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Anadigics New CEO Comments On Product and Technology Strategy and Announces Initiatives to Streamline Manufacturing Operations.

WARREN, N.J.--(BUSINESS WIRE)--Dec. 8, 1998--

ANADIGICS to Accelerate Qualification of State-of-the-Art 6- Inch Fab

To Take Special Charges of $13 million Primarily Related to Fab

Acceleration

ANADIGICS, Inc. (Nasdaq:ANAD) today announced new strategic initiatives including the implementation of several initiatives designed to lower manufacturing costs and streamline operations.

Specifically, ANADIGICS plans to accelerate the qualification of its state-of-the-art 6-inch wafer fabrication facility ("Fab-2") in Warren, New Jersey and subsequently close its current 4-inch wafer fabrication facility ("Fab-1"). Fab-2 was expected to commence operations late in the second half of 1999 as a 4-inch wafer fabrication facility. The Company plans to bring it on-line during the third quarter of 1999 as a 6-inch wafer fabrication facility. The Company expects Fab-2 to be in full production within three to six months of the start of production. Additionally, as a result of significant cycle time improvements with its offshore assembly subcontractors, the Company has decided to close its in-house low volume, engineering assembly operations. As a result of these changes, the Company expects to reduce the manufacturing operations workforce by approximately 60 personnel over the next 9 months, with the majority occurring over the next month.

Dr. Bami Bastani, President and Chief Executive Officer of ANADIGICS, commented, "My first priority since joining ANADIGICS in October has been to focus on streamlining operations and improving profitability. Fab-2, as a 6-inch facility, with optimized layout, and improved IT systems, should result in significant manufacturing efficiency improvements. By moving to Fab-2 and closing Fab-1 we expect to lower the manufacturing costs per die, which should enhance our gross margin. Fab-2 provides us with sufficient capacity to grow the Company from the current $88 million per year revenue run rate to an annual run rate of approximately $500 million, while its equipment back-up provides assured supply for our customer base."

In connection with the manufacturing efficiency initiatives announced today, the Company will record, in the aggregate, $13.1 million in special charges over the next three quarters, including $7.3 million in the fourth quarter. Of these charges, approximately $8.0 million is accelerated facility depreciation and leasehold improvement amortization related to Fab 1, including $2.7 million in the fourth quarter of 1998. Included in the $7.3 million 1998 fourth quarter charge, is a one-time charge totaling approximately $4.5 million.

Dr. Bastani commented, "We believe these actions will position the Company to achieve manufacturing gross margin improvements over the next few quarters (excluding the special charges related to acceleration of Fab-1 depreciation and amortization), and make a significant improvement in gross margin once Fab-2 is fully on-line.

"With the decisive actions announced today to streamline operations, we are positioning ANADIGICS to return to profitability," continued Dr. Bastani. "We are now focused on moving ahead with key new initiatives designed to build the Company's customer, product and technology base and to re-ignite our revenue growth.

"In the wireless markets I am absolutely committed to expanding our customer base to reduce revenue volatility. To achieve this goal we will be expanding our product portfolio of 3-volt power amplifiers and introducing new control devices while expanding our marketing and field sales efforts. In the meantime we believe we are positioned well with design-ins at Ericsson, our principal wireless customer. We are currently shipping or ramping up power amplifiers and receivers for single and dual band cellular or PCS phones. These phone models span multiple standards and include the following Ericsson phone models: KH668, KH618, KF788, CF688, CF788, AF778, AF738, EF738, SH888, S868, GF788 and GF768."

In the area of Radio Frequency integrated circuits for CATV and Cable Modems Dr. Bastani commented, "We intend to further enhance our leadership position by developing an integrated chip-set for "Tuner on Board" solutions. We believe these new chips will provide our digital CATV, Cable Modem, and Cable Telephony customers with higher levels of integration and performance. Our current chip-sets are designed in at General Instrument and Cable Modem customers, including Motorola, Nortel Networks, and COM21."

In the fiber optic arena, Dr. Bastani said, "The Internet is driving explosive growth in data and voice traffic. This presents opportunities for both datacom (Gigabit Ethernet) and telecom (SONET and Dense Wave Division Multiplex) products. Over the next year we intend to enhance and expand our presence in these markets by offering a range of higher performance, user friendly 3-volt products (TIA, CDR, Limiting amplifiers, etc.) based on PHEMT device technology.

"These new product thrusts will require additional investments in Product R&D as well as process technology R&D. The new device technologies we will be investing in during 1999 include PHEMT GaAs devices and enhancement FET (Field Effect Transistor) switches. We will also pursue advanced packaging technology to produce multi-chip modules for higher integration and ease of use by our customers. These investments and others will increase our R&D spending in 1999 to approximately $23 million. We believe this will position the Company for accelerated revenue growth into the new millenium," Dr. Bastani concluded.

ANADIGICS, Inc. is a leading supplier of gallium arsenide integrated circuits (GaAs ICs) used to receive and transmit radio and microwave frequency signals in a variety of high-volume communications applications. The Company focuses primarily on supplying integrated circuit solutions to the wireless communication, cable television and fiber optics telecommunications markets.

Except for historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, order rescheduling or cancellation, changes in estimated product lives, timely product, process, and fabrication facility development, individual product pricing pressure, variation in production yield, difficulties in obtaining components and assembly services needed for production of integrated circuits, change in economic conditions of the various markets the Company and its customers serve, as well as other risks detailed from time to time in the Company's reports filed with the Securities and Exchange Commission, including the report on Form 10-K for the year ended December 31, 1997.
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Copyright 1998, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Geographic Code:1USA
Date:Dec 8, 1998
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