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Anadigics seizes opportunity to raise extra cash

The GaAs chip manufacturer files a prospectus in a bid to raise cash through a public offering of up to 7.7 million shares, with capital expenditure plans in mind.

Anadigics, the GaAs chip maker that has seen its share price rocket over the past year, is looking to raise some more cash with a public offering of common stock.

The Warren, NJ, firm is offering 6.7 million shares initially, with an extra 1 million set to become available to meet excess demand.

Although Anadigics has not set the public price in its prospectus filed with the US Securities and Exchange Commission (SEC), the stock recently hit a five-year high of nearly $14 (see related story). At a sale price of $12 per share, the company would be set to make gross proceeds of around $92 million before underwriting discounts and other costs are taken into account.

The company plans to use the money it raises to fund some capital expenditure, as well as for general corporate purposes.

Some of the cash may be spent at its six-inch GaAs semiconductor fabrication facility in Warren, where the weekly capacity is currently 950 six-inch HBT wafer starts.

"We believe that we have the ability, with incremental capital expenditures, to increase the weekly production capacity to as much as 1500 six-inch wafers in response to market conditions," revealed the company in its prospectus.

Although this should give it sufficient capacity until 2009, Anadigics added that it is already looking at how it would be able to generate additional manufacturing capacity if that limit is reached:

"We are actively exploring future sources of additional capacity through the construction or acquisition of manufacturing facilities in low-cost manufacturing countries such as China, as well as pursuing relationships with foundries in Taiwan."

While Anadigics has been able to make inroads at key cell-phone vendors such as Samsung, LG and Motorola, it also has an increasing focus on emerging broadband wireless applications such as WiMAX.

Although the future role of WiMAX in mobile connectivity is not yet clear, the protocol does have major backing from Intel, which also happens to be Anadigics number-one customer.

During 2006, Intel accounted for 18 percent of Anadigics total net sales. The silicon giant uses power amplifiers made by Anadigics in its Centrino chipsets for Wi-Fi enabled PCs.

Anadigics has developed "BiFET" technology that it calls "InGaP-plus", which combines HBT and FET functions on a single InGaP die. It believes that this new process will play a major part in future WiMAX products.

At the recent 3GSM World Congress in Barcelona, the Mecca of the global wireless industry, Anadigics also introduced the new AWM6423 power amplifier for mobile WiMAX applications.

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