ANADIGICS INC, 10-K, 2000-03-30

ANADIGICS INC
10-K, 2000-03-30
SEMICONDUCTORS & RELATED DEVICES

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999.

/ / 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 (I.R.S. Employer Identification No.)
incorporation or organization)

[LOGO]

35 Technology Drive
Warren, New Jersey 07059
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(Address of principal executive offices) (Zip Code)

(908) 668-5000
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(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

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 / /

The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 1, 2000 was approximately $2.8 billion, based upon the
closing sales price of the Registrant's common stock as quoted on the NASDAQ
National Market on such date.

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/

The number of shares outstanding of the Registrant's common stock as of March 1,
2000 was 19,235,743 (28,853,614 reflecting a three-for-two stock split by
declaration on January 27, 2000 of a stock dividend of one share of common stock
for each two shares of common stock outstanding payable on February 29, 2000 to
holders of record on February 10, 2000).

DOCUMENTS INCORPORATED BY REFERENCE

1. Registrant's Proxy Statement for the 2000 Annual Meeting of Stockholders (the
"2000 Proxy Statement") (to be filed with the Securities and Exchange Commission
on or before April 30, 2000 is incorporated by reference in Part III hereof).

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PART 1

ITEM 1. BUSINESS.

Overview

We supply radio frequency/microwave integrated circuit solutions to the
communications industry, enabling manufacturers to enhance overall system
performance and reduce manufacturing cost and time to market. In the wireless
market we focus on applications (or solutions) for cellular and personal
communications systems handsets. In the broadband market we focus on
applications for cable television systems, cable modems and fiber optic
communications systems. We believe our competitive advantages are our design,
development and applications expertise, our high-volume, low-cost GaAs
technology manufacturing expertise and our strong working relationships with
leading original equipment manufacturers in our target markets.

We design, develop and manufacture our integrated circuits primarily
using gallium arsenide or GaAs semiconductor material with MESFET and PHEMT
process technologies. We are currently in the process of developing products
using heterojunction bipolar transistor or HBT technology, which we believe will
reduce design complexity and power usage for our next-generation power
amplifiers. We recently began production in our new six-inch diameter analog
GaAs wafer fabrication facility, which we believe to be the first and only
six-inch diameter analog GaAs wafer fabrication facility in our industry. Using
a six-inch diameter wafer allows us to produce, at a small incremental cost,
more than twice the integrated circuit dice per wafer than can be produced from
the industry norm four-inch wafer. With our strong fabrication capability,
significant management expertise and innovative designs, we believe we can
rapidly develop products in line with market requirements.

Industry Background

Over the last decade there have been remarkable developments in
electronic communications, as evidenced by the emergence of wireless
communications, internet services and digital television services. Radio
frequency/microwave and integrated circuit technologies have enabled increases
in communications capacity and significant reductions in systems costs. The
wireless and broadband communications markets are beneficiaries of current
technological trends, including higher frequencies, digital modulation and
higher levels of electronic integration.

Wireless communications, led by cellular and personal communications
systems or PCS telephone services, are growing rapidly and wireless services are
replacing wireline telephone services in some markets. According to Morgan
Stanley Dean Witter, worldwide unit sales of cellular/PCS wireless handsets were
282.2 million in 1999. Morgan Stanley Dean Witter forecasts cellular/PCS
wireless handset unit sales to be 1.4 billion in 2003, which represents a
1999-2003 compound annual growth rate of approximately 50%.

Broadband markets are also benefiting from these technological changes.
Cable television systems are moving from one-way analog TV signal distribution
systems to interactive digital systems offering increased and new video content,
internet connection services and telephony. The increased demand for
communication services, such as the internet, is also driving expansion of fiber
optic telecommunications networks.

Given these developments, original equipment manufacturers are facing
the following challenges:

o Shorter cycle times. In the wireless communications market,
handset manufacturers must bring new products to market
quickly in order to maintain their market position. We see new
handset platforms being introduced every six months;

o Need for low-cost products. Handset and set-top boxes are
increasingly becoming consumer-driven products. The wide use
of these products forces original equipment manufacturers to
offer them at attractive prices. As a result, suppliers of
components must be cost effective in order for original
equipment manufacturers to stay competitive; and

o Stronger supplier relationships. The digital, wireless, cable
and fiber optic industries are standards driven. Companies in
the communications industry must work very closely with their
suppliers in order to develop new products. Companies
therefore limit themselves to a small number of suppliers in
order to keep their competitive advantages.

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The GaAs Advantage

Over the past fifteen years, through our research and development
efforts, we have developed expertise in producing cost-effective GaAs-based
integrated circuits for high-volume commercial applications which offer the
performance attributes required for radio frequency/microwave applications that
are not easily obtainable with silicon-based integrated circuits. GaAs
transistors can operate at frequencies up to three to five times greater than
those possible with silicon and therefore can handle the requirements of radio
frequency/microwave applications. GaAs integrated circuits have a lower noise
figure than silicon-based integrated circuits, providing increased sensitivity,
less distortion and interference and better dynamic range, thereby enabling
systems to handle a wide range of signal strengths. GaAs is a semi-insulating
material which facilitates integration of the passive components required in
radio frequency/microwave applications. Finally, GaAs integrated circuits used
in transmitter applications are also more power-efficient than silicon-based
circuits, allowing for longer battery life or use of smaller batteries.

Our Strategy

Our objective is to be the leading supplier of radio frequency
integrated circuits for the wireless and broadband communications markets. The
cornerstone of our strategy is to capitalize on opportunities in the wireless
and broadband communications markets by addressing applications which leverage
our radio frequency integrated circuit design and manufacturing expertise and
our established relationships with leading original equipment manufacturers in
these markets. The key elements of our strategy are to:

Be First-to-Market with Proprietary Value-Added Products

We intend to continue to design timely, cost-effective integrated
circuit solutions for our target markets. The combination of our experienced
engineering staff and our "quick-turn" wafer fabrication and assembly service
allows us to develop prototypes that can be ready for testing in less than one
month. This design efficiency contributes to customer satisfaction and allows us
to improve product designs rapidly for manufacturing efficiency. For example, we
were the first manufacturer to offer an integrated circuit chip set for tuner
applications in cable television set-top boxes. We were also the first
manufacturer to offer a dual-band power amplifier that combines the functions of
two power amplifiers for cellular handsets into a single integrated circuit.

Capitalize on Our World Class Manufacturing Capabilities

We will continue to focus on improving manufacturing performance and
customer service, while reducing costs. We believe that we can effectively
control the critical phases of our production process in order to realize high
manufacturing yields, product quality and customer satisfaction. A key element
of our manufacturing strategy is our new six-inch wafer fabrication facility. We
believe this new facility will provide increased manufacturing capacities at a
low incremental cost and will allow us to maintain short cycle times.

Forge Strong Customer Relationships

We have developed strong working relationships with our customers, many
of whom are leading original equipment manufacturers in their markets. Because
our target markets are standards-driven, customer relationships are important.
We have been working with Ericsson on wireless handsets since 1994 and with
General Instrument on cable set-top boxes since 1992. These relationships
provide us with product development opportunities and the ability to anticipate
future market needs. The rapid feedback we receive from customers during the
product design phase increases the likelihood that our products will meet our
customers' cost and performance requirements.

Pursue Strategic Acquisitions and Alliances

We intend to pursue strategic acquisitions and alliances to expand and
improve upon our technologies, industry expertise, products and market share. We
expect that our alliances and acquisitions will be complementary to our current
businesses and will enhance our ability to work with leading original equipment
manufacturers to develop next generation solutions. We have formed strategic
alliances with several firms to accelerate our capabilities in our core wireless
and broadband markets. For example, during 1999 we entered into an agreement
with Global Communication Semiconductors, Inc. to develop HBT technology. We
also entered into an agreement with TEMIC Semiconductor GmbH during 1999 to
develop HBT products suitable for fabrication with silicon germanium.

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Target Markets and Products

Wireless Communications. The wireless communications market is a
growing, dynamic market as a result of increasing demand for:

o portable voice and data communications;
o smaller, lighter handsets offering increased functionality;
o reliable access and voice quality comparable to land lines; and
o longer talk-time and standby time.

Our radio frequency integrated circuit products are used in
transmitters and receivers of cellular and PCS handsets where small size,
multi-band operation and low power consumption are key features. In the United
States, there are two primary digital cellular standards, TDMA and CDMA. GSM is
the most widely deployed digital standard in the world, with a high degree of
acceptance in Europe and Asia. In addition, some GSM systems have been deployed
in North America. We currently provide power amplifiers primarily for the TDMA
and GSM standards and plan to introduce power amplifiers for the CDMA standard
in 2000. We also offer infrastructure products for the TDMA and GSM standards.

We are actively developing single-band and multi-band HBT power
amplifier modules for all major digital standards. HBT technology offers high
efficiency and low power consumption, as well as a lower total solution cost for
power amplifiers. This will allow our customers to build the transmitter section
of the wireless handset more easily and more quickly by reducing design
complexity and component counts. We intend to begin production of HBT wafers in
our own manufacturing facilities in the third quarter of 2000. We are also in
production and are continuing our development of a comprehensive family of
standard and custom radio frequency switches targeting handset applications
using GaAs MESFET, PHEMT and Silicon technologies. We believe that the market
for radio frequency/microwave switches will grow rapidly with the move to
multi-band, multi-mode handsets.

Our principal customers in the wireless market are Ericsson and 3Com,
Inc. (now Palm Inc.). Ericsson accounted for 33%, 34%, and 47% of our net sales
during 1997, 1998, and 1999, respectively. During February 2000, ANADIGICS
received multi-million unit orders for its linear RF switches from Motorola.
Production shipments of these switches began in February 2000.

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

Product Application
------- -----------
<S> <C>
Power and Driver Amplifiers:

o Single-band, single-mode Used in the transmitter section of cellular
power amplifiers handsets to send voice or data

o Multi-band, multi-mode Used in the transmitter section of
power amplifiers cellular handsets to send voice or data
over multiple frequencies and standards
thereby allowing a service provider to
handle more calls

o Multi-band, multi-mode Used to drive a power amplifier
driver amplifiers

o Integrated high power amplifiers Used in cellular base stations in the
transmit chain

o Dual-band 3-Volt HBT power Used in transmitter section of cellular
amplifiers* handsets to send voice or data

o Modules* A "plug in" package, containing a power
amplifier along with necessary components
otherwise provided externally to the
amplifier, which provides ease of use for
our customer
Radio Frequency Standard Products:

o Switches Used in cellular handsets and other
wireless applications to switch between
receive and transmit modes, multiple
bands, and multiple antennas

o Receivers Used in cellular handsets to receive voice
or data

* These products are at the sampling stage.

</TABLE>

4
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Cable Television/Cable Modems. The trends that currently drive product
development in the cable television and cable modem markets are:

o shift to digital cable television with interactive services;

o demand for high speed internet access; and

o emergence of cable telephony.

The convergence of these trends, enabled by digital transmission,
creates the need for innovative radio frequency integrated circuits for cable
television and cable modem applications.

Our cable products are used in cable modem, cable television set-top
box and cable television infrastructure applications. Cable television systems,
which traditionally delivered one-way analog television programming, limited to
a few entertainment channels, are increasingly used to deliver a wide array of
interactive video and other services, such as high speed internet access and
telephony. In order to support these new applications, cable system operators
must upgrade both the bandwidth (i.e., capacity) and quality of the
infrastructure and terminal equipment. The new equipment must also be able to
handle digital as well as analog modulated signals.

For cable modems and cable television set-top boxes we currently offer
tuner integrated circuits which can be used in double conversion tuners to
receive analog and digital signals in the 50-860 megahertz frequency band. Our
reverse amplifiers are used in cable modems and in cable set-top boxes which
require a reverse path to provide interactivity. These tuner and reverse
amplifier integrated circuits enable our customers to accelerate and simplify
their designs, and reduce manufacturing complexity and costs. We also introduced
an integrated multi-chip double conversion data tuner module late in 1999. This
data tuner consists of an integrated upconverter with SAW filter and an
integrated downconverter with dual synthesizer. We expect that this data tuner
and other integrated multi-chip double conversion tuner modules will be
cost-competitive with single conversion tuners and will provide improved
performance for cable modem and other single-conversion tuner applications.

We have also developed GaAs integrated circuit line amplifiers to be
used in 50-860 megahertz cable television infrastructure equipment, such as line
extenders, distribution amplifiers and system amplifiers. We have recently
expanded our product offerings in this area by introducing line amplifier
integrated circuits or ICs which operate at 24 volts and are thus more
compatible with current equipment.

Our principal customers in the cable television and cable modem markets
are Electroline Equipment, General Instrument, Komatsu Murata Manufacturing
Company, Ltd., Motorola, Philips, Scientific-Atlanta, Hughes Network Systems,
Inc., and 3Com, Inc. In addition, we have been selected by Cisco Systems for
their Global Alliance cable modem design. The Global Alliance includes customers
such as Samsung and Sony. The following table sets forth information regarding
our principal products in the cable television/cable modems market:

<S> <C>
Product Application

Cable and Broadcast Terminal Products:
o Upconverters Used in set-top box double conversion video tuner,
o Downconverters cable modems and to support cable telephony in the
video tuner

o Synthesizers* Used to provide precise frequency control in the same
applications as above

o 256 QAM upconverters Used in the digital set-top box video tuner, providing
the necessary stability to handle the more complex
digital modulations

o Reverse amplifiers Used in set-top boxes, cable modems and cable telephony to transmit
signals from a set-top box upstream to a cable company headend for
interactive applications

o Data tuner* Used in set-top boxes, cable modems and cable telephony handle
high-speed data, video, and voice signals

* These products are at the
sampling stage.

</TABLE>

5
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Cable and Broadcast Infrastructure
Products:

<S> <C>
o Line amplifiers Used in cable television systems to distribute signals
from cable headends to subscribers

o Drop amplifiers Used in cable television systems to amplify signals at
individual subscriber homes

</TABLE>

Fiber Optic Market. Growth in the fiber optic market is being driven by:

o rapid increase in data traffic driven by internet use;

o increasing implementation of corporate local area networks (LAN)
and storage area networks (SAN), which require high speed data
transfer capability; and

o ongoing upgrade of existing telecommunication and data
communication systems with fiber optic systems.

Fiber optic telecommunication systems use low-loss fiber optic cable to
link central office switches with one another and to connect the central office
to the serving area. Most telecommunication networks today are based on SONET
(United States and Japan) or SDH (Europe) standards. These standards require
high sensitivity, high bandwidth, and wide dynamic range receivers.

The front end of most fiber optic receivers contains a photodetector
and a transimpedance amplifier. Our transimpedance amplifier integrated circuits
are used in both fiber optic telecommunications and data communications
networks. Our GaAs integrated circuit transimpedance amplifiers are designed to
meet the requirements of SONET systems covering data speeds of OC-3, OC-12,
OC-24 and OC-48. We also sell products for use in the growing DWDM systems and
provide GaAs PHEMT-based next generation transimpedance amplifiers specifically
for DWDM and 3 volt applications. For data communications receivers we sell
integrated photodiode and transimpedance amplifier products for the short
wavelength (850 nanometer) and long wavelength (1300 nanometer) Gigabit Ethernet
and Fibre Channel standards. We are developing higher speed (2.5 gigabits per
second) receiver products for the data communications market in anticipation of
increased data speeds.

Fiber optic data communications systems use either Fibre Channel or
Gigabit Ethernet standards to achieve high-speed data transfer. The Gigabit
Ethernet standard is emerging as the most widely used in local area networking
situations. It addresses the need for very fast transfers of large volumes of
information and is effective in applications where large blocks of data must be
transferred within buildings and over short distances. We believe that demand
for Gigabit Ethernet and Fibre Channel solutions will grow substantially over
the next few years.

Our principal customers in the fiber optic market are Lucent, Methode,
and Nortel Networks. The following table sets forth information regarding our
principal products in the fiber optic market:

Product Application
- ------- -----------

<S> <C>
Fiber Products:

o Transimpedance amplifiers Used in the transceiver of a fiber optic link to
amplify signal received

o Metal semiconductor metal Used in the transceiver of a datacom fiber optic
transimpedance amplifiers link to detect and amplify shorter wavelength
(MSM-TIA) optical signals

o Integrated Detector Preamp(IDP) Used in the transceiver of a datacom fiber optic link
transimpedance amplifiers to detect and amplify longer wavelength optical signals
(PIN-TIA)
</TABLE>

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Marketing, Sales, Distribution and Customer Support

We primarily sell our products directly to our customers worldwide. We
have developed close working relationships with leading companies in the
broadband and wireless communications markets. During 1999, we began to expand
our field sales force to provide local support to our customers. We believe this
is critical to our objective of expanding our customer base, especially as we
expand our product portfolio. We also selectively use independent manufacturers'
representatives and distributors to complement our direct sales and customer
support efforts.

We believe that the technical nature of our products and markets
demands an extraordinary commitment to close relationships with our customers.
The sales and marketing staff, assisted by the technical staff and senior
management, visit prospective and existing customers worldwide on a regular
basis, and between visits both field and factory sales personnel communicate
regularly with our customers. 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.

Our design and applications engineering staff is actively involved with
customers during all phases of design and production by publishing and providing
our customers with engineering data, up-to-date product application notes,
communicating with our customers' engineers on a regular basis and assisting in
resolving technical problems by working with our customers' engineers both on
and off site. In most cases the design and applications engineers obtain
prototypes from our customers in order to troubleshoot and identify potential
improvements to the design in parallel with our customers' efforts. This
strategy helps our customers speed up their design process, achieve
cost-effective and manufacturable designs, and ensure a smooth transition into
high-volume production.

Our policy is to provide our customers with applications engineering
support at our customers' factories throughout the world, generally within 48
hours of a customer request. Our sales are typically made pursuant to customer
purchase orders, and such orders may be canceled by our customers without
penalty.

Manufacturing, Assembly and Testing

We fabricate all of our integrated circuits in our six-inch diameter
GaAs wafer fabrication facility in a class 100 cleanroom in Warren, New Jersey.
Present production capacity is approximately 26,000 six-inch diameter analog
GaAs wafers per year. We are in the process of expanding our manufacturing
operations. This expansion includes additional class 100 cleanroom space and
equipment installation within our existing manufacturing facility. Capacity
within the expanded manufacturing operations is expected to be approximately
41,000 six-inch diameter analog GaAs wafers per year. See "Risk Factors - We may
face constraints on our manufacturing capacity which would limit our ability to
increase sales volumes".

Our wafer processing technologies have been developed for low cost,
high yield, rapid throughput and short cycle-time manufacturing. We have
developed GaAs MESFET processes that we use to produce most of our products. By
using ion implant variations, we can optimize performance and yield, allowing us
to produce, for example, high-linearity, low-noise, receiver integrated circuits
or transmitter integrated circuits with high power and efficiency.

We have also developed a GaAs PHEMT manufacturing process, which
achieves extremely high electron mobility. Devices manufactured using our PHEMT
manufacturing process have better sensitivity and bandwidth than conventional
MESFET devices and hence are an enabling technology that serves high bit rate
fiber optic systems. We have introduced devices for fiber optic communications
applications using our recently developed PHEMT manufacturing process.

Fabricated wafers are shipped to contractors in Asia for assembly into
integrated circuit packages. Once assembled by the contractor, packaged
integrated circuits are shipped back to our Warren, New Jersey facility for
final testing. We believe that our flexible automated test systems are important
to our ability to manufacture high quality integrated circuits at a low cost. We
have devoted substantial amounts of capital over the last 18 months to increase
our product test capacity, resulting in shortened product cycle times, reduced
test-costs and improved test reliability. See "Risk Factors - We may face
constraints on our manufacturing capacity which would limit our ability to
increase sales volumes," "We may face constraints on our test capacity which
could result in manufacturing delays" and " We depend on foreign semiconductor
assembly contractors and a loss of an assembly contractor could result in delays
or reductions in product shipment".

Our manufacturing processes were certified as ISO 9001 compliant in
December 1993. Since then, we have maintained compliance with this standard.

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Raw Materials

GaAs wafers, other raw materials, and equipment used in the production
of our integrated circuits are available from several suppliers. 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, wafer fabrication and integrated circuit testing,
which we believe gives us a competitive advantage. Research and development
expenses were $16.8 million, $18.8 million, and $29.7 million in 1997, 1998, and
1999, respectively. To date, our research and development efforts have focused
on developing low cost, high volume production of GaAs integrated circuit
products for the wireless and broadband communications markets. At December 31,
1999, we had approximately 100 engineers assigned primarily to research and
development.

The ability to simulate and model circuits is a critical technology for
analog integrated circuit design, especially at high frequencies. We have
developed a set of simulation tools and device models, which are custom-fit to
our process. Recognizing the importance of powerful electronic design automation
tools, we have formed a partnership with a leading manufacturer of radio
frequency/analog electronic design automation systems to develop and enhance
design tools to improve our research and development efficiency. The
partnership's primary objectives are to improve circuit modeling, package
modeling, design tool training and design tool integration.

We are also in the process of researching and developing other wafer
processing technologies. For our GaAs HBT technology we have formed both foundry
process and technology partnerships. These agreements generally require us to
share our expertise and proprietary technology over a limited time period with
our partner in exchange for access to their expertise and proprietary
technology. In addition, we have the right to obtain foundry services on
favorable terms. In certain cases we may pay licensing fees, reimburse expenses
and/or commit to purchase a portion of our wafer needs from the other party. As
a result of our HBT technology partnership, we successfully developed
fabrication of the first InGaP HBT devices using six-inch wafers during October
1999. We plan to implement this technology in our manufacturing facility during
the third quarter of 2000. We believe these actions will position us to be the
first-to-market with products based on six-inch GaAs InGaP HBT technology.

We believe there are opportunities to develop integrated circuits in
silicon or silicon germanium which would supplement our GaAs integrated circuits
in modules. Although GaAs provides performance advantages over silicon in
high-performance radio frequency integrated circuits, silicon is a more
cost-effective solution for the lower performance part of a system. Silicon
radio frequency chips are used by our customers in conjunction with our GaAs
chips to perform less complex radio frequency functions. As we seek to increase
our integrated circuit content in product applications, we are expanding our
product offerings to also include radio frequency integrated circuits
manufactured with silicon products. Further, we believe some of these silicon
integrated circuits may have significant market potential as stand-alone
devices. The recently established RF Communication Products Group at ANADIGICS
will be exploring the use of these technologies in the wireless application. We
currently do not intend to manufacture in-house with either of these
technologies as we believe there will be adequate external foundry capacity
available.

Customers

Employees

At December 31, 1999, we had 543 employees, none of whom was a member
of a labor union. We believe our labor relations to be good and have never
experienced a work stoppage.

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Competition

Competition in all of the markets for our current products is intense
and we compete on the basis of performance, price and delivery. Competitors in
the wireless market are suppliers of discrete devices and integrated circuits.
Our competitors include Alpha Industries, Conexant Systems, Hitachi, RF Micro
Devices, and Triquint Semiconductor.

In the cable and broadcast television markets, our integrated circuits
compete primarily with manufacturers of discrete components and integrated
circuits. Our competitors include Analog Devices, Inc., Maxim Integrated
Products, Inc., Motorola, NEC Corp., Royal Philips Electronics N.V.

In the fiber optic market, we compete with other GaAs and silicon
integrated circuit manufacturers. Principal competitors in this market are Maxim
Integrated Products, Inc., Conexant Systems (formerly Microcosm Communications),
Royal Philips Electronics, and Vitesse Semiconductor as well as some of our
customers who design and fabricate their own in-house solutions. In particular,
we expect to face increased competition in our fiber optic products used in
low-data-rate SONET fiber optic transmissions. See "Risk Factors--We face
intense competition which could result in reductions in our products' prices and
sales".

Many of our competitors have significantly greater financial,
technical, manufacturing and marketing resources than we have. Increased
competition could adversely affect our revenue and profitability by causing us
to reduce prices or by reducing demand for our products.

Patents, Licenses and Proprietary Rights

It is our practice to seek U.S. and foreign patent and copyright
protection on our products and developments where appropriate and to protect our
valuable technology under U.S. and foreign laws affording protection for trade
secrets and for semiconductor chip designs. We own nineteen U.S. patents and
have three pending U.S. patent applications and one pending foreign patent
application filed under the Patent Cooperation Treaty. The U.S. patents were
issued between 1988 and 1999 and will expire between 2006 and 2018.

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 also have entered into
non-disclosure agreements to protect our confidential information delivered to
third parties, in conjunction with possible corporate collaborations and for
other purposes.

Environmental Matters

Our operations are subject to many 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 in the past have
conducted, our activities and operations in substantial compliance with
applicable environmental laws, and that costs arising from existing
environmental laws will not have a material adverse effect on our results of
operations. We cannot assure you, however, that the environmental laws 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.

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RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS REPORT, THE
FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN
INVESTMENT IN ANADIGICS, INC. CERTAIN STATEMENTS IN THIS REPORT ARE
FORWARD-LOOKING STATEMENTS (AS THAT TERM IS DEFINED IN THE SECURITIES ACT OF
1933, 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 SUCH STATEMENTS INCLUDE THOSE
FACTORS DISCUSSED BELOW, AS WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.

Business Risks

We depend on a small number of customers; a loss of or a decrease in purchases
by one of these customers would materially and adversely affect our revenues.

We receive most of our revenues from a few significant customers. Sales
to Ericsson, General Instrument and Qualcomm Personal Electronics accounted for
33%, 13% and 16%, respectively, of 1997 net sales. Ericsson and General
Instrument accounted for 34% and 17%, respectively, of 1998 net sales, and 47%
and 18%, respectively, of net sales during 1999. No other customer accounted for
greater than 10% of net sales during these periods. Substantially all of our
sales of wireless applications during 1999 were to Ericsson. Our operating
results 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 Ericsson,
General Instrument or another major customer, or if sales to Ericsson, General
Instrument or another major customer were to decrease materially, our results of
operations would be materially and adversely affected. See "Business--Target
Markets and Products".

Our business could be adversely affected by our failure to process wafers using
our GaAs InGaP HBT technology.

We have developed GaAs InGaP HBT process capability to manufacture
power amplifiers and certain other integrated circuits. Some of our competitors
already offer products using HBT technology. We hope to begin production of GaAs
InGaP HBT products in our own manufacturing facility during the third quarter of
2000. We cannot assure you that our efforts will result in commercially
successful GaAs HBT products in a timely or cost effective manner, if at all.
Our in-house product design efforts may be delayed or may fail to deliver viable
GaAs InGaP HBT products. Our results of operations could be materially and
adversely affected by our failure to process wafers using this technology. Even
if we are successful, our customers may purchase their GaAs InGaP HBT
requirements from our competitors.

Decreases in our customers' sales volumes could result in decreases in our sales
volumes.

A substantial portion of our sales are derived from sales to original
equipment manufacturers. Where our products are designed into an original
equipment manufacturer's product, our sales volumes depend upon the commercial
success of the original equipment manufacturer's product. Our operating results
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 demands for our customers' products.

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

Rapid changes in both product and process technologies characterize the
markets for our products. Because these technologies are continually improving,
we believe that our future success will depend, in part, upon our ability to
continue to improve our product and process technologies and develop new
products and process technologies. If a competing technology emerges that is
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 economic alternative technology, our results of operations would
be materially and adversely affected. We will need to make substantial
investments to develop these enhancements and technologies, and we cannot assure
you that funds for these investments will be available or that these
enhancements and technologies will be successful. See "Business--Competition"
and "Research and Development".

10
<PAGE>

Our products have experienced rapidly declining unit prices.

In each of the markets where we compete, prices of established products
tend to decline significantly over time. 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 results of operations would be materially and adversely affected.

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 GaAs integrated circuit's design and our
experience in manufacturing that type of GaAs integrated circuit. Although our
process technology uses standard silicon semiconductor manufacturing equipment,
aggregate production quantities of GaAs integrated circuits manufactured by us
and the GaAs integrated circuit industry in general have been relatively low
compared with silicon integrated circuit production volumes. We have in the past
experienced difficulties in achieving planned yields, 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:

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

o impurities in the materials used;

o contamination of the manufacturing environment; and

o equipment failure.

Because a large portion of our costs of manufacturing are relatively
fixed and average selling prices for our products tend to decline over time, it
is critical for us to improve the number of shippable integrated circuits per
wafer and increase the production volume of wafers in order to maintain and
improve our results of operations. Yield decreases can result in substantially
higher unit costs, which could materially and adversely affect our operating
results and have done so in the past. We cannot assure you that we will be able
to continue to improve yields in the future or that we will not suffer periodic
yield problems, particularly during the early production of new products or
introduction of new process technologies. In either case, our results of
operations could be materially and adversely affected. See
"Business--Manufacturing, Assembly and Testing".

We may face constraints on our manufacturing capacity which would limit our
ability to increase sales volumes.

We believe that our six-inch wafer fabrication facility should be able
to satisfy our production needs for 2000. However, if production volumes were to
increase significantly from expected levels, we might be required to hire, train
and manage additional production personnel in order to successfully increase
production capacity at this facility. We cannot assure you that we would be able
to implement these changes successfully. A delay for any reason in capacity
increase would limit our ability to increase sales volumes. In addition, if we
fail to increase production and do not have sufficient capacity to satisfy the
demand for our products, our relationships with customers could be harmed.

We depend on foreign semiconductor assembly contractors and a loss of an
assembly contractor could result in delays or reductions in product shipment.

We do not assemble our integrated circuits or our multi-chip modules.
Instead, we provide the GaAs integrated circuit dice and, in some cases,
packaging and other components to assembly vendors located primarily in Asia. We
maintain one qualified service supplier for each assembly process. If we are
unable to obtain sufficient high quality and timely assembly service, or if we
lose any of our current assembly vendors, we would experience delays or
reductions in product shipment, and/or reduced product yields that could
materially and adversely affect our results of operations.

We may face constraints on our test capacity which could result in manufacturing
delays.

We use automated test equipment that, at times, is short in supply. As
a result, we need to order the test equipment from the manufacturer far in
advance of our anticipated need. We cannot assure you that we can obtain the
appropriate equipment in a timely or cost effective manner. Our inability to
obtain appropriate test equipment in a timely manner could result in
manufacturing delays which would have a material and adverse effect on our
results of operations.

11
<PAGE>

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. We estimate
that current life cycles for cellular and PCS telephone handsets, and in turn
our cellular and PCS products, are approximately 12 to 24 months. Products with
short life cycles require us to manage closely production and inventory levels.
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 affect us. In 1998, we recorded a special charge for obsolete
inventory. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--1998 Compared to 1997 Gross Margin".

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 or packaging
components used in the production of our GaAs integrated circuits. Starting
wafers and packaging components are available from a limited number of sources.
If we are unable to obtain these wafers or components in the required quantities
and quality we could experience delays or reductions in product shipments, which
would materially and adversely affect our results of operations. Although we
have not experienced any significant difficulty to date in obtaining wafers or
components, we cannot assure you that shortages will not arise in the future.

We depend on a limited number of vendors to supply 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. See "We may face constraints on our
manufacturing capacity which would limit our ability to increase sales volumes".

Our international sales and operations involve foreign exchange risks.

Sales to customers located outside North America (based on shipping
addresses and not on the locations of ultimate end users) accounted for
approximately 57%, 58% and 61% of total net sales for 1997, 1998, and 1999,
respectively. We expect that revenues derived from international sales will
continue to represent a significant portion of our total 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 GaAs
integrated circuits, and assemble nearly all of our products.

Due to our reliance on international sales and on foreign suppliers and
assemblers, we are subject to risks of conducting business outside of the United
States, including primarily those arising from currency fluctuations, which
could affect the price of our products and/or the cost of producing them.

Our organizational documents and Delaware law may make it harder for us to be
acquired without the consent and cooperation of our board of directors and
management.

Several provisions of our certificate of incorporation and our by-laws
may deter or prevent a takeover attempt, including a takeover attempt in which
the potential purchaser offers to pay a per share price greater than the current
market price for our common stock. These provisions include:

o preferred stock--our board of directors can issue preferred
stock senior to our common stock at any time. This may make it
more difficult and more expensive to acquire us;

o staggered board--only a minority of the total number of board
members can be elected each year. This may make it more difficult
for a potential purchaser to elect enough directors to assure
control of ANADIGICS; and

o shareholder rights agreement--our shareholder rights agreement
may make it more difficult and more expensive to acquire us,
unless the shareholder rights are first redeemed by our board.

In addition, we are subject to Section 203 of the Delaware General
Corporation Law which restricts business combinations with some stockholders
once the stockholder acquires 15% or more of our common stock.

12
<PAGE>

Industry Risks

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

The semiconductor industry is intensely competitive and is
characterized by rapid technological change. We compete with manufacturers of
discrete GaAs and silicon semiconductors and with manufacturers of GaAs and
silicon integrated circuits. We expect increased competition from:

o other GaAs integrated circuit manufacturers who may replace us
as a single source supplier to an original equipment
manufacturer or otherwise dilute our sales to an original
equipment manufacturer;

o silicon analog integrated circuit manufacturers; and

o companies which may penetrate the radio frequency/microwave
integrated circuit communications market with other
technologies, such as those based on silicon germanium.

In addition, some of our customers compete with us and we have lost
business in the past to this type of competition. We expect that sales of low
data rate fiber optic products used in SONET fiber optic transmissions could
decline significantly over the next few quarters, as current customers begin to
obtain these products from in-house supply sources.

Increased competition could result in:

o decreased prices of GaAs integrated circuits;

o reduced demand for our products; and

o a reduction in our ability to recover development-engineering
costs.

Any of these developments could materially and adversely affect our
results of operations.

Most of our current and potential competitors, which include Alpha
Industries, Inc., Applied Micro Circuits (AMCC), Conexant Systems, Inc., Hitachi
Ltd., Maxim Integrated Products, Inc, Motorola, NEC Corp, RF Micro Devices,
Inc., Royal Philips Electronics, N.V., Temic Semiconductors, TriQuint
Semiconductor, Inc. and Vitesse Semiconductor Corporation, have significantly
greater financial, technical, manufacturing and marketing resources than we do.
We cannot assure you that we will be able to compete successfully with our
existing or new competitors. See "Business--Competition".

Our operating results can vary significantly.

The semiconductor industry has been characterized by cyclicality. The
industry has experienced significant economic downturns at times, involving
diminished product demand, accelerated erosion of average selling prices and
production over-capacity. Although the semiconductor industry in general, and
the portion of the industry serving the communications industry in particular,
are currently experiencing a period of increased demand, we cannot assure you
that these conditions will continue. We may experience substantial period to
period fluctuations in future operating results. You should not rely on our
operating results for any previous year(s) as an indicator of our results may be
for any future year(s).

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

Our success depends in part on our ability to obtain patents and
copyrights, maintain trade secret protection and operate without infringing on
the proprietary rights of third parties.

As is typical in the semiconductor industry, we have been notified, and
may be notified in the future, that we are infringing on certain patent and /or
other intellectual property rights of others. If it is determined that we have
infringed on others' intellectual property rights, we cannot assure you that we
would be able to obtain any required licenses on commercially reasonable terms.

13
<PAGE>

In addition to patent and copyright protection, we also rely on trade
secrets, technical know-how and other unpatented proprietary information
relating to our product development and manufacturing activities which we seek
to protect, in part, by 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. See "Business--Patents, Licenses and Proprietary Rights" and "Legal
Matters".

ITEM 2. PROPERTIES.

Anadigics, Inc. was incorporated in Delaware on April 24, 1984. Our
executive offices are located at 35 Technology Drive, Warren, New Jersey 07059.
We currently occupy space in three buildings, all of which are located in the
same industrial park. Approximately 89,000 square feet of office and
manufacturing space is occupied in a building located at 35 Technology Drive
under two separate leases both of which expire on May 1, 2005. The lease
representing approximately 72,000 square feet may be extended for an additional
ten year period and two additional five year periods and the lease representing
approximately 17,000 square feet may be extended for an additional five year
period. Approximately 7,500 square feet of office space is occupied in a
building located at 30 Technology Drive under a five-year rental agreement.
Approximately 167,000 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 occupy 5,448, 5,500 and 310 square feet of office space located
in Dallas, Texas, Newbury Park, California, and Thames Valley, UK, respectively,
under lease agreements ranging from three months to five years that can be
extended, at the option of ANADIGICS, Inc.

ANADIGICS, Inc.'s telephone number is (908) 668-5000. Our Website
address is http://www.anadigics.com.

ITEM 3. LEGAL PROCEEDINGS.

Shareholder Litigation

The previously-disclosed consolidated securities class action,
captioned In re ANADIGICS, Inc. Securities Litigation, No. 98-CV-917 (MLC)
(D.N.J.), and shareholder's derivative lawsuit, captioned Deegan v. Rosenzweig,
No. 98-CV-3640 (MLC) (D.N.J.), were settled jointly in mid-January 2000 pursuant
to a final Order of the United States District Court for the District of New
Jersey dated December 7, 1999. The total settlement payment (including the costs
of administering the settlement) was $11.8 million, of which approximately $5.3
million was paid on behalf of ANADIGICS, Inc. by the Company's insurers.

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

No matters were submitted to a vote of security holders during the
fourth quarter of 1999.

14
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

ANADIGICS' Common Stock has been quoted on the NASDAQ National Market
under the symbol "ANAD" since the commencement of trading on April 21, 1995
following the initial public offering of the Common Stock. The following table
sets forth for the periods indicated the high and low sale prices for ANADIGICS,
Inc.'s Common Stock.
HIGH LOW
--------- ---------

1999
Fourth Quarter.............................. $ 36.92 $ 18.42
Third Quarter............................... 26.58 17.33
Second Quarter.............................. 24.79 10.67
First Quarter............................... 12.42 7.46

1998
Fourth Quarter.............................. $ 9.46 $ 3.42
Third Quarter............................... 14.00 5.21
Second Quarter.............................. 11.21 7.33
First Quarter............................... 22.54 8.79

As of March 1, 2000, there were 28,853,614 shares of Common Stock
outstanding and 400 holders of record of the Common Stock.

We have never paid cash dividends on our capital stock. Our bank credit
agreement prohibits the payment of cash dividends without the consent of the
lender thereunder. See Note 10 to the Consolidated Financial Statements. We
currently anticipate that we will retain all available funds for use in the
operation and expansion of our business, and do not anticipate paying any cash
dividends in the foreseeable future.

15
<PAGE>

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, 1999 and 1998 and for the
years ended December 31, 1999, 1998, and 1997 have been derived from our audited
financial statements included herein. The selected consolidated financial data
set forth below as of December 31, 1997, 1996 and 1995 and for the years ended
December 31, 1996 and 1995 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.
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1995 1996 1997 1998 1999
--------- ---------- --------- --------- ----------

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Net sales.......................... $ 51,460 $ 68,864 $ 102,536 $ 86,075 $ 131,159
Cost of sales...................... 24,995 38,887 56,093 66,228 75,820
--------- ---------- --------- ---------- ---------
Gross profit....................... 26,465 29,977 46,443 19,847 55,339
Research and development expenses.. 11,733 12,036 16,765 18,824 29,658
Selling and administrative
expenses......................... 6,640 8,206 12,139 12,926 19,092
Restructuring charges.............. 7,126 (441)
--------- ---------- --------- ---------- ---------
Operating income (loss)............ 8,092 9,735 17,539 (19,029) 7,030
Interest expense................... 573 371 155 79 369
Interest income.................... 1,301 1,739 3,384 2,375 3,662
Provision for litigation
settlement....................... 6,925
--------- ---------- --------- ---------- ---------
Income (loss) before income taxes.. 8,820 11,103 20,768 (16,733) 3,398
Provision (benefit) for
income taxes .................... 1,527 (888) 5,439 (7,175) 810
--------- ---------- --------- ---------- ---------
Net income (loss).................. $ 7,293 $ 11,991 $ 15,329 $ (9,558) $ 2,588
========= ========== ========= ========= =========

Basic earnings (loss) per share.... $ 0.45 $ 0.65 $ 0.72 $ (0.43) $ 0.11
========= ========== ========= ========= =========

Weighted average common shares
outstanding...................... 16,286,175 18,532,967 21,419,936 22,085,912 23,602,799

Diluted earnings (loss) per
share........................... $ 0.43 $ 0.62 $ 0.68 $ (0.43) $ 0.10
========= ========== ========= ========= =========
Weighted average common and
dilutive securities
outstanding ..................... 17,062,118 19,361,777 22,595,819 22,085,912 25,203,882

AT DECEMBER 31,
-----------------------------------------------
1995 1996 1997 1998 1999
-------- -------- -------- -------- --------

(IN THOUSANDS)
BALANCE SHEET DATA:
Working capital...................... $ 35,953 $ 37,825 $ 65,061 $ 57,123 $176,322
Total assets......................... 66,250 86,996 168,084 154,098 317,610
Current maturities of capital
lease obligations.................. 1,718 1,292 425 229 151
Capital lease obligations, less
current portion.................... 1,919 627 389 183 32
Current maturities of long-term debt. 1,000 1,000
Long-term debt, less current portion. 4,000 3,000
Total stockholders' equity........... 53,823 70,557 146,463 137,807 276,649

</TABLE>

16
<PAGE>

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

OVERVIEW

We were organized in 1984 and initially focused on the development and
manufacture of GaAs integrated circuits for low-volume defense and aerospace
applications. In 1988 we began shifting our strategy to focus on radio
frequency/microwave communications systems for high-volume applications, and
began production for these applications in 1989. In 1992 we introduced
integrated circuits for cable television. In late 1994 we entered the wireless
communications market with the introduction of cellular telephone integrated
circuits. In 1998 we expanded our fiber optic product offerings with the
introduction of transimpedance amplifiers for the gigabit ethernet market.

In the next few years, we believe there are opportunities to develop
integrated circuits in silicon or silicon germanium technology that improves the
performance of silicon by improving silicon's electron mobility which would
enhance our GaAs integrated circuits in modules. The recently established RF
Standard Products Group at ANADIGICS will be exploring the use of these
technologies in wireless applications.

We strive to achieve market advantage through the application of our
radio frequency/microwave design and application knowledge. With our design
expertise we have led the industry with the introduction of innovative products.
Recent examples include dual-band power amplifiers for use in wireless handsets,
cable television 256 QAM upconverters and cable television reverse amplifiers,
all of which offer greater levels of product performance and reduce original
equipment manufacturers' production costs.

We aim to achieve cost advantage through the scale and efficiency of
our manufacturing operations. We recently began production in our new six-inch
analog GaAs wafer fabrication facility, which we believe to be the first and
only six-inch analog GaAs wafer fabrication facility in our industry. Using a
six-inch wafer allows us to produce, at a small incremental cost, more than
twice the integrated circuit dice per wafer than can be produced from the
industry norm four-inch wafer.

RESULTS OF OPERATIONS

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

YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Net sales............................................ 100.0% 100.0% 100.0%
Cost of sales........................................ 54.7 76.9 57.8
------ ------ ------
Gross profit......................................... 45.3 23.1 42.2
Research and development............................. 16.4 21.9 22.6
Selling and administrative expense................... 11.8 15.0 14.5
Restructuring charges................................ 8.3 (0.3)
------ ------ ------
Operating income (loss).............................. 17.1 (22.1) 5.4
Interest expense..................................... 0.2 0.1 (0.3)
Interest income...................................... 3.3 2.8 2.8
Provision for litigation settlement.................. 5.3
------ ------ ------
Income (loss) before income taxes.................... 20.2 (19.4) 2.6
Provision (benefit) for income taxes................. 5.3 (8.3) 0.6
------ ------ ------
Net income (loss).................................... 14.9% (11.1)% 2.0%
====== ====== ======

</TABLE>

17
<PAGE>

1999 COMPARED TO 1998

NET SALES. Net sales during 1999 increased 52% to $131.2 million from
$86.1 million in 1998. Sales of integrated circuits for cellular and PCS
applications increased 80% during 1999 to $60.8 million from $33.7 million
during 1998 as demand for our dual-band power amplifiers increased.

Sales of integrated circuits for cable and broadcast applications
increased 38% during 1999 to $46.9 million from $34.1 million in 1998. Included
in the sales of integrated circuits for cable and broadcast applications are
sales of low-noise-block converter integrated circuits (which we ceased
production of during the third quarter of 1998) of $0.7 million and $4.4 million
during 1999 and 1998, respectively. The increase in sales of integrated circuits
for cable and broadcast applications during 1999 was due to increased demand for
our integrated circuit chip set, which is used in digital set-top converters and
cable modems, and our integrated circuit line amplifier, which is used as a
repeater in hybrid cable television distribution networks.

Sales of integrated circuits for fiber optic telecommunication and data
communication applications increased 32% during 1999 to $23.3 million from $17.6
million in 1998, as demand for our transimpedance amplifiers for Synchronous
Optical Network (SONET) long-haul fiber optic telecommunications applications
and for high speed gigabit ethernet data communications applications increased.
We expect increased competition from internally sourced silicon integrated
circuits at certain of our customers for SONET OC-12 and OC-24 fiber optic
transimpedance amplifiers. Increased competition could result in decreased
prices of our integrated circuits and/or reduced demand for our products. Sales
of SONET OC-12 and OC-24 fiber optic transimpedance amplifiers were
approximately $9.9 million during 1999.

Engineering service sales, which reflect customers' contributions to
research and development, decreased 80% during 1999 to $0.2 million from $0.7
million in 1998.

Generally, selling prices for same product sales were lower during 1999
compared to 1998.

GROSS MARGIN. Gross margin during 1999 increased to 42.2% from 23.1% in
1998. Excluding accelerated depreciation expense of $5.3 million, gross margin
was 46.2% during 1999. The accelerated depreciation expense was due to a
reduction in the useful lives of the fabrication facility equipment and
leasehold improvements with original lives ranging from five to twenty years
that were reduced to a life of nine months beginning October 1, 1998. The
reduction in estimated useful life followed our October 1998 decision to close
our four-inch wafer fabrication facility.

Excluding special charges for inventory reserves (which were primarily
for work-in-process and finished goods) of $6.6 million (substantially all of
which was scrapped prior to December 31, 1998) and accelerated depreciation
expense of $2.7 million associated with our October 1998 decision to close our
four-inch wafer fabrication facility, gross margin was 33.9% during 1998. The
special charges for inventory reserves consisted of the following: $3.4 million
of older generation, single-band power amplifier integrated circuits used in
cellular applications, $2.1 million of LNB integrated circuits used in DBS
applications, and $1.1 million of older generation line amplifiers used in CATV
applications. ANADIGICS was aggressively attempting to sell these integrated
circuits in certain markets (primarily secondary communications markets in
Asia). We experienced limited success in selling these integrated circuits
during 1998 and reevaluated our selling efforts and the potential markets for
these products during 1998. Based upon this reevaluation, we decided that we
would curtail our efforts to sell these products.

The increase in gross margin during 1999 to 46.2% (excluding the
accelerated depreciation of $5.3 million) from 33.9% (excluding the special
charge for inventory reserves of $6.6 million and accelerated depreciation
expense of $2.7 million) resulted from leveraging fixed costs over higher sales
levels during 1999 and manufacturing cost structure improvements.

RESEARCH AND DEVELOPMENT. ANADIGICS-funded research and development
expenses increased 58% during 1999 to $29.7 million from $18.8 million in 1998.
The increase was primarily attributable to: (1) increased research and
development of integrated circuits for cellular and PCS, CATV, and fiber optic
applications, and (2) increased research and development of new process
technologies. As a percent of sales, ANADIGICS-funded research and development
increased to 22.6% during 1999 from 21.9% in 1998.

SELLING AND ADMINISTRATIVE. Selling and administrative expenses
increased 48% during 1999 to $19.1 million from $12.9 million in 1998. The
increase was primarily attributable to increases in performance-related
compensation costs, recruiting and relocation costs, consulting costs, and
marketing costs. As a percentage of sales, selling and administrative expenses
decreased to 14.6% during 1999 from 15.0% in 1998.

18
<PAGE>

RESTRUCTURING CHARGES. During 1999, we reversed $0.4 million of a
manufacturing restructuring charge recorded during 1998.

We recorded restructuring charges totaling $7.1 million during 1998 in
connection with our plan to lower manufacturing costs and streamline our
manufacturing operations. The restructuring charges consisted of writedowns of
impaired assets of $4.5 million, reductions in force of $1.6 million, and wafer
fabrication facility shutdown and removal costs of $1.0 million.

Writedowns of Impaired Assets. We evaluated the on-going value of
certain assets. Based upon our plan to dispose of certain assets with a carrying
amount of $4.6 million and our estimate of sales value, net of related costs to
sell, at $0.1 million. The estimated sales value was based on quoted market
prices or on the best information available under the circumstances. In most
instances, there was no market for the impaired asset and therefore the fair
value was zero. As a result, we recorded an impairment loss of $4.5 million,
which consisted of the following items:

Write-down of assets associated with the conversion of the
new wafer fabrication facility from 4-inch to 6-inch wafers $ 2.2
Write-down of assets associated with the closure of the
Company's in-house assembly operations 1.0
Write-off of software, in connection with our
on-going information systems improvements 0.8
Unused production assets previously used in the production
of DBS LNB converter integrated circuits 0.5
-------
Total write-down on impairment of long-lived assets $ 4.5
=======

Reductions in Force. We recorded charges of $1.1 million during the
first quarter of 1998 and $0.5 million during the fourth quarter of 1998
associated with reductions in our workforce. The workforce reduction charges
primarily consisted of severance pay, extended medical coverage, and
outplacement service costs for approximately 165 employees primarily involved in
our production operations. Approximately $1.2 million of severance pay, extended
medical coverage, and outplacement service costs were paid through the second
quarter of 1999 for the termination of approximately 120 employees. As noted
above, the remaining liability of $0.4 million was reversed during the third
quarter of 1999.

Facility Shutdown and Removal Costs. We recorded charges of $1.0
million associated with the shutdown and removal of our four-inch wafer
fabrication facility, which is expected to be completed by the end of the first
half of 2000.

INTEREST INCOME, NET. Interest income, net increased 43% during 1999 to
$3.3 million from $2.3 million in 1998. The increase in interest income, net of
$1.0 million was primarily due to a higher amount of investments during 1999 as
we received proceeds of $116.1 million (net of related expenses) from a common
stock public offering completed on November 1, 1999.

PROVISION FOR LITIGATION SETTLEMENT. We recorded a provision for
litigation settlement of $6.9 million during 1999. The $6.9 million provision
consists of a settlement payment by the Company of approximately $6.5 million in
connection with the settlement of the lawsuits referenced in Item 3. above, plus
other related costs and legal fees. (See Part I--Item 3. Legal Proceedings).

PROVISION FOR INCOME TAXES. We recorded a provision for income taxes
during 1999 of $0.8 million, or 23.8% of income before income taxes. The
provision for income taxes primarily consisted of federal and state income taxes
of $1.3 million at the respective statutory rates, which were partially offset
by $0.5 million of research and experimentation tax credits.

19
<PAGE>

1998 COMPARED TO 1997

NET SALES. Net sales during 1998 decreased 16% to $86.1 million from
$102.5 million in 1997. Net sales consist of product sales and engineering
service sales. Net product sales decreased 15% to $85.4 million in 1998 from
$101.0 in 1997. Engineering service sales, which reflect customers'
contributions to research and development, decreased 54% during 1998 to $0.7
million from $1.5 million in 1997.

Sales of integrated circuits for cellular and PCS applications
decreased 44% during 1998 to $33.7 million from $59.7 million during 1997. The
lower demand was due to several factors, including increased competition, a
shift in demand to lower cost phones not using our parts, customer delays in
ramp-up of new generation dual-band phones using our new parts, and in part, to
the effect of the Asian financial crisis on the wireless communications markets.

Sales of integrated circuits for cable and broadcast applications
increased 36% during 1998 to $28.3 million from $20.8 million in 1997. The
increase in sales of integrated circuits for cable and broadcast applications
during 1998 was due to increases in demand for our integrated circuits used in
digital set-top converters and cable modems, and our integrated circuit line
amplifier used as a repeater in hybrid fiber coaxial distribution networks.

Sales of integrated circuits for fiber optic telecommunication and data
communication applications increased 53% during 1998 to $17.6 million from $11.5
million in 1997. The increase was primarily due to an increase in demand for
transimpedance amplifiers for Synchronous Optical Network (SONET) fiber optic
telecommunications applications and sales of a new family of integrated circuits
for data communication applications.

Sales of integrated circuits for direct broadcast satellite
applications decreased 36% during 1998 to $5.7 million from $9.0 million in
1997. During the third quarter of 1998, we decided to cease production of our
low noise block ("LNB") converter integrated circuits that were used in DBS
applications because of reduced demand for LNB converter integrated circuits and
the effects of the Asian financial crisis.

Generally, selling prices for same product sales were lower during 1998
compared to 1997.

GROSS MARGIN. Gross margin during 1998 declined to 23.1% from 45.3% in
1997. The reduction in gross margin was primarily due to increased inventory
reserves totaling $13.8 million, including a special charge of $6.6 million
(substantially all of which was scrapped prior to December 31, 1998) and
accelerated depreciation charges (related to the planned closing of our existing
wafer fabrication facility) of $2.7 million that were recorded during 1998.

The remaining portion of the reserves recorded during 1998 of $7.2
million (which were primarily work-in-process and finished goods) consists of
inventory reserves for excess or obsolete inventory which were recorded based
upon our on-going inventory analysis during 1998.

Lower factory utilization and higher fixed costs associated with our
new test and manufacturing administration facilities placed into service during
the second quarter of 1998 also contributed to the reduction in gross margin
during 1998, compared to 1997.

RESEARCH AND DEVELOPMENT. ANADIGICS-funded research and development
expenses increased 12% during 1998 to $18.8 million from $16.8 million in 1997.
The increase was primarily attributable to increased research and development of
integrated circuits for fiber optic and cellular and PCS applications. As a
percent of sales, ANADIGICS-funded research and development increased to 21.9%
during 1998 from 16.4% in 1997.

SELLING AND ADMINISTRATIVE. Selling and administrative expenses
increased 6% during 1998 to $12.9 million from $12.1 million in 1997. The
increase was due in part to executive relocation costs, an increase in operating
costs associated with our information systems, and other consulting costs. As a
percentage of sales, selling and administrative expenses increased to 15.0%
during 1998 from 11.8% in 1997.

RESTRUCTURING CHARGES. In connection with our plan to lower
manufacturing costs and streamline our manufacturing operations, we recorded
restructuring charges totaling $7.1 million during 1998. The restructuring
charges consisted of writedowns of impaired assets of $4.5 million, reductions
in force of $1.6 million, and wafer fabrication facility shutdown and removal
costs of $1.0 million.

INTEREST INCOME, NET. Interest income, net decreased 29% during 1998 to
$2.3 million from $3.2 million in 1997. The reduction in interest income, net of
$0.9 million was primarily due to a lower amount of investments during 1998,
caused by plant and equipment purchases that were primarily for our new wafer
fabrication facility.

20
<PAGE>

BENEFIT FOR INCOME TAXES. We recorded a benefit for income taxes during
1998 of $7.2 million, or 42.9% of the loss before income taxes. The benefit for
income taxes primarily related to the 1998 federal and state net operating
losses, federal and state research and development credits, and state
manufacturing credits, all of which we plan to carry forward.

LIQUIDITY AND SOURCES OF CAPITAL

At December 31, 1999 we had $149.9 million of cash and cash equivalents
on hand and $21.9 million in marketable securities. Included in these amounts
are proceeds we received from completion of a public offering of common stock in
November 1999, which raised $116.1 million, net of related expenses. We had $4.0
million of bank debt outstanding as of December 31, 1999. We entered into an
interest rate swap agreement in 1998, which effectively fixes the interest rate
on this portion of the credit facility at 7.09%. The swap effectively changed
the variable interest rate of this bank debt to a fixed rate for which the
present value of the cash flow is approximately the same. As of December 31,
1999, we also had $15.0 million available under a term loan facility. The term
loan facility drawdown period expires on July 1, 2001. The outstanding bank debt
and the term loan facility are subject to certain financial covenants.
Substantially all of our assets are pledged as security for repayments of the
outstanding bank debt and borrowings, if any, under the term loan facility.

Operations generated $30.5 million in cash during 1999. Investing
activities, consisting of purchases of equipment of $29.6 million and net
purchases of marketable securities of $3.6 million, used $33.3 million of cash
during 1999. Financing activities raised $128.7 million during 1999. Cash
provided by financing activities primarily consisted of proceeds received from
completion of a public offering of common stock in November 1999, which raised
$116.1 million, net of related expenses as noted above.

As previously planned and disclosed, we ceased our wafer fabrication
operations in our four-inch wafer fabrication facility during the third quarter
of 1999. Fabrication facility dismantling and restoration activities began late
in the fourth quarter of 1999. We plan to continue dismantling the facility
during the first quarter of 2000 and restoring these areas as office space by
the end of the first half of 2000.

In December 1999, we entered into an agreement to expand our six-inch
production facility. The expansion, which is expected to cost approximately
$10.0 million, will approximately double our current production capacity and is
expected to be completed by June 30, 2000.

In addition to the above, at December 31, 1999, we also committed to
purchase approximately $6.0 million of equipment and furniture, and leasehold
improvements during the first half of 2000.

We believe that our sources of capital, including internally generated
funds and $15.0 million available under our $20.0 million existing credit
facility, will be adequate to satisfy anticipated capital needs for the next
twelve months and beyond. Our anticipated capital needs may include acquisitions
of complimentary businesses or technologies, or investments in other companies.
However, 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.

IMPACT OF YEAR 2000

The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of our
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.

To address the Year 2000 issue, we formed a senior team of internal
staff and outside consultants to ensure that the Year 2000 issue did not have an
adverse effect on our core business operations. To accomplish this, we invested
approximately $1.0 million in new computer hardware and software and $0.5
million in assessment development and remediation efforts in 1998 and 1999 to
ensure that our information technology systems, non-information technology
systems, and manufacturing equipment were Year 2000 compliant.

We have completed our remediation and testing procedures and to date,
we have not experienced any disruptions in our business due to Year 2000
compliance problems. However, it is possible that certain of our systems, or
systems of our customers or vendors may fail to operate in the Year 2000. To the
extent we experience Year 2000 related issues in the future, our business and
results of operations may be materially adversely effected.

21
<PAGE>

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the FASB issued Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities, which is required to be adopted
in years beginning after June 15, 2000. The Statement permits early adoption as
of the beginning of any fiscal quarter after its issuance. We expect to adopt
the new Statement effective January 1, 2001. The Statement will require us to
recognize all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If a derivative is
a hedge, depending on the nature of the hedge, changes in the fair value of the
derivative will either be offset against the change in fair value of the hedged
asset, liability, or firm commitment through earnings, or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings. We do not anticipate that the adoption of this Statement
will have a significant effect 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 credit
facility and our investments in certain available-for-sale securities. To date,
we have managed our exposure to changes in interest rates from our credit
facility by entering into interest rate swap agreements which allow us to
convert our debt from variable to fixed interest rates. We plan to continue to
reduce our exposure to changes in interest rates from our credit facility by
using interest rate derivative instruments. Our available-for-sale securities
consist of fixed income investments (U.S. Treasury and Agency securities and
short-term commercial paper). We continually monitor our exposure to changes in
interest rates from our available-for-sale securities. Accordingly, we believe
that the effects of changes in interest rates are limited and would not have a
material impact on our financial condition or results of operations. However, it
is possible that we are at risk if interest rates change in an unfavorable
direction. The magnitude of any gain or loss will 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.

22
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Auditors

The Board of Directors and Stockholders
ANADIGICS, Inc.

We have audited the accompanying consolidated balance sheets of ANADIGICS, Inc.
as of December 31, 1998 and 1999, and the related consolidated statements of
operations, comprehensive income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1999. Our audit also
included the financial statement schedule listed in the Index at Item 14(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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the 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 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, 1998 and 1999, and the consolidated results of their operations,
and their cash flows for each of the three years in the period ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

ERNST & YOUNG LLP

MetroPark, New Jersey
January 27, 2000

23
<PAGE>

ANADIGICS, INC.

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

DECEMBER 31,
--------------------
1998 1999
--------- ---------
ASSETS

Current assets:
<S> <C> <C>
Cash and cash equivalents............................................ $ 23,987 $ 149,895
Marketable securities................................................ 16,923 14,452
Accounts receivable, net of allowance for doubtful accounts of $128
and $485 in 1998 and 1999, respectively............................ 11,848 25,151
Inventories.......................................................... 8,729 10,334
Prepaid expenses and other current assets............................ 2,531 2,708
Insurance settlement receivable...................................... - 5,325
Deferred taxes....................................................... 4,345 4,840
--------- ---------
Total current assets................................................... 68,363 212,705

Marketable securities.................................................. 1,486 7,404
Plant and equipment:
Equipment and furniture.............................................. 71,625 115,195
Leasehold improvements............................................... 15,717 27,553
Projects in process.................................................. 34,286 8,525
--------- ---------
121,628 151,273
Less accumulated depreciation and amortization....................... 44,199 66,383
--------- ---------
77,429 84,890
Deferred taxes......................................................... 5,955 10,447
Other assets........................................................... 865 2,164
--------- ---------
$ 154,098 $ 317,610
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable..................................................... $ 6,138 $ 15,901
Accrued litigation settlement costs.................................. - 11,761
Accrued liabilities.................................................. 2,306 6,577
Current maturities of capital lease obligations...................... 229 151
Accrued restructuring costs.......................................... 1,567 993
Current maturities of long-term debt................................. 1,000 1,000
--------- ---------
Total current liabilities.............................................. 11,240 36,383

Capital lease obligations, less current portion........................ 183 32
Other long-term liabilities............................................ 868 1,546
Long-term debt, less current portion................................... 4,000 3,000
Commitments and contingencies..........................................
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized, none
issued or outstanding..............................................
Common stock, convertible, non-voting, $0.01 par value, 1,000,000
shares authorized, none issued or outstanding......................
Common stock, $0.01 par value, 68,000,000 shares authorized,
22,107,534 and 28,853,614 issued and outstanding at December 31,
1998 and 1999, respectively........................................ 221 289
Additional paid-in capital........................................... 160,141 296,496
Accumulated deficit.................................................. (22,598) (20,010)
Accumulated other comprehensive income (loss)........................ 43 (126)
--------- ---------
Total stockholders' equity............................................. 137,807 276,649
--------- ---------
$ 154,098 $ 317,610
========= =========
</TABLE>

See accompanying notes.

24
<PAGE>

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
----------------------------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
Net sales............................................... $ 102,536 $ 86,075 $ 131,159
Cost of sales........................................... 56,093 66,228 75,820
---------- ---------- ----------
Gross profit............................................ 46,443 19,847 55,339
Research and development expenses....................... 16,765 18,824 29,658
Selling and administrative expenses..................... 12,139 12,926 19,092
Restructuring charges................................... 7,126 (441)
---------- ---------- ----------
28,904 38,876 48,309
---------- ---------- ----------
Operating income (loss)................................. 17,539 (19,029) 7,030
Interest income, net.................................... 3,229 2,296 3,293
Provision for litigation settlement..................... 6,925
---------- ---------- ----------
Income (loss) before income taxes....................... 20,768 (16,733) 3,398
Provision (benefit) for income taxes.................... 5,439 (7,175) 810
---------- ---------- ----------
Net income (loss)....................................... $ 15,329 $ (9,558) $ 2,588
========== ========== ==========

Basic earnings (loss) per share......................... $ 0.72 $ (0.43) $ 0.11
========== ========== ==========

Weighted average common shares outstanding.............. 21,419,936 22,085,912 23,602,799
========== ========== ==========

Diluted earnings (loss) per share....................... $ 0.68 $ (0.43) $ 0.10
========== ========== ==========
Weighted average common and dilutive securities
outstanding........................................... 22,595,819 22,085,912 25,203,882
========== ========== ==========
</TABLE>

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(DOLLARS IN THOUSANDS)

YEAR ENDED DECEMBER 31,
--------------------------------
1997 1998 1999
--------- ---------- ---------
<S> <C> <C> <C>
Net income (loss)....................................... $ 15,329 $ (9,558) $ 2,588
Unrealized gain (loss) on marketable
securities............................................ 46 6 (169)
--------- ---------- ---------
Comprehensive income (loss)............................. $ 15,375 $ (9,552) $ 2,419
========= ========== =========

</TABLE>

See accompanying notes.

25
<PAGE>

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON PAID-IN ACCUMULATED COMPREHENSIVE STOCKHOLDERS'
STOCK CAPITAL DEFICIT INCOME (LOSS) EQUITY
---------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996.. $ 189 $ 98,746 $ (28,369) $ (9) $ 70,557
Issuance of common stock
in public offering, net
of expenses............. 29 55,317 55,346
Stock options exercised.... 3 1,699 1,702
Shares issued under
employee stock purchase
plan.................... 978 978
Tax effect of stock
options exercised....... 2,505 2,505
Unrealized gains on market
able securities......... 46 46
Net income................. 15,329 15,329
------ ---------- --------- -------- ---------
Balance, December 31, 1997.. 221 $159,245 (13,040) 37 146,463
Stock options exercised... 402 402
Shares issued under
employee stock purchase
plan.................... 425 425
Tax effect of stock
options exercised....... 69 69
Unrealized gains on market-
able securities......... 6 6
Net loss................... (9,558) (9,558)
------ --------- --------- ------- ---------
Balance, December 31, 1998.. 221 160,141 (22,598) 43 137,807
Stock options exercised... 14 12,679 12,693
Shares issued under
employee stock purchase
plan.................... 1 1,110 1,111
Tax effect of stock
options exercised....... 5,626 5,626
Unrealized losses on market
able securities......... (169) (169)
Issuance of common stock
in public offering, net
of expenses............. 53 116,077 116,130
Stock-based compensation... 335 335
Warrants for services
provided................ 528 528
Net income................. 2,588 2,588
------ --------- --------- ------ ---------
Balance, December 31, 1999 $ 289 $ 296,496 $ (20,010) $ (126) $ 276,649
====== ========= ========= ====== =========

</TABLE>

See accompanying notes.

26
<PAGE>

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
-------------------------------
1997 1998 1999
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss)............................................. $ 15,329 $ (9,558) $ 2,588
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation................................................ 7,644 14,409 21,895
Amortization................................................ 945 707 289
Impairment of long-lived assets............................. 4,510
Write-down of inventory..................................... 6,603
Deferred taxes.............................................. 1,328 (6,798) 639
Stock-based compensation.................................... 335
Warrants for services provided.............................. 528
Provision for litigation settlement......................... 6,436
Changes in operating assets and liabilities:
Accounts receivable....................................... (7,303) 6,151 (13,303)
Inventory................................................. (10,777) 4,346 (1,605)
Prepaid expenses and other assets......................... (679) (1,001) (1,476)
Accounts payable.......................................... 4,050 (5,085) 9,763
Income taxes payable...................................... 1,268 (2,439)
Accrued and other liabilities............................. 2,515 (1,644) 4,375
--------- --------- --------
Net cash provided by operating activities..................... 14,320 10,201 30,464

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment.............................. (52,105) (24,607) (29,645)
Purchases of marketable securities............................ (43,768) (24,145) (26,403)
Proceeds from sales of marketable securities.................. 27,149 31,369 22,787
--------- --------- --------
Net cash used in investing activities......................... (68,724) (17,383) (33,261)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments of obligations under capital leases.................. (1,105) (402) (229)
Borrowings (repayments) of long-term debt..................... 5,000 (1,000)
Issuances of common stock, net of related expenses............ 58,072 896 129,934
--------- --------- --------
Net cash provided by financing activities..................... 56,967 5,494 128,705
--------- --------- --------

Net increase (decrease) in cash and cash equivalents.......... 2,563 (1,688) 125,908
Cash and cash equivalents at beginning of period.............. 23,112 25,675 23,987
--------- --------- --------
Cash and cash equivalents at end of period.................... $ 25,675 $ 23,987 $149,895
========= ========= ========

Supplemental disclosures of cash flow information:
Interest paid................................................. $ 155 $ 72 $ 368
========= ========= ========

Taxes paid.................................................... $ 2,843 $ 3,132 $ 225
========= ========= ========
Supplemental schedule of non-cash financing activities:
Tax benefit of stock options exercised........................ $ 2,505 $ 69 $ 5,626
========= ========= ========
</TABLE>

See accompanying notes.

27
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

ANADIGICS, Inc. (the "Company") is a leading supplier of radio
frequency ("RF")/microwave integrated circuit solutions for the communications
industry. The Company's products are used to send and receive signals in a
variety of broadband and wireless communications applications. Its efforts in
the broadband market are focused on applications for cable television systems
("CATV"), cable modems, and fiber optic communications systems. In the wireless
market, the Company's efforts are focused on applications for cellular and
personal communication systems ("PCS") handsets.

The Company designs, develops and manufactures integrated circuits
primarily using gallium arsenide ("GaAs") semiconductor material and either
MESFET (Metal Semiconductor Field Effect Transistor) or PHEMT (Pseudomorphic
High Electron Mobility Transistor) process technology. The Company manufactures
its integrated circuits in its six-inch analog GaAs wafer fabrication facility.
GaAs offers certain advantages in RF/microwave applications including the
integration of numerous RF/microwave functions which cannot be easily integrated
in silicon-based circuits. The Company's high frequency integrated circuits
enable manufacturers of communications equipment to enhance overall system
performance and reduce manufacturing cost and time to market.

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

The consolidated financial statements and notes thereto, for all
periods presented, reflect a three-for-two stock split declared on January 27,
2000 in the form of a stock dividend of one share of common stock for every two
shares of common stock outstanding. The dividend is payable on February 29, 2000
to holders of record on February 10, 2000.

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. Accounts receivable from customers are denominated in U.S. dollars.
The Company has not experienced significant losses related to receivables from
individual customers.

Approximately 62% of the Company's net sales in 1997 were to three
customers, Ericsson, General Instrument, and Qualcomm, who individually
accounted for 33%, 16%, and 13%, respectively, of net sales. Approximately 51%
of the Company's net sales in 1998 were to two customers, Ericsson and General
Instrument, who individually accounted for 34% and 17%, respectively, of net
sales. Approximately 65% of the Company's net sales in 1999 were to two
customers, Ericsson and General Instrument, who individually accounted for 47%
and 18%, respectively, of net sales. Accounts receivable from these customers
accounted for 64% and 56% of total accounts receivable at December 31, 1998 and
1999, respectively. 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:
<TABLE>
<CAPTION>

YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1997 Application 1998 Application 1999 Application
------ ----------- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Largest customer......... $ 33,935 Wireless $ 29,173 Wireless $ 61,264 Wireless
Second largest customer.. 16,792 Wireless 14,664 CATV 23,954 CATV
Third largest customer... 12,851 CATV
</TABLE>

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

28
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

Production revenue is recorded when products are shipped to customers.
Customer-funded research and development is included in net sales when
contractual obligations are completed.

WARRANTY COSTS

The Company provides, by a current charge to income, an amount it
estimates 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.

COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE

All direct internal and external costs incurred in connection with the
application development stage of software for internal use are capitalized. All
other costs associated with internal use software are expensed when incurred.
Amounts capitalized are amortized on a straight-line basis over three years.

PLANT AND EQUIPMENT

Plant and equipment are stated at cost. Depreciation of plant and
equipment has been provided on the straight-line method over 3-5 years.

The cost of equipment acquired under capital leases was $11,987 and
$11,975 at December 31, 1998 and 1999, respectively, and accumulated
amortization was $11,639 and $11,928 at December 31, 1998 and 1999,
respectively. Equipment acquired under a capital lease is amortized over the
useful life of the leased equipment or the life of the lease, whichever is
shorter.

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 amounts used for income tax purposes.

RESEARCH AND DEVELOPMENT COSTS

The Company charges all research and development costs associated with
the development of new products to expense when incurred. Engineering and design
costs related to customer-funded research and development contracts are
classified as cost of sales.

CASH EQUIVALENTS

The Company considers as cash equivalents all highly liquid marketable
securities with an original maturity of three months or less.

MARKETABLE SECURITIES

Available for sale securities are stated at fair value, with unrealized
gains and losses, net of tax, reported in other 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.

STOCK BASED COMPENSATION

As permitted by FASB Statement No. 123, "Accounting for Stock-Based
Compensation" (FASB 123), the Company has elected to follow Accounting Principal
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and
related interpretations in accounting for its employee stock option plans. Under
APB 25, no compensation expense is recognized at the time of option grant
because the exercise price of the Company's employee stock options equals the
fair market value of the underlying common stock on the date of grant.

29
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

IMPAIRMENT OF LONG-LIVED ASSETS

The Company records impairment losses on long-lived assets used in
operations or expected to be disposed when events and circumstances indicate
that the undiscounted cash flows estimated to be generated by these assets are
less than the carrying amounts of those assets.

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.

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 expenses. The
carrying values of capital lease obligations and long-term debt approximate fair
value since the related interest rates approximate rates currently available to
the Company.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities". In accordance with the revised
effective date pursuant to FASB Statement No. 137, the Company expects to adopt
the new Statement effective January 1, 2001. The Statement will require the
Company to recognize all derivatives on the balance sheet at fair value. The
Company does not anticipate that the adoption of this Statement will have a
significant effect on its results of operations or financial position.

2. INVENTORIES

Inventories are stated at the lower of cost (first in-first out method)
or market. Inventories consist of the following:

DECEMBER 31,
--------------------
1998 1999
--------- ---------
Raw materials............................. $ 885 $ 1,995
Work in process........................... 8,613 7,370
Finished goods............................ 7,261 4,105
--------- ---------
$ 16,759 $ 13,470
Reserves (8,030) (3,136)
--------- ---------

$ 8,729 $ 10,334
========= ========

30
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

3. INVESTMENTS

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

Available-for-Sale Securities
-------------------------------------
Gross Estimated
Unrealized Fair
Cost Gains (Losses) Value
-------------------------------------

U.S Treasury and
Agency Securities $ 2,117 $ 7 $ 2,124
U.S. Corporate Securities 16,249 36 16,285
-------- ------ --------
Total at December 31, 1998 $ 18,366 $ 43 $ 18,409
======== ====== ========

U.S Treasury and
Agency Securities $ 4,698 $ (46) $ 4,652
U.S. Corporate Securities 17,284 (80) 17,204
-------- ------ --------
Total at December 31, 1999 $ 21,982 $ (126) $ 21,856
======== ======= ========

The amortized cost and estimated fair value of debt and marketable
equity securities at December 31, 1999, by contractual maturity, are shown
below. Expected maturities may differ from contractual maturities because the
issuers of the securities may have the right to prepay obligations without
prepayment penalties.

Available-for-Sale Securities
--------------------------------
Estimated
Fair
Cost Value
--------------------------------

Due in one year or less $ 14,491 $ 14,452
Due after one year through three years 7,491 7,404
-------- --------
Total $ 21,982 $ 21,856
======== ========

4. ACCRUED LIABILITIES

Accrued liabilities consist of the following:
DECEMBER 31,
--------------------
1998 1999
--------- ---------

Accrued compensation............................. $ 842 $ 4,724
Warranty reserve................................. 304 490
Other............................................ 1,160 1,363
--------- ---------
$ 2,306 $ 6,577
========= =========

31
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

5. COMMITMENTS AND CONTINGENCIES

The Company leases manufacturing, warehousing, office space, and
manufacturing equipment under noncancelable operating leases that expire through
2016. The Company also leases certain equipment under capital leases that expire
through 2000. Rent expense was $1,640, $3,148 and $3,441 in 1997, 1998 and 1999,
respectively. The future minimum lease payments under the noncancelable
operating leases and the present value of the minimum capital lease payments are
as follows:

CAPITAL OPERATING
YEAR LEASES LEASES
- ---- ----------- -----------
2000............................................. $ 156 $ 3,465
2001............................................. 34 3,549
2002............................................. 3,637
2003............................................. 3,541
2004............................................. 3,191
Thereafter....................................... 23,018
----------- ----------
Total minimum lease payments..................... 190 $ 40,401
---------- ==========

Less amount representing interest................ 7
----------
Present value of net minimum lease payments...... $ 183
==========

In December 1999, the Company entered into certain agreements to expand its
six-inch production facility. The expansion, which is expected to cost
approximately $10,000, will increase the Company's current production capacity
by approximately one-third and is expected to be completed by June 30, 2000.

In addition to the above, at December 31, 1999, the Company also committed
to purchase approximately $6,000 of equipment and furniture, and leasehold
improvements during the first half of 2000.

6. EARNINGS PER SHARE

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

Year ended December 31,
------------------------------------
1997 1998 1999
----------- ----------- ----------
Weighted average common shares
outstanding used to calculate
basic earnings per share. . . . . 21,419,936 22,085,912 23,602,799

Net effect of dilutive stock options--
based on treasury stock method
using average market price . . . . 1,175,883 -* 1,601,083
--------- --------- ---------

Weighted average common and dilutive
securities outstanding used
to calculate diluted earnings
per share . . . . . . . . . . . . . 22,595,819 22,085,912 25,203,882
========== ========== ==========

* - The dilutive stock options are not included as their effect is
anti-dilutive.

32
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

7. SEGMENTS

The Company operates in one segment. All of its integrated circuits are
manufactured using the same manufacturing facilities located in the same
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,
------------------------------
1997 1998 1999
--------- --------- ---------
Cellular and PCS Applications............... $ 59,676 $ 33,716 $ 60,843
CATV Applications........................... 20,848 28,327 42,664
Fiber Optic Applications.................... 11,457 17,582 23,290
Direct Broadcast Satellite Applications..... 8,989 5,735 4,217
Engineering Service Sales................... 1,566 715 145
--------- --------- ---------
Total.................................. $ 102,536 $ 86,075 $ 131,159
========= ========= =========

The Company primarily sells to four geographic regions; Europe, Asia,
North America (primarily U.S.A.), and South America. The geographic region is
determined by the destination of the shipped product. Net sales to each of the
four geographic regions are as follows:

YEAR ENDED DECEMBER 31,
--------------------------------
1997 1998 1999
--------- --------- ----------
Europe.................................... $ 32,097 $ 20,459 $ 30,161
Asia...................................... 26,142 24,470 31,681
North America (primarily U.S.A)........... 44,297 36,416 51,605
South America............................. - 4,730 17,712
--------- --------- ---------
Total............................... $ 102,536 $ 86,075 $ 131,159
========= ========= =========

8. INCOME TAXES

The components of the provision (benefit) for income taxes are as
follows:

YEAR ENDED DECEMBER 31,
---------------------------
1997 1998 1999
-------- -------- -------
Current provision: Federal........ $ 3,780 $ (377) $ 171
State ........ 331
Deferred provision (benefit): Federal........ 826 (5,316) 468
State.......... 502 (1,482) 171
-------- -------- -------
Total .................................... $ 5,439 $ (7,175) $ 810
======== ======== =======

33
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

8. INCOME TAXES (CONTINUED)

Significant components of the Company's net deferred tax assets as of
December 31, 1998 and 1999 are as follows:

DECEMBER 31,
--------------------
1998 1999
--------- ---------
Current:
Accruals/reserves..................................... $ 3,926 $ 4,840
Net operating loss carryforwards...................... 419
--------- ---------
4,345 4,840

Long-term:
Net operating loss carryforwards...................... 4,211 8,625
General business and research and development credits. 1,350 2,021
Deferred rent expense................................. 332 591
Difference in basis of plant and equipment............ 62 (790)
--------- ---------
Net long-term deferred tax assets....................... 5,955 10,447
--------- ---------
Net deferred tax assets................................. $ 10,300 $ 15,287
========= =========

As of December 31, 1999, the Company had net operating loss
carryforwards of approximately $26,000 for both federal and state tax reporting
purposes. The federal carryforward will begin to expire in 2018, and the state
carryforwards will begin to expire in 2005. A portion of the deferred tax asset
arising in 1999 relates to the exercise of non-qualified stock options by
employees.

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

YEAR ENDED DECEMBER 31,
---------------------------------------------------
1997 1998 1999
---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Tax at U.S. statutory rate................ $ 7,268 35.0% $ (5,857) (35.0)% $ 1,189 35.0%
Change in federal valuation allowance..... (1,913) (9.2)
Tax benefit of foreign sales corporation.. (472) (2.3)
State tax expense (benefit), net of
Federal tax effect..................... 542 2.6 (963) (5.8) 111 3.3
Research and experimentation tax credits.. (500) (14.1)
Other..................................... 14 0.1 (355) (2.1) 10 (0.2)
-------- ------ --------- ------- --------- ------
Provision (benefit) for income taxes...... $ 5,439 26.2% $ (7,175) (42.9)% $ 810 23.8%
======== ====== ========= ======= ========= ======

</TABLE>

34
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

9. STOCKHOLDERS' EQUITY

The Company has a warrant outstanding, which entitles the holder to
purchase 22,500 shares of common stock at an exercise price of $6.92 per share.
The warrant was exercisable on December 31, 1999 and expires on November 17,
2001. During 1999, a charge of $528 relating to this warrant, which was issued
to a third party in connection with services provided, was recorded and is
included in Selling and administrative expenses in the consolidated statement of
operations.

The Company has additional warrants outstanding which entitle the
holder to purchase 45,000 shares of common stock at exercise prices ranging from
$9.00 to $32.17 per share, all of which were exercisable as of December 31,
1999. These warrants expire between September of 2001 and 2003.

On December 17, 1998, the Company adopted a Shareholders' Rights
Agreement (the "Agreement"). Pursuant to the Agreement, 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 15% 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 15% or more of the
voting power of ANADIGICS, Inc. common stock or other voting securities.

During November 1999, the Company completed a secondary public offering
of 5,309,066 shares of common stock, generating net proceedss to the Company
of $116,130.

10. LONG-TERM DEBT, CREDIT FACILITY AND INTEREST RATE SWAP AGREEMENT

The Company has a secured $20,000 revolving credit facility of which
$5,000 was drawn down and converted to a term loan during 1998 which requires
equal principal repayments of $250 due quarterly through December 31, 2003, plus
interest. As of December 31, 1999, $4,000 remained outstanding on the $5,000
term loan. Interest on the credit facility is calculated at LIBOR plus 1.75%.
The LIBOR rate was 6.04% at December 31, 1999.

The Company enters into interest rate swap agreements to manage its
exposure to interest rate movements by effectively converting its debt from
variable to fixed rates. Maturity dates of the interest rate swap agreements
will generally match those of the underlying debt or financial arrangements. In
1998, the Company entered into an interest rate swap with a maturity of five
years which involved the exchange of variable rate payments for fixed rate
payments without the exchange of the underlying principal amounts. In accordance
with the terms of the swap agreement, the Company pays 7.09% interest and
receives LIBOR plus 1.75% calculated on the notional amount. The notional amount
of the interest rate swap was $4,000 at December 31, 1999. The Company concluded
that the swap effectively changed the variable interest rate characteristics to
a fixed rate for which the present value of the cash flows are approximately the
same, and as a result, there is no adjustment to mark the swap to market. Cash
flows associated with the financial instrument are classified consistent with
the cash flows from the transactions being hedged.

The remaining $15,000 under the revolving bank credit facility provides
for interest at the bank's base rate minus 25 basis points or, at the Company's
discretion, other market-based rates. The Company has the option to swap
floating rate for fixed rate loans at the time of drawdown. The drawdown period
expires on July 1, 2001. Any drawdowns may be paid over a term of up to sixty
months. Amounts drawn and amounts available under this facility are subject to
certain financial covenants. Under this facility, the payment of dividends,
among other things, requires approval by the bank. Substantially all assets of
ANADIGICS, Inc. are pledged as security for the repayment of amounts drawn under
this credit facility. On a quarterly basis, the Company pays an annual
commitment fee equal to 0.125% of the daily unused line of credit.

35
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

11. EMPLOYEE BENEFIT PLANS

In 1995, the Company adopted an employee stock purchase plan ("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 843,750 shares of
common stock are 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. In 1998, 65,440 shares of common stock were purchased at a price
of $6.50 per share, as determined by the ESP Plan. During 1999, 165,920 shares
of common stock were purchased at a price of $6.69 per share, as determined by
the ESP Plan.

Certain executives and key employees have been granted options to
purchase shares of common stock under stock option plans adopted in 1994, 1995
and 1997. An aggregate of 489,130, 4,162,500 and 1,800,000 shares of common
stock were reserved for issuance under the 1994 Long-Term Incentive Share and
Award Plan, the 1995 Long-Term Incentive Share Award Plan and the 1997 Long-Term
Incentive and Share Award Plan for Employees (the "Plans"), respectively. The
Plans provide for the granting of stock options, stock appreciation rights,
restricted shares, or other share based awards to eligible employees and
directors, as defined in the Plans. Options granted under the Plans become
exercisable in varying amounts over periods of up to three years.

FASB 123 requires pro forma information regarding net income and
earnings per share as if the Company has accounted for its employee stock
options, warrants and shares of common stock purchased by employees in
connection with the ESP Plan ("equity awards") under the fair value method of
FASB 123. The fair value of these equity awards was estimated at the date of
grant using a Black-Scholes option pricing model with the following weighted
average assumptions for 1997, 1998 and 1999, respectively: risk-free interest
rate of 5.90%, 4.50%, and 5.84%; expected volatility of 0.50, 0.60, and 0.60;
expected option life of one year from vesting and an expected dividend yield of
0.0%.

For purposes of pro forma disclosures, the estimated fair value of the
equity awards is amortized to expense over the options' vesting period. The
Company's pro forma information is as follows:

1997 1998 1999
--------- --------- ----------
Pro forma net income (loss).................. $ 11,777 $ (13,092) $ ( 2,072)
Pro forma basic earnings (loss) per share.... $ 0.55 $ (0.59) $ (0.09)

A summary of the Company's stock option activity, and related
information for the years ended December 31, 1997, 1998 and 1999 are as follows:

1997 1998 1999
----------------- ------------------ ----------------
WEIGHTED WEIGHTED WEIGHTED
COMMON AVERAGE COMMON AVERAGE COMMON AVERAGE
STOCK EXERCISE STOCK EXERCISE STOCK EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year. 1,632,332 $ 6.51 2,337,113 $ 13.18 5,193,199 $ 9.59
Granted........................ 1,066,397 21.03 3,124,884 7.25 1,847,667 29.84
Exercised...................... (328,869) 5.19 (55,086) 6.51 (1,185,308) 10.57
Forfeited...................... (32,747) 16.49 (213,672) 15.18 (197,939) 10.89
--------- --------- ---------
Outstanding at end of year....... 2,337,113 13.18 5,193,239 9.59 5,657,619 15.96
========= ========= =========

Exercisable at end of year....... 1,118,945 6.87 1,732,184 11.2 2,112,843 10.78
========= ========= =========

</TABLE>

The weighted average fair value of options granted during 1997, 1998,
and 1999 was $8.10, $7.17, and $13.20, respectively.

36
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

11. EMPLOYEE BENEFIT PLANS (CONTINUED)

Stock options outstanding at December 31, 1999 are summarized as
follows:

OUTSTANDING WEIGHTED AVERAGE WEIGHTED AVERAGE
RANGE OF OPTIONS AT REMAINING EXERCISE
EXERCISE PRICES DECEMBER 31, 1999 CONTRACTUAL LIFE PRICE
- ---------------- ------------------ ------------------ ----------------
$ 0.38 to $ 4.17 985,110 8.39 $ 3.87
$ 5.33 to $ 7.65 1,190,377 7.93 $ 5.48
$ 8.00 to $10.63 703,886 7.61 $ 10.08
$10.90 to $20.00 952,267 7.56 $ 16.03
$20.08 to $34.33 1,825,979 9.68 $ 31.54
----------
$ 0.38 to $34.33 5,657,619 8.47 $ 15.96

During 1999, stock-based compensation expense of $335 was recorded and
is included in Selling and administrative expenses in the consolidated statement
of operations. No such expenses were incurred during 1998 and 1997.

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. Company contributions are
determined on an annual basis and are at the discretion of the Board of
Directors. For the year ended December 31, 1999, the Company recorded expense of
$500 relating to a plan contribution. No contributions were made in 1998 and
1997.

12. RESTRUCTURING CHARGES.

During 1999, the Company reversed $441 of a manufacturing restructuring
charge recorded during 1998.

In 1998, the Company recorded restructuring charges totaling $7,126.
The restructuring charges consisted of writedowns of impaired long-lived assets
of $4,510, reductions in force of $1,616, and wafer fabrication facility
shutdown and removal costs of $1,000 which are expected to be completed by the
end of the first half of 2000. In connection with the impairment evaluation, the
Company determined that certain other equipment related to conversion of the new
wafer fabrication facility had shorter depreciable lives. Accordingly, the
Company accelerated depreciation on these assets during 1998 and 1999. The
effect of the accelerated depreciation was approximately ($1,517) or ($0.07) per
share and ($4,052) or ($0.16) per share on the 1998 net loss and 1999 net
income, respectively. These assets, which had original estimated lives of five
to twenty years, were reduced to an estimated life of nine months.

Writedowns of Impaired Assets. The Company evaluated the on-going value
of certain assets. Based upon this evaluation, the Company planned to dispose of
certain assets with a carrying amount of $4,635 and estimated the sales value,
net of related costs to sell, at $125. The estimated sales value was based on
quoted market prices or on the best information available under the
circumstances. In most instances, there was no market for the impaired asset and
therefore the fair value was zero. As a result, the Company recorded an
impairment loss of $4,510, which consisted of the following items:

Write-down of assets associated with the conversion of the
new wafer fabrication facility from 4-inch to 6-inch wafers $ 2,149
Write-down of assets associated with the closure of the
Company's in-house assembly operations 1,004
Write-off of software, in connection with our
on-going information systems improvements 842
Unused production assets previously used in the production
of DBS LNB converter integrated circuits 515
-------

Total write-down on impairment of long-lived assets $ 4,510
=======

The effect of suspending depreciation on these assets was approximately
$220 in 1998.

37
<PAGE>

ANADIGICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

12. RESTRUCTURING CHARGES (CONTINUED)

Reductions in Force. The Company recorded charges of $1,100 during the
first quarter of 1998 and $516 during the fourth quarter of 1998 associated with
reductions in its workforce. The workforce reduction charges primarily consisted
of severance pay, extended medical coverage, and outplacement service costs for
approximately 165 employees primarily involved in the Company's production
operations. Approximately $1,175 of severance pay, extended medical coverage,
and outplacement service costs were paid through the second quarter of 1999 for
the termination of approximately 120 employees. As noted above, the remaining
liability of $441 was reversed during the third quarter of 1999.

Facility Shutdown and Removal Costs. The Company recorded charges of
$1,000 associated with the shutdown and removal of its four-inch wafer
fabrication facility, which is expected to be completed by the end of the first
half of 2000.

13. LEGAL PROCEEDINGS

The previously-disclosed consolidated securities class action,
captioned In re ANADIGICS, Inc. Securities Litigation, No. 98-CV-917 (MLC)
(D.N.J.), and shareholder's derivative lawsuit, captioned Deegan v. Rosenzweig,
No. 98-CV-3640 (MLC) (D.N.J.), were settled jointly in mid-January 2000 pursuant
to a final Order of the United States District Court for the District of New
Jersey dated December 7, 1999. The total settlement payment (including the costs
of administering the settlement) was $11,875, of which approximately $5,325 was
paid on behalf of ANADIGICS, Inc. by the Company's insurers. The Company also
became obligated to pay other costs and legal fees related to the settlement in
the amount of approximately $375, resulting in a provision for litigation
settlement of $6,925 during 1999.

14. QUARTERLY FINANCIAL DATA (UNAUDITED)

QUARTER ENDED
-------------------------------------------------------------------------------------------------
MARCH 29, JUNE 28, SEPT. 27, DEC. 31, APRIL 4, JULY 4, OCT.3, DEC. 31,
1998 1998 1998 1998 1999 1999 1999 1999
----------- ----------- ----------- --------- ----------- ----------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales..................... $ 18,785 $ 22,675 $ 22,041 $ 22,574 $ 25,048 $ 30,534 $ 35,460 $ 40,117
Cost of sales................. 12,068 14,565 21,758 17,838 16,900 19,248 18,862 20,810
--------- --------- --------- --------- -------- --------- --------- --------
Gross profit.................. 6,717 8,110 283 4,736 8,148 11,286 16,598 19,307
Research and development...... 4,642 5,108 4,334 4,739 5,581 6,387 8,293 9,397
Selling and administrative
expense.................... 3,345 3,060 3,084 3,437 3,859 4,885 5,091 5,257
Restructuring charges......... 1,100 1,357 4,669 (441)
--------- --------- --------- --------- -------- --------- --------- --------
Operating income (loss)....... (2,370) (58) (8,492) (8,109) (1,292) 14 3,655 4,653
Interest income, net.......... 656 570 560 511 517 478 503 1,795
Provision for litigation
settlement................. 6,925
--------- --------- --------- --------- -------- --------- --------- --------
Income (loss) before income
taxes...................... (1,714) 512 (7,932) (7,598) (775) (6,433) 4,158 6,448
Provision (benefit) for income
taxes...................... (643) 192 (2,975) (3,749) (287) (2,380) 1,413 2,064
--------- --------- --------- --------- -------- --------- --------- --------
Net income (loss)............. $ (1,071) $ 320 $ (4,957) $ (3,849) $ (488) $ (4,053) $ 2,745 $ 4,384
========= ======== ========= ======== ======== ======== ======== =======
Basic earnings (loss) per
share...... $ (0.05) $ 0.01 $ (0.22) $ (0.17) $ (0.02) $ (0.18) $ 0.12 $ 0.16
========= ======== ========= ======== ======== ======== ======== =======
Diluted earnings (loss)
per share.... $ (0.05) $ 0.01 $ (0.22) $ (0.17) $ (0.02) $ (0.18) $ 0.11 $ 0.15
========= ======== ========= ======== ======== ======== ======== =======
Market price per share of
common stock:
High........................ $ 22.54 $ 11.21 $ 14.00 $ 9.46 $ 12.42 $ 24.79 $ 26.58 $ 36.92
Low......................... $ 8.79 $ 7.33 $ 5.21 $ 3.42 $ 7.46 $ 10.67 $ 17.33 $ 18.42

</TABLE>
The quarterly per share amounts do not total to the annual per share
amounts because of the differences in the weighted average shares in each
period. The above earnings per share amounts retroactively reflect the
three-for-two stock split.

38
<PAGE>

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

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information contained in the 2000 Proxy Statement under the heading
"Information Regarding Directors and Executive Officers" is incorporated herein
by reference in response to this item.

ITEM 11. EXECUTIVE COMPENSATION.

The information contained in the 2000 Proxy Statement under the heading
"Compensation and Other Transactions with Directors and Executive Officers" is
incorporated herein by reference in response to this item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information contained in the 2000 Proxy Statement under the heading
"Principal Stockholders" and "Stock Ownership of Directors and Management" is
incorporated herein by reference in response to this item.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) 1. Financial Statements

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

- Report of Independent Auditors

- Consolidated Balance Sheets--December 31, 1998 and 1999

- Consolidated Statements of Operations--Years ended December 31, 1997,
1998, and 1999

- Consolidated Statements of Comprehensive Income--Years ended December
31, 1997, 1998, and 1999

- Consolidated Statements of Shareholders' Equity--Years ended December
31, 1997, 1998, and 1999

- Consolidated Statements of Cash Flows--Years ended December 31, 1997,
1998, and 1999

- Notes to Consolidated Financial Statements--December 31, 1999

(a) 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.

(a) 3. Exhibit List

3.2 Form of Restated Certificate of Incorporation of the Registrant.
Filed as an exhibit to the Company's Registration Statement on Form
S-1 (Registration No. 33-89928), and incorporated herein by reference.

3.4 Form of Amended By-laws of the Registrant. Filed as an exhibit to
the Company's Registration Statement on Form S-1 (Registration No.
33-89928), and incorporated by reference.

39
<PAGE>

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 certificate of amendment to amended and restated certificate
of amendment. Filed as an exhibit to the Company's Registration
Statement on Form S-3 (Registration No. 333-83889), and incorporated
herein by reference.

4.3 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.

4.4 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.

4.5 Rights Agreement dated as of December 17, 1998 between the registrant
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 filed December
17, 1998, and incorporated herein by reference.

9.1 Consent and Voting Agreement dated as of February 28, 1994, executed in
connection with the issuance of Senior Series P Convertible Preferred
Stock. Filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 33-89928), and incorporated herein by
reference.

9.2 Schedule of Consent and Voting Agreements, which are substantially
identical to the Consent and Voting Agreement filed as Exhibit 9.1.
Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 33-89928), and incorporated herein by reference.

9.3 Consent and Voting Agreement dated as of September 20, 1989, between
the Registrant and Ronald Rosenzweig. Filed as an exhibit to the
Company's Registration Statement on Form S-1 (Registration No.
33-89928), and incorporated herein by reference.

9.4 Schedule of Consent and Voting Agreements, which are substantially
identical to the Consent and Voting Agreement filed as Exhibit 9.3.
Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 33-89928), and incorporated herein by reference.

10.1 Form of 1995 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 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.

10.3 Employee Savings and Protection Plan. Filed as an exhibit to the
Company's Registration Statement on Form S-1 (Registration No. 33-
89928), and incorporated herein by reference.

10.4 Form of Employee Stock Purchase Plan. Filed as an exhibit to the
Company's Registration Statement on Form S-1 (Registration No. 33-
89928), and incorporated herein by reference.

10.5 Lease Agreement between Mr. Bethel Corporate Center and the
Registrant dated May 1, 1993. Filed as an exhibit to the Company's
Registration Statement on Form S-1 (Registration No. 33-89928),
and incorporated herein by reference.

10.8 Stock Purchase Agreement dated as of February 28, 1994. Filed as an
exhibit to the Company's Registration Statement on Form S-1
(Registration No. 33-89928), and incorporated herein by reference.

10.9 Right of First Refusal and Tag Along Agreement dated as of February 28,
1994. Filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 33-89928), and incorporated herein by
reference.

40
<PAGE>

10.10 Amended and Restated Loan Agreement by and between First Union National
Bank, formerly known as First Fidelity Bank, National Association dated
January 25, 1996. Filed as an exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995, and incorporated herein
by reference.

10.11 First Amendment, dated as of December 23, 1996, to the Amended and
Restated Loan Agreement, dated as of January 25, 1996, between the
Company and First Union National Bank, formerly known as First Fidelity
Bank, National Association. Filed as an exhibit to the Company's
Registration Statement (Registration No. 333-20783), and incorporated
herein by reference.

10.12 Second Amendment, dated as of July 1, 1997, to the Amended and Restated
Loan Agreement, dated as of January 25, 1996, between the Company and
First Union National Bank, formerly known as First Fidelity Bank,
National Association. Filed as an exhibit to the Company's Registration
Statement (Registration No. 333-20783), and incorporated herein by
reference.

10.13 Third Amendment, dated as of December 30, 1998, to the Amended and
Restated Loan Agreement, dated as of January 25, 1996, between the
Company and First Union National Bank, formerly known as First Fidelity
Bank, National Association. Filed as an exhibit to the Company's
Registration Statement (Registration No. 333-20783), and incorporated
herein by reference.

10.14 Fourth Amendment, dated as of June 30, 1999, to the Amended and
Restated Loan Agreement, dated as of January 25, 1996, between the
Company and First Union National Bank, formerly known as First Fidelity
Bank, National Association. Filed as an exhibit to the Company's
Registration Statement (Registration No. 333-20783), and incorporated
herein by reference.

10.15 Lease Agreement between United States Land Resources, L.P. and the
Company dated as of April 26, 1996. Filed as an exhibit to the
Company's Registration Statement (Registration No. 333-20783), and
incorporated herein by reference.

*23.1 Consent of Ernst and Young LLP.

*27.1 Financial Data Schedule.

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the fourth quarter of 1999.

*Filed herewith.

41
<PAGE>

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 24th day of March,
2000.

ANADIGICS, INC.

BY: /s/ Dr. Bami Bastani
-----------------------------------------
Dr. Bami Bastani
CHIEF EXECUTIVE OFFICER
AND PRESIDENT

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON
THE DATES INDICATED:
<TABLE>
<CAPTION>

NAME TITLE DATE
- --------------------------- --------------------------- ---------------

<S> <C> <C>
/s/ Dr. Bami Bastani President, Chief Executive Officer and March 28, 2000
- --------------------------- Director (Principal Executive Officer)
Dr. Bami Bastani

/s/ Thomas C. Shields Senior Vice President and Chief Financial March 28, 2000
- --------------------------- Officer (Principal Financial
Thomas C Shields Accounting Officer)

/s/ Ronald Rosenzweig Chairman of the Board of Directors March 28, 2000
- ---------------------------
Ronald Rosenzweig

/s/ Paul S. Bachow Director March 28, 2000
- ---------------------------
Paul S. Bachow

/s/ David Fellows Director March 28, 2000
- ---------------------------
David Fellows

/s/ Harry T. Rein Director March 28, 2000
- ---------------------------
Harry T. Rein

/s/ Lewis Solomon Director March 28, 2000
- ---------------------------
Lewis Solomon

/s/ Dennis F. Strigl Director March 28, 2000
- ---------------------------
Dennis F. Strigl
</TABLE>

42
<PAGE>

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>

ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF DESCRIPTION
OF PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ---------- ---------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Year ended December 31, 1999:
Deducted from asset account:
Allowance for doubtful accounts............ $ 128 $ 497 $ (140)(1) $ 485
Reserve for excess and obsolete inventory.. 8,030 489 ( 5,383)(2) 3,136
Reserve for warranty claims.................. 304 186 490

Year ended December 31, 1998:
Deducted from asset account:
Allowance for doubtful accounts............ $ 396 $ 4 $ (272)(1) $ 128
Reserve for excess and obsolete inventory.. 7,174 13,803 (12,947)(2) 8,030
Reserve for warranty claims.................. 550 (246)(4) 304

Year ended December 31, 1997:
Deducted from asset account:
Allowance for doubtful accounts............ $ 340 $ 77 $ (21)(1) $ 396
Reserve for excess and obsolete inventory.. 1,681 5,776 (283)(2) 7,174
Valuation allowance for deferred tax assets 10,831 - (10,831)(3) -
Reserve for warranty claims.................. 225 1,554 (1,229)(4) 550

</TABLE>
- -------------------------
(1) Uncollectible accounts written-off to the allowance account.
(2) Inventory write-offs to the reserve account.
(3) Benefit and/or recognition of deferred tax assets.
(4) Warranty expenses incurred to the reserve for warranty
claims.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-89928) 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, and the Registration Statement
(Form S-8 No. 33-32533) pertaining to the ANADIGICS, Inc. 1997 Long-Term
Incentive and Share Award Plan for Employees, of our report dated January 27,
2000, with respect to the consolidated financial statements and schedule of
ANADIGICS, Inc. included in the Annual Report (Form 10-K) for the year ended
December 31, 1999.

/s/ ERNST & YOUNG LLP

MetroPark, New Jersey
March 22, 2000

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted for the
twelve months ended December 31, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 149,895,000
<SECURITIES> 14,452,000
<RECEIVABLES> 25,151,000
<ALLOWANCES> 0
<INVENTORY> 10,334,000
<CURRENT-ASSETS> 212,705,000
<PP&E> 151,273,000
<DEPRECIATION> 66,383,000
<TOTAL-ASSETS> 317,610,000
<CURRENT-LIABILITIES> 36,383,000
<BONDS> 0
0
0
<COMMON> 289,000
<OTHER-SE> 276,360,000
<TOTAL-LIABILITY-AND-EQUITY> 317,610,000
<SALES> 131,159,000
<TOTAL-REVENUES> 131,159,000
<CGS> 75,820,000
<TOTAL-COSTS> 75,820,000
<OTHER-EXPENSES> 55,235,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,293,000)
<INCOME-PRETAX> 3,398,000
<INCOME-TAX> 810,000
<INCOME-CONTINUING> 2,588,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,588,000
<EPS-BASIC> 0.11
<EPS-DILUTED> 0.10

</TABLE>