Expanding research & development is important to the future of the United States and to M/A-COM; without R&D, industrial units rapidly become non-competitive.

M/A-COM R&D is directly responsible for our company's leadership and success by producing new products and processes in the telecommunications, defense and health fields.

The R&D tax credit has, by itself, stimulated us to make a greater financial commitment to R&D than we otherwise would have, which we expect will make us more competitive in international as well as domestic markets.

Refusal to make the credit permanent would tell corporate management that R&D is no longer a national priority; this would be the wrong signal to send.

M/A-COM, Inc., South Avenue, Burlington, MA 01803, (617) 272-9600

Mr. Chairman, I am John R. Colbert, Treasurer of M/ACOM, Inc. I am pleased to have the opportunity to present M/ACOM's views in support of extending the tax credit for increasing research and development expenditures. I have been assisted in

preparing this statement by Dr. Joseph Saloom, a Senior Vice President of M/A-COM and Deputy Director of our Components Technology Center, and Mr. Stephen Zezima, our Corporate Tax

Manager.

Dr. Saloom is one of the administrators of our

corporate R&D activities.

M/A-COM was founded in 1950 as Microwave Associates, Inc. and adopted its present name in 1978 to reflect the company's diversification. We have evolved from a company that chiefly sold microwave products to the military into a designer and manufacturer of equipment and systems for use in satellite communications, data communications, television broadcasting and

cable television (CATV).

M/A-COM is the nation's largest supplier of coaxial cable for the CATV industry and a major designer and manufacturer of numerous digital digital communications products as well as microwave semiconductors, semiconductors, components and subsystems and other products for commercial and defense applications.

Fiscal 1982 was a record year for M/A-COM, with sales reaching $587 million. However, because of the worldwide recession, profits were down and earnings per share fell 4% from the previous year. In spite of flat profits, we substantially

increased research and development expenditures in 1982. to discuss this in more detail in a moment.

I want

M/A-COM is a leader in high technology industry in the United States. In the digital communications area, our products include sophisticated modems used to increase the capacity, reliability and security of satellite communications systems; a line of digital processors used for multiplexing data streams into packets for efficient transmission; satellite communications terminals for real time data transmission for business communications; and microwave data transceivers for local distribution of data. We have developed satellite communications systems for the Department of Defense, and we are the largest supplier of digital Time Division Multiple satellite terminals for commercial satellite networks.

Access (TDMA)

communications

In the microwave components area, M/A-COM manufactures

a broad line of products that generate, control and receive microwave energy. These products incorporate microwave semiconductor technology and are sold to manufacturers and users of military radar, missile guidance systems, electronic countermeasures equipment, and navigation systems. Some of the specific products include PIN diodes, used to control the passage of electrical energy through circuits; Schottky-barrier and point contact diodes, used to receive and detect microwave signals; Gunn diodes, used to generate low levels of microwave power; and

microwave transistors, used to amplify microwave signals. M/ACOM now has in place the technology base to manufacture the underlying materials--silicon, gallium arsenide and ferrites-used for microwave components, as well as the ability to manufacture circuits, assemblies and subsystems for commercial

and defense products. The experience gained from gained from the recent conflicts in the Falkland Islands and the Middle East suggests increasing emphasis on the development of microwave components needed drive complex electronic warfare systems. On the commercial side, the lighter weight and increased reliability of systems based on microwave semiconductor technology, such as portable microwave transmission systems for electronic newsgathering, assures continued growth and competition.

We at M/A-COM were greatly heartened by the recognition of the importance of industrial research and development displayed by members of this committee in enacting the R&D tax credit as part of the Economic Recovery Tax Act of 1981, and we have sought to do our part in continuing the American tradition of industrial growth. As a "high technology" manufacturing company, we are acutely sensitive to the continuing need to grow; research and development provides the fertile soil which

companies like ours must have in order to prosper.

vital

We view our own research and development program as the element which enables us to maintain the place of leadership we have earned in our own industry. In the fast

growing, highly competitive

telecommunications

industry the company with an old product line quickly becomes the company you used to hear about, but don't any more. For an example, TV news coverage used to depend upon a person at the scene who made some sort of recording, which was then transported back to the TV station, then broadcast to the public. Initially, that camera was bulky and heavy, and the film had to be carried away and processed. Today, using technology created by M/A-COM research, easily transportable microwave links and lightweight minicams relay pictures instantaneously to the broadcast station and "live" into the homes of the American public. Now, when Reggie Jackson hits a home run, a new President is inaugurated, or this committee makes the R&D tax credit permanent, we can all see it live as it happens. No more need to wait for "film at ll."

M/A-COM research has application in many facets of American life. For example, microwave sensor technology which was developed for the space space program has been applied by our scientists to medicine, resulting in a device which is able to detect both existing and incipient cancer incipient cancer tumors in the human body by sensing a heat differential unique to a tumor. This device is currently being tested in several medical institutions around the country. If it fulfills its promise, it will provide every physician and health facility with affordable access to a reliable means of cancer diagnosis, enabling early treatment of victims. Another device, also in the in the same testing stage and using similar microwave technology, will allow the treatment of