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, 2006.Or/
                /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                EXCHANGE ACT OF 1934.Commission
                File No. 0-25662**ANADIGICS,
                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 / / Accelerated filer /X/ 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 July 1, 2006 was approximately $318 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,
      2007 was 49,968,653 (excluding 113,761 shares held in treasury).





Documents
      incorporated by reference: Definitive proxy statement for the registrant’s 2007
      annual meeting of shareholders (Part III).











**TABLE
      OF CONTENTS**





PagePART
                IItem
                1:
            Business
            4Item
                1A:
            Risk
                Factors
            14Item
                1B:
            Unresolved
                Staff Comments
            22Item
                2:
            Properties
            22Item
                3:
            Legal
                Proceedings
            22Item
                4:
            Submission
                of Matters to a Vote of Security Holders
            22PART
                IIItem
                5:
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            23Item
                6:
            Selected
                Financial Data
            23Item
                7:
            Management’s
                Discussion and Analysis of Financial Condition and
              Results
                of Operations
            24Item
                7A:
            Quantitative
                and Qualitative Disclosures About Market Risk
            31Item
                8:
            Financial
                Statements and Supplementary Data
            32Item
                9:
            Changes
                in and Disagreements with Accountants on Accounting and
              Financial
                Disclosure
            57Item
                9A:
            Controls
                and Procedures
            57Item
                9B:
            Other
                Information
            58PART
                IIIItem
                10:
            Directors,
                Executive Officers and Corporate Governance
            59Item
                11:
            Executive
                Compensation
            59Item
                12:
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            59Item
                13:
            Certain
                Relationships and Related Transactions and Director
                Independence
            60Item
                14:
            Principal
                Accounting Fees and Services
            60PART
                IVItem
                15:
            Exhibits,
                Financial Statement Schedules
            60








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 (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.





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 Cisco Systems, Inc.
      (Cisco), Intel Corporation (Intel), Motorola, Inc. (Motorola) and Qualcomm
      Incorporated (Qualcomm) 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 have longstanding relationships include Atheros
      Communications, Inc. (Atheros), High Tech Computer Corp. (HTC), Huawei
      Technologies Co., Ltd. (Huawei), KYOCERA Corporation (Kyocera), Lenovo Group Limited (Lenovo), LG Electronics Inc. (LG
      Electronics), Marvell Technology Group Ltd. (Marvell), MediaTek AEI, Inc.
      (MediaTek), Murata Manufacturing Co., Ltd. (Murata), Novatel Wireless, Inc.
      (Novatel), Palm, Inc. (Palm), Research In Motion Limited (RIM), Samsung
      Electronics Co., Ltd. (Samsung), Sierra Wireless, Inc. (Sierra Wireless), TCL
      Mobile Communication Co., Ltd. (TCL), TDK Electronics Corporation (TDK), 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 Qualcomm’s reference designs makes it more difficult for our
      competitors to displace our products and 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 and 802.11 n (draft-n, MIMO) standards,
      which require multiple PAs in the same chipset as compared to one PA, which
      was
      required under prior standards. We are experiencing growth in our semiconductor
      tuner and active splitter business 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 digital television (DTV), television in personal
      computer (TV-in-PC) applications and 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 active
      splitters. We believe our infrastructure business will benefit from the launch
      of 1 GHz CATV products from Cisco, which we expect will drive an upgrade 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 greater financial leverage. We anticipate that with incremental capital
      expenditures our Warren, New Jersey fab will fulfill our manufacturing needs
      into 2009. We are actively exploring future sources of additional manufacturing
      capacity through the construction or acquisition of manufacturing facilities
      in
      low-cost manufacturing countries such as China, as well as pursuing
      relationships with foundries in Taiwan. 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 believe our strong fabrication capability and
      available capacity, combined with integrated product design and logistics
      expertise, allow us to quickly develop and manufacture products for which demand
      has grown.





**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
      International Data Corporation (IDC), the number of wireless handsets
      manufactured to these new technological standards is expected to grow from
      127.4
      million units shipped in 2005 to 836.0 million units by 2010, representing
      a
      45.7% compound annual growth rate, as compared to the overall number of wireless
      handsets manufactured, which is expected to grow from 833.0 million units in
      2005 to more than 1.3 billion units in 2010, representing a compound annual
      growth rate of 9.5% during the same period.  As the primary PA supplier on
      Qualcomm's MSM SURF reference design, which is the leading design based on
      the
      HSDPA, HSUPA 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 HSDPA and HSUPA standards for voice and multimedia is a positive
      catalyst for our 3G and 3.5G PAs since we are the primary PA supplier on
      Qualcomm’s MSM SURF reference design, which is currently the leading design
      based on the HSDPA and HSUPA standards. 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. 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 since 2006, as Clearwire Corporation, Intel,
      Motorola and Sprint Nextel Corp. have committed to launch mobile WiMAX systems
      in the U.S. According to IDC, worldwide unit shipments of WiMAX customer premise
      equipment (CPE) are expected to increase at a 175.2% compound annual growth
      rate
      from 2005 to 2010. IDC also predicts that (i) in 2008, 8% of notebook computers,
      or 9 million units shipped that year, (ii) in 2009, 18% of notebook computers,
      or 25 million units shipped that year, and (iii) in 2010, 33% of notebook
      computers, or 52 million units shipped that year, will be WiMAX enabled. We
      currently ship WiMAX PAs for point-to-point connectivity to customers such
      as
      Airspan Network, Inc. and Alvarion, Ltd. based on Intel’s reference designs, as
      well as WiBRO (a WiMAX standard) PAs to Samsung. We believe that our
      relationships with these and other leading equipment and chipset vendors 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, a single PA supported each WiFi chipset. In
      2006, WiFi products for mobile computing began requiring dual-band designs
      which
      incorporate an additional PA.




Over
      the past
      few years, technology based upon the widely adopted 802.11 b specification
      has
      been replaced by the 802.11 g and dual-band 802.11 a/b/g specifications, which
      have become the mainstream WiFi technology. The industry is now rapidly
      migrating to the multi-band 802.11 n (draft-n, MIMO) standards, which require
      multiple PAs to operate instead of one PA. The worldwide unit shipments of
      multi-band 802.11 n (draft-n, MIMO) semiconductor chipsets are expected to
      have
      a 162.6% compound annual growth rate from 2005 to 2010 according to IDC. 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 and
      multi-band WiFi chips.




Not
      only are
      notebook computers increasingly being shipped with embedded WiFi functionality,
      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 wireless access points and printers
      through Broadcom and smart handheld wireless devices alongside Marvell’s
      chipset, and we are actively engaged in discussions to be included in the
      reference designs of other leading WiFi chipset providers for these
      applications.





**Cable
      Set-Top Box and Cable Modem Markets**


The
      market
      for CATV set-top boxes is 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. High-end
      set-top boxes with DVRs require multiple semiconductor tuners and an active
      splitter. As the demand for this type of high-end set-top box continues to
      grow,
      the demand for the components we manufacture increases even more rapidly,
      thereby outpacing the growth of the end markets into which they are sold. As
      a
      long-term supplier to Cisco and Motorola, 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 creating increased demand for
      digital set-top boxes. According to IDC, worldwide unit shipments of set-top
      boxes for digital cable and IPTV are expected to increase at a 29.2% compound
      annual growth rate from 2005 to 2010. 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 other components. The DOCSIS 3.0
      standard uses multiple channels simultaneously to provide wider bandwidth and
      higher data throughput and we are developing new products for this
      standard.





**CATV
      Infrastructure and FTTP**


We
      are a
      leading supplier of 12V and 24V line amplifier radio frequency integrated
      circuits (RFICs) 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, LAN, MAN and SAN. 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, which
      is currently being introduced in 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, 4G WEDGE, HSDPA,
                HSUPA and WiMAX, (2) WiFi 802.11 a/b/g and 802.11 n, and (3) CATV
                DVR
                set-top boxes, DOCSIS-3.0 and CATV and FTTP
                infrastructure.




·
            ***Focus
                on gross margin expansion.***We
                seek to increase our gross margins and profitability by focusing
                onthose
                products and markets where we currently enjoy a leading market position
                and have strong technologicalleadership.
                We intend to focus on supplying products in the following markets
                for this
                purpose: (1) 3G, 3.5G, 4G WEDGE, HSDPA, HSUPA and WiMAX, (2) WiFi
                802.11
                a/b/g and 802.11 n, and (3) CATV DVR set-top box, DOCSIS-3.0 and
                CATV and
                FTTP infrastructure. In addition, we believe that our gross margins
                will
                increase to the extent we achieve increased utilization of our
                fab.




·
            ***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 MediaTek, Qualcomm and Texas Instruments,
                three of
                the leading wireless chipset providers, and by leaders in the WiMAX/WiBRO
                market, such as 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
                asCisco, 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 handset manufacturers 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 handset manufacturers
                such as
                HTC, Huawei, TCL and ZTE. Not only do these manufacturers export
                their
                products to North America, South America and Europe, but they also
                use our
                products in wireless handsets to supply 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 MediaTek, Qualcomm
                and
                Texas Instruments 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-*plus*technology
                to achieve a high level of integration in our products and reduce
                our
                costs of production. In addition, we will focus on increasing the
                utilization 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, 2004, 2005 and
      2006, wireless handset applications accounted for approximately 50%, 49% and
      54%, respectively, of our total net sales, while broadband applications
      accounted for approximately 50%, 51% and 46%, respectively, of our total net
      sales.





***Wireless
      Handsets***




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





**Product**
            **Application****Handset
                Products**Power
                Amplifier (PA)
            Used
                in RF transmit chain of wireless handset to amplify signal to base
                station.Single-band
                PA module
            Encapsulates
                InGaP HBT PA die and certain passive components in multi-layer laminate
                module. Used primarily in Code Division Multiple Access (CDMA) and
                W-CDMA
                handsets.HELP
                PA Module
            High
                Efficiency at Low Power PA that lowers average power consumption
                by 50%.
                Used primarily in CDMA and W-CDMA handsets.Quad-band
                PA module
            Encapsulates
                InGaP HBT PA die, CMOS bias control chip, and certain passive components
                in multi-layer laminate module. Used primarily in GSM and EDGE
                handsets.PowerPlexer
            Transmit
                module, which encapsulates two InGaP HBT PA die, CMOS, bias and power
                control chip, antenna switch, coupler, harmonic filter and passives
                in
                multi-layer laminate module. Used in GSM handsets.RF
                Switches
            Used
                in wireless handsets and other wireless applications to switch between
                receive and transmit modes and multiple frequency
                bands.Front
                End Module
            Highly
                integrated module that encapsulates PAs, RF coupler, transmit filter,
                duplexer and antenna switch








***Broadband
      Communications***




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**
            **Application****CATV
                Set-Top Boxes Products**Tuner
                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.





**Product**
            **Application****CATV
                Infrastructure Products**Line
                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**
            **Application****WiFi
                Products**2.4
                GHz PAs (802.11 b/g)
            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 PAs (802.11 a)
            Used
                in wireless rich-media applications, such as streaming audio/video,
                to
                boost the transmit signal for increased range and data
                throughput.Dual
                Band PAs (802.11 a/b/g)
            Used
                in wireless network systems that require seamless transition between
                frequencies to mitigate interference and congestion.MIMO
                PAs (802.11 n, draft-n)
            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**
            **Application****WiMAX
                Products**Mobile
                WiMAX PAs
            PA
                modules used in 2.5 and 3.3 GHz bands for mobility
                applications.Mobile
                WiBRO PAs
            PA
                modules used in 1.8, 1.9, 2.5, 2.57 and 3.5 GHz bands for mobility
                applications.Fixed
                Point WiMAX PAs
            PA
                modules used in 2.5, 3.3 and 3.5 GHz bands 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), Takachiho Koheki Co., Ltd. and World Peace Group,
      one
      of the largest distribution businesses in Asia. Many of our customers are
      serviced through Richardson Electronics in the United States, Europe and Korea,
      while World Peace Group primarily focuses on China and Taiwan. Our relationship
      with World Peace Group enables us to manage our inventories and payment terms
      in
      China with a single entity. World Peace Group’s vast sales network also provides
      us access to tier-one customers in China. 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 Texas Instruments’ reference design team in Denmark. 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. Our Warren facility has a 19,000 square foot fab, including 10,000
      square feet of Class 100 clean room space. At December 31, 2006, our weekly
      capacity was approximately 950 equivalent six-inch HBT wafers. We believe that
      based upon the available clean room space in our Warren facility we have the
      ability, with incremental capital expenditures, to increase the weekly
      production capacity to as much as 1,500 equivalent six-inch HBT wafers in
      response to market conditions.




Our
      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.




We
      anticipate
      that with incremental capital expenditures our Warren, New Jersey fab will
      fulfill our manufacturing needs into 2009. We are actively exploring future
      sources of additional manufacturing capacity through the construction or
      acquisition of manufacturing facilities in low-cost manufacturing countries
      such
      as China, as well as pursuing relationships with foundries in
      Taiwan.




***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
      by
      lowering the average test cost per unit.





**Raw
      Materials**




GaAs
      wafers, InP 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 $33.3 million, $29.9 million and $35.6
      million in 2004, 2005 and 2006, respectively. We continue to focus our research
      and development on PAs and front end modules for GSM, GPRS, EDGE, CDMA and
      W-CDMA in the wireless handset market, and on semiconductor tuners, active
      splitters, WiFi, WiMAX, CATV infrastructure and FTTP 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. Our RF
      PA
      modules use a multi-layer laminate substrate to combine our patented
      InGaP- *plus* HBT PA
      ICs with custom-designed CMOS controllers and passive components.





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 module efforts.
      We
      currently 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 World Peace Group accounted for 18% and 17%, respectively, of total
      net sales during 2006. No other customer accounted for 10% or more of total
      net
      sales during 2006. 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, 2006, we had 508 employees, including 8 employees in Denmark,
      6 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 in the wireless handset market
      are Avago Technologies Limited, RF Micro Devices, Inc., Skyworks Solutions,
      Inc.
      and TriQuint Semiconductor, Inc.





Within
      our broadband market, which includes the cable set-top box, WiFi, WiMAX and
      CATV
      infra-structure markets, our competitors are also primarily manufacturers of
      both discrete components and ICs. Our key competitors are Microsemi Corp.,
      Microtune, Inc., SiGe Semiconductor, Inc. and Sirenza Micro
      Devices.





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 56 U.S. patents and have 18 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**







***We
      have a history of recent losses, and may continue to incur
      losses.***




We
      have
      incurred operating and net losses in each of the three years in the period
      ended
      December 31, 2006, and may continue to incur losses in 2007. Although we
      continue to gain increased market acceptance for certain of our products, we
      cannot assure you as to when or whether we will become profitable
      again.





***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.
      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.





***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. If we
      are
      unable to obtain these wafers, packaging or passive components in the required
      quantities, 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.




***In
      the event we are not able to satisfy a significant increase in 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.***




In
      some
      areas of our business, we have customers, particularly those in the wireless
      handset market, that ship their completed products in very large unit volumes.
      These customers may require large inventories of our products on short notice.
      While we anticipate that with incremental capital expenditures our Warren,
      New
      Jersey fab will fulfill our manufacturing needs into 2009, in the event we
      are
      unable to meet our customers’ demands during periods when their production
      volumes increase, we may be considered an undependable supplier and our
      customers may seek alternate suppliers. If our customers consider us to be
      an
      undependable supplier, our operating results could be adversely affected as
      we
      may not be able to find alternative sources of revenue.




***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 World Peace Group, one of the
      largest distribution businesses in Asia, accounted for approximately 18% and
      17%, respectively, of our total net sales during 2006. Sales to our greater
      than
      10% customers have exceeded 30% of total net sales in each of the last three
      fiscal years. 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.





***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.





***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 maintain two qualified service locations for the bulk of
      all assembly and test processes. If we are unable to obtain sufficient high
      quality and timely assembly or test service, or if our contractors lose one
      of
      their current assembly or test service locations, or 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.





***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 have experienced 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.





***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, 2006, including
      marketable securities, of $83.5 million, together with the net proceeds of
      this
      offering, 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 expenses 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 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 technical sales
      and marketing personnel, design and application engineers, as well as senior
      management. We do not presently maintain key-man life insurance on 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 61%,
      61%
      and 62% of our net sales for the years ended December 31, 2004, 2005 and 2006,
      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, all of which are located in the same industrial park.
      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
      also lease approximately 22,000 square feet of manufacturing space in Camarillo,
      California and approximately 29,000 square feet in aggregate of office space
      in
      the following locations: Richardson, Texas; Atlanta, Georgia; Aalborg, Denmark;
      Taipei, Taiwan; China; and South Korea under lease agreements with remaining
      terms ranging from four to thirty two 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 2006.








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
                2006Fourth
                Quarter
            
            $
            10.38
            
            $
            6.80Third
                Quarter
            
            
            8.60
            
            
            5.03Second
                Quarter
            
            
            9.26
            
            
            6.08First
                Quarter
            
            
            8.24
            
            
            5.35Calendar
                2005Fourth
                Quarter
            
            $
            6.30
            
            $
            3.05Third
                Quarter
            
            
            3.55
            
            
            1.70Second
                Quarter
            
            
            1.95
            
            
            1.26First
                Quarter
            
            
            3.80
            
            
            1.43




As
      of December 31, 2006, there were 49,108,435 shares of Common Stock outstanding
      (excluding Treasury) and 727 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 2005 and for the years ended December 31,
      2006, 2005, and 2004 have been derived from our audited financial statements
      included herein. The selected consolidated financial data set forth below as
      of
      December 31, 2004, 2003 and 2002 and for the years ended December 31, 2003
      and
      2002 have been derived from our audited financial statements 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.





2002
            
            
            2003
            
            
            2004
            
            
            2005
            
            
            2006RESULTS
                OF OPERATIONSNet
                sales
            
            $
            82,564
            
            $
            75,212
            
            $
            91,350
            
            $
            108,281
            
            $
            169,885Gross
                profit
            
            
            7,262
            
            
            3,285
            
            
            13,995
            
            
            22,352
            
            
            50,710Operating
                loss
            
            
            (65,565
            )
            
            (50,998
            )
            
            (41,822
            )
            
            (28,727
            )
            
            (9,480
            )Loss
                before income taxes
            
            
            (52,183
            )
            
            (51,139
            )
            
            (43,082
            )
            
            (31,233
            )
            
            (8,850
            )Net
                loss
            
            
            (55,886
            )
            
            (50,757
            )
            
            (43,082
            )
            
            (31,233
            )
            
            (8,850
            )Loss
                per share:Basic
                and diluted
            
            $
            (1.83
            )
            $
            (1.65
            )
            $
            (1.33
            )
            $
            (0.92
            )
            $
            (0.20
            )BALANCE
                SHEET DATA:Total
                cash and marketable securities
            
            $
            155,518
            
            $
            121,630
            
            $
            104,051
            
            $
            86,357
            
            $
            83,482Working
                capital
            
            
            110,151
            
            
            81,100
            
            
            89,517
            
            
            52,007
            
            
            100,895Total
                assets
            
            
            255,671
            
            
            207,898
            
            
            185,895
            
            
            168,273
            
            
            182,602Total
                capital lease obligations
            
            
            -
            
            
            90
            
            
            18
            
            
            2,032
            
            
            1,775Long-term
                debt, including current portion
            
            
            66,700
            
            
            66,700
            
            
            84,700
            
            
            84,700
            
            
            38,000Total
                stockholders’ equity
            
            
            171,088
            
            
            121,046
            
            
            84,615
            
            
            58,135
            
            
            115,760







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 PAs, tuner
      integrated circuits, active splitters, line amplifiers and other components,
      which can be sold individually or packaged as integrated 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 3G products that use the W-CDMA and
      EDGE standards, 3.5G products that use the HSDPA and HSUPA standards, 4G
      products for WiMAX and WiBRO systems, WiFi products that use the 802.11 a/b/g
      and 802.11 n (draft-n, MIMO) standards, CATV 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 Cisco, Intel, Motorola
      and Qualcomm 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 have longstanding relationships include Atheros, HTC, Huawei,
      Kyocera, Lenovo, LG Electronics, Marvell, MediaTek, Murata, Novatel, Palm,
      RIM,
      Samsung, Sierra Wireless, TCL, TDK, 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
      anticipate that with incremental capital expenditures our Warren, New Jersey
      fab
      will fulfill our manufacturing needs into 2009. We are actively exploring future
      sources of additional manufacturing capacity through the construction or
      acquisition of manufacturing facilities in low-cost manufacturing countries
      such
      as China, as well as pursuing relationships with foundries in Taiwan. 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 believe our
      strong fabrication capability and available capacity, combined with integrated
      product design and logistics expertise, allow us to quickly develop and
      manufacture products for which demand has grown.




We
      have fixed
      expenses particularly relating to capital equipment and manufacturing overhead.
      Accordingly, as unit volume throughput increased in recent years, our fixed
      production costs decreased as a percentage of revenue and our gross margin
      and
      profitability improved. Decreases in volume would have the inverse effect.
      We
      will continue to invest in selected strategic research and development programs
      to maintain our competitive position.




We
      experienced net sales growth approximating 20% during 2004 and 2005 as our
      Broadband and Wireless businesses benefited from unit growth in addition to
      accelerated demand, a better pricing environment and acceptance of new product
      developments. These trends were felt across our end markets and continued in
      2006.




In
      2006, our
      businesses grew over 50%, as new product offerings were well timed to market
      demand and benefited from increased RF content and functionality. This trend
      was
      observed throughout the year and we ended 2006 by recording our seventh
      consecutive quarter of sales growth. The sales growth and leverage of our fixed
      manufacturing expense base, led to gross margin increases and substantially
      lessened our operating and net losses during the period.




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 to continue to result in, 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 4 to the accompanying consolidated financial
      statements.





CRITICAL
      ACCOUNTING POLICIES





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 not recognized
      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.
      Cancellation revenue is recognized 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.





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 during the year. The accrued liability
      for warranty costs is included in accrued liabilities in the consolidated
      balance sheets.





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 or expected to be
      disposed of 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. 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.





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.





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.





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 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.





RESULTS
      OF OPERATIONS




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





2004
            
            
            2005
            
            
            2006Net
                sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            84.7
            
            
            79.4
            
            
            70.1Gross
                profit
            
            
            15.3
            
            
            20.6
            
            
            29.9Research
                and development expense
            
            
            36.5
            
            
            27.6
            
            
            21.0Selling
                and administrative expenses
            
            
            24.6
            
            
            19.6
            
            
            14.5Restructuring
                and other charges
            
            
            -
            
            
            (0.1
            )
            
            -Operating
                loss
            
            
            (45.8
            )
            
            (26.5
            )
            
            (5.6
            )Interest
                income
            
            
            2.4
            
            
            2.3
            
            
            3.2Interest
                expense
            
            
            (4.5
            )
            
            (4.6
            )
            
            (2.8
            )Gain
                on repurchase of Convertible notes
            
            
            0.4
            
            
            -
            
            
            -Other
                income
            
            
            0.3
            
            
            -
            
            
            -Net
                loss
            
            
            (47.2
            %)
            
            (28.8
            %)
            
            (5.2
            %)





2006
      COMPARED TO 2005




NET
      SALES.
      Net sales during 2006 increased 56.9% to $169.9 million, compared to $108.3
      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 42.6% to $78.6
      million in 2006 from $55.1 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 29.9% of net sales, compared with 20.6% 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
      19.1% during 2006 to $35.6 million from $29.9 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 15.4% during
      2006
      to $24.6 million from $21.3 million in 2005. The increase was primarily due
      to
      increased stock-based compensation of $2.4 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 120.4% 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.




2005
      COMPARED TO 2004




NET
      SALES.
      Net sales in 2005 increased 18.5% to $108.3 million, compared to $91.3 million
      for 2004. The increase in net sales of $17.0 million was primarily due to i)
      an
      increase of $16.4 million in our sales of GSM PA products used in wireless
      handsets, ii) an increase of $8.2 million in our sales of WLAN PAs used in
      the
      network computer market and iii) an increase of $2.4 million in our sales of
      tuner and active splitter products used in the cable set-top box market.
      Partially offsetting these increases were i) a decrease of $5.9 million in
      our
      sales of CDMA PAs and ii) a decrease of $2.3 million in our sales of switch
      products used in wireless handsets. The decline in net sales of CDMA PAs was
      primarily due to a transition in 2005 to lower-priced next generation PA modules
      and declines in average selling prices. The decline in net sales of switch
      products was primarily due to our decision to reduce our research and
      development expenditures in this product line.




Specifically,
      net sales in 2005 of our wireless products increased 17.1% to $53.2 million
      compared to $45.4 million for 2004. Net sales in 2005 of our broadband products
      increased 19.9% to $55.1 million compared to $46.0 million in 2004.




GROSS
      MARGIN.
      Gross margin for 2005 improved to 20.6% of net sales, compared with 15.3% of
      net
      sales in the prior year. The increase in gross margin from the prior year is
      the
      result of increased sales and production volumes with consequent absorption
      of
      fixed costs. The decrease in our depreciation expense of $4.1 million offset
      declines in average selling prices.




RESEARCH
      & DEVELOPMENT. Company sponsored research and development expenses decreased
      10.2% during 2005 to $29.9 million from $33.3 million during 2004 primarily
      due
      to decreased headcount and related compensation expense.




SELLING
      AND
      ADMINISTRATIVE. Selling and administrative expenses decreased 5.4% during 2005
      to $21.3 million from $22.5 million in 2004. The decrease was primarily due
      to
      decreased headcount, compensation expense and related costs within sales and
      marketing.




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.




Activity
      and
      liability balances related to the restructuring and other charges for the years
      ended December 31, 2004 and 2005 are as follows (in millions):





Lease
                RelatedYear
                ended December 31, 2004:Beginning
                balance
            
            $
            2.0Deductions
            
            
            (1.3
            )December
                31, 2004 restructuring balance
            
            
            0.7Year
                ended December 31, 2005:Deductions
            
            
            (0.6
            )Savings
                on settlement of obligation
            
            
            (0.1
            )December
                31, 2005 restructuring balance
            
            
            -




INTEREST
      INCOME. ****** Interest
      income increased 12% to $2.5 million during 2005 from $2.2 million in 2004.
      The
      increase was due to higher average interest rates.




INTEREST
      EXPENSE. Interest expense increased to $5.0 million in 2005 from $4.1 million
      in
      2004. Interest expense arises from obligations under our 2006 Notes and our
      2009
      Notes. In September 2004, we repurchased $20.0 million aggregate principal
      amount of our 2006 Notes and consequently reduced the outstanding principal
      balance to $46.7 million, and concurrently issued $38.0 million aggregate
      principal amount of our 2009 Notes.




GAIN
      ON
      REPURCHASE OF CONVERTIBLE NOTES. During 2004, we recognized a gain of $0.3
      million, on the repurchase of $20.0 million aggregate principal amount of our
      2006 Notes, after adjusting for accrued interest and the write-off of a
      proportionate share of unamortized offering costs.





LIQUIDITY
      AND SOURCES OF CAPITAL




At
      December
      31, 2006 we had $13.7 million of cash and cash equivalents on hand and $69.8
      million in marketable securities. We had $38.0 million aggregate principal
      amount of our 2009 Notes outstanding as of December 31, 2006.




Operations
      required the use of $0.5 million in cash during 2006. Investing activities
      used
      $8.6 million of cash during 2006, consisting principally of purchases of
      equipment of $13.4 million, partially offset by net proceeds on sales of
      marketable securities of $4.7 million. Financing activities provided $10.9
      million of cash in 2006, primarily consisting of proceeds received from the
      issuance of stock, principally from the March 2006 Offering, and was partially
      offset by the $46.7 million repayment of our 2006 Convertible
      Notes.




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.
      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, 2006:





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
            
            $
            43,304
            
            $
            1,900
            
            $
            41,404
            
            $
            -
            
            $
            -Operating
                leases
            
            
            20,211
            
            
            2,243
            
            
            3,853
            
            
            3,717
            
            
            10,398Capital
                leases
            
            
            2,133
            
            
            427
            
            
            854
            
            
            852
            
            
            -Unconditional
                purchase obligations
            
            
            10,495
            
            
            10,495
            
            
            -
            
            
            -
            
            
            -Total
                contractual cash obligations
            
            $
            76,143
            
            $
            15,065
            
            $
            46,111
            
            $
            4,569
            
            $
            10,398





IMPACT
      OF
      RECENTLY ISSUED ACCOUNTING STANDARDS




Effective
      January 1, 2006, the Company adopted Financial Accounting Standards Board (FASB)
      Statement No. 151 (FAS 151), Inventory Costs, an amendment of Accounting
      Research Bulletin No. 43 (ARB No. 43), Chapter 4. FAS 151 clarifies that
      abnormal amounts of idle facility expense, freight, handling costs and wasted
      materials should be recognized as current period charges. In addition, FAS
      151
      requires that allocation of fixed production overhead to inventory be based
      on
      the normal capacity of the production facilities. The adoption of FAS 151 did
      not have a material impact on the condensed consolidated financial
      statements.




In
      July 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 FIN48 on January 1, 2007 and currently believes it will 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.





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 agency 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, 2006, we held marketable securities with an estimated fair value of $69.8
      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, 2006:





Estimated
                Principal Amount and Weighted Average Stated Rate by Expected Maturity
                Value
            
            Fair
                Value($’s
                000)
            
            
            2007
            
            
            2008
            
            
            2009
            
            
            Total
            
            
            ($’s
                000)Principal
            
            $
            60,885
            
            $
            9,000
            
            $
            -
            
            $
            69,885
            
            $
            69,776Weighted
                Average Stated Rates
            
            
            5.40
            %
            
            4.26
            %
            
            -
            
            
            5.26
            %
            
            -


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.




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, 2006,
      the fair value of our outstanding convertible notes, estimated based upon dealer
      quotes, was approximately $71.5 million.





ITEM
      8.
      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.




Report
      of
      Independent Registered Public Accounting Firm




To
      the
      Board of Directors and Stockholders


ANADIGICS,
      Inc.




We
      have
      audited the accompanying consolidated balance sheets of ANADIGICS, Inc. as
      of
      December 31, 2006 and 2005, and the related consolidated statements of
      operations, comprehensive loss, stockholders' equity and cash flows for the
      years then ended. Our audits also included the consolidated financial statement
      schedule for the year 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 2005, and their consolidated results of operations and
      cash flows for the years 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.





We
      also
      have audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States), the effectiveness of ANADIGICS, Inc.'s internal
      control over financial reporting as of December 31, 2006, 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 26, 2007 expressed an unqualified opinion
      thereon.











/s/
      J.H.
      Cohn LLP








Roseland,
      New Jersey


February
      27, 2007










Report
      of
      Independent Registered Public Accounting Firm





The
      Board
      of Directors and Stockholders


ANADIGICS,
      Inc.





We
      have
      audited the accompanying consolidated statements of operations, comprehensive
      loss, stockholders’ equity, and cash flows of ANADIGICS, Inc. for the year ended
      December 31, 2004. Our audit also included the information for the year ended
      December 31, 2004 included in 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 provides a
      reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated results of ANADIGICS, Inc.’s operations and
      cash flows for the year ended December 31, 2004 in conformity with U.S.
      generally accepted accounting principles. Also, in our opinion, the information
      for the year ended December 31, 2004 in 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.












/s/
      ERNST
& YOUNG LLP











MetroPark,
      New Jersey


March
      2,
      2005










ANADIGICS,
      INC.


CONSOLIDATED
      BALANCE SHEETS


(AMOUNTS
      IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)








December
                31,2005
            
            
            2006ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            11,891
            
            $
            13,706Marketable
                securities
            
            
            70,364
            
            
            60,892Accounts
                receivable, net of allowance for doubtful accounts of $1,060 and
                $1,115 in
                2005 and 2006, respectively
            
            
            18,755
            
            
            27,311Inventories
            
            
            16,009
            
            
            20,355Prepaid
                expenses and other current assets
            
            
            2,188
            
            
            2,662Total
                current assets
            
            
            119,207
            
            
            124,926Marketable
                securities
            
            
            4,102
            
            
            8,884Plant
                and equipmentEquipment
                and furniture
            
            
            133,262
            
            
            143,195Leasehold
                improvements
            
            
            38,748
            
            
            38,748Projects
                in process
            
            
            1,617
            
            
            4,975173,627
            
            
            186,918Less
                accumulated depreciation and amortization
            
            
            137,320
            
            
            145,55036,307
            
            
            41,368Goodwill
                and other intangibles, less accumulated amortization of $499 and
                $439 in
                2005 and 2006, respectively
            
            
            6,044
            
            
            5,929Other
                assets
            
            
            2,613
            
            
            1,495$
            168,273
            
            $
            182,602LIABILITIES
                AND STOCKHOLDERS EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            15,519
            
            $
            18,031Accrued
                liabilities
            
            
            4,672
            
            
            5,688Accrued
                restructuring costs
            
            
            40
            
            
            -Current
                maturities of long-term debt
            
            
            46,700
            
            
            -Current
                maturities of capital lease obligations
            
            
            269
            
            
            312Total
                current liabilities
            
            
            67,200
            
            
            24,031Other
                long-term liabilities
            
            
            3,175
            
            
            3,348Long-term
                debt
            
            
            38,000
            
            
            38,000Capital
                lease obligations, less current portion
            
            
            1,763
            
            
            1,463Commitments
                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,
                2005 and
                2006, and 35,007 and 49,200 issued at December 31, 2005 and 2006,
                respectively
            
            
            350
            
            
            492Additional
                paid-in capital
            
            
            347,555
            
            
            413,672Accumulated
                deficit
            
            
            (289,196
            )
            
            (298,046
            )Accumulated
                other comprehensive loss
            
            
            (316
            )
            
            (100
            )Treasury
                stock at cost: 114 shares
            
            
            (258
            )
            
            (258
            )Total
                stockholders’ equity
            
            
            58,135
            
            
            115,760$
            168,273
            
            $
            182,602







See
      accompanying notes.








ANADIGICS,
      INC.


CONSOLIDATED
      STATEMENTS OF OPERATIONS


(AMOUNTS
      IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)





YEAR
                ENDED DECEMBER 31,2004
            
            
            2005
            
            
            2006Net
                sales
            
            $
            91,350
            
            $
            108,281
            
            $
            169,885Cost
                of sales
            
            
            77,355
            
            
            85,929
            
            
            119,175Gross
                profit
            
            
            13,995
            
            
            22,352
            
            
            50,710Research
                and development expenses
            
            
            33,306
            
            
            29,906
            
            
            35,628Selling
                and administrative expenses
            
            
            22,511
            
            
            21,293
            
            
            24,562Restructuring
                and other charges
            
            
            -
            
            
            (120
            )
            
            -55,817
            
            
            51,079
            
            
            60,190Operating
                loss
            
            
            (41,822
            )
            
            (28,727
            )
            
            (9,480
            )Interest
                income
            
            
            2,203
            
            
            2,473
            
            
            5,450Interest
                expense
            
            
            (4,085
            )
            
            (4,997
            )
            
            (4,816
            )Gain
                on repurchase of Convertible notes
            
            
            327
            
            
            -
            
            
            -Other
                income(expense)
            
            
            295
            
            
            18
            
            
            (4
            )Net
                loss
            
            $
            (43,082
            )
            $
            (31,233
            )
            $
            (8,850
            )Basic
                and diluted loss per share
            
            $
            (1.33
            )
            $
            (0.92
            )
            $
            (0.20
            )Weighted
                average basic and diluted common shares outstanding
            
            
            32,413
            
            
            34,012
            
            
            43,814




CONSOLIDATED
      STATEMENTS OF COMPREHENSIVE LOSS


(AMOUNTS
      IN THOUSANDS)





Year
                Ended December 31,2004
            
            
            2005
            
            
            2006Net
                loss
            
            $
            (43,082
            )
            $
            (31,233
            )
            $
            (8,850
            )Other
                comprehensive income (loss)Unrealized
                (loss) gain on marketable securities
            
            
            (617
            )
            
            242
            
            
            207Foreign
                currency translation adjustment
            
            
            12
            
            
            (72
            )
            
            9Reclassification
                adjustment:Net
                realized gain previously included in other comprehensive
                income
            
            
            (19
            )
            
            -
            
            
            -Comprehensive
                loss
            
            $
            (43,706
            )
            $
            (31,063
            )
            $
            (8,634
            )







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, 2003
            
            
            31,226
            
            $
            312
            
            
            -
            
            $
            -
            
            $
            335,477
            
            $
            (214,881
            )
            $
            138
            
            $
            121,046Stock
                options exercised
            
            
            536
            
            
            5
            
            
            
            
            
            
            
            
            1,355
            
            
            
            
            
            
            
            
            1,360Shares
                issued under employee stock purchase plan
            
            
            182
            
            
            2
            
            
            
            
            
            
            
            
            561
            
            
            
            
            
            
            
            
            563Shares
                issued as contingent acquisition consideration
            
            
            747
            
            
            8
            
            
            
            
            
            
            
            
            4,640
            
            
            
            
            
            
            
            
            4,648Restricted
                stock grant, net of forfeitures
            
            
            381
            
            
            4
            
            
            
            
            
            
            
            
            (4
            )
            
            
            
            
            
            
            
            -Amortization
                of stock-based compensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            704
            
            
            
            
            
            
            
            
            704Other
                comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (624
            )
            
            (624
            )Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (43,082
            )
            
            
            
            
            (43,082
            )Balance,
                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 expenses
            
            
            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
            )
            $
            115,760




See
      accompanying notes.










ANADIGICS,
      INC.





CONSOLIDATED
      STATEMENTS OF CASH FLOWS





(AMOUNTS
      IN THOUSANDS)




YEAR
                ENDED DECEMBER 31,2004
            
            
            2005
            
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (43,082
            )
            $
            (31,233
            )
            $
            (8,850
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Gain
                on repurchase of Convertible notes
            
            
            (327
            )
            
            -
            
            
            -Depreciation
            
            
            15,282
            
            
            10,921
            
            
            7,931Amortization
            
            
            1,483
            
            
            1,703
            
            
            1,809Stock-based
                compensation
            
            
            704
            
            
            2,649
            
            
            8,354Amortization
                of premium on marketable securities
            
            
            2,090
            
            
            1,189
            
            
            163Loss
                (gain) on sale of equipment
            
            
            15
            
            
            (1
            )
            
            7Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            1,304
            
            
            (7,985
            )
            
            (8,556
            )Inventory
            
            
            (4,115
            )
            
            (1,573
            )
            
            (4,346
            )Prepaid
                expenses and other assets
            
            
            361
            
            
            1,101
            
            
            (703
            )Accounts
                payable
            
            
            (1,476
            )
            
            7,498
            
            
            2,512Accrued
                and other liabilities
            
            
            (1,892
            )
            
            (701
            )
            
            1,158Net
                cash used in operating activities
            
            
            (29,653
            )
            
            (16,432
            )
            
            (521
            )CASH
                FLOWS FROM INVESTING ACTIVITIESPurchases
                of plant and equipment
            
            
            (3,427
            )
            
            (2,262
            )
            
            (13,374
            )Purchases
                of marketable securities
            
            
            (51,128
            )
            
            (64,098
            )
            
            (227,150
            )Proceeds
                from sales of marketable securities
            
            
            58,627
            
            
            81,565
            
            
            231,884Business
                acquisitions
            
            
            (55
            )
            
            -
            
            
            -Proceeds
                from sale of equipment
            
            
            130
            
            
            53
            
            
            28Net
                cash provided (used) by investing activities
            
            
            4,147
            
            
            15,258
            
            
            (8,612
            )CASH
                FLOWS FROM FINANCING ACTIVITIESPayment
                of obligations under capital leases
            
            
            (66
            )
            
            (40
            )
            
            (257
            )Proceeds
                from issuance of long-term debt net of offering costs
            
            
            35,695
            
            
            -
            
            
            -Repurchase
                of Convertible notes
            
            
            (19,400
            )
            
            -
            
            
            -Repayment
                of Convertible notes
            
            
            -
            
            
            -
            
            
            (46,700
            )Issuances
                of common stock, net of related expenses
            
            
            1,923
            
            
            2,192
            
            
            57,905Repurchase
                of common stock into treasury
            
            
            -
            
            
            (258
            )
            
            -Net
                cash provided by financing activities
            
            
            18,152
            
            
            1,894
            
            
            10,948Net
                (decrease) increase in cash and cash equivalents
            
            
            (7,354
            )
            
            720
            
            
            1,815Cash
                and cash equivalents at beginning of period
            
            
            18,525
            
            
            11,171
            
            
            11,891Cash
                and cash equivalents at end of period
            
            $
            11,171
            
            $
            11,891
            
            $
            13,706Supplemental
                disclosures of cash flow information:Interest
                paid
            
            $
            3,193
            
            $
            4,346
            
            $
            4,370Taxes
                paid
            
            
            117
            
            
            82
            
            
            37Acquisition
                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




We
      are 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 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 (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. 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
      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 proprietary technology, which
      utilizes InGaP-plus TM ,
      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.
      We
      fabricate substantially all of our ICs in our six-inch diameter GaAs wafer
      fabrication facility. We believe our strong fabrication capability combined
      with
      integrated product design and logistics expertise, allow quick development
      and
      manufacture of products to meet market and customer requirements.


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.





USE
      OF
      ESTIMATES





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America 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, 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 who accounted for 10% or more of the Company’s total net
      sales and corresponding end application information are as follows:




YEAR
                  ENDED DECEMBER 31,2004
              
              2005
              
              2006Customer
                (application)Intel
                (Broadband)
              
              <10
              %
              <10
              %
              
              $
              15,678
              
              14
              %
              
              $
              29,827
              
              18
              %World
                Peace Group (Wireless & Broadband)
              
              <10
              %
              <10
              %
              
              $
              17,275
              
              16
              %
              
              $
              28,175
              
              17
              %LG
                  Electronics (Wireless)
              $
              13,628
              
              15
              %
              
              $
              12,321
              
              11
              %
              
              
              <10
              %
              <10
              %Kyocera
                  (Wireless)
              $
              9,751
              
              11
              %
              
              
              <10
              %
              <10
              %
              
              
              <10
              %
              <10
              %Motorola
                  (Broadband)
              $
              9,184
              
              10
              %
              
              
              <10
              %
              <10
              %
              
              
              <10
              %
              <10
              %Cisco
                  (Broadband)
              $
              9,218
              
              10
              %
              
              
              <10
              %
              <10
              %
              
              
              <10
              %
              <10
              %
  Accounts
      receivable at December 31, 2005 and 2006 from the greater than 10% customers
      accounted for 29% and 34% 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 not
      recognized 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. Cancellation revenue is recognized 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. 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 $9,781 and $9,806 at December 31,
      2005 and 2006, respectively, and accumulated amortization was $7,726 and $8,072
      at December 31, 2005 and 2006, 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,
      process technology, customer list and a covenant-not-to-compete 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. Process technology,
      the customer list and the covenant continued to be amortized using the
      straight-line method over three to four year lives. The carrying amount of
      the
      Company’s intangibles are reviewed on a regular basis for any signs 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.





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,
      with unrealized gains and losses reported in other accumulated comprehensive
      income or loss. 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 7 for a summary of available for sale
      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 date.
      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 are not included as 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, 2005
      and 2006, the fair value of the Company's outstanding Convertible senior notes,
      estimated based upon dealer quotes, were approximately $93,694 and $71,516,
      respectively compared to their carrying values of $84,700 and $38,000,
      respectively.





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




Effective
      January 1, 2006, the Company adopted FASB Statement No. 151 (FAS 151), Inventory
      Costs, an amendment of Accounting Research Bulletin No. 43 (ARB No. 43), Chapter
      4. FAS 151 clarifies that abnormal amounts of idle facility expense, freight,
      handling costs and wasted materials should be recognized as current period
      charges. In addition, FAS 151 requires that allocation of fixed production
      overhead to inventory be based on the normal capacity of the production
      facilities. The adoption of FAS 151 did not have a material impact on the
      condensed consolidated financial statements.




In
      July 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 and currently believes it will 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.




2.
            INTANGIBLES
                AND GOODWILL





As
      of December 31, 2005 and 2006, the Company's intangible assets consist of the
      following:





Gross
                Carrying Amount
            Accumulated
                AmortizationDecember
                31,
            December
                31,2005
            
            
            2006
            
            
            2005
            
            
            2006Goodwill
            
            $
            5,918
            
            $
            5,918
            
            $
            -
            
            $
            -Process
                Technology
            
            
            210
            
            
            210
            
            
            147
            
            
            199Covenant
                not to compete
            
            
            175
            
            
            -
            
            
            175
            
            
            -Customer
                list
            
            
            240
            
            
            240
            
            
            177
            
            
            240$
            6,543
            
            $
            6,368
            
            $
            499
            
            $
            439




Annual
      amortization expense related to intangible assets is calculated over their
      estimated useful lives of three to four years and was $194, $240 and $115 in
      the
      years ended December 31, 2004, 2005 and 2006, respectively. The $11 unamortized
      balance at December 31, 2006 relating to process technology will be fully
      amortized in 2007.




3.
      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, 2004, 2005 and 2006 are as follows:





BalanceJanuary
                1, 2004 restructuring balance
            
            $
            1,994Deductions
            
            
            (1,268
            )December
                31, 2004 restructuring balance
            
            
            726Deductions
            
            
            (566
            )Savings
                on settlement of obligation
            
            
            (120
            )December
                31, 2005 restructuring balance
            
            
            40Deductions
            
            
            (40
            )December
                31, 2006 restructuring balance
            
            $
            -





4.
      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 31,2004
            
            
            2005
            
            
            2006Wireless
            
            $
            45,379
            
            $
            53,143
            
            $
            91,275Broadband
            
            
            45,971
            
            
            55,138
            
            
            78,610Total
            
            $
            91,350
            
            $
            108,281
            
            $
            169,885




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 31,2004
            
            
            2005
            
            
            2006Asia
            
            $
            48,939
            
            $
            57,188
            
            $
            92,462USA
                and Canada
            
            
            35,982
            
            
            41,729
            
            
            64,634Other
            
            
            6,429
            
            
            9,364
            
            
            12,789Total
            
            $
            91,350
            
            $
            108,281
            
            $
            169,885




5.
      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 $1,999 and $1,273 at December 31, 2005 and 2006,
      respectively, consisting principally of underwriters' fees, were included in
      other assets and are being amortized over the life of the notes.





6.
      COMMITMENTS AND CONTINGENCIES




The
      Company
      leases manufacturing, warehousing and office space and manufacturing equipment
      under noncancelable operating leases that expire through 2016. The Company
      also
      leases certain equipment under capital lease that expires in 2011. Rent expense,
      net of sublease income was $3,063, $2,447 and $2,101 in 2004, 2005 and 2006,
      respectively. Sublease income was $780, $270 and $24 in 2004, 2005 and 2006,
      respectively. The future minimum lease payments under the noncancelable
      operating leases and the present value of the minimum capital lease payments
      are
      as follows:





YEAR
            
            
            Capital
                Leases
            
            
            Operating
                Leases2007
            
            
            427
            
            
            2,2432008
            
            
            427
            
            
            1,9612009
            
            
            427
            
            
            1,8922010
            
            
            427
            
            
            1,8592011
            
            
            425
            
            
            1,858Thereafter
            
            
            -
            
            
            10,398Total
                minimum lease payments
            
            
            2,133
            
            
            20,211Less:
                amount representing interest
            
            
            (369
            )
            
            -$
            1,764
            
            $
            20,211





In
      addition
      to the above, at December 31, 2006, the Company had unconditional purchase
      obligations of approximately $10,495.





7.
      MARKETABLE SECURITIES




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





Available-for-Sale
                SecuritiesCost
            
            
            Gross
                Unrealized Gains (Losses)
            
            
            Estimated
                Fair ValueGovernment-Sponsored
                Enterprises
            
            $
            8,500
            
            $
            (53
            )
            $
            8,447State
                & Municipal Debt Securities
            
            
            10,725
            
            
            -
            
            
            10,725Corporate
                Debt Securities
            
            
            55,510
            
            
            (216
            )
            
            55,294Total
                at December 31, 2005
            
            $
            74,735
            
            $
            (269
            )
            $
            74,466Government-Sponsored
                Enterprises
            
            $
            6,395
            
            $
            (12
            )
            $
            6,383State
                & Municipal Debt Securities
            
            
            10,045
            
            
            -
            
            
            10,045Corporate
                Debt Securities
            
            
            53,398
            
            
            (50
            )
            
            53,348Total
                at December 31, 2006
            
            $
            69,838
            
            $
            (62
            )
            $
            69,776





Management
      has the ability and intent, if necessary, to liquidate any 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 on the accompanying
      consolidated balance sheet. Expected maturities may differ from contractual
      maturities because the issuers of the securities may have the right to prepay
      obligations. The amortized cost and estimated fair value of marketable
      securities at December 31, 2006, are shown below:





Available-for-Sale
                SecuritiesCost
            
            
            Estimated
                Fair ValueDue
                in one year or less
            
            $
            60,925
            
            $
            60,892Due
                after one year through two years
            
            
            8,913
            
            
            8,884Total
            
            $
            69,838
            
            $
            69,776





8.
      INVENTORIES




Inventories
      consist of the following:




December
                31,2005
            
            
            2006Raw
                materials
            
            $
            2,870
            
            $
            5,700Work
                in progress
            
            
            10,973
            
            
            12,097Finished
                goods
            
            
            5,068
            
            
            6,34118,911
            
            
            24,138Reserves
            
            
            (2,902
            )
            
            (3,783
            )Total
            
            $
            16,009
            
            $
            20,355





9.
      ACCRUED LIABILITIES




Accrued
      liabilities consist of the following:





December
                31,2005
            
            
            2006Accrued
                compensation
            
            $
            2,123
            
            $
            2,421Warranty
                reserve
            
            
            396
            
            
            347Other
            
            
            2,153
            
            
            2,920Total
            
            $
            4,672
            
            $
            5,688





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





10.
      INCOME TAXES




The
      current
      and deferred components of income taxes for each of the years ended December
      31,
      2004, 2005 and 2006 were zero.




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, 2005 and 2006
      are as follows:





December
                31,2005
            
            
            2006Deferred
                tax balancesAccruals/reserves
            
            $
            3,148
            
            $
            6,045Net
                operating loss carryforwards
            
            
            105,819
            
            
            108,327Research
                and experimentation credits
            
            
            5,870
            
            
            10,686Deferred
                rent expense
            
            
            1,215
            
            
            1,336Difference
                in basis of plant and equipment
            
            
            3,560
            
            
            4,136Other
            
            
            -
            
            
            -Valuation
                allowance
            
            
            (119,612
            )
            
            (130,530
            )Net
                deferred tax assets
            
            
            -
            
            
            -





As
      of
      December 31, 2006, the Company had net operating loss carryforwards of
      approximately $298,000 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. At December 31, 2006, $27,403 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.




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 31,2004
              2005
              2006Tax
                  at US statutory rate
              
              $
              (15,079
              )
              
              (35.0
              )%
              $
              (10,932
              )
              
              (35.0
              )%
              $
              (3,097
              )
              
              (35.0
              )%Effect
                  of permanent items
              
              
              (750
              )
              
              (1.7
              )
              
              (88
              )
              
              (0.3
              )
              
              (2,086
              )
              
              (23.6
              )State
                  and foreign tax (benefit), net of federal tax effect
              
              
              (1,470
              )
              
              (3.4
              )
              
              (1,023
              )
              
              (3.3
              )
              
              (481
              )
              
              (5.4
              )Research
                  and experimentation tax credits, net
              
              
              (516
              )
              
              (1.2
              )
              
              (797
              )
              
              (2.6
              )
              
              (4,816
              )
              
              (54.4
              )Valuation
                  allowance
              
              
              17,850
              
              
              41.4
              
              
              12,763
              
              
              40.9
              
              
              10,918
              
              
              123.3Other
              
              
              (35
              )
              
              (0.1
              )
              
              77
              
              
              0.3
              
              
              (438
              )
              
              (4.9
              )Benefit
                  from income taxes
              
              $
              -
              
              
              0.0
              %
              $
              -
              
              
              0.0
              %
              $
              -
              
              
              0.0
              %




11.
      STOCKHOLDERS' EQUITY




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.





12.
      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 5,450 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 182 ($3.11), 328 ($3.13)
      and
      187 ($5.36), respectively for the years ended December 31, 2004, 2005 and 2006,
      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 2004 and 2005, only amortization of restricted stock grants was
      required. The Company is using the straight-line basis in calculating
      stock-based compensation expense.




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,US
                GAAP
              (as
                reported)
            Pro
                forma
              (comparison
                only)2006
            2005
            2004
            2005
            2004Amortization
                of restricted stock awards
            $(7,754)
            $(2,649)
            $(669)
            $(2,649)
            $(669)Amortization
                of ESP Plan
            (400)
            -
            -
            (567)
            (483)Amortization
                of stock option awards
            (200)
            -
            (35)
            (542)
            (8,826)Total
                stock-based compensation
            $(8,354)
            $(2,649)
            $(704)
            $(3,758)
            $(9,978)Net
                loss
            $(8,850)
            $(31,233)
            $(43,082)
            $(32,342)
            $(52,356)Basic
                and diluted loss per share
            $(0.20)
            $(0.92)
            $(1.33)
            $(0.95)
            $(1.62)By
                Financial Statement line itemCost
                of sales
            $1,829
            $596
            $115
            $798
            $1,118Research
                and development expenses
            3,287
            1,185
            316
            1,561
            1,901Selling
                and administrative expenses
            3,238
            868
            273
            1,399
            6,959


(1)
            Pro
                forma disclosure for 2004 and 2005 presents the full effect of share
                based
                compensation expense as required under FAS 123R, which was adopted
                effective January 1, 2006 using the modified-prospective method.
                As
                reported historical GAAP 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, 2004
      to
      December 31, 2006 is presented in tabular form below:




Restricted
                Shares
            
            Stock
                OptionsShares
            
            
            
            
            
            WA
                price per share
            
            
            Issuable
                upon exercise
            
            
            WA
                exercise priceGrants
                outstanding at January 1, 2004
            
            
            -
            
            
            
            
            $
            -
            
            
            5,905
            
            $
            7.30Granted
            
            
            403
            
            
            
            
            
            4.01
            
            
            1,944
            
            
            7.16Shares
                vested/options exercised
            
            
            -
            
            
            
            
            
            -
            
            
            (537
            )
            
            2.53Forfeited/expired
            
            
            (22
            )
            
            
            
            
            4.01
            
            
            (520
            )
            
            9.31Balance
                at December 31, 2004
            
            
            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
            
            $
            8.36


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




Exercisable
      options and their related average exercise prices were 6,172 ($7.94), 5,759
      ($7.83) and 4,644 ($8.30) as of December 31, 2004, 2005 and 2006, respectively.
      The total fair value of restricted shares vested during the years ended December
      31, 2005 and 2006 were $808 and $4,003, respectively. The intrinsic value of
      exercised options during the years ended December 31, 2004, 2005 and 2006 were
      $2,098, $932 and $3,801, respectively.




In
      January
      2007, the Company granted an additional 608 restricted shares under the
      2005 Plan at a market price equal to $9.53, which represented the fair market
      value at the date of grants.





Weighted
                average information as of December 31, 2006Options
                currently exercisableShares
                issuable upon exercise
            
            
            4,644Weighted
                average exercise price
            
            $
            8.30Weighted
                average remaining contractual term
            
            
            4.8
                yearsWeighted
                average remaining contractual term for outstanding options
            
            
            5.7
                yearsIntrinsic
                value of exercisable options
            
            $
            12,490Intrinsic
                value of outstanding options
            
            $
            12,885Unrecognized
                stock-based compensation costOption
                plans
            
            $
            5,171Restricted
                stock
            
            $
            11,443Weighted
                average remaining vest period for option plans
            
            
            2.0
                yearsWeighted
                average remaining vest period for restricted stock
            
            
            0.9
                years





Stock
      options outstanding at December 31, 2006 are summarized as follows :


Range
                of exercise prices
            
            Outstanding
                Options at December 31, 2006
            
            Weighted
                average remaining contractual life
            
            Weighted
                average exercise price
            
            Exercisable
                at December 31, 2006
            
            Weighted
                average exercise price$1.39
                - $4.17
            
            
            1,548
            
            
            4.52
            
            $
            3.30
            
            
            1,522
            
            $
            3.32$4.33
                - $8.17
            
            
            1,842
            
            
            6.22
            
            $
            6.88
            
            
            1,820
            
            $
            6.89$8.67
                - $13.59
            
            
            1,626
            
            
            7.30
            
            $
            10.22
            
            
            650
            
            $
            12.28$13.94
                - $53.48
            
            
            653
            
            
            3.06
            
            $
            19.87
            
            
            652
            
            $
            19.87





On
      July 3,
      2003, the Company announced a voluntary stock option exchange program for
      employees and officers. Directors of the Company were not eligible for the
      exchange program. Pursuant to the terms and conditions of the offer, which
      expired on August 4, 2003, the Company accepted for cancellation options to
      purchase 1,674 shares of common stock having a weighted average exercise price
      of $19.49. On February 6, 2004, participating employees were issued 552 stock
      options, under this one for three exchange program, for the cancelled options.
      The new options have an exercise price equal to $7.27, which represented the
      fair market value at the date of grant and are now fully vested.




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,
      2004, 2005 and 2006 are summarized below:





Year
                ended December 31,2004
            
            
            2005
            
            2006Stock
                option awardsRisk-free
                interest rate
            
            
            2.2
            %
            
            3.4
            %
            4.6%Expected
                volatility
            
            
            101
            %
            
            95
            %
            76%Average
                expected term (in years)
            
            
            2.75
            
            
            2.75
            
            4.72Expected
                dividend yield
            
            
            0.0
            %
            
            0.0
            %
            0.0%Weighted
                average fair value of options granted
            
            $
            4.17
            
            $
            1.70
            
            $5.54ESP
                PlanRisk-free
                interest rate
            
            
            2.8
            %
            
            4.4
            %
            5.0%Expected
                volatility
            
            
            70
            %
            
            80
            %
            62%Average
                expected term
            
            
            1
            
            
            1
            
            1Expected
                dividend yield
            
            
            0
            %
            
            0
            %
            
            0
            %Weighted
                average fair value of purchase option
            
            $
            2.66
            
            $
            1.72
            
            $
            2.13




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 being  also
      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. This plan was amended in 2001 and the Company now matches
      50% of employee contributions up to 6% of their gross pay. The Company recorded
      expense of $730, $675 and $746 for the years ended December 31, 2004, 2005
      and
      2006, respectively, relating to plan contributions.




13.
      EARNINGS PER SHARE





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





Year ended
                December 31,2004
            
            
            2005
            
            
            2006Weighted
                average common shares outstanding used to calculate basic earnings
                per
                share
            
            
            32,413
            
            
            34,012
            
            
            43,814Net
                effect of dilutive securities - based on treasury stock method using
                average market price
            
            
            -*
            
            
            -*
            
            
            -*Weighted
                average common shares outstanding used to calculate diluted earnings
                per
                share
            
            
            32,413
            
            
            34,012
            
            
            43,814




*
      Any
      dilution arising from the Company's outstanding stock options or shares
      potentially issuable upon conversion of the Convertible notes are not included
      as their effect is anti-dilutive.







14.
      OTHER
      ACCUMULATED COMPREHENSIVE INCOME (LOSS)





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





Foreign
                Currency Translation Adjustments
            
            
            Unrealized
                Gain (loss) on available-for-sale securities
            
            
            TotalBalance
                at December 31, 2004
            
            $
            25
            
            $
            (511
            )
            $
            (486
            )Unrealized
                gain on available-for-sale securities
            
            
            -
            
            
            242
            
            
            242Foreign
                currency translation adjustment
            
            
            (72
            )
            
            -
            
            
            (72
            )Balance
                at December 31, 2005
            
            
            (47
            )
            
            (269
            )
            
            (316
            )Unrealized
                gain on available-for-sale securities
            
            
            -
            
            
            207
            
            
            207Foreign
                currency translation adjustment
            
            
            9
            
            
            -
            
            
            9Balance
                at December 31, 2006
            
            $
            (38
            )
            $
            (62
            )
            $
            (100
            )








15.
      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.




16.
      QUARTERLY FINANCIAL DATA (UNAUDITED)





2005
      and
      2006 Quarterly Financial Data





The
      following
      table sets forth certain unaudited results of operations for each quarter during
      2006 and 2005. 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
                Ended2005
            2006April
                2
            
            
            July
                2
            
            
            Oct.
                1
            
            
            Dec.
                31
            
            
            April
                1
            
            
            July
                1
            
            
            Sept.
                30
            
            
            Dec.
                31Net
                sales
            
            $
            21,773
            
            $
            23,943
            
            $
            29,264
            
            $
            33,301
            
            $
            35,721
            
            $
            40,215
            
            $
            44,825
            
            $
            49,124Cost
                of sales
            
            
            19,252
            
            
            19,511
            
            
            22,691
            
            
            24,475
            
            
            26,284
            
            
            28,940
            
            
            31,035
            
            
            32,916Gross
                profit
            
            
            2,521
            
            
            4,432
            
            
            6,573
            
            
            8,826
            
            
            9,437
            
            
            11,275
            
            
            13,790
            
            
            16,208Research
                and development expenses
            
            
            7,862
            
            
            7,374
            
            
            7,491
            
            
            7,179
            
            
            8,159
            
            
            8,498
            
            
            9,137
            
            
            9,834Selling
                and administrative expense
            
            
            5,552
            
            
            5,506
            
            
            5,234
            
            
            5,001
            
            
            5,493
            
            
            5,869
            
            
            6,328
            
            
            6,872Restructuring
                and other charges
            
            
            (120
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Operating
                loss
            
            
            (10,773
            )
            
            (8,448
            )
            
            (6,152
            )
            
            (3,354
            )
            
            (4,215
            )
            
            (3,092
            )
            
            (1,675
            )
            
            (498
            )Interest
                income
            
            
            577
            
            
            599
            
            
            607
            
            
            690
            
            
            866
            
            
            1,571
            
            
            1,648
            
            
            1,365Interest
                expense
            
            
            (1,249
            )
            
            (1,249
            )
            
            (1,250
            )
            
            (1,249
            )
            
            (1,288
            )
            
            (1,287
            )
            
            (1,285
            )
            
            (956
            )Other
                (expense) income
            
            
            (6
            )
            
            9
            
            
            15
            
            
            -
            
            
            -
            
            
            21
            
            
            -
            
            
            (25
            )Net
                loss
            
            $
            (11,451
            )
            $
            (9,089
            )
            $
            (6,780
            )
            $
            (3,913
            )
            $
            (4,637
            )
            $
            (2,787
            )
            $
            (1,312
            )
            $
            (114
            )Basic
                and diluted loss per share
            
            $
            (0.34
            )
            $
            (0.27
            )
            $
            (0.20
            )
            $
            (0.11
            )
            $
            (0.12
            )
            $
            (0.06
            )
            $
            (0.03
            )
            $
            0.00





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 Ernst & Young LLP to J.H. Cohn LLP during its fiscal
      year ended December 31, 2005, please refer to the Company’s current report on
      Form 8-K filed with the SEC on June 3, 2005. The Company had no disagreements
      during its 2005 and 2006 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, 2006. 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, 2006.




Our
      management’s evaluation of the effectiveness of our internal control over
      financial reporting as of December 31, 2006 has been audited by J.H. Cohn 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 pre vent
      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.





ITEM
      9B.
      OTHER INFORMATION





None.





Report
      of
      Independent Registered Public Accounting Firm








To
      the
      Board of Directors and Stockholders


ANADIGICS,
      Inc.








We
      have
      audited management's assessment, included in Item 9A, Management's Report on
      Internal Control over Financial Reporting, that ANADIGICS, Inc. maintained
      effective internal control over financial reporting as of December 31, 2006
      based on criteria established in "Internal Control - Integrated Framework"
      issued by the Committee of Sponsoring Organizations of the Treadway Commission.
      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. Our responsibility is to express
      an
      opinion on management's assessment and an opinion on the effectiveness of 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, evaluating management's assessment, testing and evaluating
      the design and operating effectiveness of internal control, 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 accounting principles generally accepted in the United States of America.
      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 accounting principles generally accepted in the United States
      of
      America, and 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 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, management's assessment that ANADIGICS, Inc. maintained effective
      internal control over financial reporting as of December 31, 2006, is fairly
      stated, in all material respects, based on the criteria established in "Internal
      Control - Integrated Framework" issued by the Committee of the Sponsoring
      Organizations of the Treadway Commission. Also, in our opinion, ANADIGICS,
      Inc.
      maintained, in all material respects, effective internal control over financial
      reporting as of December 31, 2006, based on such 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, 2006, and the related consolidated statements of
      operations, comprehensive loss, stockholders' equity and cash flows for the
      year
      then ended, and our report dated February 27, 2007 expressed an unqualified
      opinion thereon.








/s/
      J.H.
      Cohn LLP





Roseland,
      New Jersey


February
      27, 2007






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 2007 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 2007 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 2007 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 2007 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 2007 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, 2005 and
                2006





-
            Consolidated
                Statements of Operations - Year ended December 31, 2004, 2005 and
                2006-
            Consolidated
                Statements of Comprehensive Loss - Year ended December 31, 2004,
                2005 and
                2006





-
            Consolidated
                Statements of Stockholders’ Equity - Year ended December 31, 2004, 2005
                and 2006-
            Consolidated
                Statements of Cash Flows - Year ended December 31, 2004, 2005 and
                2006





-
            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; and as amended and filed as an exhibit to the Company’s Quarterly
                Report on Form 10-Q dated August 10, 2006; 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, and incorporated herein by reference.*21
            Subsidiary
                Listing*23.1
            Consent
                of J.H. Cohn LLP.*23.2
            Consent
                of Ernst & Young 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 27th day of February
      2007.







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
                27, 2007Dr.
                Bami Bastani/s/
                Thomas C. Shields
            Executive
                Vice President and Chief Financial Officer (Principal Financial Accounting
                Officer)
            February
                27, 2007Thomas
                C. Shields/s/
                Ronald Rosenzweig
            Chairman
                of the Board of Directors
            February
                27, 2007Ronald
                Rosenzweig/s/
                Paul S. Bachow
            Director
            February
                27, 2007Paul
                S. Bachow/s/
                Garry McGuire
            Director
            February
                27, 2007Garry
                McGuire/s/
                Harry T. Rein
            Director
            February
                27, 2007Harry
                T. Rein/s/
                Lewis Solomon
            Director
            February
                27, 2007Lewis
                Solomon/s/
                Dennis F. Strigl
            Director
            February
                27, 2007Dennis
                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, 2006:Deducted
                from asset account:Allowance
                for doubtful accounts
            
            $
            1,060
            
            $
            125
            
            $
            (70
            )
            
            (1
            )
            $
            1,115Reserve
                for excess and obsolete inventory
            
            
            2,902
            
            
            1,704
            
            
            (823
            )
            
            (2
            )
            
            3,783Reserve
                for warranty claims
            
            
            396
            
            
            677
            
            
            (726
            )
            
            (3
            )
            
            347Year
                ended December 31, 2005:Deducted
                from asset account:Allowance
                for doubtful accounts
            
            $
            988
            
            $
            90
            
            $
            (18
            )
            
            (1
            )
            $
            1,060Reserve
                for excess and obsolete inventory
            
            
            4,074
            
            
            269
            
            
            (1,441
            )
            
            (2
            )
            
            2,902Reserve
                for warranty claims
            
            
            159
            
            
            634
            
            
            (397
            )
            
            (3
            )
            
            396Year
                ended December 31, 2004Deducted
                from asset account:Allowance
                for doubtful accounts
            
            $
            752
            
            $
            240
            
            $
            (4
            )
            
            (1
            )
            $
            988Reserve
                for excess and obsolete inventory
            
            
            4,745
            
            
            1,636
            
            
            (2,307
            )
            
            (2
            )
            
            4,074Reserve
                for warranty claims
            
            
            100
            
            
            390
            
            
            (331
            )
            
            (3
            )
            
            159







(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%Telcom
                Devices Corp.
            California
            100%





EXHIBIT
      23.1








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 and the Registration Statement (Form S-8 No.
      33-91750) 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.
      33-32533 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 and Form S-3 No. 333-139124) of our reports dated February
      27, 2007, with respect to the consolidated financial statements and
      schedule of ANADIGICS, Inc. and ANADIGICS, Inc. management's assessment of
      the
      effectiveness of internal control over financial reporting, and the
      effectiveness of internal control over financial reporting of ANADIGICS, Inc.
      included in this Annual Report (Form 10-K) for the year ended December 31,
      2006.











/s/
      J.H.
      Cohn LLP





Roseland,
      New Jersey


February
      27, 2007







EXHIBIT
      23.2






CONSENT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








We
      consent to the incorporation by reference in the Registration Statement (Form
      S-8 No. 33-91750) 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, in the 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, in the Registration Statement (Form S-8 No. 333-136280)
      pertaining to the ANADIGICS, Inc. Amended and Restated 2005 Long-Term Incentive
      and Share Award Plan and in the Registration Statements (Form S-3 No. 333-75040,
      Form S-3 No. 333-110538 Form S-3 No. 333-120947 and Form S-3 No.
      333-139124) of our report dated March 2, 2005, with respect to the
      consolidated statement of operations, comprehensive loss, stockholders’ equity
      and cash flows of ANADIGICS, Inc. for the year ended December 31, 2004 and
      the
      information for the year ended December 31, 2004 included in the related
      financial statement schedule of ANADIGICS, Inc. included in this Annual Report
      (Form 10-K) for the year ended December 31, 2006.





/s/
      ERNST & YOUNG LLP







MetroPark,
      New Jersey


February
      27, 2007