            
            
            -
            
            
            
            (46,700
            )
            
            
            -Issuances
      of common stock, net of related costs
            
            
            2,192
            
            
            
            57,905
            
            
            
            113,068Repurchase
      of common stock into treasury
            
            
            (258
            )
            
            
            -
            
            
            
            -Net
      cash provided by financing activities
            
            
            1,894
            
            
            
            10,948
            
            
            
            111,293Net
      increase in cash and cash equivalents
            
            
            720
            
            
            
            1,815
            
            
            
            44,080Cash
      and cash equivalents at beginning of period
            
            
            11,171
            
            
            
            11,891
            
            
            
            13,706Cash
      and cash equivalents at end of period
            
            $
            11,891
            
            
            $
            13,706
            
            
            $
            57,786Supplemental
      disclosures of cash flow information:Interest
      paid
            
            $
            4,346
            
            
            $
            4,370
            
            
            $
            1,997Taxes
      paid
            
            
            82
            
            
            
            37
            
            
            
            28Acquisition
      of equipment under capital leases
            
            
            2,055
            
            
            
            -
            
            
            
            -




















See
accompanying notes.










ANADIGICS,
INC.





NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





(AMOUNTS
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)








1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




NATURE OF
OPERATIONS AND BASIS OF PRESENTATION




ANADIGICS,
Inc (the Company) is a provider of semiconductor solutions in the rapidly
growing broadband wireless and wireline communications markets.  The
Company’s products include power amplifiers (PAs), tuner integrated circuits,
active splitters, line amplifiers and other components, which can be sold
individually or packaged as integrated radio frequency (RF) and front end
modules.  The Company offers third generation (3G) products that use
the Wideband Code-Division Multiple Access (W-CDMA) and Enhanced Data Rates for
Global System for Mobile Communication (GSM) Evolution (EDGE) standards, beyond
third generation (3.5G) products that use the High Speed Down Line Packet Access
(HSDPA) and High Speed Uplink Line Packet Access (HSUPA) standards, fourth
generation (4G) products for Worldwide Interoperability for Microwave Access
(WiMAX) and Wireless Broadband (WiBRO) systems, Wireless Fidelity (WiFi)
products that use the 802.11 a/b/g and 802.11 n (draft-n, Multiple Input
Multiple Output (MIMO)) standards, cable television (CATV) set-top box products,
CATV infrastructure products and Fiber-To-The-Premises (FTTP)
products.  The Company’s integrated solutions enable its customers to
improve RF performance, power efficiency, reliability, time-to-market and the
integration of chip components into single packages, while reducing the size,
weight and cost of their products.





The Company
designs, develops and manufactures RF integrated circuits (RFICs) primarily
using Gallium Arsenide (GaAs) compound semiconductor substrates with various
process technologies, Metal Semiconductor Field Effect Transistors (MESFET),
Pseudomorphic High Electron Mobility Transistors (pHEMT), and Heterojunction
Bipolar Transistors (HBT). The Company’s proprietary technology, which utilizes
InGaP-plusTM, combines InGaP
HBT and pHEMT processes on a single substrate, enabling it to integrate the PA
function and the RF active switch function on the same die. The Company
fabricates substantially all of its ICs in its six-inch diameter GaAs wafer
fabrication facility.





The
consolidated financial statements include the accounts of ANADIGICS, Inc. and
its wholly owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated in consolidation.




As more fully
discussed in Note 2 below, the Company sold the majority of the operating assets
of Telcom Devices Inc, (Telcom, a wholly-owned subsidiary of the Company) on
April 2, 2007 and effectively ceased Telcom’s operations. Accordingly, the
financial results, position and cashflow of Telcom have been classified as
discontinued operations in the accompanying financial statements for all periods
presented.





USE OF
ESTIMATES





The
preparation of financial statements in conformity with US generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts in the consolidated financial statements and the
accompanying notes. Actual results could differ from those estimates.
Significant estimates that affect the financial statements include, but are not
limited to: recoverability of inventories, stock-based compensation, reserves
for distributor arrangements and returns, valuation of certain marketable
securities, useful lives and amortization periods and recoverability of
long-lived assets.




CONCENTRATION
OF CREDIT RISK




The Company
grants trade credit to its customers, who are primarily foreign manufacturers of
wireless communication devices, cable and broadcast television receivers and
fiber optic communication devices. The Company performs periodic credit
evaluations of its customers and generally does not require collateral. Sales
and accounts receivable from customers are denominated in U.S. dollars. The
Company has not experienced significant losses related to receivables from these
individual customers.




Net sales to
individual customers and their affiliates who accounted for 10% or more of the
Company’s total net sales and corresponding end application information are as
follows:





YEAR ENDED DECEMBER
      312005
            
            
            2006
            
            
            2007Customer
      (application)
            
            
            
            
            $
            
            %
            
            
            
            
            $
            
            %
            
            
            
            
            $
            
            %Intel
      (Broadband)
            
            
            15,678
            
            
            
            15
            %
            
            
            29,827
            
            
            
            18
            %
            
            
            49,862
            
            
            
            22
            %Samsung
      Electronics (Wireless)
            
            <10%
            
            
            <10%
            
            
            <10%
            
            
            <10%
            
            
            
            30,471
            
            
            
            13
            %Shenzhen
      Huawei Mobile Comm. Tech. (Wireless)
            
            <10%
            
            
            <10%
            
            
            <10%
            
            
            <10%
            
            
            
            23,953
            
            
            
            10
            %Cisco
      (Broadband)
            
            <10%
            
            
            <10%
            
            
            <10%
            
            
            <10%
            
            
            
            23,378
            
            
            
            10
            %World
      Peace Group (Wireless & Broadband)
            
            
            17,275
            
            
            
            17
            %
            
            
            28,175
            
            
            
            17
            %
            
            
            22,855
            
            
            
            10
            %LG
      Electronics (Wireless)
            
            
            12,321
            
            
            
            12
            %
            
            <10%
            
            
            <10%
            
            
            
            22,188
            
            
            
            10
            %




Accounts
receivable at December 31, 2006 and 2007 from the greater than 10% customers
accounted for 31% and 78% of total accounts receivable,
respectively.





REVENUE
RECOGNITION





Revenue from
product sales is recognized when the title, risk and rewards of product
ownership are transferred to the customer, price and terms are fixed, no
significant vendor obligation exists and collection of the resulting receivable
is reasonably assured. The Company sells to certain distributors who are granted
rights of return and exchange and certain price protection. Revenue is
appropriately reserved for the portion of shipments subject to return, exchange
or price protection until such rights expire. The Company charges customers for
the costs of certain contractually-committed inventories that remain at the end
of a product's life. Such amounts are recognized as cancellation revenue when
cash is received. The value of the inventory related to cancellation revenue
may, in some instances, have been reserved during prior periods in accordance
with the Company’s inventory obsolescence policy. The Company maintains an
allowance for doubtful accounts for estimated losses resulting from customers'
failure to make payments.




WARRANTY
COSTS




The Company
provides, by a current charge to income, an amount it estimates, by examining
historical returns and other information it deems critical, will be needed to
cover future warranty obligations for products sold during the year. The accrued
liability for warranty costs is included in accrued liabilities in the
consolidated balance sheets.





PLANT AND
EQUIPMENT




Plant and
equipment are stated at cost. Depreciation of plant, furniture and equipment has
been provided on the straight-line method over 3-5 years. During 2007, the
Company began depreciating certain new wafer fabrication equipment over a seven
year useful life. Leasehold improvements are amortized and included in
depreciation over the useful life of the leasehold or the life of the lease,
whichever is shorter.





The cost of
equipment acquired under capital leases was $9,806 and $7,751 at December 31,
2006 and 2007, respectively, and accumulated amortization was $8,072 and $7,734
at December 31, 2006 and 2007, respectively. Equipment acquired under a capital
lease is amortized and included in depreciation over the useful life of the
leased equipment or the life of the lease, whichever is shorter.





GOODWILL
AND OTHER INTANGIBLES





Goodwill,
intellectual property, customer list, covenant-not-to compete and assembled
workforce were recorded as part of the Company's acquisitions. Goodwill is not
subject to amortization but is reviewed for potential impairment annually or
upon the occurrence of an impairment indicator using a two-phase process. The
first phase screens for impairment; while the second phase measures the
impairment. Intellectual property, customer list, covenant and the assembled
workforce have been amortized using the straight-line method over two to four
year lives. The carrying amount of the Company’s intangibles are reviewed on a
regular basis for indicators of an impairment. The Company determines if the
carrying amount is impaired based on anticipated cash flows. In the event of
impairment, a loss is recognized based on the amount by which the carrying
amount exceeds the fair value of the asset. For each of the reporting units,
fair value is determined primarily using the anticipated cash flows, discounted
at a rate commensurate with the associated risk.





IMPAIRMENT
OF LONG-LIVED ASSETS





Long-lived
assets used in operations are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets might not be
recoverable. For long-lived assets to be held and used, the Company recognizes
an impairment loss only if its carrying amount is not recoverable through its
undiscounted cash flows and measures the impairment loss based on the difference
between the carrying amount and fair value. Long-lived assets held for sale are
reported at the lower of cost or fair value less costs to sell.





INCOME
TAXES




Deferred
income taxes reflect the net effects of temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes and
the income tax basis of such assets and liabilities. The Company maintains a
full valuation allowance on its deferred tax assets. Accordingly, the Company
has not recorded a benefit or provision for income taxes. The Company recognizes
interest and penalties related to the underpayment of income taxes in income tax
expense. Upon adoption of FIN 48, the Company had no unrecognized tax benefits.
No unrecognized tax benefits, interest or penalties were accrued at December 31,
2007. The Company’s U.S. federal net operating losses have occurred since 1998
and as such, tax years subject to potential tax examination could apply from
that date because carrying-back net operating loss opens the relevant year to
audit.





RESEARCH
AND DEVELOPMENT COSTS




The Company
charges all research and development costs associated with the development of
new products to expense when incurred.




CASH
EQUIVALENTS




The Company
considers all highly liquid marketable securities with a maturity of three
months or less when purchased as cash equivalents.




MARKETABLE
SECURITIES




Available for
sale securities are stated at fair value, as determined by quoted market prices
or as needed, broker-dealer valuation models, with unrealized gains and losses
reported in other accumulated comprehensive income or loss. Unrealized losses
are reviewed by management and those considered other than temporary are
recorded as a charge to income. The cost of securities sold is based upon the
specific identification method. The amortized cost of debt securities is
adjusted for amortization of premium and accretion of discounts to maturity.
Such amortization, realized gains and losses, interest and dividends are
included in interest income. See Note 9 for a summary of marketable
securities.





INVENTORY




Inventories are
valued at the lower of cost or market ("LCM"), using the first-in, first-out
method. In addition to LCM limitations, the Company reserves against inventory
items for estimated obsolescence or unmarketable inventory. The reserve for
excess and obsolete inventory is primarily based upon forecasted short-term
demand for the product and any change to the reserve arising from forecast
revisions is reflected in cost of sales in the period the revision is
made.





DEFERRED
RENT





Aggregate
rental expense is recognized on a straight-line basis over the lease terms of
operating leases that contain predetermined increases in rentals payable during
the lease term.




FOREIGN
CURRENCY TRANSLATION





The financial
statements of subsidiaries outside of the United States are measured using the
local currency as the functional currency. Assets and liabilities of these
subsidiaries are translated at the rates of exchange at the balance sheet dates.
The resultant translation adjustments are included in other accumulated
comprehensive income or loss. Income and expense items are translated at the
average monthly rates of exchange. Gains and losses from foreign currency
transactions of these subsidiaries are included in the determination of net
income or loss.




EARNINGS
PER SHARE




Basic and
diluted earnings per share are calculated in accordance with FASB Statement No.
128, Earnings Per Share. Basic earnings per share is computed by dividing net
income by the weighted average number of common shares outstanding during the
period. Diluted earnings per share reflects the potential dilution that could
occur if stock options and other commitments to issue common stock were
exercised resulting in the issuance of common stock of the Company. Any dilution
arising from the Company's outstanding stock options or shares potentially
issuable upon conversion of the Convertible notes will not be included where
their effect is anti-dilutive.




FAIR
VALUE OF FINANCIAL INSTRUMENTS





The fair
value of a financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties. The fair value of
each of the following instruments approximates their carrying value because of
the short maturity of these instruments: cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities. At December 31, 2006
and 2007, the fair value of the Company's outstanding Convertible senior notes,
estimated based upon dealer quotes, were approximately $71,516 and $89,490,
respectively compared to their carrying values of $38,000 and $38,000,
respectively.  See Note 9 for a summary of marketable
securities.





STOCK-BASED
COMPENSATION




The Company
has various stock-based compensation plans for employees and directors, which
are described more fully in Note 12 “Employee Benefits Plans”. Effective January
1, 2006, the Company accounts for these plans under Financial Accounting
Standards Board (FASB) Statement No. 123R Share Based Payment (FAS
123R).





IMPACT OF
RECENTLY ISSUED ACCOUNTING STANDARDS




In June 2006,
the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109” (FIN 48), which clarifies the
accounting and disclosure for uncertainty in tax positions, as defined. FIN 48
seeks to reduce the diversity in practice associated with certain aspects of the
recognition and measurement related to accounting for income taxes. The Company
adopted FIN 48 on January 1, 2007 which did not have a material impact on its
consolidated financial statements.




In September
2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (FAS
157) which defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles and expands disclosures about fair
value measurements. FAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within those
fiscal years. The Company has not yet determined the impact FAS 157 may have on
its results of operations or financial position.





In February,
2007, the FASB issued FASB Statement No. 159 “The Fair Value Option for
Financial Assets and Financial Liabilities” (FAS 159), which permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. FAS 159 is effective for fiscal years
beginning after November 15, 2007. The Company has not yet determined the impact
FAS 159 may have on its results of operations or financial
position.





In
June 2007, the FASB’s Emerging Issues Task Force reached a consensus on
EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for
Goods or Services to Be Used in Future Research and Development Activities”
(EITF 07-3) that would require nonrefundable advance payments made by the
Company for future R&D activities to be capitalized and recognized as an
expense as the goods or services are received by the Company. EITF 07-3 is
effective with respect to new arrangements entered into beginning
January 1, 2008. The Company has not yet determined the impact EITF 07-3
may have on its results of operations or financial position.




In
December 2007, the FASB issued FASB Statement No. 141R, “Business
Combinations,” (FAS 141R) which changes how business acquisitions are
accounted.  FAS 141R requires the acquiring entity in a business
combination to recognize all (and only) the assets acquired and liabilities
assumed in the transaction and establishes the acquisition-date fair value as
the measurement objective for all assets acquired and liabilities assumed in a
business combination.  Certain provisions of this standard will, among
other things, impact the determination of acquisition-date fair value of
consideration paid in a business combination (including contingent
consideration); exclude transaction costs from acquisition accounting; and
change accounting practices for acquired contingencies, acquisition-related
restructuring costs, in-process research and development, indemnification
assets, and tax benefits.  FAS 141R is effective for financial statements
issued for fiscal years beginning after December 15, 2008.  The
Company has not yet determined the impact FAS 141R may have on its results of
operations or financial position.




In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB
No. 51,” (FAS 160) which establishes new standards governing the accounting
for and reporting of noncontrolling interests (NCIs) in partially owned
consolidated subsidiaries and the loss of control of subsidiaries.  Certain
provisions of this standard indicate, among other things, that NCIs (previously
referred to as minority interests) be treated as a separate component of equity,
not as a liability; that increases and decrease in the parent’s ownership
interest that leave control intact be treated as equity transactions, rather
than as step acquisitions or dilution gains or losses; and that losses of a
partially owned consolidated subsidiary be allocated to the NCI even when such
allocation might result in a deficit balance. This standard also requires
changes to certain presentation and disclosure requirements. FAS 160 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. The provisions of the standard are to be applied to all NCIs
prospectively, except for the presentation and disclosure requirements, which
are to be applied retrospectively to all periods presented. The Company has not
yet determined the impact FAS 160 may have on its results of operations or
financial position.





RECLASSIFICATIONS




Certain prior
period amounts have been reclassified to conform to the current
presentation.








2.  DISCONTINUED
OPERATIONS




On April 2,
2007, the Company sold the majority of Telcom’s operating assets to GTRAN
Camarillo, Inc. in exchange for $500 and effectively ceased Telcom’s operations.
As a consequence of the sale, the financial results, position and cashflow of
Telcom have been classified as discontinued operations in the accompanying
financial statements for all periods presented.




Summarized
operating results and loss on sale of discontinued operations in the years ended
December 31, 2005, 2006 and 2007 were as follows:





Year
      ended December 31,2005
            
            
            2006
            
            
            2007Revenue
            
            $
            4,410
            
            
            $
            3,443
            
            
            $
            559Operating
      loss
            
            
            (777
            )
            
            
            (997
            )
            
            
            (479
            )Interest
      income
            
            
            10
            
            
            
            17
            
            
            
            4Loss
      on sale of discontinued operations
            
            
            -
            
            
            
            -
            
            
            
            (490
            )Loss
      from discontinued operations
            
            $
            (767
            )
            
            $
            (980
            )
            
            $
            (965
            )




The assets
and liabilities of Telcom as of December 31, 2007 are zero. Such amounts as of
December 31, 2006 are reflected as discontinued operations and
were:





December
      31, 2006Assets
      of discontinued operationsAccounts
      receivable
            
            $
            604Inventory
            
            
            654Other
      current and non-current assets
            
            
            62Fixed
      assets, net
            
            
            109Total
            
            $
            1,429Liabilities
      of discontinued operations
            
            $
            252




3.  PURCHASE
OF ASSETS OF RF GROUP




On September
5, 2007, the Company purchased certain assets and assumed certain related
obligations of the radio frequency group of Fairchild Semiconductor (RF group)
in exchange for cash of $2,415, inclusive of transaction costs of $115. The
assets acquired were principally equipment used in researching and developing
RFICs for the broadband wireless communications markets. No products or
manufacturing processes were included as part of the purchase. The RF group
staff of 23 accepted employment with the Company.




Included in
the purchase were fixed assets with an estimated fair market value of $1,723,
non-exclusive rights to certain intellectual property and assembled workforce
valued at approximately $168 and $524, respectively. The fixed assets,
intellectual property and assembled workforce costs will be amortized over their
estimated useful lives of 3, 2 and 3 years, respectively.




4.
 INTANGIBLES AND GOODWILL




As of
December 31, 2006 and 2007, the Company's intangible assets consist of the
following:





Gross
      Carrying Amount
            
            
            Accumulated
      AmortizationDecember
      31,
            
            
            December
      31,2006
            
            
            2007
            
            
            2006
            
            
            2007Goodwill
            
            $
            5,918
            
            
            $
            5,918
            
            
            $
            -
            
            
            $
            -Intellectual
      property
            
            
            210
            
            
            
            378
            
            
            
            199
            
            
            
            238Customer
      list
            
            
            240
            
            
            
            240
            
            
            
            240
            
            
            
            240Assembled
      Workforce
            
            
            -
            
            
            
            524
            
            
            
            -
            
            
            
            58$
            6,368
            
            
            $
            7,060
            
            
            $
            439
            
            
            $
            536





Annual
amortization expense related to intangible assets is calculated over their
estimated useful lives of two to four years and was $240, $115 and $97 in the
years ended December 31, 2005, 2006 and 2007,
respectively.   Future annual amortization expense related to
intangible assets is expected as follows, $259 in 2008, $231 in 2009 and the
remainder in 2010.





5.
RESTRUCTURING AND OTHER CHARGES





The January
1, 2005 restructuring balance related to lease-related costs.  Certain
lease-related obligations were settled during 2005 and resulted in a savings to
the Company of $120.




Activity and
liability balances related to the restructuring and other charges for the years
ended December 31, 2005 and 2006 are as follows:





BalanceJanuary
      1, 2005 restructuring balance
            
            $
            726Deductions
            
            
            (566
            )Savings
      on settlement of obligation
            
            
            (120
            )December
      31, 2005 restructuring balance
            
            
            40Deductions
            
            
            (40
            )December
      31, 2006 restructuring balance
            
            $
            -





6.
SEGMENTS




The Company
operates in one segment. Its integrated circuits are primarily manufactured
using common manufacturing facilities located in the same domestic geographic
area. All operating expenses and assets of the Company are combined and reviewed
by the chief operating decision maker on an enterprise-wide basis, resulting in
no additional discrete financial information or reportable segment
information.




The Company
classifies its revenues based upon the end application of the product in which
its integrated circuits are used. Net sales by end application are regularly
reviewed by the chief operating decision maker and are as follows:





Year Ended
      December 31,2005
            
            
            2006
            
            
            2007Wireless
            
            $
            53,143
            
            
            $
            91,275
            
            
            $
            129,044Broadband
            
            
            50,728
            
            
            
            75,167
            
            
            
            101,512Total
            
            $
            103,871
            
            
            $
            166,442
            
            
            $
            230,556





The Company
primarily sells to three geographic regions: Asia, USA and Canada, and Other.
The geographic region is determined based on shipping addresses, not on the
locations of the ultimate users. Net sales to each of the three geographic
regions are as follows:




Year
      Ended December 31,2005
            
            
            2006
            
            
            2007Asia
            
            $
            56,677
            
            
            $
            91,626
            
            
            $
            153,422USA
      and Canada
            
            
            38,689
            
            
            
            62,741
            
            
            
            66,706Other
            
            
            8,505
            
            
            
            12,075
            
            
            
            10,428Total
            
            $
            103,871
            
            
            $
            166,442
            
            
            $
            230,556




7.
LONG-TERM DEBT




On September
24, 2004, the Company issued $38,000 aggregate principal amount of 5%
Convertible Senior Notes (2009 Notes) due October 15, 2009. The 2009 Notes are
convertible into shares of the Company’s common stock at any time prior to their
maturity, at an initial conversion rate, subject to adjustment, of 200 shares
for each $1,000 principal amount, which is equivalent to a conversion price of
$5.00 per share (7,600 shares contingently issuable). Pursuant to the indenture,
dated as of September 24, 2004, between the Company and U.S. Bank Trust
Association, as trustee, in the event of a “fundamental change” on or prior to
July 15, 2009, the Company will pay a make whole premium upon the repurchase or
conversion of the 2009 Notes. Subject to certain exceptions, the make whole
premium will be 1% of the principal amount of the 2009 Notes, plus an additional
premium based on the date such “fundamental change” becomes effective and the
price paid per share of the Company’s common stock in the transaction
constituting the “fundamental change”. Interest on the 2009 Notes is payable
semi-annually in arrears on April 15 and October 15 of each year.





On November
27, 2001, the Company issued $100,000 aggregate principal amount of 5%
Convertible Senior Notes (2006 Notes) due November 15, 2006.  The 2006
Notes were convertible into shares of common stock at a rate of 47.619 shares
for each $1,000 principal amount (convertible at a price of $21.00 per share),
subject to adjustment. During 2002, the Company repurchased and retired $33,300
aggregate principal amount of the 2006 Notes.  In addition, in the
third quarter of 2004 and concurrent with the issuance of the 2009 Notes, the
Company repurchased and retired $20,000 aggregate principal amount of the 2006
Notes for $19,758 in cash, inclusive of accrued interest of $358. The Company
recognized a gain of $327 on the repurchase, after adjusting for the write-off
of a proportionate share of unamortized offering costs. On November 15, 2006,
the Company repaid the remaining $46,700 balance of the 2006 Notes
obligation.





Unamortized
debt issuance costs of $1,273 and $807 at December 31, 2006 and 2007,
respectively, consisting principally of underwriters' fees, were included in
other assets and are being amortized over the life of the notes.





8.
COMMITMENTS AND CONTINGENCIES




The Company
leases manufacturing, warehousing and office space and manufacturing equipment
under noncancelable operating leases that expire through 2016. Rent expense, net
of sublease income was $2,447, $2,101 and $2,411 in 2005, 2006 and 2007,
respectively. Sublease income was $270 and $24 in 2005 and 2006, respectively.
As of December 31, 2007, there were no capital lease obligations
outstanding.  The future minimum lease payments under the
noncancelable operating leases are as follows:





YEAR
            
            Operating
      Leases2008
            
            $
            2,6862009
            
            
            2,4742010
            
            
            2,2112011
            
            
            1,8592012
            
            
            2,003Thereafter
            
            
            8,396Total
      minimum lease payments
            
            $
            19,629





In addition
to the above, at December 31, 2007, the Company had unconditional purchase
obligations of approximately $20,327 of which $17,570 relates to capital
equipment purchase requirements primarily over the first half of
2008.  Such capital purchase requirements will serve to increase the
installed equipment capacity of the Company's manufacturing operations in
response to anticipated increases in customer demand for the Company's products.
In early 2007, the Company signed an agreement with KSND in China to jointly
construct a wafer fabrication facility. The agreement requires the Company to
invest approximately $50,000 over a ten-year period, inclusive of
$16,700 required by January 31, 2010, of which approximately $3,500 has
been funded as of December 31, 2007. In the event the Company decides
unilaterally not to proceed with the agreement with KSND by January 31, 2010,
its maximum obligation under the agreement with KSND would be
$16,700 reduced by payments made to the date of cancellation.




9.
MARKETABLE SECURITIES





The following
is a summary of available-for-sale securities:





Available-for-Sale
      SecuritiesCost
            
            
            Gross
      Unrealized Gains
            
            
            Gross
      Unrealized Losses
            
            
            Estimated
      Fair ValueGovernment-Sponsored
      Enterprises Debt Securities
            
            $
            6,395
            
            
            $
            -
            
            
            $
            (12
            )
            
            $
            6,383State
      & Municipal Auction Rate Securities
            
            
            14,470
            
            
            
            -
            
            
            
            -
            
            
            
            14,470Corporate
      Debt Securities – Non-Auction
            
            
            27,398
            
            
            
            -
            
            
            
            (50
            )
            
            
            27,348Corporate
      Debt Securities – Auction Rate
            
            
            6,400
            
            
            
            -
            
            
            
            -
            
            
            
            6,400Preferred
      Equity Securities – Auction Rate
            
            
            15,175
            
            
            
            -
            
            
            
            -
            
            
            
            15,175Total
      at December 31, 2006
            
            $
            69,838
            
            
            $
            -
            
            
            $
            (62
            )
            
            $
            69,776Government-Sponsored
      Enterprises Debt Securities
            
            $
            60,812
            
            
            $
            32
            
            
            $
            (23
            )
            
            $
            60,821State
      & Municipal Auction Rate Securities
            
            
            19,290
            
            
            
            -
            
            
            
            -
            
            
            
            19,290Corporate
      Debt Securities – Non-Auction
            
            
            20,805
            
            
            
            3
            
            
            
            (60
            )
            
            
            20,748Corporate
      Debt Securities – Auction Rate
            
            
            6,323
            
            
            
            -
            
            
            
            -
            
            
            
            6,323Preferred
      Equity Securities – Auction Rate
            
            
            11,844
            
            
            
            -
            
            
            
            -
            
            
            
            11,844Total
      at December 31, 2007
            
            $
            119,074
            
            
            $
            35
            
            
            $
            (83
            )
            
            $
            119,026




Classification of
marketable securities as current or non-current is dependent upon management’s
intended holding period, the security’s maturity date and liquidity
considerations based on market conditions. If management intends to hold the
securities for longer than one year as of the balance sheet date, they are
classified as non-current. Since these marketable securities are classified as
available-for-sale securities, changes in fair value will flow through other
comprehensive income, with amounts reclassified out of other comprehensive
income into earnings upon sale or “other-than-temporary”
impairment.




Auction rate
securities are generally long-term debt instruments that provide liquidity
through a Dutch auction process that resets the applicable interest rate at
pre-determined calendar intervals, generally every 28 days. This mechanism
generally allows existing investors to rollover their holdings and continue to
own their respective securities or liquidate their holdings by selling their
securities at par value. We generally invest in these securities for short
periods of time as part of our cash management program. During the second half
of 2007, certain auction rate debt and preferred securities failed to auction
due to sell orders exceeding buy orders. The funds associated with failed
auctions will not be accessible until a successful auction occurs or a buyer is
found outside of the auction process. Based on broker-dealer valuation models,
auction rate securities with an original value of approximately $5,625 had an
estimated fair value of $4,668 as of December 31, 2007. It was determined
that this decline was other than temporary and as result an impairment charge of
$957 was recorded in other income (expense). These auction rate securities are
classified as non-current marketable securities as of December 31,
2007.




Management
has the ability and intent, if necessary, to liquidate certain of its marketable
securities in order to meet the Company’s liquidity needs in the next 12 months.
Accordingly, certain securities with contractual maturities greater than one
year from year-end have been classified as short-term. Expected maturities may
differ from contractual maturities because the issuers of the securities may
have the right to prepay obligations without prepayment penalties. The amortized
cost and estimated fair value of marketable debt securities at December 31, 2007
by contractual maturity, are shown below:





Available-for-Sale
      Debt SecuritiesAmortized
      Cost
            
            
            Estimated
      Fair ValueDue
      in one year or less
            
            $
            71,010
            
            
            $
            70,988Due
      after one year through five years
            
            
            10,607
            
            
            
            10,581Due
      after five years through ten years
            
            
            2,950
            
            
            
            2,950Due
      after 10 years
            
            
            22,663
            
            
            
            22,663Total
            
            $
            107,230
            
            
            $
            107,182




In
mid-February, 2008, we were informed that there was insufficient demand at
auctions for certain of our auction rate securities. As a result, certain of the
affected securities are currently not liquid and the interest rates have been
reset to the predetermined higher rates.





10.
INVENTORIES




Inventories
consist of the following:




December
      31,2006
            
            
            2007Raw
      materials
            
            $
            5,888
            
            
            $
            8,915Work
      in progress
            
            
            11,566
            
            
            
            15,256Finished
      goods
            
            
            6,295
            
            
            
            4,05523,749
            
            
            
            28,226Reserves
            
            
            (3,530
            )
            
            
            (4,237
            )Total
            
            $
            20,219
            
            
            $
            23,989





11.
ACCRUED LIABILITIES




Accrued
liabilities consist of the following:





December
      31,2006
            
            
            2007Accrued
      compensation
            
            $
            2,356
            
            
            $
            4,022Warranty
      reserve
            
            
            347
            
            
            
            327Other
            
            
            2,885
            
            
            
            3,579$
            5,588
            
            
            $
            7,928





Warranty
reserve movements in the years ended December 31, 2005, 2006 and 2007 for
returns were $397, $726 and $541, respectively. The periodic charges for
estimated warranty costs were $634, $677 and $521 in the years ended December
31, 2005, 2006 and 2007, respectively.





12.
INCOME TAXES




The current
and deferred components of income taxes for the years ended December 31, 2005
and 2006 were zero. For the year ended December 31, 2007, the current Federal
and state component of income taxes were $2,083 and $190, respectively which
were fully offset by deferred tax movements including the valuation
allowance.





Deferred tax
assets require a valuation allowance when, in the opinion of management, it is
more likely than not that some portion of the deferred tax assets may not be
realized. Whereas realization of the deferred tax assets is dependent upon the
timing and magnitude of future taxable income prior to the expiration of the
deferred tax attributes, management began recording a full valuation allowance
in 2001. The amount of the deferred tax assets considered realizable, however,
could change if estimates of future taxable income during the carry-forward
period are changed.





Significant
components of the Company’s net deferred taxes as of December 31, 2006 and 2007
are as follows:





December
      31,2006
            
            
            2007Deferred
      tax balancesAccruals/reserves
            
            $
            6,121
            
            
            $
            7,583Net
      operating loss carryforwards
            
            
            106,226
            
            
            
            103,004Research
      and experimentation credits
            
            
            10,686
            
            
            
            13,199Deferred
      rent expense
            
            
            1,336
            
            
            
            1,186Difference
      in basis of plant and equipment
            
            
            4,136
            
            
            
            3,335Other
            
            
            -
            
            
            
            -Valuation
      allowance
            
            
            (128,505
            )
            
            
            (128,307
            )Net
      deferred tax assets
            
            
            -
            
            
            
            -





As of
December 31, 2007, the Company had net operating loss carryforwards of
approximately $320,499 for both federal and state tax reporting purposes. The
federal carryforward will begin to expire in 2019, and the state carryforwards
have begun to expire. A portion of net operating loss carryforwards and tax
credit carryforwards may be subject to an annual limitation regarding their
utilization against taxable income in future periods due to the “change of
ownership” provisions of the Internal Revenue Code and similar state provisions.
A portion of these carryforwards may expire before becoming available to reduce
future income tax liabilities.




At December
31, 2007, $25,149 of the deferred tax asset related to net operating loss
carryforwards and an equivalent amount of deferred tax asset valuation allowance
represented tax benefits associated with the exercise of non-qualified stock
options and restricted stock deduction over book. Such benefit, when realized,
will be credited to additional paid-in capital. Included within the Company’s
net operating loss tax carryforwards at December 31, 2007, the Company has
excess tax benefits, related to stock-based compensation that arose subsequent
to the adoption of FAS 123R of $37,052 ($6,215 at December 31, 2006) which are
not recorded as a deferred tax asset as the amounts would not have resulted in a
reduction in current taxes payable until all other tax attributes currently
available to the Company were utilized. The benefit of these deductions will be
recorded to additional paid-in capital at the time the tax deduction results in
a reduction of current taxes payable.




The earnings
associated with the Company’s investment in its foreign subsidiaries is
considered to be permanently invested and no provision for U.S. federal and
state income taxes on those earnings or translation adjustments have been
provided.




The
reconciliation of income tax expense computed at the U.S. federal statutory rate
to the benefit from income taxes is as follows:




Year
      Ended December 31,2005
            
            
            2006
            
            
            2007Tax
      at US statutory rate
            
            $
            (10,932
            )
            
            
            (35.0
            )%
            
            $
            (3,097
            )
            
            
            (35.0
            )%
            
            $
            2,083
            
            
            
            35.0
            %Effect
      of permanent items
            
            
            (88
            )
            
            
            (0.3
            )
            
            
            19
            
            
            
            0.2
            
            
            
            (28
            )
            
            
            (0.5
            )State
      and foreign tax (benefit), net of federal tax effect
            
            
            (1,023
            )
            
            
            (3.3
            )
            
            
            (286
            )
            
            
            (3.2
            )
            
            
            190
            
            
            
            3.2Research
      and experimentation tax credits, net
            
            
            (797
            )
            
            
            (2.6
            )
            
            
            (4,816
            )
            
            
            (54.4
            )
            
            
            (2,513
            )
            
            
            (42.2
            )Valuation
      allowance
            
            
            12,763
            
            
            
            40.9
            
            
            
            8,892
            
            
            
            100.5
            
            
            
            (198
            )
            
            
            (3.3
            )Other
            
            
            77
            
            
            
            0.3
            
            
            
            (712
            )
            
            
            (8.1
            )
            
            
            466
            
            
            
            7.8(Benefit
      from) provision for  income taxes
            
            $
            -
            
            
            
            0.0
            %
            
            $
            -
            
            
            
            0.0
            %
            
            $
            -
            
            
            
            0.0
            %





13.
STOCKHOLDERS' EQUITY




In March
2007, the Company completed an underwritten public offering of 8,625 shares of
common stock at a price of $12.25 which generated net proceeds to the Company of
$98,955. In March 2006, the Company completed an underwritten public offering of
10,446 shares of common stock at a price of $5.50 which generated net proceeds
to the Company of $53,110.





On December
17, 1998, the Company adopted a Shareholders’ Rights Agreement (the Agreement).
Pursuant to the Agreement, as amended on November 30, 2000, rights were
distributed as a dividend at the rate of one right for each share of ANADIGICS,
Inc. common stock, par value $0.01 per share, held by stockholders of record as
of the close of business on December 31, 1998. The rights will expire on
December 17, 2008, unless earlier redeemed or exchanged. Under the Agreement,
each right will entitle the registered holder to buy one one-thousandth of a
share of Series A Junior Participating Preferred Stock at a price of $75.00 per
one one-thousandth of a share, subject to adjustment in accordance with the
Agreement. The rights will become exercisable only if a person or group of
affiliated or associated persons acquires, or obtains the right to acquire,
beneficial ownership of ANADIGICS, Inc. common stock or other voting securities
that have 18% or more of the voting power of the outstanding shares of voting
stock, or upon the commencement or announcement of an intention to make a tender
offer or exchange offer, the consummation of which would result in such person
or group acquiring, or obtaining the right to acquire, beneficial ownership of
18% or more of the voting power of ANADIGICS, Inc. common stock or other voting
securities.





14.
EMPLOYEE BENEFIT PLANS




Effective
January 1, 2006, the Company adopted the provisions of FAS 123R in accounting
for share based payments to employees, having previously followed the provisions
of Accounting Principles Board Opinion Number 25, “Accounting for Stock Issued
to Employees”, as permitted by FAS 123.  The Company has adopted FAS
123R using the modified-prospective transition method, which requires the
recognition of compensation expense over the remaining vesting period for all
awards that remain unvested as of January 1, 2006. The Company adopted the
alternative transition method provided in FASB Staff Position No. FAS 123R–3
“Transition Election Related to Accounting for the Tax Effects of Share-Based
Payment Awards” for calculating the tax effects of stock-based compensation. The
alternative transition method includes simplified methods to establish the
beginning balance of the additional paid-in-capital pool (APIC pool) related to
the tax effects of employee stock-based compensation, and to determine the
subsequent impact on the APIC pool and consolidated statements of cash flows of
the tax effects of employee stock-based compensation awards that are outstanding
upon adoption of FAS 123R.





Equity
Compensation Plans


The
Company had 4 equity compensation plans under which equity securities are
authorized for issuance to employees and/or directors:


§
            The
      1995 Long-Term Incentive and Share Award Plan for Officers and Directors
      (terminated February 28, 2005)  (1995
  Plan);


§
            The
      1997 Long Term Incentive and Share Award Plan (1997
  Plan);


§
            The
      2005 Long Term Incentive and Share Award Plan (2005 Plan, collectively
      with the 1995 Plan and the 1997 Plan, the Plans);
  and


§
            The
      ESP Plan.




Employees and
outside directors have been granted restricted stock and options to purchase
shares of common stock under stock option plans adopted in 1995, 1997 and 2005.
An aggregate of 4,913, 5,100 and 6,450 shares of common stock were reserved for
issuance under the 1995 Plan, the 1997 Plan and the 2005 Plan, respectively. The
Plans provide for the granting of stock options, stock appreciation rights,
restricted shares and other share based awards to eligible employees and
directors, as defined in the Plans. Option grants have terms of ten years and
become exercisable in varying amounts over periods of up to three years. To
date, no stock appreciation rights have been granted under the
Plans.




In 1995, the
Company adopted the ESP Plan under Section 423 of the Internal Revenue Code. All
full-time employees of ANADIGICS, Inc. and part-time employees, as defined in
the ESP Plan, are eligible to participate in the ESP Plan. An aggregate of 2,694
shares of common stock were reserved for offering under the ESP Plan. Offerings
are made at the commencement of each calendar year and must be purchased by the
end of that calendar year. Pursuant to the terms of the ESP Plan, shares
purchased and the applicable per share price were 328 ($3.13), 187 ($5.36) and
236 ($7.95), respectively for the years ended December 31, 2005, 2006 and 2007,
respectively.




Under FAS
123R, stock-based compensation expense arises from the amortization of
restricted stock grants, unamortized stock option grants and from the ESP Plan
whereas in 2005, only amortization of restricted stock grants was required.
Effective with the adoption of FAS 123R, the Company uses the straight-line
basis in calculating stock-based compensation expense.





(1)
            The
      following table illustrates the effect on net loss and loss per common
      share as if the Company had applied the fair value method to measure
      stock-based compensation, required under the disclosure provisions
      of  FAS 123R (1):





For
      years ended December 31,Pro
      forma
              (comparison
      only)
            
            
            As
      reported2005
            
            
            2005
            
            
            2006
            
            
            2007Amortization
      of restricted stock awards
            
            $
            (2,649
            )
            
            $
            (2,649
            )
            
            $
            (7,754
            )
            
            $
            (12,319
            )Amortization
      of ESP Plan
            
            
            (567
            )
            
            
            -
            
            
            
            (400
            )
            
            
            (705
            )Amortization
      of stock option awards
            
            
            (542
            )
            
            
            -
            
            
            
            (200
            )
            
            
            (2,297
            )Total
      stock-based compensation
            
            $
            (3,758
            )
            
            $
            (2,649
            )
            
            $
            (8,354
            )
            
            $
            (15,321
            )Net
      income (loss)
            
            $
            (32,342
            )
            
            $
            (31,233
            )
            
            $
            (8,850
            )
            
            $
            5,951Earnings
      (loss) per share:Basic
            
            $
            (0.95
            )
            
            $
            (0.92
            )
            
            $
            (0.20
            )
            
            $
            0.11Diluted
            
            $
            (0.95
            )
            
            $
            (0.92
            )
            
            $
            (0.20
            )
            
            $
            0.10By
      Financial Statement line itemCost
      of sales
            
            $
            772
            
            
            $
            570
            
            
            $
            1,777
            
            
            $
            3,409Research
      and development expenses
            
            
            1,553
            
            
            
            1,177
            
            
            
            3,271
            
            
            
            5,855Selling
      and administrative expenses
            
            
            1,337
            
            
            
            806
            
            
            
            3,121
            
            
            
            6,012Loss
      from discontinued operations
            
            
            96
            
            
            
            96
            
            
            
            185
            
            
            
            45


Pro forma
disclosure for 2005 presents the effect of share based compensation expense as
required under FAS 123. As reported historical results for periods prior to
January 1, 2006 reflect only that portion of share based compensation expense
required by GAAP prior to the adoption of FAS 123R.





Restricted
Stock Awards




Commencing in
August 2004, the Company began granting restricted shares under the Plans. The
value of the restricted stock awards are fixed upon the date of grant and
amortized over the related vesting period of one to three
years.  Restricted stock awards are subject to forfeiture if
employment terminates prior to vesting. The restricted stock awards carry voting
and dividend rights commencing upon grant but may not be traded or transferred
prior to vesting.  Grant, vest and forfeit activity and related
weighted average (WA) price per share for restricted stock and for stock options
during the period from January 1, 2005 to December 31, 2007 is presented in
tabular form below:





Restricted
      Shares
            
            
            Stock
      OptionsShares
            
            
            WA
      price per share
            
            
            Issuable
      upon exercise
            
            
            WA
      exercise priceShares
      outstanding at January 1, 2005
            
            
            381
            
            
            
            4.01
            
            
            
            6,792
            
            
            
            7.47Granted
            
            
            1,303
            
            
            
            2.71
            
            
            
            159
            
            
            
            3.12Shares
      vested/options exercised
            
            
            (357
            )*
            
            
            4.01
            
            
            
            (416
            )
            
            
            2.80Forfeited/expired
            
            
            (113
            )
            
            
            2.95
            
            
            
            (591
            )
            
            
            7.57Balance
      at December 31, 2005
            
            
            1,214
            
            
            
            2.72
            
            
            
            5,944
            
            
            
            7.67Granted
            
            
            2,685
            
            
            
            6.90
            
            
            
            994
            
            
            
            8.80Shares
      vested/options exercised
            
            
            (675
            )
            
            
            2.68
            
            
            
            (983
            )
            
            
            3.85Forfeited/expired
            
            
            (86
            )
            
            
            5.46
            
            
            
            (286
            )
            
            
            11.16Balance
      at December 31, 2006
            
            
            3,138
            
            
            $
            6.23
            
            
            
            5,669
            
            
            $
            8.36Granted
            
            
            1,185
            
            
            
            12.40
            
            
            
            182
            
            
            
            11.48Shares
      vested/options exercised
            
            
            (1,916
            )
            
            
            6.07
            
            
            
            (2,135
            )
            
            
            5.73Forfeited/expired
            
            
            (195
            )
            
            
            7.21
            
            
            
            (225
            )
            
            
            15.29Balance
      at December 31, 2007
            
            
            2,212
            
            
            $
            9.61
            
            
            
            3,491
            
            
            $
            9.68


* 114
shares were repurchased by the Company to fund withholding tax
obligations.





Exercisable
options and their related average exercise prices were 5,759 ($7.83), 4,644
($8.30) and 2,701 ($9.77) as of December 31, 2005, 2006 and 2007, respectively.
The total fair value of restricted shares vested during the years ended December
31, 2006 and 2007 were $4,003 and $25,023, respectively. The intrinsic value of
exercised options during the years ended December 31, 2005, 2006 and 2007 were
$932, $3,801 and $18,120, respectively.




In January 2008, the
Company granted an additional 1,399 restricted shares under the 2005 Plan
at an average market price equal to $8.52, which represented the fair market
value at the date of grants.





Weighted
      average information as of December 31, 2007Options
      currently exercisableShares issuable upon
      exercise
            
            
            2,701Weighted average exercise
      price
            
            $
            9.77Weighted average remaining
      contractual term
            
            4.5
      yearsWeighted
      average remaining contractual term for outstanding options
            
            5.6
      yearsIntrinsic
      value of exercisable options
            
            $
            9,729Intrinsic
      value of outstanding options
            
            $
            11,704Unrecognized
      stock-based compensation costOption plans
            
            $
            4,155Restricted stock
            
            $
            13,008Weighted
      average remaining vest period for option plans
            
            1.9
      yearsWeighted
      average remaining vest period for restricted stock
            
            1.2
      years





Stock options outstanding at December
31, 2007 are summarized as follows:




Range
      of exercise prices
            
            
            Outstanding
      Options at December 31, 2007
            
            
            Weighted
      average remaining contractual life
            
            
            Weighted
      average exercise price
            
            
            Exercisable
      at December 31, 2007
            
            
            Weighted
      average exercise price$
            1.39
      - $7.27
            
            
            
            1,461
            
            
            
            4.91
            
            
            $
            5.53
            
            
            
            1,446
            
            
            $
            5.54$
            7.65
      - $8.84
            
            
            
            971
            
            
            
            8.82
            
            
            $
            8.82
            
            
            
            315
            
            
            $
            8.77$
            9.00
      – 13.94
            
            
            
            509
            
            
            
            3.39
            
            
            $
            12.25
            
            
            
            436
            
            
            $
            12.51$
            14.39
      - $53.48
            
            
            
            550
            
            
            
            3.22
            
            
            $
            19.82
            
            
            
            504
            
            
            $
            20.15








On December
22, 2004, the Company authorized the immediate vesting of eligible employees’
unvested share options with an exercise price greater than $5.00 per share.
Directors were not eligible. In total, 1,772 options with an average exercise
price of $7.26 immediately vested and had an average remaining contractual life
of 9.1 years. The unamortized fair value associated with these accelerated-vest
shares in the amount of $2,654 amortized immediately. Had the accelerated-vest
program not occurred, the related cost in the years ended December 31, 2006
and 2007 would have included $751 and $57, respectively. In addition to its
employee-retention value, the Company’s decision to accelerate the vesting of
these “out-of-the-money” options was based upon the accounting of such costs
moving from disclosure-only in 2004 to being included in the Company’s
consolidated statement of operations in 2005 based upon the Company’s expected
adoption of FAS 123R prior to its required adoption date being
deferred.   For the year ended December 31, 2005, $1,846 would have
been included in the pro forma disclosure.




Valuation
for ESP Plan and Stock Option Awards




The fair
value of these equity awards was estimated at the date of grant using a
Black-Scholes option pricing model. The weighted average assumptions and fair
values for stock-based compensation grants used for the years ended December 31,
2005, 2006 and 2007 are summarized below:





Year
      ended December 31,2005
            
            
            2006
            
            
            2007Stock
      option awardsRisk-free
      interest rate
            
            
            3.4
            %
            
            
            4.6
            %
            
            
            4.8
            %Expected
      volatility
            
            
            95
            %
            
            
            76
            %
            
            
            71
            %Average
      expected term (in years)
            
            
            2.75
            
            
            
            4.72
            
            
            
            4.75Expected
      dividend yield
            
            
            0.0
            %
            
            
            0.0
            %
            
            
            0.0
            %Weighted
      average fair value of options granted
            
            $
            1.70
            
            
            $
            5.54
            
            
            $
            6.91ESP
      PlanRisk-free
      interest rate
            
            
            4.4
            %
            
            
            5.0
            %
            
            
            3.3
            %Expected
      volatility
            
            
            80
            %
            
            
            62
            %
            
            
            58
            %Average
      expected term
            
            
            1
            
            
            
            1
            
            
            
            1Expected
      dividend yield
            
            
            0
            %
            
            
            0
            %
            
            
            0
            %Weighted
      average fair value of purchase option
            
            $
            1.72
            
            
            $
            2.13
            
            
            $
            2.99




In adopting
FAS 123R on January 1, 2006, the Company evaluated the assumptions used in the
Black Scholes model and modified its methodology for computing the expected
volatility and expected term. Expected volatility was modified from being based
solely on Company historical volatility to a combination of both Company and
peer company historical volatility. The expected term of the stock options was
modified from being based solely on historical observations of employee exercise
patterns to beingalso combined with expectations of employee exercise behavior
in the future giving consideration to the contractual terms of the stock-based
awards. The risk free interest rate assumption has consistently been based on
the yield at the time of grant of a U.S. Treasury security with an equivalent
remaining term. The Company has never paid cash dividends and does not currently
intend to pay cash dividends and has consistently assumed a 0% dividend
yield.





ANADIGICS, Inc. also
sponsors an Employee Savings and Protection Plan under Section 401(k) of the
Internal Revenue Code which is available to all full-time employees. Employees
can make voluntary contributions up to limitations prescribed by the Internal
Revenue Code. The Company matches 50% of employee contributions up to 6% of
their gross pay. The Company recorded expense of $675, $746 and $885 for the
years ended December 31, 2005, 2006 and 2007, respectively, relating to plan
contributions.




15.
EARNINGS PER SHARE





The
reconciliation of shares used to calculate basic and diluted earnings per share
consists of the following:





Year ended
      December 31,2005
            
            
            2006
            
            
            2007Weighted
      average common shares outstanding used to calculate basic (loss) earnings
      per share
            
            
            34,012
            
            
            
            43,814
            
            
            
            55,189Net
      effect of dilutive securities - based on treasury stock method using
      average market price
            
            
            -
            
            
            
            -
            
            
            
            3,432Weighted
      average common shares outstanding used to calculate diluted (loss)
      earnings per share
            
            
            34,012
            
            
            
            43,814
            
            
            
            58,621




Dilution
arising from the Company's outstanding stock options or shares potentially
issuable upon conversion of the Convertible notes was not included in the years
ended December 31, 2005 and 2006 as their effect was anti-dilutive. Potential
dilution arising from any of the remainder of the Company's outstanding stock
options, unvested restricted shares or shares potentially issuable upon
conversion of the Convertible notes are detailed below. Such potential dilution
was excluded as their effect was anti-dilutive.





Year ended
      December 31,2005
            
            
            2006
            
            
            2007Convertible
      notes
            
            
            9,824
            
            
            
            7,600
            
            
            
            7,600Stock
      options
            
            
            5,944
            
            
            
            5,669
            
            
            
            1,703Unvested
      restricted shares
            
            
            1,214
            
            
            
            3,138
            
            
            
            204





16. OTHER
ACCUMULATED COMPREHENSIVE INCOME (LOSS)





The
components of other accumulated comprehensive income (loss) are as
follows:





For
      year ended December 31,2006
            
            
            2007Unrealized
      gain (loss) on available-for-sale securities
            
            $
            (62
            )
            
            $
            (48
            )Foreign
      currency translation adjustment
            
            
            (38
            )
            
            
            (46
            )Total
            
            $
            (100
            )
            
            $
            (94
            )




17. LEGAL
PROCEEDINGS





ANADIGICS is
a party to litigation arising out of the operation of our business. We believe
that the ultimate resolution of such litigation should not have a material
adverse effect on our consolidated financial condition or results of
operation.




18.
QUARTERLY FINANCIAL DATA (UNAUDITED)





2006 and
2007 Quarterly Financial Data




The following
table sets forth certain unaudited results of operations for each quarter during
2006 and 2007. The unaudited information has been prepared on the same basis as
the audited consolidated financial statements and includes all adjustments which
management considers necessary for a fair presentation of the financial data
shown. The operating results for any quarter are not necessarily indicative of
the results to be attained for any future period. Basic and diluted loss per
share are computed independently for each of the periods presented. Accordingly,
the sum of the quarterly loss per share may not agree to the total for the year
(in thousands, except for per share data).





Quarter
      Ended2006
            
            
            2007April
      1
            
            
            July
      1
            
            
            Sept.
      30
            
            
            Dec.
      31
            
            
            March
      31
            
            
            June
      30
            
            
            Sept.
      29
            
            
            Dec.
      31Net
      sales
            
            $
            34,695
            
            
            $
            39,348
            
            
            $
            43,943
            
            
            $
            48,456
            
            
            $
            49,573
            
            
            $
            53,869
            
            
            $
            59,545
            
            
            $
            67,569Cost
      of sales
            
            
            25,289
            
            
            
            28,237
            
            
            
            30,278
            
            
            
            32,407
            
            
            
            33,287
            
            
            
            34,963
            
            
            
            39,387
            
            
            
            44,131Gross
      profit
            
            
            9,406
            
            
            
            11,111
            
            
            
            13,665
            
            
            
            16,049
            
            
            
            16,286
            
            
            
            18,906
            
            
            
            20,158
            
            
            
            23,438Research
      and development expenses
            
            
            8,006
            
            
            
            8,358
            
            
            
            8,976
            
            
            
            9,714
            
            
            
            9,738
            
            
            
            11,080
            
            
            
            12,491
            
            
            
            13,230Selling
      and administrative expense
            
            
            5,264
            
            
            
            5,678
            
            
            
            6,139
            
            
            
            6,579
            
            
            
            7,359
            
            
            
            7,482
            
            
            
            7,221
            
            
            
            8,109Operating
      (loss) income
            
            
            (3,864
            )
            
            
            (2,925
            )
            
            
            (1,450
            )
            
            
            (244
            )
            
            
            (811
            )
            
            
            344
            
            
            
            446
            
            
            
            2,099Interest
      income
            
            
            863
            
            
            
            1,567
            
            
            
            1,643
            
            
            
            1360
            
            
            
            1,240
            
            
            
            2,198
            
            
            
            2,338
            
            
            
            2,259Interest
      expense
            
            
            (1,288
            )
            
            
            (1,287
            )
            
            
            (1,285
            )
            
            
            (956
            )
            
            
            (625
            )
            
            
            (655
            )
            
            
            (592
            )
            
            
            (591
            )Other
      (expense) income
            
            
            -
            
            
            
            21
            
            
            
            -
            
            
            
            (25
            )
            
            
            -
            
            
            
            -
            
            
            
            173
            
            
            
            (907
            )Income
      (loss) from continuing operations
            
            
            (4,289
            )
            
            
            (2,624
            )
            
            
            (1,092
            )
            
            
            135
            
            
            
            (196
            )
            
            
            1,887
            
            
            
            2,365
            
            
            
            2,860Loss
      from discontinued operation
            
            
            (348
            )
            
            
            (163
            )
            
            
            (220
            )
            
            
            (249
            )
            
            
            (965
            )
            
            
            -
            
            
            
            -
            
            
            
            -Net
      (loss) income
            
            $
            (4,637
            )
            
            $
            (2,787
            )
            
            $
            (1,312
            )
            
            $
            (114
            )
            
            $
            (1,161
            )
            
            $
            1,887
            
            
            $
            2,365
            
            
            $
            2,860Basic
      (loss) income per share:Continuing
      operations
            
            $
            (0.11
            )
            
            $
            (0.06
            )
            
            $
            (0.02
            )
            
            $
            -
            
            
            $
            -
            
            
            $
            0.03
            
            
            $
            0.04
            
            
            $
            0.05Discontinued
      operations
            
            
            (0.01
            )
            
            
            -
            
            
            
            (0.01
            )
            
            
            -
            
            
            
            (0.02
            )
            
            
            -
            
            
            
            -
            
            
            
            -Net
      (loss) income
            
            $
            (0.12
            )
            
            $
            (0.06
            )
            
            $
            (0.03
            )
            
            $
            -
            
            
            $
            (0.02
            )
            
            $
            0.03
            
            
            $
            0.04
            
            
            $
            0.05Diluted
      (loss) income per share:Continuing
      operations
            
            $
            (0.11
            )
            
            $
            (0.06
            )
            
            $
            (0.02
            )
            
            $
            -
            
            
            $
            -
            
            
            $
            0.03
            
            
            $
            0.04
            
            
            $
            0.05Discontinued
      operations
            
            
            (0.01
            )
            
            
            -
            
            
            
            (0.01
            )
            
            
            -
            
            
            
            (0.02
            )
            
            
            -
            
            
            
            -
            
            
            
            -Net
      (loss) income
            
            $
            (0.12
            )
            
            $
            (0.06
            )
            
            $
            (0.03
            )
            
            $
            -
            
            
            $
            (0.02
            )
            
            $
            0.03
            
            
            $
            0.04
            
            
            $
            0.05





ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.





For
information regarding the Company’s change in independent registered public
accounting firm from J.H. Cohn LLP to Ernst & Young LLP during its fiscal
year ended December 31, 2007, please refer to the Company’s current report on
Form 8-K filed with the SEC on June 7, 2007. The Company had no disagreements
during its 2006 and 2007 fiscal years with its independent auditors regarding
accounting or financial disclosure matters.





ITEM 9A. CONTROLS AND PROCEDURES.





Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures





Under the
supervision and with the participation of our management, including our Chief
Executive Officer, or CEO and Chief Financial Officer, or CFO, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of
December 31, 2007. Based on that evaluation, our management, including our CEO
and CFO, concluded that our disclosure controls and procedures were effective to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
as specified within the SEC’s rules and forms.





Management’s
Report on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f). Under the supervision and with the participation of our management,
including our CEO and CFO, we conducted an evaluation of the effectiveness of
our internal control over financial reporting based on the framework of Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on that evaluation, our management concluded
that our internal control over financial reporting was effective as of December
31, 2007.





The
effectiveness of our internal control over financial reporting as of December
31, 2007 has been audited by Ernst & Young LLP, an independent registered
public accounting firm, as stated in their report which is included
below.




There was no
change in the Company’s internal control over financial reporting during the
Company’s last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.





Inherent
Limitations of Controls





Because of
their inherent limitations, disclosure controls and procedures and internal
control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

















Report of Independent Registered Public Accounting
Firm





To the
Board of Directors and Stockholders


ANADIGICS,
Inc.








We have
audited ANADIGICS, Inc.’s internal control over financial reporting as of
December 31, 2007, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (the COSO criteria). ANADIGICS, Inc.’s management is responsible for
maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting
included in the accompanying Management’s Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on the
company’s internal control over financial reporting based on our
audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing
and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.





A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial
statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.





In our
opinion, ANADIGICS, Inc.’s maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2007, based on the
COSO criteria.





We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheet of ANADIGICS,
Inc. as of December 31, 2007, and the related consolidated statements of
operations, comprehensive income, stockholders' equity, and cash flows for the
year ended December 31, 2007 of ANADIGICS Inc. and our report dated February 29,
2008 expressed an unqualified opinion thereon.







/s/ Ernst & Young
LLP






MetroPark,
New Jersey


February
29, 2008











ITEM 9B. OTHER INFORMATION
 
 None.




PART III








ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.




The Company
has adopted a Code of Conduct and Business Ethics that applies to directors,
officers and employees, including the President and Chief Executive Officer, and
Chief Financial Officer and has posted such code on its website at
(www.anadigics.com). Changes to and waivers granted with respect to the
Company’s Code of Conduct and Business Ethics for officers and directors that
are required to be disclosed pursuant to the applicable rules and regulations
will be filed on a current report on Form 8-K and posted on the Company
website.




The
registrant incorporates by reference herein information to be set forth in its
definitive proxy statement for its 2008 annual meeting of shareholders that is
responsive to the information required with respect to this Item.





ITEM 11. EXECUTIVE COMPENSATION.




The
registrant incorporates by reference herein information to be set forth in its
definitive proxy statement for its 2008 annual meeting of shareholders that is
responsive to the information required with respect to this Item.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.




The
registrant incorporates by reference herein information to be set forth in its
definitive proxy statement for its 2008 annual meeting of shareholders that is
responsive to the information required with respect to this Item.





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE.




The
registrant incorporates by reference herein information to be set forth in its
definitive proxy statement for its 2008 annual meeting of shareholders that is
responsive to the information required with respect to this Item.





ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.




The
registrant incorporates by reference herein information to be set forth in its
definitive proxy statement for its 2008 annual meeting of shareholders that is
responsive to the information required with respect to this Item.





PART IV








ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.





(a) 1.
Financial Statements





Financial
Statements are included in Item 8, "Financial Statements and Supplementary Data"
as follows:





-
            Reports
      of Independent Registered Public Accounting Firms-
            Consolidated
      Balance Sheets - December 31, 2006 and
2007





-
            Consolidated
      Statements of Operations - Year ended December 31, 2005, 2006 and
      2007-
            Consolidated
      Statements of Comprehensive (Loss) Income - Year ended December 31, 2005,
      2006 and 2007





-
            Consolidated
      Statements of Stockholders’ Equity - Year ended December 31, 2005, 2006
      and 2007-
            Consolidated
      Statements of Cash Flows - Year ended December 31, 2005, 2006 and
      2007





-
            Notes
      to Consolidated Financial
Statements




2.
Financial Statement Schedules





Schedule
II - Valuation and Qualifying Accounts




All other
schedules for which provision is made in the applicable accounting regulation of
the Securities and Exchange Commission are not required under the related
instructions or are inapplicable and therefore have been omitted.





(b)
Exhibit List





2.1
            Stock
      Purchase Agreement dated April 2, 2001, among the Company, Telcom Devices
      Corp. and the sellers named therein. Filed as an exhibit to the Company’s
      Current Report on Form 8-K dated April 6, 2001, and incorporated herein by
      reference.3.1
            Amended
      and Restated Certificate of Incorporation of the Company, together with
      all amendments thereto. Filed as an exhibit to the Company's Registration
      Statement on Form S-3 (Registration No. 333-75040), and incorporated
      herein by reference.3.2
            Amended
      and Restated By-laws of the Company. Filed as an exhibit to the Company's
      Registration Statement on Form S-3 (Registration No. 333-75040), and
      incorporated herein by reference.4.1
            Form
      of Common Stock Certificate. Filed as an exhibit to the Company's
      Registration Statement on Form S-1 (Registration No. 33-89928), and
      incorporated herein by reference.4.2
            Form
      of Registration Rights Agreement. Filed as an exhibit to the Company's
      Registration Statement on Form S-1 (Registration No. 33-89928), and
      incorporated herein by reference.4.3
            Schedule
      to Form of Registration Rights Agreement. Filed as an exhibit to the
      Company's Registration Statement on Form S-1 (Registration No. 333-20783),
      and incorporated herein by reference.4.4
            Rights
      Agreement dated as of December 17, 1998 between the Company and Chase
      Mellon Shareholder Services L.L.C., as Rights Agent. Filed as an exhibit
      to the Company’s Current Report on Form 8-K dated December 17, 1998, and
      incorporated herein by reference.4.5
            Amendment
      No. 1 as of November 20, 2000 to the Rights Agreement dated as of December
      17, 1998 between the Company and Chase Mellon Shareholder Services L.L.C.,
      as Rights Agent. Filed as an exhibit to the Company’s Current Report on
      Form 8-K dated December 4, 2000, and incorporated herein by
      reference.4.6
            Indenture,
      dated as September 24, 2004, between the Company, as Issuer, and U.S. Bank
      Trust National Association, as Trustee for the 5% Convertible Senior Notes
      due October 15, 2009. Filed as an exhibit to the Company’s Current Report
      on Form 8-K dated September 28, 2004, and incorporated herein by
      reference.4.7
            Registration
      Rights Agreement, dated September 24, 2004, between the Company, as
      Issuer, and the Purchasers of 5% Convertible Senior Notes due October 15,
      2009. Filed as an exhibit to the Company’s Current Report on Form 8-K
      dated September 28, 2004, and incorporated herein by
      reference.4.8
            Form
      of 5% Convertible Senior Note due October 15, 2009 (included in Exhibit
      4.6).10.1
            1994
      Long-Term Incentive and Share Award Plan. Filed as an exhibit to the
      Company's Registration Statement on Form S-1 (Registration No. 33-89928),
      and incorporated herein by reference.10.2
            1995
      Long-Term Incentive and Share Award Plan, as amended May 29, 1997 and May
      24, 2000. Filed as an exhibit to the Company’s Current Report on Form S-8
      (Registration No. 333-49632), and incorporated herein by
      reference.10.3
            Employee
      Savings and Protection Plan. Filed as an exhibit to the Company's
      Registration Statement on Form S-1 (Registration No. 33-89928); as amended
      and filed as an exhibit to the Company’s Registration Statement on Form
      S-8 (Registration No. 333-125971) dated June 20, 2005; each as
      incorporated herein by reference.10.4
            Amended
      and Restated Employee Stock Purchase Plan. Filed as Appendix B to the
      Company's Definitive Proxy Statement on Schedule 14A filed on April 19,
      2005 and incorporated herein by reference.10.5
            Lease
      Agreement between United States Land Resources, L.P. (and its successor in
      interest, Warren Hi-Tech Center, L.P.), and the Company dated as of April
      26, 1996. Filed as an exhibit to the Company's Registration Statement on
      Form S-1 (Registration No. 333-20783); as amended in the Company’s Annual
      Report filed on Form 10-K405 dated March 29, 2002; each as incorporated
      herein by reference.10.6
            Employment
      Agreement between the Company and Dr. Bamdad Bastani, dated September 17,
      1998. Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q
      for the quarter ended July 4, 1999; as amended and filed as an exhibit to
      the Company’s Current Report on Form 8-K dated May 10, 2005; as amended
      and filed as an exhibit to the Company’s Current Report on Form 8-K dated
      November 7, 2005; each as incorporated herein by
  reference.10.7
            Employment
      Agreement between the Company and Ronald Rosenzweig, dated June 1, 1999.
      Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the
      quarter ended July 4, 1999; as amended and filed as an exhibit to the
      Company’s Current Report on Form 10-K405 dated March 29, 2002; as amended
      and filed as an exhibit to the Company's Annual Report on Form 10-K dated
      March 15, 2004; as amended and filed as an exhibit to the Company’s
      Quarterly Report on Form 10-Q dated November 3, 2004; as amended and filed
      as an exhibit to the Company’s Quarterly Report on Form 10-Q dated August
      5, 2005; as amended and filed as an exhibit to the Company’s Quarterly
      Report on Form 10-Q dated August 10, 2006; and as amended and filed as an
      exhibit to the Company’s Quarterly Report on Form 10-Q dated August 7,
      2007; each as incorporated herein by reference.10.8
            Employment
      Agreement between the Company and Thomas C. Shields, dated July 25, 2000.
      Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated
      March 29, 2002; as amended and filed as an exhibit to the Company’s
      Current Report on Form 8-K dated May 10, 2005; as amended and filed as an
      exhibit to the Company’s Current Report on Form 8-K dated November 7,
      2005; each as incorporated herein by reference.10.9
            Employment
      Agreement between the Company and Charles Huang, dated July 25, 2000.
      Filed as an exhibit to the Company’s Annual Report on Form 10-K405 dated
      March 29, 2002; each as incorporated herein by
  reference.10.10
            Form
      of 1997 Long-Term Incentive and Share Award Plan. Filed as an exhibit to
      the Company’s Annual Report on Form 10-K405 dated February 18, 1997, and
      incorporated herein by reference.10.11
            2005
      Long Term Incentive and Share Award Plan. Filed as Appendix C to the
      Company’s Definitive Proxy Statement on Schedule 14A filed on April 19,
      2005; as amended, with such amendment filed as an exhibit to the Company’s
      current report on Form 8-K dated May 23, 2007; each as incorporated herein
      by reference.10.12
            Employment
      Agreement between the Company and Ron Michels, dated July 25,
      2000,
              as
      amended and restated from time to time.  Filed as an exhibit to
      the Company’s
              Current
      Report on Form 8-K dated January 5, 2007, and incorporated herein
      by
              reference.10.13
            Employment
      Agreement between the Company and Ali Khatibzadeh, dated July
      25,
              2000,
      as amended and restated from time to time.  Filed as an exhibit
      to the Company’s
              Current
      Report on Form 8-K dated January 5, 2007, and incorporated herein
      by
              reference.10.14
            Amended
      and Restated Investment Contract between the Company and Kunshan
      New
              and Hi-Tech
      Industrial Development Zone, dated as of April 5, 2007.  Filed
      as an
              exhibit
      to the Company’s Current Report on Form 8-K dated April 11, 2007,
      and
              incorporated
      herein by reference.*21
            Subsidiary
      Listing*23.1
            Consent
      of Ernst & Young LLP.*23.2
            Consent
      of J.H. Cohn LLP.24.1
            Power
      of Attorney (included on the signature page of this Annual Report on Form
      10-K).*31.1
            Rule
      13a-14(a)/15d-14(a) Certification of Bami Bastani, President and Chief
      Executive Officer of ANADIGICS, Inc.*31.2
            Rule
      13a-14(a)/15d-14(a) Certification of Thomas C. Shields, Executive Vice
      President and Chief Financial Officer of ANADIGICS,
Inc.*32.1
            Section
      1350 Certification of Bami Bastani, President and Chief Executive Officer
      of ANADIGICS, Inc.*32.2
            Section
      1350 Certification of Thomas C. Shields, Executive Vice President and
      Chief Financial Officer of ANADIGICS, Inc.*
      Filed herewith










SIGNATURES




Pursuant to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on the 29th day of February
2008.







ANADIGICS,
INC.




BY: /s/
Bami Bastani


-----------------------------------------


Dr. Bami
Bastani


CHIEF
EXECUTIVE OFFICER AND PRESIDENT





KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints each of Bami Bastani and Thomas Shields as his
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place, and stead, in any and all capacities, to sign
and file any and all amendments to this Annual Report on Form 10-K, with all
exhibits thereto and hereto, and other documents with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue
hereof.





PURSUANT TO THE REQUIREMENTS OF THE
SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS ON BEHALF OF ANADIGICS, INC. IN THE CAPACITIES AND ON THE DATES
INDICATED:







Name
            Title
            Date/s/
      Bami Bastani
            President,
      Chief Executive Officer and Director (Principal Executive
      Officer)
            February
      29, 2008Dr.
      Bami Bastani/s/ Thomas C.
      Shields
            Executive
      Vice President and Chief Financial Officer (Principal Financial Accounting
      Officer)
            February
      29, 2008Thomas
      C. Shields/s/
      Ronald Rosenzweig
            Chairman
      of the Board of Directors
            February
      29, 2008Ronald
      Rosenzweig/s/
      Paul S. Bachow
            Director
            February
      29, 2008Paul
      S. Bachow/s/
      Gilles Delfassy
            Director
            February
      29, 2008Gilles
      Delfassy/s/
      David Fellows
            Director
            February
      29, 2008David
      Fellows/s/
      Harry T. Rein
            Director
            February
      29, 2008Harry
      T. Rein/s/
      Lewis Solomon
            Director
            February
      29, 2008Lewis
      Solomon/s/
      Dennis F. Strigl
            Director
            February
      29, 2008Dennis
      F. Strigl










SCHEDULE
II--VALUATION AND QUALIFYING ACCOUNTS





Description(Dollars
      in Thousands)
              
              Balance
      at beginning of period
              
              
              Additions
      charged to costs and expenses
              
              
              Deductions
              
              
              
              
              Balance
      at end of periodYear
      ended December 31, 2007:Deducted
      from asset account:Allowance
      for doubtful accounts
              
              $
              923
              
              
              $
              1
              
              
              $
              -
              
              (1
              )
              
              $
              924Reserve
      for excess and obsolete inventory
              
              
              3,530
              
              
              
              977
              
              
              
              (270
              )
              (2
              )
              
              
              4,237Reserve
      for warranty claims
              
              
              347
              
              
              
              521
              
              
              
              (541
              )
              (3
              )
              
              
              327Year
      ended December 31, 2006:Deducted
      from asset account:Allowance
      for doubtful accounts
              
              $
              923
              
              
              $
              -
              
              
              $
              -
              
              (1
              )
              
              $
              923Reserve
      for excess and obsolete inventory
              
              
              2,545
              
              
              
              1,808
              
              
              
              (823
              )
              (2
              )
              
              
              3,530Reserve
      for warranty claims
              
              
              396
              
              
              
              677
              
              
              
              (726
              )
              (3
              )
              
              
              347Year
      ended December 31, 2005Deducted
      from asset account:Allowance
      for doubtful accounts
              
              $
              922
              
              
              $
              1
              
              
              $
              -
              
              (1
              )
              
              $
              923Reserve
      for excess and obsolete inventory
              
              
              3,711
              
              
              
              275
              
              
              
              (1,441
              )
              (2
              )
              
              
              2,545Reserve
      for warranty claims
              
              
              159
              
              
              
              634
              
              
              
              (397
              )
              (3
              )
              
              
              396
   (1)
Uncollectible accounts written-off to the allowance account.
 (2) Inventory write-offs to the reserve
account.
 (3)
Warranty expenses incurred to the reserve for warranty
claims.




EXHIBIT
21





Subsidiaries
of ANADIGICS, Inc.





Name
      of Subsidiary
            State
      of Jurisdiction of Incorporation
            %
      OwnedANADIGICS
      (U.K.) Limited
            United
      Kingdom
            100%ANADIGICS,
      Limited
            Israel
            100%ANADIGICS
      Denmark ApS
            Denmark
            100%ANADIGICS
      Acquisition Corp
            Delaware
            100%ANADIGICS
      Holding Corp.
            Delaware
            100%Broadband & Wireless
      Investors, Incorporated
            Delaware
            100%ANADIGICS
      China Holdings Corp.
            Cayman
      Islands
            100%





EXHIBIT
23.1








CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM











1.
      Registration Statements (Form S-3 Nos. 333-75040, 333-110538, 333-120947,
      333-139124 and 333-141161),


2.
      Registration Statements (Form S-8 Nos. 33-91750 and 333-49632)
      pertaining to the ANADIGICS, Inc. Stock Option Plan, 1994 Long-Term
      Incentive and Share Award Plan, 1995 Long-Term Incentive Share Award Plan
      and Employee Stock Purchase Plan,


3.
      Registration Statements (Form S-8 Nos. 333-32533 and 333-63836)
      pertaining to the ANADIGICS, Inc. 1997 Long-Term Incentive and Share Award
      Plan for Employees,


4.
      Registration Statement (Form S-8 No. 333-125971) pertaining to the
      ANADIGICS, Inc. 2005 Long Term Incentive and Share Award Plan and the
      Amended and Restated Employee Stock Purchase Plan,
  and


5.
      Registration Statement (Form S-8 No. 333-136280) pertaining to the
      ANADIGICS, Inc. Amended and Restated 2005 Long-Term Incentive and Share
      Award Plan;





of our
reports dated February 29, 2008, with respect to the consolidated financial
statements and schedule of ANADIGICS, Inc. and the effectiveness of internal
control over financial reporting of ANADIGICS, Inc. included in this Annual
Report (Form 10-K) of ANADIGICS, Inc. for the year ended December 31,
2007.







/s/ Ernst & Young
LLP




Metro
Park, New Jersey


February
29, 2008











EXHIBIT
23.2






CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








We
consent to the incorporation by reference in the Registration Statements (Form
S-8 No. 333-125971 and Form S-8 No. 333-136280) pertaining to the ANADIGICS,
Inc. 2005 Long-Term Incentive and Share Award Plan and Amended and Restated
Employee Stock Purchase Plan, the Registration Statements (Form S-8 No. 33-91750
and Form S-8 No. 333-49632) pertaining to the ANADIGICS, Inc. Stock Option Plan,
1994 Long-Term Incentive and Share Award Plan, 1995 Long-Term Incentive Share
Award Plan and Employee Stock Purchase Plan, in the Registration Statements
(Form S-8 No. 333-32533 and Form S-8 No. 333-63836) pertaining to the ANADIGICS,
Inc. 1997 Long-Term Incentive and Share Award Plan for Employees and in the
Registration Statements (Form S-3 No. 333-75040, Form S-3 No. 333-110538, Form
S-3 No. 333-120947, Form S-3 No. 333-139124 and Form S-3 No. 333-141161) of our
report dated February 27, 2007, with respect to the consolidated
balance sheet of ANADIGICS, Inc. as of December 31, 2006 and the related
consolidated statements of operations, comprehensive loss, stockholders’ equity
and cash flows for each of the years in the two year period then ended and the
information for each of the years in the two year period then ended included in
the related financial statement schedule of ANADIGICS, Inc. included in this
Annual Report (Form 10-K) for the year ended December 31, 2007.











/s/ J.H.
Cohn LLP





Roseland,
New Jersey


February
29, 2008