ANADIGICS INC - FORM 10-K - March 12, 2010

Attached files

file	filename
EX-21.0 - EXHIBIT 21 SUBSIDIARIES - ANADIGICS INC	exhibit21.htm
EX-23.1 - EXHIBIT 23.1 ACCOUNTING FIRM - ANADIGICS INC	exhibit231.htm
EX-31.1 - EXHIBIT 31.1 RIVAS CERTIFICATION - ANADIGICS INC	exhibit31rivas.htm
EX-32.1 - EXHIBIT 32.1 RIVAS - ANADIGICS INC	exhibit32rivas.htm
EX-10.9 - EXHIBIT 10.9 HUANG - ANADIGICS INC	exhibit109huang.htm
EX-31.2 - EXHIBIT 31.2 SHIELDS CERTIFICATION - ANADIGICS INC	exhibit31shields.htm
EX-32.2 - EXHIBIT 32.2 SHIELDS - ANADIGICS INC	exhibit32shields.htm
EX-10.13 - EXHIBIT 10.13 WHITE - ANADIGICS INC	exhibit1013white.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

/x/ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009.

Or

/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File No. 0-25662

ANADIGICS, Inc.
(Exact name of registrant as specified in its charter)

Delaware	22-2582106
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

141 Mt. Bethel Road, Warren, New Jersey	07059
(Address of principal executive offices)	(Zip Code)

(908) 668-5000
(Registrant's telephone number, including area code)

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

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

Common Stock, $0.01 par value

The above securities are registered on the NASDAQ Global Market

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes / / No / /

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one): Large accelerated filer / / Accelerated filer / X / Non-accelerated filer (Do not check if a smaller reporting company) / / Smaller reporting company / /

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

The aggregate market value of the voting common equity held by non-affiliates of the registrant as of July 4, 2009 was approximately $254 million, based upon the closing sales price of the registrant’s common equity as quoted on the NASDAQ Global Market on such date.

The number of shares outstanding of the registrant's common stock as of February 28, 2010 was 65,156,283 (excluding 114,574 shares held in treasury).

Documents incorporated by reference: Definitive proxy statement for the registrant’s 2010 annual meeting of shareholders (Part III).

TABLE OF CONTENTS


PART I
Item 1:	Business
Item 1A:	Risk Factors
Item 1B:	Unresolved Staff Comments
Item 2:	Properties
Item 3:	Legal Proceedings
Item 4:	Submission of Matters to a Vote of Security Holders

PART II
Item 5:	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6:	Selected Financial Data
Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A:	Quantitative and Qualitative Disclosures About Market Risk
Item 8:	Financial Statements and Supplementary Data
Item 9:	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A:	Controls and Procedures
Item 9B:	Other Information

PART III
Item 10:	Directors, Executive Officers and Corporate Governance
Item 11:	Executive Compensation
Item 12:	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13:	Certain Relationships and Related Transactions and Director Independence
Item 14:	Principal Accounting Fees and Services

PART IV
Item 15:	Exhibits, Financial Statement Schedules

PART I

ITEM 1. BUSINESS.

Overview

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

Our business strategy focuses on developing RF front end solutions for our customers and partnering with industry-leading wireless and wireline chipset providers to incorporate our solutions into their reference designs. Our integrated solutions enable our customers to improve RF performance, power efficiency, reliability, time-to-market and the integration of chip components into single packages, while reducing the size, weight and cost of their products.

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

We believe our business will benefit in the long-term from two key factors: (1) fast growth in the markets for 3G, 3.5G, 4G, WiFi and CATV products and (2) an increased dollar content of our solutions within the products in these end markets. We believe that the combination of these factors will enable us to outpace the overall end product unit growth in these broadband wireless and wireline communications markets. For example, additional PAs with higher performance levels and integration are required in 3G and 3.5G wireless handsets as compared to prior standards. The complexity of 3G, 3.5G and 4G designs coupled with our selection in several leading reference designs allows us to capitalize on the growth in the 3G, 3.5G and 4G markets. In the WiFi market, our business will benefit from both increasing shipments of WiFi-enabled handheld devices as well as the growing adoption of dual-band 802.11 a/b/g solutions and the 802.11 n MIMO standard, which commonly use multiple PAs with each chipset. We are positioning our CATV set-top box business to capitalize on the growth of home gateway products, which provide multi-function capabilities such as digital video recording (DVR), high definition television (HDTV) reception, multi-room access and Internet connectivity, by expanding our offering of active splitter products. In addition, we believe that the new generation of cable modems based on the Data Over Cable Service Interface Specification 3.0 (DOCSIS-3.0) standard will increase the addressable market for our upstream amplifiers. We anticipate that our new hybrid line amplifier products will expand our addressable share of the CATV infrastructure market and we further believe that our infrastructure business will continue to benefit from the adoption of 1 GHz CATV systems worldwide and from RF amplifiers being used in FTTP optical networks such as Verizon Communication Inc.’s (Verizon) FiOS.

We continue to focus on leveraging our technological advantages to remain a leading supplier of innovative semiconductor solutions for broadband wireless and wireline communications. We believe our patented InGaP-plus technology, which combines the bipolar technology of a PA (HBT PA) with the surface device technology of an RF active switch (pHEMT) on the same die, provides us with a competitive advantage in the marketplace. Additionally, we believe technologies such as High Efficiency at Low Power (HELP-TM, HELP2-TM and HELP3-TM, collectively HELP) power amplifiers provide our customers a competitive advantage by enabling their 3G, 3.5G and 4G devices to consume less battery power and deliver longer talk time than comparable products in their markets.

Our six-inch diameter Gallium Arsenide (GaAs) wafer fabrication facility (fab) located at our corporate headquarters in Warren, New Jersey, has been operational since 1999. During 2009, we announced a hybrid manufacturing strategy whereby we entered into a strategic foundry agreement with WIN Semiconductors to supplement our existing wafer fabrication capability and allows for additional and flexible capacity without the requisite capital investment.

Industry Background

Wireless 3 and 3.5 G Market

The number of wireless handsets designed for 3G and 4G standards like CDMA/EVDO, WCDMA/HSPA and LTE is expected to grow faster than the overall market as these standards become dominant over the next several years. According to Allied Business Intelligence (ABI), annual shipments of 3G and 4G handsets forecast to grow from 503 million units in 2009 to 883 million units by 2013, a 75% increase in four years. Shipments of 3G and 4G wireless modems and other mobile broadband data devices are forecast to grow even more rapidly, from 60 million units in 2009 to 239 million units in 2013, a four-fold increase in four years. As a qualified PA supplier to top-tier handset manufacturers such as Research in Motion (“RIM”), LG Electronics (“LGE”) and Samsung Electronics Co., Ltd we believe we are well positioned to benefit from the continuing transition to 3G and 4G technologies.

Traditionally, the chipset in a wireless handset required one or two power amplifiers. As wireless operators gained additional frequency licenses to deploy 3G and 4G networks, requirements for mobile devices that can operate in multiple bands has increased demand for power amplifiers in handsets, datacards and wireless modems. These wireless devices also require PAs with higher power and better linearity to meet more demanding performance specifications.

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

·	Deployment of 3G and 4G networks and services.

·	New subscriber additions in emerging markets.

·	New features and applications to drive replacements in established markets.

·	Convergence of voice, data and video services.

Wireless handsets and mobile data devices utilize a semiconductor chipset to enable communication with the network. Key components of a wireless semiconductor chipset include a baseband, transceiver and one or more power amplifiers (PAs). Each PA boosts the transmitter RF output to deliver enough signal power to enable connection with the radio access network for voice and data throughput. As additional features and functionality are incorporated into wireless handsets to leverage the higher network data rates to enable applications such as high speed data and streaming video services, increasing demands are placed on the handset battery, thereby reducing battery life. The high-performance PA is a critical component in the handset because it directly affects battery life and, consequently, available talk time. We believe our differentiated InGaP-plus process and design technologies such as HELP™ provide a competitive advantage by enabling us to provide PAs that consume less battery power and extend talk time.

In addition to wireless handsets and data cards, 3G and 3.5G capabilities are increasingly being embedded in notebook computers. We are a leading participant in this market through the use of our power amplifiers in Qualcomm reference designs, and in embedded wireless modules manufactured by leading providers to this growing market.

Wireless 4G

As a fourth-generation wireless standard, WiMAX continues to gain momentum worldwide, as commercial mobile broadband wireless services that use this technology continue to be introduced and gain subscribers. Clearwire Corporation is well on its way to providing nationwide service in the United States; UQ Communications Inc. plans to support service over all of Japan within three years; and successful service launches in Korea, Russia, Malaysia and Taiwan all indicate the growth potential of this technology. We currently ship WiMAX PAs to several customers, and believe that our relationships with leading WiMAX equipment and chipset vendors have positioned us to be one of the market-leading providers of WiMAX PAs in the world.

Long Term Evolution (LTE) is the 4G standard developed by the 3GPP consortium and supported by the Global mobile Suppliers Association (GSA), one of the largest wireless industry groups. A survey by the GSA in February 2010 identified 59 LTE network commitments in 28 countries, with 20 networks planning to begin commercial LTE service in 2010. The GSA expects additional operators to announce their LTE plans during 2010. According to the GSA, LTE is needed to accommodate the dramatic traffic growth anticipated for data, and to fully address the mass market. LTE will significantly boost network throughputs, reduce latency, improve spectrum and deliver operational efficiencies and performance; the next step in the user experience. ANADIGICS long-standing business relationships with key players in the LTE ecosystem makes us well-positioned to benefit from the developing demand for LTE-capable power amplifiers as more LTE networks are deployed.

Wireless Fidelity (WiFi)

The market for electronic devices with WiFi, or wireless LAN, networking capabilities continues to grow. ABI Research forecasts that shipments of WiFi-enabled devices will grow from 600 million units in 2009 to over 1.5 billion units in 2013, representing a 26% compounded annual growth rate over that period of time. WiFi functionality in notebook and netbook computers has become standard, and WiFi is now being embedded in other consumer electronic devices such as cameras, printers, audio devices, mobile phones, mobile internet devices and gaming consoles. Our WiFi power amplifier, front end module (FEM) and front end integrated circuit (FEIC) business stands to benefit from the following two market trends, in particular:

(i) With the advent of the 802.11n standard in 2007, WiFi products for mobile computing have expanded into MIMO architectures, which require multiple PAs per product. ABI estimates that in 2009 about 46% of all WiFi integrated circuits shipped conformed to the 802.11n standard, and forecasts that market share to reach 85% by 2013. This trend suggests that the growth rate of PA demand may significantly outpace that of WiFi products in general. We believe that in addition to an increase in demand for PAs, there will also be an increase in demand for FEMs or FEICs that include multiple PAs.

(ii) Annual shipments of WiFi-enabled cellular handsets and mobile internet devices are expected to grow from 142 million units in 2009 to 559 million units in 2013, according to ABI. We believe that a growing share of these devices will require dual-band operation, representing a significant opportunity for our new dual-band FEMs and FEICs. These products offer high levels of functional integration in small form factors which are necessary for handheld applications.

We continue to secure new RF front end sockets in next-generation reference designs from leading WiFi chipset providers for a wide range of applications. Taking into account the multiple-PA MIMO technology supported by the 802.11n standard and the demand for small, integrated products for handheld applications, we believe that our portfolio of differentiated products in these high-growth market areas will allow us to benefit from the prevailing WiFi market trends.

Cable Set-Top Box and Cable Modem Markets

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

As the cable modem market transitions to the new DOCSIS 3.0 standard, we believe it will provide additional opportunity for our upstream amplifier products. The DOCSIS 3.0 standard uses multiple channels simultaneously to provide wider bandwidth and higher data throughput than previous technologies, and we believe that we are well positioned to support this market opportunity.

CATV Infrastructure and FTTP

We are a leading supplier of 12V and 24V line amplifier radio frequency integrated circuit (RFIC) amplifiers and drop amplifiers to the CATV infrastructure market. This market shows continuing demand for equipment upgrades as a result of increasing CATV infrastructure bandwidth requirements, the need of cable service providers to offer converged voice, data and video services over their broadband networks, and the increased deployment of CATV fiber nodes. We are participating in these upgrades through our collaboration with industry leaders, and as a result of the rollout of digital cable in China and parts of Europe. We are also offering new line amplifier products in industry-standard packages that we believe will expand our addressable market. Historically, we have enjoyed long product life cycles in these markets. Additionally, we are providing optical network RF amplifiers in the FTTP market for use in systems such as Verizon’s FiOS, for which deployments continue throughout the U.S.

Our Strategy

Our objective is creating value through innovative RF and Mixed Signal solutions that enable instantaneous connectivity anytime, anywhere. The key elements of our strategy include:

Focus on the high-growth end markets of broadband wireless and wireline. We target the fastest-growing and most sophisticated segments of the wireless and wireline communications markets. These segments offer the largest growth opportunity and the greatest opportunity for semiconductor manufacturers to extract value.

Create innovative RF patented technology resulting in industry-leading products. Our longstanding reputation of innovation in process technology and design has resulted in best-in-class RF products. We consistently provide performance advantages that help our customers deliver differentiated products to market.

·	Work closely with industry-leading customers and partners. We strive to develop close working relationships with industry leaders in the wireless and broadband markets. These relationships give us insight into the most important specifications for next-generation products.

Build market share to improve economies of scale. Establishing our business as a leading technology enabler for the long-term involves responsible investment for future technologies supported by appropriate long-term return. Increased volumes are critical to semiconductor companies and consistent with long-term viability for our business.

·	Provide additional and flexible capacity through foundries. Leveraging third-party foundry capabilities to supplement our existing wafer fab, and expand our ability to grow scale while limiting costly further capital investment in manufacturing.

Focus on improving our financial model. We seek to increase our gross margins and profitability by focusing on those products and markets where we can achieve a strong market position by deploying our technological leadership. We intend to focus on supplying products in the following markets for this purpose: (1) 3G standards CDMA/EVDO, W-CDMA/HSPA and UMTS, (2) 4G standards LTE and WiMAX, (3) WiFi standards 802.11 a/b/g and 802.11 n, (4) CATV set-top boxes and cable modems, and (5) CATV and FTTP infrastructure amplifiers.

Products

We classify our revenues based upon the end application of the product in which our integrated circuits are used. For the years ended December 31, 2007, 2008 and 2009, wireless accounted for approximately 56%, 60% and 68% respectively, of our total net sales, while broadband accounted for approximately 44%, 40% and 32%, respectively, of our total net sales.

Wireless

Our Wireless product line includes power amplifier modules for CDMA/EVDO, GSM/EDGE, WCDMA/HSPA, LTE and other wireless technologies for mobile handsets and data devices. The following table describes our principal products for these applications:

Product	Application
Power Amplifier (PA)	Used in RF transmit chain of wireless handset, modem, datacard or embedded module to amplify uplink signal to base station.
HELP™ PA Module (multiple versions)	ANADIGICS proprietary High Efficiency at Low Power PA design reduces average PA power consumption as much as 75% in CDMA/EVDO and W-CDMA/HSPA devices.
ZeroIC™ PA Module	Unique InGaP PA design for specific Qualcomm CDMA/EVDO platforms includes switched RF path with zero current consumption to conserve battery life at lower power levels.
Multi-band PA Modules	Two or more PA’s in a single package enables device operation in multiple frequency bands at lower cost and with less board area compared to multiple single-band PA designs.

Broadband

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

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

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

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

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

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

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

Product	Application
WiMAX Products
Mobile WiMAX PAs	PA modules used for mobility applications.
Fixed Point WiMAX PAs	PA modules used for point-to-point Central Premises Equipment (CPE) applications.

Marketing, Sales, Distribution and Customer Support

We sell our products primarily to our direct customers worldwide and have developed close working relationships with leading companies in the broadband wireless and wireline communications markets. Additionally, we selectively use independent manufacturers’ representatives and distributors to complement our direct sales and customer support efforts. Our relationships with our distributors enable them to maintain local practices regarding inventories and payment terms while supporting our growth in Asian wireless and global broadband markets. Working with distributors like World Peace Group and Richardson Electronics, who have extensive sales networks, provides us access to tier-one customers in these markets. We believe this is critical to our objective of expanding our customer base, especially as we expand our product portfolio.

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

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

Process Technology, Manufacturing, Assembly and Testing

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

Manufacturing

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

During 2009, we announced a hybrid manufacturing strategy whereby we entered into a strategic foundry agreement with WIN Semiconductors to supplement our existing wafer fabrication capability and allow for additional and flexible capacity without the requisite capital investment. We have begun developing certain new products that will use this additional production and process capability.

Assembly

Fabricated GaAs wafers are shipped to contractors in Asia for packaging. Certain processes cannot be easily or economically integrated onto a single die, and consequently multi-chip modules that combine multiple die within a single package are now required, enabling the selection of the optimal process technology for each IC within the package. This provides enhanced integration at the sub-system level and these solutions generate significant size reductions in wireless handset component circuitry.

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

Final Test

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

Raw Materials

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

Research and Development

We have made significant investments in our proprietary processes, including product design, packaging and wafer fabrication, which we believe gives us a competitive advantage. Research and development expenses were $46.5 million, $54.5 million and $46.0 million in 2007, 2008 and 2009, respectively. We continue to focus our research and development on advanced PAs and front end modules for 3, 3.5 and 4 G wireless markets, and on active splitters, WiFi PAs and Front-End ICs, WiMAX PAs, CATV infrastructure amplifiers and FTTP amplifiers in the broadband market.

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

Customers

Sales to LGE and RIM accounted for 15% and 14%, respectively, of total net sales during 2009. No other customer accounted for 10% or more of total net sales during 2009. See “Risk Factors—We depend on a small number of customers; a loss of or a decrease in purchases and/or change in purchasing patterns by one of these customers could materially and adversely affect our revenues and our ability to forecast revenue.”

Employees

As of December 31, 2009, we had 564 employees.

Competition

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

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

Patents, Licenses and Proprietary Rights

It is our practice to seek U.S. patent and copyright protection on our products and developments where appropriate and to protect our valuable technology under U.S. laws affording protection for trade secrets and for semiconductor chip designs. We own 70 U.S. patents and have 9 pending U.S. patent applications. The U.S. patents were issued between 1991 and 2009 and will expire between 2010 and 2027.

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

Environmental Matters

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

Available Information

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

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

ITEM 1A. RISK FACTORS

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

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

Risks Related to ANADIGICS

We have experienced losses in the past, and expect to continue to incur losses.

We have incurred substantial operating and net losses in the past. While we had positive operating results during calendar year 2007, we had a net loss in calendar years 2008 and 2009 as a result of the general economic downturn, market factors beyond our control and a loss in market share, and we expect to continue to incur losses in 2010. Additionally, we compete in an industry with limited visibility into customers’ forecasts beyond just a few quarters. If economic conditions worsen or there is an abrupt change in our customers’ businesses or markets, our business, financial condition and results of operations will likely be materially and adversely affected.

Unfavorable general economic conditions in individual or world markets could negatively impact our financial performance.

Unfavorable general economic conditions, such as a recession or economic slowdown in the United States or in one or more of our other major markets, could negatively affect the demand for some of our products. Our customer base includes OEMs that are reliant on consumer demand. Consumers may seek to reduce discretionary spending, which can soften demand for our customers’ products and can negatively affect our financial performance.

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

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

Our results of operations also may be subject to significant quarterly and annual fluctuations. These fluctuations are due to a number of factors, many of which are beyond our control, including, among others: (i) changes in end-user demand for the products manufactured and sold by our customers; (ii) the effects of competitive pricing pressures, including decreases in average selling prices of our products; (iii) industry production capacity levels and fluctuations in industry manufacturing yields; (iv) levels of inventory in our end markets; (v) availability and cost of products from our suppliers; (vi) the gain or loss of significant customers; (vii) our ability to develop, introduce and market new products and technologies on a timely basis; (viii) new product and technology introductions by competitors; (ix) changes in the mix of products produced and sold; (x) market acceptance of our products and our customers; and (xi) intellectual property disputes.

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

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

In calendar years 2007 and 2008 we increased capacity in our manufacturing facility in order to attempt to meet customer demands. At present, we are underutilizing this facility, resulting in excess capacity. This excess capacity means we incur higher fixed costs for our products relative to the revenues we generate. Because large portions of our manufacturing costs are relatively fixed, our manufacturing volumes are critical to our operating results. If we fail to achieve acceptable manufacturing volumes or experience product shipment delays, our results of operations could be harmed. During periods of decreased demand, our high fixed manufacturing costs negatively affect our results of operations. We base our expense levels in part on our expectations of future orders and these expense levels are predominantly fixed. If we receive fewer customer orders than expected or if our customers delay or cancel orders, we may not be able to reduce our manufacturing costs, which would have an adverse effect on our results of operations. If we are unable to improve utilization levels and correctly manage capacity, the increased expense levels relative to revenue will have an adverse effect on our business, financial condition and results of operations.

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

We receive a significant portion of our revenues from a few significant customers and their subcontractors. Sales to LGE and RIM accounted for 15% and 14%, respectively, of total net sales during 2009. Sales to our greater than 10% customers have approximated or exceeded 30% of total net sales in each of the last three fiscal years. Our financial condition and results of operations have been materially and adversely affected in the past by the failure of anticipated orders to be realized and by deferrals or cancellations of orders as a result of changes in customer requirements. If we were to lose any of our major customers, or if sales to these customers were to decrease materially, our financial condition and results of operations could be materially and adversely affected.

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

The markets for our products are intensely competitive and are characterized by rapid technological change. We compete with U.S. and international semiconductor and integrated circuit (IC) manufacturers of all sizes, some of whom have significantly greater financial, technical, manufacturing and marketing resources than we do. We currently face significant competition in our markets and expect that intense price and product competition will continue. This competition has resulted in, and is expected to continue to result in, declining average selling prices for our products and increased challenges in maintaining or increasing market share. We believe that the principal competitive factors for suppliers in our markets include, among others: (i) time-to-market; (ii) timely new product innovation; (iii) product quality, reliability and performance; (iv) product price; (v) features available in products; (vi) compliance with industry standards; (vii) strategic relationships with leading reference design providers and customers; and (viii) access to and protection of intellectual property.

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

Current and potential competitors have established, or may in the future establish, financial or strategic relationships among themselves or with customers, distributors, reference design providers or other third parties with whom we have or may in the future have relationships. If our competitors are able to strengthen existing, or establish new, relationships with these third parties they may rapidly acquire market share at our expense, which occurred to some extent in 2008 when we were unable to fully meet customer demand due to capacity constraints. We cannot assure you that we will be able to compete successfully against current and potential competitors. Increased competition could result in pricing pressures, decreased gross margins and loss of market share and may materially and adversely affect our financial condition and results of operations.

We have implemented restructuring programs in the past and may need to in future.

We implemented cost restructuring programs in late 2008 and early 2009, and have implemented other restructuring programs in our history. Such restructuring programs are costly to implement and may inadequately address the operating environment. No assurance can be given that the implementation of cost reduction programs will generate the anticipated cost savings and other benefits or that future or additional measures may be required. We could incorrectly anticipate the extent and term of the market decline and weakness for our products and services and we may be forced to restructure further or may incur future operating charges due to poor business conditions.

We face risks from failures in our manufacturing processes and the processes of our vendors.

The fabrication of integrated circuits, particularly those made of GaAs, is a highly complex and precise process. Our integrated circuits are primarily manufactured on wafers made of GaAs requiring multiple process steps. It requires production in a highly controlled, clean environment. Minor impurities, contamination of the clean room environment, errors in any step of the fabrication process, defects in the masks used to print circuits on a wafer, defects in equipment or materials, downtime on equipment, human error, interruptions in electrical supply or a number of other factors can cause a substantial interruption in our manufacturing processes. Moreover, our manufacturing process is subject to fluctuations in our demand and fab utilization. In an environment of increasing manufacturing output and personnel to satisfy increasing demand, we may incur manufacturing disruptions limiting supply to customers.

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

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

We also depend on certain vendors for components, equipment and services. We maintain stringent policies regarding qualification of these vendors. However, if these vendors’ processes vary in reliability or quality, they could negatively affect our products, and thereby, our results of operations.

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

We do not assemble or test all of our integrated circuits or multi-chip modules. Instead, we provide the integrated circuit die and, in some cases, packaging and other components to assembly and test vendors located primarily in Asia. Our products contain numerous component parts, substrates and silicon-based products, obtained from external suppliers. The use of external suppliers involves a number of risks, including the possibility of material disruptions in the supply of key components and the lack of control over delivery schedules, capacity constraints, manufacturing yields, quality, fabrication costs, warranty issues and protection of intellectual property. Further, we are dependent upon a few foreign semiconductor assembly and test subcontractors. If these vendors’ processes vary in reliability or quality, they could negatively affect our products and, therefore, our results of operations. If we are unable to obtain sufficient high quality and timely component parts, assembly or test service, if we experience delays in transferring or requalifying our production between suppliers, assembly or test locations or if means of transportation to or from these locations are interrupted, we would experience increased costs, delays or reductions in product shipment, and/or reduced product yields, which could materially and adversely affect our financial condition and results of operations.

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

We do not manufacture any of the starting wafers, packaging or passive components used in the production of our gallium arsenide integrated circuits. While we do not typically rely on a single source of supply for our raw materials, we are currently dependent on a sole-source supplier for certain epitaxial wafers used in the gallium arsenide semiconductor manufacturing processes at our manufacturing facility. If we were to lose this sole source of supply, for any reason, a material adverse effect on our business could result until an alternate source is obtained. Packaging and passive components are available from a limited number of sources. To the extent that we are unable to obtain these packaging or passive components in the required quantities, as has occurred from time to time in the past, we could experience delays or reductions in product shipments, which could materially and adversely affect our financial condition and results of operations.

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

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

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

Regardless of the process technology used, the fabrication of integrated circuits is a highly complex and precise process. Problems in the fabrication process can cause a substantial percentage of wafers to be rejected or numerous integrated circuits on each wafer to be nonfunctional, thereby reducing yields. These difficulties can include: (i) defects in masks, which are used to transfer circuit patterns onto our wafers; (ii) impurities in the materials used; (iii) operator errors; (iv) contamination of the manufacturing environment; (v) equipment failure; and (vi) interruptions in electrical supply.

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

Our products may experience significant declines in unit prices.

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

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

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

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

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

If our products fail to perform or meet customer requirements, we could incur significant additional costs.

The fabrication of integrated circuits from substrate materials and the modules containing these components is a highly complex and precise process. Our customers specify quality, performance and reliability standards that we must meet. If our products do not meet these standards, we may be required to rework or replace the products. Our products may contain undetected defects or failures that only become evident after we commence volume shipments, which we may experience from time to time. Other defects or failures may also occur in the future. If such failures or defects occur, we could: (i) lose revenues; (ii) incur increased costs such as warranty expense and costs associated with customer support; (iii) experience delays, cancellations or rescheduling of orders for our products; or (iv) experience increased product returns or discounts.

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

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

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

In the future, we may need to access sources of financing to fund our growth. Taking into consideration our cash balance as of December 31, 2009, including marketable securities, of $92.5 million, we believe that our existing sources of liquidity will be sufficient to fund our research and development, capital expenditures, working capital requirements, interest and other financing requirements for at least the next twelve months.

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

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

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

We maintain investments in financial instruments including corporate debt obligations, auction rate securities, certificates of deposit and government-related obligations, which included $6.6 million carrying value of auction rate securities at December 31, 2009. These investments must be supported by actively trading financial markets in order to be liquid investments. Financial markets can temporarily or permanently have an imbalance of buyers and sellers that can impact valuations and liquidity. Auction rate markets have experienced imbalances since late 2007 and may continue to be imbalanced. Such imbalances could negatively impact the fair value of our investments, requiring a charge against income as occurred in 2007, 2008 and 2009, our access to cash and the liquidity of our marketable securities. We can not assure you that our marketable securities could be sold for their carrying value or in our required time frame to support our intermediate term cashflow and liquidity needs.

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

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

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

Sales to customers located outside the United States (based on shipping addresses and not on the locations of ultimate end users) accounted for 95%, 94% and 93% of our net sales for the years ended December 31, 2007, 2008 and 2009, respectively. We expect that international sales will continue to represent a significant portion of our net sales. In addition, independent third parties located in Asia supply a substantial portion of the starting wafers and packaging components that we use in the production of gallium arsenide integrated circuits, and assemble and test nearly all of our products.

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

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

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

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

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

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

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

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

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

The trading price of our common stock has and may continue to fluctuate significantly. Such fluctuations may be influenced by many factors, including: (i) our operating results and prospects; (ii) the operating results and prospects of our major customers; (iii) announcements by our competitors; (iv) the depth and liquidity of the market for our common stock; (v) investor perception of us and the industry in which we operate; (vi) changes in our earnings estimates or buy/sell recommendations by analysts covering our stock; (vii) general financial and other market conditions; and (viii) domestic and international economic conditions.

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

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

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

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

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

We and certain of our officers and directors are defendants in litigation and the outcome of these lawsuits may, to the extent not covered by insurance, negatively affect our financial condition, results of operations and cash flows.

Since late 2008, the Company and certain of its former and current officers and/or directors have been parties to a now consolidated putative securities class action lawsuit pending in the United States District Court for the District of New Jersey. This lawsuit alleges federal securities fraud claims and seeks unspecified damages arising out of the alleged non-disclosure of information concerning, among other things, manufacturing inefficiencies and customer demand. The alleged class period runs from July 24, 2007 through August 7, 2008. In early 2009, two shareholders’ derivative lawsuits were filed in New Jersey Superior Court against the Company, as a nominal defendant, and certain of its current and former directors, alleging state law claims and seeking unspecified damages arising out of the same events at issue in the putative class action lawsuits. Neither the putative class action lawsuits nor the shareholders’ derivative lawsuits have yet advanced beyond the preliminary procedural stages. (See “Item 3. Legal Proceedings” for additional details on these cases and related matters.)

At this time, we cannot predict the probable outcome of these lawsuits. The pendency of these lawsuits, and any others that might subsequently be filed against us, could divert the attention of management from our business, harm our reputation and otherwise have a negative effect on our financial condition, results of operations and cash flows. Any adverse outcome in any one of these lawsuits may, to the extent not reimbursed by insurance, have a negative effect on our financial condition, results of operations and cash flows.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES.

Our executive offices and primary fabrication facility are located at 141 Mt. Bethel Road, Warren, New Jersey 07059. We currently lease space in several buildings in Warren, New Jersey, located within the industrial complex. Approximately 150,000 square feet of manufacturing and office space is occupied in a building located at 141 Mt. Bethel Road in Warren, New Jersey under a twenty-year lease expiring on December 31, 2016. We occupy another 25,000 square feet of office space in a nearby building under a three-year lease expiring on October 31, 2010.

We also lease approximately 40,800 square feet in aggregate of office space in the following locations: Atlanta, Georgia; Tyngsboro, Massachusetts; Richardson, Texas; Taipei, Taiwan; Aalborg, Denmark; China; South Korea; and Japan under lease agreements with remaining terms ranging from four to thirty six months that can be extended, at our option.

ITEM 3. LEGAL PROCEEDINGS.

On or about November 11, 2008, plaintiff Charlie Attias filed a putative securities class action lawsuit in the United States District Court for the District of New Jersey, captioned Charlie Attias v. Anadigics, Inc., et al., No. 3:08-cv-05572, and, on or about November 21, 2008, plaintiff Paul Kuznetz filed a related class action lawsuit in the same court, captioned Paul J. Kuznetz v. Anadigics, Inc., et al., No. 3:08-cv-05750 (jointly, the "Class Actions"). The Complaints in the Class Actions, which were consolidated under the caption In re Anadigics, Inc. Securities Litigation, No. 3:08-cv-05572, by an Order of the District Court dated November 24, 2008, seek unspecified damages for alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5 promulgated thereunder, in connection with alleged misrepresentations and omissions in connection with, among other things, Anadigics's manufacturing capabilities and the demand for its products. On October 23, 2009, plaintiffs filed a Consolidated Amended Class Action Complaint, which names the Company, a current officer and a former officer-director, and alleges a proposed class period that runs from July 24, 2007 through August 7, 2008. On December 23, 2009, defendants filed a motion to dismiss the Amended Complaint. The motion is scheduled to be fully briefed by the parties on or before March 30, 2010.

On or about January 14, 2009, a shareholder's derivative lawsuit, captioned Sicari v. Anadigics, Inc., et al., No. SOM-L-88-09, was filed in the Superior Court of New Jersey, and, on or about February 2, 2009, a related shareholder's derivative lawsuit, captioned Moradzadeh v. Anadigics, Inc., et al., No. SOM-L-198-09, was filed in the same court (jointly, the "Derivative Lawsuits"). The Derivative Lawsuits seek unspecified damages for alleged state law claims against certain of the Company's current and former directors arising out of the matters at issue in the Class Actions. By Order dated March 6, 2009, the New Jersey Superior Court consolidated the Derivative Lawsuits under the caption In re Anadigics, Inc. Derivative Litigation, No. SOM-L-88-09. By Order dated March 27, 2009, the court stayed the Derivative Lawsuits pending disposition of the defendants' motion to dismiss the Amended Complaint in the Class Actions.

Because the Class Actions and the Derivative Lawsuits, which are in a preliminary stage, do not specify alleged monetary damages, we are unable to reasonably estimate a possible range of loss, if any, to the Company in connection therewith.

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

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

No matters were submitted to a vote of the Company’s security holders during the fourth quarter of 2009.

PART II

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

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

	High		Low
Calendar 2009
Fourth Quarter	$	4.93	$	2.86
Third Quarter		5.21		3.38
Second Quarter		4.59		1.98
First Quarter		2.51		1.43

Calendar 2008
Fourth Quarter	$	2.96	$	1.13
Third Quarter		10.53		2.88
Second Quarter		13.95		6.52
First Quarter		11.59		5.85

As of December 31, 2009, there were 64,398,029 shares of Common Stock outstanding (excluding shares held in Treasury) and 685 holders of record of the Common Stock.

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

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

ITEM 6. SELECTED FINANCIAL DATA.

The selected financial data set forth below should be read in conjunction with Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", and our financial statements, related notes and other financial information included herein. The selected consolidated financial data set forth below as of December 31, 2008 and 2009 and for the years ended December 31, 2007, 2008 and 2009 have been derived from our audited financial statements included herein. The selected consolidated financial data set forth below as of December 31, 2005, 2006 and 2007 and for the years ended December 31, 2005 and 2006 have been derived from our audited financial statements, as adjusted for discontinued operations, that are not included herein or incorporated by reference herein. Our historical results are not necessarily indicative of the results that may be expected for any future period.

(amounts in thousands, except for per share amounts)	2005			2006			2007		2008			2009
RESULTS OF OPERATIONS
Net sales	$	103,871		$	166,442		$	230,556	$	258,170		$	140,484
Gross profit		21,736			50,231			78,788		78,587			20,158
Operating (loss) income from continuing operations		(27,950	)		(8,483	)		2,078		(38,267	)		(55,323	)
(Loss) income before income taxes		(30,466	)		(7,870	)		6,916		(41,872	)		(57,404	)
Benefit from income taxes		-			-			-		-			(321	)
Net (loss) income from continuing operations		(30,466	)		(7,870	)		6,916		(41,872	)		(57,083	)

(Loss) earnings per share from continuing operations:
Basic	$	(0.90	)	$	(0.18	)	$	0.13	$	(0.70	)	$	(0.92	)
Diluted	$	(0.90	)	$	(0.18	)	$	0.12	$	(0.70	)	$	(0.92	)

BALANCE SHEET DATA:
Total cash and marketable securities	$	86,357		$	83,482		$	176,812	$	145,724		$	92,526
Total assets		168,273			182,602			333,461		303,777			214,452
Total capital lease obligations		2,032			1,775			-		-			-
Current portion of long-term debt		46,700			-			-		38,000			-
Long-term debt		38,000			38,000			38,000		-			-
Total stockholders’ equity		58,135			115,760			250,106		230,008			189,058

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

OVERVIEW

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

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

Our six-inch diameter GaAs fab located at our corporate headquarters in Warren, New Jersey, has been operational since 1999. During 2009, we announced a hybrid manufacturing strategy whereby we entered into a strategic foundry agreement with WIN Semiconductors to supplement our existing wafer fabrication capability and allow for additional and flexible capacity without the requisite capital investment.

Our annual revenues declined from 2008, as a result of a combination of a reduction in market share with certain customers and an industry slowdown due to the current macroeconomic environment. Although our annual revenue declined in 2009, we experienced sequential growth in quarterly revenue commencing with the second quarter of 2009.

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

We have only one reportable segment. For financial information related to such segment and certain geographic areas, see Note 4 to the accompanying consolidated financial statements.

CRITICAL ACCOUNTING POLICIES & SIGNIFICANT ESTIMATES

GENERAL

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

REVENUE RECOGNITION

Revenue from product sales is recognized when title to the products is transferred to the customer, which occurs upon shipment or delivery, depending upon the terms of the sales order. We sell to certain distributors who are granted limited contractual rights of return and exchange and certain pre-negotiated individual product-customer price protection. Revenue from sales of our products to distributors is recognized, net of allowances, upon shipment of the products to the distributors. At the time of shipment, title transfers to the distributors and payment from the distributors is due on our standard commercial terms; payment terms are not contingent upon resale of the products. Revenue is appropriately reduced for the portion of shipments subject to return, exchange or price protection. Allowances for the distributors are recorded upon shipment and calculated based on the distributors’ indicated intent, historical data, current economic conditions and contractual terms. We believe we can reasonably and reliably estimate allowances for credits to distributors in a timely manner. We charge customers for the costs of certain contractually-committed inventories that remain at the end of a product's life. Such amounts are recognized as cancellation revenue when cash is received. The value of the inventory related to cancellation revenue may, in some instances, have been reserved during prior periods in accordance with our inventory obsolescence policy.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

WARRANTY COSTS

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

STOCK-BASED COMPENSATION

We account for stock-based compensation costs in accordance with Accounting Standards Codification (ASC) 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense for all stock-based payment awards made to our employees and directors. Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period which in most cases is the vesting period. Determining the fair value of certain awards at the grant date requires considerable judgment, including estimating expected volatility, expected term and risk-free interest rate. Our expected volatility is based on historical and implied volatility. The expected term of the stock options is based on several factors including historical observations of employee exercise patterns and expectations of employee exercise behavior in the future giving consideration to the contractual terms of the stock-based awards. The risk free interest rate assumption is based on the yield at the time of grant of a U.S. Treasury security with an equivalent remaining term. If factors change and we employ different assumptions, stock-based compensation expense may differ significantly from what we have recorded in the past.

MARKETABLE SECURITIES

Available-for-sale securities are stated at fair value, as determined by quoted market prices or, as needed, independent valuation models, with unrealized gains and losses reported in other accumulated comprehensive income or loss. Independent valuations developed to estimate the fair value of illiquid auction rate securities (ARS) were determined using a combination of two calculations: (1) a discounted cash flow model, where the expected cash flows of the ARS are discounted to the present value using a yield that incorporates compensation for illiquidity, and (2) a market comparables method, where the ARS are valued based on indications, from the secondary market, of what discounts buyers demand when purchasing similar ARS. The valuations include numerous assumptions such as assessments of the underlying structure of each security, expected cash flows, discount rates, credit ratings, workout periods and overall capital market liquidity. We review our investments on an ongoing basis for indications of possible impairment, and if an impairment is identified, we determine whether the impairment is temporary or other-than-temporary, in which case it is recorded as a charge to income. Determination of whether the impairment is temporary or other-than-temporary requires significant judgment. Unrealized losses are recognized in our consolidated statement of operations when a decline in fair value is determined to be other than temporary. The primary factors we consider in classifying the impairment are the extent to which and period of time that the fair value of each investment has declined below its cost basis.

INVENTORY

Inventories are valued at the lower of cost or market ("LCM"), using the first-in, first-out method. We capitalize production overhead costs to inventory on the basis of normal capacity of the production facility and in periods of abnormally low utilization we charge the related expenses as a period cost in the statement of operations. In addition to LCM limitations, we reserve against inventory items for estimated obsolescence or unmarketable inventory. The reserve for excess and obsolete inventory is primarily based upon forecasted short-term demand for the product. Once established, these write-downs are considered permanent adjustments to the cost basis of the excess inventory. If actual demand and market conditions are less favorable than those projected by management, additional inventory write-downs may be required. In the event we sell inventory that had been covered by a specific inventory reserve, the sale is recorded at the actual selling price and the related cost of goods sold at the full inventory cost, net of the reserve.

LONG-LIVED ASSETS

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

We assess the impairment of long-lived assets, including intangible assets, whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Factors which could trigger an impairment review include the following: significant changes in the manner of use of the assets; significant underperformance relative to historical or projected future operating results; or significant negative industry or economic trends. An impairment occurs when the future undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of such assets. Cash flow estimates are based on historical results adjusted to reflect management’s best estimate of future market and operating conditions. The net carrying values of assets not recoverable through future cash flows are reduced to fair value. Estimates of fair value represent management’s best estimates based on industry trends, and market rates and transactions. In connection with completing step two of our goodwill impairment analysis during the fourth quarter of 2008, we assessed the fair values of our related intangible assets, consisting principally of assembled workforce related to the WiFi reporting unit and expensed such value as an impairment charge in the statement of operations.

During the fourth quarter of 2008, we evaluated our future options with regard to our investment in constructing a wafer fabrication facility in Kunshan China and subsequently estimated and evaluated future cashflows associated with this investment. Such estimates included significant assumptions on possible recoveries through a sale of the facility, further investment, and a return in demand for production capacity and discount rate. After evaluating the discounted cash flows, we fully impaired the investment and charged such amounts within restructuring and impairment charges in our statement of operations.

Long-lived assets held for sale are reported at the lower of cost or fair value less costs to sell. Management considers sensitivities to capacity, utilization and technological developments in making its assumptions of fair value.

DEFERRED TAXES

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

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

RESULTS OF OPERATIONS

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

	2007			2008			2009

Net sales		100.0	%		100.0	%		100.0	%
Cost of sales		65.8			69.6			85.7

Gross profit		34.2			30.4			14.3
Research and development expense		20.2			21.1			32.7
Selling and administrative expenses		13.1			15.9			19.2
Restructuring and impairment charges		-			8.2			1.8

Operating (loss) income		0.9	%		(14.8	%)		(39.4	%)
Interest income		3.5			2.0			0.8
Interest expense		(1.1	)		(0.9	)		(1.3	)
Other expense		(0.3	)		(2.5	)		(0.9	)

Income (loss) from continuing operations before income taxes		3.0	%		(16.2	%)		(40.8	%)
Benefit from income taxes		-			-			(0.2	)

Income (loss) from continuing operations		3.0	%		(16.2	%)		(40.6	%)
Loss from discontinued operations		(0.4	%)		-			-
Net income (loss)		2.6	%		(16.2	%)		(40.6	%)

2009 COMPARED TO 2008

NET SALES. Net sales for the year ended December 31, 2009 decreased 45.6% to $140.5 million, compared to net sales for the year ended December 31, 2008 of $258.2 million. The net sales decline resulted from a combination of a reduction in market share with certain customers and an industry slowdown due to the unfavorable macroeconomic environment.

Net sales for the year ended December 31, 2009 of the Company’s wireless products decreased 38.0% to $96.0 million compared to net sales for the year ended December 31, 2008 of $154.7 million. The decrease in sales was primarily due to decreased demand in both the CDMA and EDGE/WEDGE cellular device markets resulting from a reduction in market share with certain customers and an industry slowdown due to the unfavorable macroeconomic environment.

Net sales for the year ended December 31, 2009 of the Company’s broadband products decreased 57.0% to $44.5 million compared to net sales for the year ended December 31, 2008 of $103.5 million. The decrease in sales was primarily due to decreased demand for WLAN PAs shipped into the PC Notebook market resulting from the combination of a reduction in market share with one of our key customers and general softness in demand for WLAN PAs that has occurred due to the unfavorable macroeconomic environment. To a lesser degree, decreased demand in the set top box and cable infrastructure markets contributed to the lower sales for the year ended December 31, 2009.

GROSS MARGIN. Gross margin for 2009 declined to 14.3% of net sales, compared with 30.4% of net sales in the prior year. Gross margin for 2009 included charges of $5.3 million, representing 3.8% of revenue, arising from a settlement of a commercial dispute with a customer and certain inventory reserve charges. Gross margin for 2008 included charges of $7.1 million, representing 2.7% of revenue, associated with production equipment purchase cancelation charges, equipment impairment charges and inventory reserve charges, which the Company considered an anomaly of the period. After considering the charges outlined above, the decrease in gross margin were primarily due to lower product shipments and wafer production, and fixed production costs increasing as a percent of lower revenues. Fixed production costs include, but are not limited to depreciation, maintenance and operations’ support functions.

RESEARCH & DEVELOPMENT. Company-sponsored research and development (R&D) expenses decreased 15.6% during 2009 to $46.0 million from $54.5 million during 2008. The decrease was primarily due to decreased headcount and related materials used in our R&D product and process development following workforce reductions in late 2008 and early 2009.

SELLING AND ADMINISTRATIVE. Selling and administrative expenses decreased 34.5% during 2009 to $26.9 million from $41.1 million in 2008. In 2008, selling and administrative expenses included $5.7 million associated with the departure of our former Chief Executive Officer, including $2.2 million of stock-based compensation upon accelerated vesting of certain equity awards. The remaining decrease in 2009 was primarily driven by lower headcount and operating expenses following workforce reductions in late 2008 and early 2009.

RESTRUCTURING AND IMPAIRMENT CHARGES. During the first quarter of 2009 we implemented workforce reductions, which eliminated approximately 110 positions, resulting in a restructuring charge of $2.6 million principally for severance and related benefits. During the fourth quarter of 2008, we implemented workforce reductions which eliminated approximately 100 positions resulting in a restructuring charge of $2.1 million, principally for severance and related benefits.

During the fourth quarter of 2008, we evaluated alternatives with regard to our investment in the construction of a wafer fabrication facility in Kunshan China in light of surplus industry production capacity, reduced demand experienced by the Company, as well as the broader macroeconomic environment. We determined that the carrying amount of the China fabrication building was not recoverable as the carrying amount was greater than the sum of the undiscounted cash flows expected from the use and disposition of these assets. As a result of this impairment analysis, we recorded a full $13.0 million impairment charge in the fourth quarter of 2008.

In 2008, our annual goodwill impairment test determined that the fair value of the WiFi reporting unit was less than the carrying value of the net assets of the reporting unit, and thus we performed step two of the impairment test. Our step two analysis resulted in no implied fair value of goodwill and therefore, we recognized an impairment charge of $5.9 million in the fourth quarter of 2008, representing a write off of the entire amount of our previously recorded goodwill. In connection with our goodwill impairment analysis, we also assessed the fair values of our related intangible assets, which carried an unamortized value of $0.3 million consisting principally of assembled workforce related to the WiFi reporting unit noting it was similarly impaired and charged the remaining unamortized carrying value to restructuring and impairment charges.

INTEREST INCOME. Interest income decreased 78.4% to $1.1 million during 2009 from $5.3 million in 2008. The decrease was primarily due to lower interest rates, as we maintained liquidity in Government-backed investments, and were compounded by lower average funds invested.

INTEREST EXPENSE. Interest expense decreased 19.8% to $1.9 million in 2009 compared to $2.4 million in 2008. The interest expense principally arose from obligations under our 5% Convertible Senior Notes due in October 2009 (“2009 Notes”) which matured on October 15, 2009.

OTHER INCOME (EXPENSE). Other income (expense) primarily results from valuation activity in marketable securities we hold. Other expense is primarily comprised of other-than-temporary declines in value on certain auction rate securities and a corporate debt security held by the Company of $1.5 million and $6.8 million in 2009 and 2008, respectively. The aforementioned other-than-temporary declines were net of $0.2 million and $0.4 million of income recorded on par value redemption recoveries in 2009 and 2008, respectively.

BENEFIT FROM INCOME TAXES. The Housing and Economic Recovery Act of 2008 included the partial refund of certain carried-forward Research and Experimental (R&E) tax credits. During the third quarter of 2009, the Company finalized and filed the R&E claim as part of its 2008 Federal tax return and subsequently received cash of $0.3 million for the R&E credits. Such refund was recorded as a benefit from income taxes.

2008 COMPARED TO 2007

NET SALES. Net sales for the year ended December 31, 2008 increased 12.0% to $258.2 million, compared to net sales for the year ended December 31, 2007 of $230.6 million. The net sales improvement was primarily due to increased demand for wireless third generation technologies (or 3G), most significantly WCDMA.

Net sales for the year ended December 31, 2008 for the Company’s wireless products increased 19.9% to $154.7 million compared to net sales for the year ended December 31, 2007 of $129.0 million. The net sales improvement was primarily due to increased demand for power amplifiers for 3G applications of $34.7 million or 29.1%, most significantly in WCDMA applications. The growth in 3G was partially offset by lower net sales in power amplifiers for GSM of $9.1 million or 91.5%, which resulted from the Company’s shift in market focus to 3G technologies.

Net sales for the year ended December 31, 2008 for the Company’s broadband products increased to $103.5 million or 2.0% compared to net sales for the year ended December 31, 2007 of $101.5 million. The net sales improvement was due to increased demand for integrated circuits used in cable set-top boxes of $10.2 million or 55.4% partly offset by a decline in cable infrastructure and WiFi applications of $8.2 million or 9.9%.

GROSS MARGIN. Gross margin for 2008 declined to 30.4% of net sales, compared with 34.2% of net sales in the prior year. The decline in gross margin was impacted by $7.1 million in charges principally comprised of production equipment purchase cancelation charges of $1.9 million, impairment charges on equipment held for sale of $1.5 million and $3.5 million of inventory reserve charges on dedicated inventory which was surplus to reduced customer demand. In addition, depreciation expense increased by $5.4 million, which was partially offset by improvements in product mix.

RESEARCH & DEVELOPMENT. Company sponsored research and development expenses increased 17.0% during 2008 to $54.5 million from $46.5 million during 2007. The increase was primarily due to an expansion and focus in research and development efforts on new product development, requiring increased staffing and support costs, including automated design tools. In addition, our purchase of the RF group from Fairchild Semiconductor on September 5, 2007 which further added to our new product development capability, impacted the year on year comparison in the amount of $2.9 million, such amount was primarily comprised of staffing-related costs.

SELLING AND ADMINISTRATIVE. Selling and administrative expenses increased 36.2% during 2008 to $41.1 million from $30.2 million in 2007. The increase included $5.7 million associated with the departure of our former Chief Executive Officer, including $2.2 million of stock-based compensation upon accelerated vesting of certain equity awards. The remaining increase was primarily driven by increased staff and outside advisors costs.

RESTRUCTURING AND IMPAIRMENT CHARGES. During the fourth quarter of 2008, we implemented a workforce reduction which eliminated approximately 100 positions resulting in a restructuring charge of $2.1 million, principally for severance and related benefits.

Our annual goodwill impairment test determined that the fair value of the WiFi reporting unit was less than the carrying value of the net assets of the reporting unit, and thus we performed step two of the impairment test. Our step two analysis resulted in no implied fair value of goodwill and therefore, we recognized an impairment charge of $5.9 million in the fourth quarter of 2008, representing a write off of the entire amount of our previously recorded goodwill. In connection with our goodwill impairment analysis, we also assessed the fair values of our related intangible assets, which carried an unamortized value of $0.3 million consisting principally of assembled workforce related to the WiFi reporting unit noting it was similarly impaired and charged the remaining unamortized carrying value to restructuring and impairment charges.

INTEREST INCOME. Interest income decreased 34.6% to $5.3 million during 2008 from $8.0 million in 2007. The decrease was primarily due to lower interest rates globally as we reinvested funds and concentrated our investments in shorter-term vehicles which carried federal deposit insurance.

INTEREST EXPENSE. Interest expense was essentially flat at $2.4 million in 2008 compared to $2.5 million in 2007. The interest expense arises from obligations under our 5% Convertible Senior Notes due in October 2009 (“2009 Notes”).

OTHER EXPENSE. Other expense was $6.5 million in 2008 compared to $0.7 million in 2007 and included charges for other than temporary declines in value on certain auction rate securities (ARS) held by the Company of $6.8 million and $1.0 million respectively. While interest continues to be paid currently by all the issuers of these ARS, due to the severity of the decline in fair value and the duration of time for which these ARS have been in a loss position, the Company concluded that ARS held at December 31, 2008 experienced an other-than-temporary decline in fair value and recorded impairment charges of $4.7 million for the year ended December 31, 2008. The aforementioned other-than-temporary impairment charge was net of $0.4 million of income recorded on par value redemption recoveries. Additionally during 2008, a corporate debt ARS position was exchanged for the underlying 30 year notes. This debt trades in the market with a value of $1.9 million against its face value of $4.0 million. Due to the severity and duration of the decline, the Company has recorded an impairment of $2.1 million related to this security.

LOSS FROM DISCONTINUED OPERATIONS. Loss from discontinued operations was $1.0 million in 2007 and included $0.5 million loss on the sale of the majority of the operating assets of Telcom Devices Inc. upon its sale at the close of the first quarter of 2007.

LIQUIDITY AND SOURCES OF CAPITAL

At December 31, 2009 we had $83.2 million of cash and cash equivalents and $9.3 million in marketable securities. In October 2009, we repaid $38.0 million aggregate principal amount of our 2009 Notes upon maturity.

Operations used $8.5 million in cash during 2009, primarily as a result of our operating results adjusted for non-cash expenses which was partly offset by $16.0 million generated by reducing working capital. Investing activities provided $5.0 million of cash during 2009, consisting of net sales of marketable securities of $14.0 million and $1.3 million of proceeds on sales of fixed assets, which were partly offset by purchases of equipment of $10.3 million. Financing activities required $36.9 million of cash during 2009, which principally consisted of repayment of our $38.0 million 5% Convertible notes, partly offset by proceeds received from the employee stock purchase plan and stock option exercises.

At December 31, 2009, the Company had unconditional purchase obligations of approximately $0.9 million.

We believe that our existing sources of capital, including our existing cash and marketable securities, will be adequate to satisfy operational needs and anticipated capital needs for at least the next twelve months. Our anticipated capital needs may include acquisitions of complimentary businesses or technologies, investments in other companies or repurchases of our equity. Subject to liquidity considerations of our auction rate securities as discussed more fully in Item 7A, we may elect to finance all or part of our future capital requirements through additional equity or debt financing. There can be no assurance that such additional financing would be available on satisfactory terms.

The table below summarizes required cash payments as of December 31, 2009:

CONTRACTUAL OBLIGATIONS	PAYMENTS DUE BY PERIOD (in thousands)
	Total		Less than 1 year		1 – 3 years		4 - 5 years		After 5 years
Operating leases		15,493		2,750		4,348		4,084		4,311
Unconditional purchase obligations		913		913		-		-		-
Total contractual cash obligations	$	16,406	$	3,663	$	4,348	$	4,084	$	4,311

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2009, the Financial Accounting Standards Board (FASB) issued FAS 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles", which was primarily codified into Accounting Standards Codification (ASC) 105 "Generally Accepted Accounting Standards". This standard will become the single source of authoritative nongovernmental U.S. generally accepted accounting principles. All existing accounting standard documents will be superseded and all other accounting literature not included in the FASB Codification will be considered non-authoritative. This guidance is effective for interim and annual periods ending after September 15, 2009. For clarity, we have chosen to include the available Codification references in this annual report in addition to pre-Codification accounting standard references. As the Codification is not intended to change the existing accounting guidance, its adoption did not have an impact on our consolidated financial statements.

In September 2006, the FASB issued FASB Statement No. 157, “Fair Value Measurements” (ASC 820) which defined fair value, established a framework for measuring fair value in generally accepted accounting principles and expanded disclosures about fair value measurements. ASC 820 was effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the FASB issued FSP FAS 157-2 “Partial Deferral of the Effective Date of Statement 157” (ASC 820-10-65-2), which delayed the effective date for non-financial assets and liabilities that are not measured or disclosed on a recurring basis to fiscal years beginning after November 15, 2008. The adoption of ASC 820-10-65-2 as of January 1, 2009 did not have a material effect on our consolidated financial statements for non-financial assets and liabilities and any other assets and liabilities carried at fair value.

In April 2009, the FASB issued FSP 157-4, “Determining Whether a Market Is Not Active and a Transaction Is Not Distressed” (ASC 820-10-65-4), which provides additional guidance on factors to consider in estimating fair value when there has been a significant decrease in market activity for a financial asset. ASC 820-10-65-4 was effective for interim and annual periods ending after June 15, 2009. This standard was effective beginning with our second quarter of 2009 financial reporting and did not have a material impact on our consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-05, “Measuring Liabilities at Fair Value.” This ASU clarifies the application of certain valuation techniques in circumstances in which a quoted price in an active market for the identical liability is not available and clarifies that when estimating the fair value of a liability, the fair value is not adjusted to reflect the impact of contractual restrictions that prevent its transfer. This standard was effective beginning with our third quarter of 2009 financial reporting and did not have a material impact on our consolidated financial statements.

In December 2007, the FASB issued FASB Statement No. 141R, “Business Combinations” (ASC 805), which changes how business acquisitions are accounted. ASC 805 requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. ASC 805 was effective for financial statements issued for fiscal years beginning after December 15, 2008 and upon adoption did not have a material impact on our consolidated financial statements. However it is expected to change our accounting prospectively for future business combinations consummated subsequently.

In December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51” (ASC 810), which changes the accounting for and reporting of noncontrolling interests (formerly known as minority interests) in consolidated financial statements. It was effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008, with early adoption prohibited. Upon implementation, prior periods will be recast for the changes required by ASC 810. The adoption of this standard effective January 1, 2009 did not have a material impact on our consolidated financial statements.

In March 2008, the FASB issued FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (ASC 815), which applies to all derivative instruments and related hedged items accounted for under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities". ASC 815 requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The fair value of derivative instruments and their gains and losses will need to be presented in tabular format in order to present a more complete picture of the effects of using derivative instruments. ASC 815 was effective for financial statements issued for fiscal years beginning after November 15, 2008. The adoption of this standard effective January 1, 2009 did not have a material impact on our consolidated financial statements.

In May 2008, the FASB issued FSP Accounting Principles Board 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" (ASC 470-20), which requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. ASC 470-20 was effective for fiscal years beginning after December 15, 2008 on a retroactive basis. The adoption of this standard effective January 1, 2009 did not have a material impact on our consolidated financial statements.

In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (primarily covered within ASC 260-10), which clarifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. Awards of this nature are considered participating securities and the two-class method of computing basic and diluted earnings per share must be applied. ASC 260-10 was effective for fiscal years beginning after December 15, 2008. The adoption of this standard effective January 1, 2009 did not have a material impact on our consolidated financial statements.

In April 2009, the FASB issued FSP 115-2 and FSP 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (ASC 320-10-65-1), which changes the method for determining whether an other-than-temporary impairment exists for debt securities and the amount of the impairment to be recorded in earnings. ASC 320-10-65-1 was effective for interim and annual periods ending after June 15, 2009 and apply based upon the Company’s ability and intent to hold the security to maturity or a recovery in valuation. The adoption of this standard did not have an impact on our consolidated financial statements, as it is more likely than not that we will sell the impaired debt securities prior to a recovery in valuation.

In April 2009, the FASB issued FSP 107-1, APB 28-1, “Interim Disclosures About Fair Value of Financial Instruments” (ASC 825-10-65-1), which requires fair value disclosures in both interim as well as annual financial statements in order to provide more timely information about the effects of current market conditions on financial instruments. ASC 825-10-65-1 was effective for interim and annual periods ending after June 15, 2009. This standard was effective beginning with our second quarter of 2009 financial reporting and the additional financial reporting disclosures are included herein.

In May 2009, the FASB issued FASB Statement No. 165, “Subsequent Events” (ASC 855-10), which establishes general standards of accounting and disclosure for events that occur after the balance sheet date but before the financial statements are issued. ASC 855-10 was effective for interim and annual periods ending after June 15, 2009. This standard was effective beginning with our second quarter of 2009 financial reporting and did not have an impact on our consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our cash and available-for-sale securities are exposed to changes in short-term interest rates. Our available-for-sale securities consist of a corporate bond security and certain auction rate securities discussed more specifically below. We continually monitor our exposure to changes in interest rates and the credit ratings of issuers with respect to our available-for-sale securities. Accordingly, we believe that the effects of changes in interest rates and the credit ratings of these issuers are limited and would not have a material impact on our financial condition or results of operations. However, it is possible that we would be at risk if interest rates or the credit ratings of these issuers were to change in an unfavorable direction. The magnitude of any gain or loss would be a function of the difference between the fixed rate of the financial instrument and the market rate and our financial condition and results of operations could be materially affected.

At December 31, 2009, we held marketable securities with an estimated fair value of $9.3 million. Our primary interest rate exposure results from changes in short-term interest rates. We do not purchase financial instruments for trading or speculative purposes. All of our marketable securities are classified as available-for-sale securities. The following table provides information about our marketable securities at December 31, 2009:

Estimated Principal Amount and Weighted Average Stated Interest Rate by Expected Maturity Value										Fair Value

($’s 000)	2010			> 10 years			Total			($’s 000)

Principal	$	0		$	15,900		$	15,900		$	9,354

Weighted Average Stated Interest Rates		0	%		1.47	%		1.47	%		-

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

All of our investment securities are classified as available-for-sale and therefore reported on our balance sheet at market value. Within our $9.3 million in marketable securities at December 31, 2009, we held a total of $6.6 million of auction rate securities (ARS) and $2.7 million as a corporate debt security, which was originally purchased as an ARS prior to its exchange for the underlying 30 year notes due 2037. ARS are generally financial instruments of long-term duration with interest rates that are reset in short intervals through auctions. During the second half of 2007, certain auction rate debt and preferred securities failed to auction due to sell orders exceeding buy orders. In February 2008, liquidity issues in the global credit markets resulted in failures of the auction process for a broader range of ARS, including substantially all of the auction rate corporate, state and municipal debt and preferred equity securities we hold. When there is insufficient demand for the securities at the time of an auction and the auction is not completed, the interest rates reset to predetermined higher rates (default rates). While certain issuers redeemed certain of their ARS during 2008, the market remained constrained by illiquidity and the lack of free trading. The funds associated with the remaining failed auctions will not be accessible until a successful auction occurs, a buyer is found outside of the auction process or an issuer redeems its security. If the credit ratings of the security issuers deteriorate and any decline in market value is determined to be other-than-temporary, we would be required to adjust the carrying value of the investment through an additional impairment charge. To date, we have not realized any losses on ARS held by the Company or the notes received in exchange for an ARS, but have recognized other-than-temporary impairments of $9.3 million. During 2009, fair market values of certain of our ARS, when combined with the fair market values of our corporate debt security, increased by $2.7 million, which was recorded to other comprehensive income.

We anticipate selling these impaired debt securities prior to a recovery in valuation. We will continue to monitor and evaluate these investments for impairment and for short term classification purposes. We may not be able to access cash by selling the aforementioned debt or preferred securities without the loss of principal until a buyer is located, a future auction for these investments is successful, they are redeemed by their issuers or they mature. If we are unable to sell these securities in the market or they are not redeemed, then we may be required to hold them to maturity or in perpetuity for the preferred ARS. Based on our ability to access our cash, our expected operating cash flows, and our other sources of cash, we do not anticipate that the potential illiquidity of these investments will affect our ability to execute our current business plan.

Our 2009 Notes were convertible with a fixed rate of interest of 5% and were repaid on the October 15, 2009 maturity date.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

ANADIGICS, Inc.

We have audited the accompanying consolidated balance sheets of ANADIGICS, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. Our audit also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the 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. at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ANADIGICS, Inc.’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2010 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

MetroPark, New Jersey

March 12, 2010

ANADIGICS, INC.

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	December 31,
	2008			2009
ASSETS
Current assets:
Cash and cash equivalents	$	123,552		$	83,172
Marketable securities		13,340			-
Accounts receivable, net of allowance for doubtful accounts of $739 at December 31, 2008 and 2009		25,384			20,013
Inventories		33,578			18,250
Prepaid expenses and other current assets		3,121			2,503

Total current assets		198,975			123,938

Marketable securities		8,832			9,354
Plant and equipment
Equipment and furniture		201,217			208,735
Leasehold improvements		40,589			44,705
Projects in process		18,940			5,978
		260,746			259,418
Less accumulated depreciation and amortization		165,075			178,534
		95,671			80,884
Other assets		299			276
	$	303,777		$	214,452
LIABILITIES AND STOCKHOLDERS EQUITY

Current liabilities:
Accounts payable	$	18,267		$	11,287
Accrued liabilities		13,203			10,208
Accrued restructuring costs		1,165			55
Convertible notes		38,000			-
Total current liabilities		70,635			21,550

Other long-term liabilities		3,134			3,844

Commitments and contingencies

Stockholders’ equity
Preferred stock, $0.01 par value, 5,000 shares authorized, none issued or outstanding
Common stock, convertible, non-voting, $0.01 par value, 1,000 shares authorized, none issued or outstanding
Common stock, $0.01 par value, 144,000 shares authorized at December 31, 2008 and 2009, and 63,424 and 64,517 issued at December 31, 2008 and 2009, respectively		634			645
Additional paid-in capital		563,468			576,975
Accumulated deficit		(333,967	)		(391,050	)
Accumulated other comprehensive income		131			2,747
Treasury stock at cost: 114 and 115 shares at December 31, 2008 and 2009, respectively		(258	)		(259	)
Total stockholders’ equity		230,008			189,058
	$	303,777		$	214,452

See accompanying notes.

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

	YEAR ENDED DECEMBER 31,
	2007			2008			2009

Net sales	$	230,556		$	258,170		$	140,484
Cost of sales		151,768			179,583			120,326

Gross profit		78,788			78,587			20,158
Research and development expenses		46,539			54,452			45,969
Selling and administrative expenses		30,171			41,098			26,914
Restructuring and impairment charges		-			21,304			2,598
		76,710			116,854			75,481

Operating income (loss)		2,078			(38,267	)		(55,323	)

Interest income		8,035			5,254			1,134
Interest expense		(2,463	)		(2,365	)		(1,897	)
Other expense		(734	)		(6,494	)		(1,318	)

Income (loss) from continuing operations before income taxes	$	6,916		$	(41,872	)	$	(57,404	)
Benefit from income taxes		-			-			(321	)

Income (loss) from continuing operations	$	6,916		$	(41,872	)	$	(57,083	)
Loss from discontinued operations		(965	)		-			-
Net income (loss)	$	5,951		$	(41,872	)	$	(57,083	)

Basic earnings (loss) per share:
Income (loss) from continuing operations	$	0.13		$	(0.70	)	$	(0.92	)
Loss from discontinued operations		(0.02	)		-			-
Net income (loss)	$	0.11		$	(0.70	)	$	(0.92	)

Diluted earnings (loss) per share:
Income (loss) from continuing operations	$	0.12		$	(0.70	)	$	(0.92	)
Loss from discontinued operations		(0.02	)		-			-
Net income (loss)	$	0.10		$	(0.70	)	$	(0.92	)

Weighted average common shares outstanding used in computing earnings (loss) per share:
Basic		55,189			60,183			62,372
Diluted		58,621			60,183			62,372

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(AMOUNTS IN THOUSANDS)

	Year Ended December 31,
	2007			2008			2009
Net income (loss)	$	5,951		$	(41,872	)	$	(57,083	)
Other comprehensive income (loss):
Unrealized (loss) gain on marketable securities		(948	)		(1,373	)		2,701
Foreign currency translation adjustment		(8	)		164			(85	)

Reclassification adjustment:
Net recognized loss on marketable securities previously included in other comprehensive income (loss)		962			1,434			-
Comprehensive income (loss)	$	5,957		$	(41,647	)	$	(54,467	)

See accompanying notes.

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(AMOUNTS IN THOUSANDS)

	Common Stock Shares		Common Stock Amount		Treasury Stock Shares			Treasury Stock Amount			Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (loss )			Total Stockholders’ Equity

Balance, December 31, 2006		49,200	$	492		(114	)	$	(258	)	$	413,672		$	(298,046	)	$	(100	)	$	115,760

Stock options exercised		2,135		22								12,217									12,239
Shares issued under employee stock purchase plan		236		2								1,872									1,874
Issuance of common stock in public offering, net of costs		8,625		86								98,869									98,955
Restricted stock grant, net of forfeitures		1,096		11								(11	)								-
Amortization of stock-based compensation												15,321									15,321
Other comprehensive income																		6			6
Net income															5,951						5,951

Balance, December 31, 2007		61,292	$	613		(114	)	$	(258	)	$	541,940		$	(292,095	)	$	(94	)	$	250,106

Stock options exercised		384		4								2,596									2,600
Shares issued under employee stock purchase plan		183		2								234									236
Restricted stock grant, net of forfeitures		1,565		15								(15	)								-
Amortization of stock-based compensation												18,713									18,713
Other comprehensive income																		225			225
Net loss															(41,872	)					(41,872	)

Balance, December 31, 2008		63,424	$	634		(114	)	$	(258	)	$	563,468		$	(333,967	)	$	131		$	230,008

Stock options exercised		49		1								101									102
Shares issued under employee stock purchase plan		729		7								1,006									1,013
Treasury share purchase						(1	)		(1	)											(1	)
Restricted stock activity, net of forfeitures		315		3								(3	)								-
Amortization of stock-based compensation												12,403									12,403
Other comprehensive income																		2,616			2,616
Net loss															(57,083	)					(57,083	)

Balance, December 31, 2009		64,517	$	645		(115	)	$	(259	)	$	576,975		$	(391,050	)	$	2,747		$	189,058

See accompanying notes.

ANADIGICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)

	YEAR ENDED DECEMBER 31,
	2007			2008			2009

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	5,951		$	(41,872	)	$	(57,083	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Loss from discontinued operations		965			-			-
Depreciation		9,547			15,984			18,463
Amortization		738			718			341
Stock based compensation		15,276			18,713			12,403
Amortization of (discount) premium on marketable securities		(550	)		(90	)		12
Recognized marketable securities impairment and other		962			6,807			1,492
Gain on disposal of equipment		(9	)		(295	)		(167	)
Asset impairment charges		-			20,634			-
Changes in operating assets and liabilities:
Accounts receivable		(18,957	)		20,280			5,371
Inventory		(3,770	)		(9,589	)		15,328
Prepaid expenses and other assets		(1,233	)		523			300
Accounts payable		5,922			(11,187	)		(1,489	)
Accrued and other liabilities		1,984			6,438			(3,480	)
Net cash provided by (used in) operating activities		16,826			27,064			(8,509	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment		(32,506	)		(54,541	)		(10,346	)
Purchases of marketable securities		(267,357	)		(20,410	)		(15,201	)
Proceeds from sales and redemptions of marketable securities		217,709			110,608			29,216
Purchase of RF group assets		(2,415	)		-			-
Proceeds from sale of equipment		30			209			1,346
Proceeds from sale of discontinued operations		500			-			-
Net cash (used in) provided by investing activities		(84,039	)		35,866			5,015

CASH FLOWS FROM FINANCING ACTIVITIES
Payment of obligations under capital leases		(1,775	)		-			-
Repayment of Convertible notes		-			-			(38,000	)
Issuances of common stock, net of related costs		113,068			2,836			1,115
Repurchase of common stock into treasury		-			-			(1	)
Net cash provided by (used in) financing activities		111,293			2,836			(36,886	)

Net increase (decrease) in cash and cash equivalents		44,080			65,766			(40,380	)
Cash and cash equivalents at beginning of period		13,706			57,786			123,552

Cash and cash equivalents at end of period	$	57,786		$	123,552		$	83,172

Supplemental disclosures of cash flow information:
Interest paid	$	1,997		$	1,900		$	1,900
Net taxes paid (refunded)		28