<PAGE>
 
                      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 [FEE REQUIRED]

For the fiscal year ended March 29, 1998

                                      OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from _________________  to _________________

Commission file number 1-5560
                       ------


                            ALPHA INDUSTRIES, INC.

            (Exact name of registrant as specified in its charter)


<TABLE> 
<S>                                                                                    <C> 
                             DELAWARE                                                     04-2302115 
                 (State or other jurisdiction of                                        (I.R.S. Employer
                  incorporation or organization)                                       Identification No.)

             20 SYLVAN ROAD, WOBURN, MASSACHUSETTS                                           01801
            (Address of principal executive offices)                                       (Zip Code)

       Registrant's telephone number, including area code:                               (781) 935-5150

</TABLE>



       Securities registered pursuant to Section 12(b) of the Act:  NONE
          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.25 par value

     Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

     Yes      X                 No 
         --------------            ____________________                    

     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 registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.         [X]

     The aggregate market value of the Registrant's Common Stock held by 
non-affiliates of the Registrant at May 24, 1998 was approximately $156,109,000.

     The number of shares of Common Stock outstanding at May 24, 1998 was
10,475,714.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Company's Proxy Statement, to be filed within 120 days of
the end of the Registrant's fiscal year are incorporated by reference into Part
III of this Report.

                   The Exhibit Index is located on page 40.

                              Page 1 of 53 pages.

<PAGE>
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                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

 

                                     PART I



ITEM 1  BUSINESS

BUSINESS GROUPS

The Company operates in one business segment which is organized around three
operating groups. The Wireless Semiconductor Products group and the Application
Specific Products group are both located at the Company's corporate headquarters
outside Boston, Massachusetts while the Ceramic Products group is located in
Maryland.  The following lists the three groups with their primary products and
markets:



<TABLE>
<CAPTION>
GROUPS                         PRIMARY PRODUCTS                 PRIMARY MARKETS    
- ------                         ----------------                 ---------------            
<S>                            <C>                              <C>  
WIRELESS SEMICONDUCTOR         GaAs RF Integrated Circuits      Wireless Telephony
PRODUCTS                       Discrete Semiconductors          (Predominantly Handsets)
                                                                TV Distribution

APPLICATION SPECIFIC           Discrete Semiconductors          Satellite Communications
PRODUCTS (ASP)                 Components                       Telecommunications
                                                                Space  
                                                                Defense

CERAMIC PRODUCTS               Electrical Ceramics              Wireless Infrastructure
                               Ferrite Material                 Other Wireless
</TABLE>



WIRELESS SEMICONDUCTORS PRODUCTS

The Wireless Semiconductor Products group manufactures GaAs integrated circuits
and discrete components on a high volume, low cost basis. With 360 employees and
a high capacity GaAs fab capable of producing both Metal Semiconductor Field
Effect Transistors (MESFET) and Pseudomorphic High Electron Mobility Transistor
(PHEMT) wafers, the Wireless Semiconductor Products group is the growth leader
in the Company's strategy. The Company has decided to manufacture its next
generation products with PHEMT process technology. The advantages of PHEMT
include a lower material cost, gate lengths as low as 0.15 micron and excellent
RF performance, especially efficiency, at supply voltages well below 3 volts.
This latter characteristic is essential to reducing phone size and increasing
talk time.

The Wireless Semiconductor Products group sells its products to most major
handset manufacturers, including Motorola, Ericsson, Nokia, Philips Consumer
Communications, Nortel, Siemens and others.  Approximately 75% of the Company's
R&D expenditures are focused on this group.  The Company's products are used in
all major air interfaces, including the leading digital standards, GSM, CDMA and
TDMA, and in the analog AMPS standard widely used in North America and Latin
America.

                                       2

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                                         ---------------------------------------
                                         Alpha Industries, Inc. and Subsidiaries
                                         ---------------------------------------

APPLICATION SPECIFIC PRODUCTS

The Application Specific Products (ASP) group manufactures discrete
semiconductors and components for base station equipment, satellite
communications systems (both in space and on the ground), data communications,
and defense markets. Typical products from the ASP group include GaAs integrated
circuits in ceramic packages, custom silicon and discrete GaAs components. While
the Wireless Semiconductor group's products are high volume and low cost, ASP
products are moderate in volume, higher cost and generally more complex. The ASP
group currently employs approximately 210 people.

CERAMIC PRODUCTS

The Ceramic Products group, located in Maryland with 260 employees, manufactures
ceramic-based products that improve signal selection and filtering.  These
products include dielectric and coaxial resonators, ceramic filters and other
products based on magnetic materials, principally ferrites.  Ceramic products
are used in base station infrastructure equipment, TV distribution, DBS, radar
detectors, other satellite systems, GPS and defense applications.

The following table summarizes the Company's market applications in its three
groups:


<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
                                                 WIRELESS          APPLICATION
                                              SEMICONDUCTOR         SPECIFIC          CERAMIC
MARKETS                                          PRODUCTS           PRODUCTS         PRODUCTS
- ---------------------------------------------------------------------------------------------------------------------------------- 
<S>                                           <C>                  <C>               <C>
Wireless Handset                                    X
- ---------------------------------------------------------------------------------------------------------------------------------- 
Wireless Infrastructure                             X                  X                X
- ----------------------------------------------------------------------------------------------------------------------------------
TV Distribution and Set Top Boxes                   X
- ---------------------------------------------------------------------------------------------------------------------------------- 
TV Distribution and Multimedia                      X                                   X
- ---------------------------------------------------------------------------------------------------------------------------------- 
Satellite Communications (Payload)                                     X
- ---------------------------------------------------------------------------------------------------------------------------------- 
Satellite Communications (Ground)                                      X                X
- ---------------------------------------------------------------------------------------------------------------------------------- 
Satellite Communications (Handsets)                 X                                   X
- ---------------------------------------------------------------------------------------------------------------------------------- 
Telecommunications                                  X                  X                X
- ---------------------------------------------------------------------------------------------------------------------------------- 
Global Positioning Satellite Systems                X                                   X
- ----------------------------------------------------------------------------------------------------------------------------------
Defense                                                                X                X
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


MARKETS AND DISTRIBUTION

During fiscal 1998, approximately 82% of the Company's sales were to
manufacturers of commercial products, primarily in the wireless communications
markets and include components for products such as wireless telephones and base
stations. The remaining 18% of sales were for use in a wide variety of defense-
related systems.

Export sales to non-affiliates for fiscal 1998, 1997, and 1996 were $39.2
million, $26.7 million, and $23.6 million, respectively. This compares with
domestic sales for the same period of $70.9 million, $53.2 million, and $66.1
million, respectively.  During fiscal 1998, 1997, and 1996 the Company operated
a sales subsidiary in the United Kingdom.  At the end of fiscal 1997, the
Company sold its ceramic manufacturing operation in France. During fiscal 1996,
the Company closed its sales subsidiary in Germany and replaced it with an
independent sales representative and distributor. See Note 2 to the Consolidated
Financial Statements on page 27 for financial information about the Company's
foreign and domestic operations.

                                       3

<PAGE>
 
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Alpha Industries, Inc. and Subsidiaries
=======================================

The Company's sales are made through 13 independent domestic sales
representatives and 21 independent international sales representatives, as well
as through its own sales force of 44 persons. Approximately 19% of the Company's
sales are made through its own direct sales force and 81% through sales
representatives.

RESEARCH AND DEVELOPMENT

The Company's products and markets are subject to continued technological
advances.  Recognizing this, the Company has maintained a high level of R&D
activities to remain competitive in certain areas and to be an industry leader
in other areas.

Company sponsored R&D expenditures for fiscal 1998, 1997, and 1996 were $10.0
million, $9.5 million, and $9.1 million, respectively.  With the Company's
conversion to commercial markets, customer sponsored R & D was not material in
amount for fiscal 1998 or 1997 but was $4.2 million in fiscal 1996.  This
decrease was the result of a shift away from defense related contracts.

RAW MATERIALS

Raw materials for the Company's products and manufacturing processes are
generally available from several sources.  It is the Company's policy not to
depend on a sole source of supply. However, there are limited situations where
the Company procures certain components and services for its products from
single or limited sources. The Company purchases these materials and services on
a purchase order basis, does not carry significant inventories and does not have
any long-term supply contracts with its source vendors. The inability of the
Company to obtain these materials in required quantities would result in
significant delays or reductions in product shipments, which would materially
and adversely affect the Company's operating results.

WORKING CAPITAL

The business of the Company is not seasonal, and there are no special practices
with respect to working capital for the Company or the industry in general. The
Company provides a limited warranty on its products against defects in material
and workmanship. Payment terms are 30 days in the domestic market and generally
60 days in foreign markets.

CONTRACTS

During fiscal 1998, one customer, Motorola, Inc., accounted for approximately
25% of the Company's total sales and no other single customer accounted for 10%
or more of the Company's total sales. The 18% of the Company's sales that were
to the United States Government and prime contractors and subcontractors thereof
are subject to termination at the convenience of the Government, in which event
the Company would normally be reimbursed for costs incurred. While U.S.
Government orders are canceled in this manner, the Company has seldom
experienced any material terminations for convenience.

COMPETITIVE CONDITIONS

The Company competes on the basis of price, performance, quality, reliability,
size, ability to meet delivery requirements and customer service and support.
The Company experiences intense competition worldwide from a number of
multinational companies that offer a variety of competitive products and broader
product lines, and which have substantially greater financial resources and
production, marketing, manufacturing, engineering and other capabilities than
the Company. The Company also faces competition from a number of smaller
companies. In addition, the Company's customers, particularly its largest
customers, may have or could acquire the capability to develop or manufacture
products competitive with those that have been or

                                       4

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

may be developed or manufactured by the Company.

PATENT AND TRADEMARKS

The Company owns a small number of patents and has other patent applications
under preparation or pending. However, the Company believes that its
technological position depends primarily on the ability to develop new
innovative products through the technical competence of its engineering
personnel.

BACKLOG

The Company's backlog of undelivered orders on March 29, 1998 was approximately
$36.8 million compared with $32.5 million on March 30, 1997.  The Company's
policy is to record commercial orders on a quarterly basis consistent with
expected customer short-term requirements. Management believes all orders in the
Company's backlog to be firm. At least 90% of the March 29, 1998 backlog is
anticipated to be shipped in fiscal 1999.

ENVIRONMENTAL REGULATIONS

In the Company's opinion, compliance with federal, state, and local
environmental protection regulations does not and will not have a material
effect on the capital expenditures, earnings, and competitive position of the
Company.

EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the executive
officers of the Company at May 31, 1998.


<TABLE>
<CAPTION>
     NAME                           AGE          POSITION                                               
     <S>                            <C>          <C>                                                    
     George S. Kariotis              75          Chairman of the Board of Directors                     
     Thomas C. Leonard               63          Director, President and Chief Executive Officer        
     Paul E. Vincent                 50          Vice President, Chief Financial Officer and Treasurer  
     David J. Aldrich                41          Vice President                                         
     Jean Pierre Gillard             54          Vice President                                         
     Richard Langman                 51          Vice President, President of Trans-Tech, Inc.          
     James C. Nemiah                 44          Secretary, Corporate Counsel                            
</TABLE>



All officers serve until the next Board of Directors meeting following the
Annual Meeting of Stockholders scheduled for September 14, 1998, or until their
successors are elected and qualified. No officer was elected pursuant to any
arrangement or understanding.

Mr. Kariotis was Chairman of the Board and Chief Executive Officer from 1962
(when the Company was founded) until 1978, and, from 1974 to 1978, he was also
Treasurer of the Company. From 1979 to 1983, Mr. Kariotis was the Secretary of
Manpower Development and Economic Affairs for the Commonwealth of Massachusetts.
He was re-elected Chairman of the Board of the Company in 1983 and Chief
Executive Officer in 1985. Mr. Kariotis resigned as Chief Executive Officer in
July 1986 while he campaigned for public office. He resumed his position as
Chief Executive Officer in November 1986, and served in that capacity until
1991.

                                       5

<PAGE>

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Alpha Industries, Inc. and Subsidiaries
======================================= 

Mr. Leonard joined the Company in 1992 as General Manager of the Components and
Systems Division. He became the General Manager of Operations for the Alpha
Microwave Division effective January 1994 and was elected Vice President in
1994. Mr. Leonard was elected President, Chief Executive Officer and Director in
July 1996. Mr. Leonard has over 30 years experience in the microwave industry,
having held a series of general managerial and marketing positions at M/A-COM,
Inc., from 1972 to 1992 and prior to 1972 at Varian Associates and Sylvania.

Mr. Vincent joined the Company in 1979 and was the Controller from 1979 to 1997.
In January 1997, Mr. Vincent was appointed Vice President, Chief Financial
Officer and Treasurer.  Mr. Vincent is a Certified Public Accountant.

Mr. Aldrich joined the Company in 1995 as Vice President, Chief Financial
Officer and Treasurer.  In May 1996 Mr. Aldrich was also appointed General
Manager of Alpha Microwave Division. In January 1997, he relinquished his
positions as Chief Financial Officer and Treasurer.  From 1989 to 1995, Mr.
Aldrich held several positions at M/A-COM, Inc., including Manager Integrated
Circuits Active Products, Corporate Vice President Strategic Planning, Director
of Finance and Administration, and Director of Strategic Initiatives with the
Microelectronics Division.  Prior to joining M/A-COM, Inc., Mr. Aldrich was
Controller with Adams Russell Electronics Company from 1984 to 1989 and a
project leader for a NASA satellite communications program with Space
Communications Company (a Fairchild Industries and Contel Inc. Partnership) from
1981 to 1983.  Mr. Aldrich is a Director of Microwave Power Devices, Inc., a
wireless high-power amplifier company.

Mr. Gillard joined the Company in 1992 as Director of GaAs IC Products.
In June 1996, he was named as the Company's Vice President of Business
Development. Before joining the Company, Mr. Gillard held a number of Vice
President positions at M/A-COM, Inc. in Sales, Marketing and Business
Development. Mr. Gillard received his engineering education at Ecole Central
d'Electronique, Paris, France and his business training at the Massachusetts
Institute of Technology's Sloan School.

Mr. Langman joined the Company in January 1997, as Vice President of Alpha
Industries, Inc., and President and General Manager of Trans-Tech, Inc. Prior to
joining the Company, Mr. Langman worked for Coors Ceramics Company for 23 years,
holding senior executive positions in operations and sales. Mr. Langman received
his B.S. in Ceramic Engineering from Alfred University and his M.S. in
Metallurgy and Material Science from Lehigh University.

Mr. Nemiah joined the Company in November 1995 as Corporate Counsel and
Assistant Secretary.  He was named Secretary in September 1996.  Prior to
joining the Company, Mr. Nemiah was at American Science and Engineering from
1987 to 1995, holding the positions of Vice President, General Counsel and
Clerk.

EMPLOYEES

As of March 29, 1998, the Company and its subsidiaries employed approximately
840 persons, compared with 800 persons as of March 30, 1997.


I
TEM 2  PROPERTIES

The following information describes the major facilities owned and leased by the
Company. The Company believes it has adequate production capacity to meet its
current business needs but is adding required capacity over the next 12 to 18
months to better serve the wireless market as demand continues to grow.  As
described in Note 4 to the Consolidated Financial Statements on pages 29 and 30,
several properties secure debt of the Company.

                                       6

<PAGE>

                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

ITEM 2  PROPERTIES (CONTINUED)

a)  The Company owns a 158,000 square foot plant plus eight acres of land at 20
    Sylvan Road, Woburn, Massachusetts. This plant is occupied by the Wireless
    Semiconductor and Application Specific manufacturing operations and
    corporate headquarters.

b)  The Company owns a 92,000 square foot facility in Adamstown, Maryland. This
    plant is occupied by the Company's wholly owned subsidiary, Trans-Tech,
    Inc., and is utilized as the Company's primary ceramic products
    manufacturing facility.

c)  The Company leases a 33,000 square foot facility in Frederick, Maryland.
    This plant is used by the Company's wholly owned subsidiary, Trans-Tech,
    Inc., to manufacture ceramic filters.

d)  The Company leases 60,000 square feet of space in Frederick, Maryland. This
    facility is currently substantially unoccupied and the Company is seeking a
    sub-tenant for the entire facility.


ITEM 3  LEGAL PROCEEDINGS


The Company does not have any material pending legal proceedings other than
routine litigation incidental to its business.

The Company has been notified by federal and state environmental agencies of its
potential liability with respect to the Spectron, Inc. Superfund site in Elkton,
Maryland. Several hundred other companies have also been notified about their
potential liability regarding this site.  The Company continues to deny that it
has any responsibility with respect to this site other than as a de minimis
                                                                 -- -------
party. Management is of the opinion that the outcome of the aforementioned
environmental matter will not have a material effect on the Company's
operations.

See also Note 9 to the Consolidated Financial Statements on page 37.


ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the fiscal
quarter ended March 29, 1998.


                                    PART II



ITEM 5  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
        MATTERS

See the section entitled "Quarterly Financial Data" appearing on page 23 for
information regarding Common Stock market prices.  Dividends have not been paid
in either of the past two fiscal years. See Note 4 to the Consolidated Financial
Statements appearing on pages 29 and 30 for information regarding dividend
restrictions.

                                       7

<PAGE>

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Alpha Industries, Inc. and Subsidiaries
======================================= 


ITEM 6  SELECTED FINANCIAL DATA

FIVE YEAR FINANCIAL SUMMARY
(In thousands, except per share amounts and financial ratios)


<TABLE> 
<CAPTION> 
                                                            FISCAL YEAR

                                                1998         1997       1996        1995       1994
- ----------------------------------------------------------------------------------------------------------------------------------
RESULTS OF OPERATION
<S>                                            <C>        <C>         <C>         <C>       <C>
   Sales....................................   $116,881   $ 85,253    $ 96,894    $78,254   $ 70,147
   Net income (loss)........................     10,302    (15,572)      3,794      2,847    (11,466)
   Per share data
       Net income (loss) diluted............   $   0.98   $  (1.58)   $   0.43    $  0.36   $  (1.53)
       Net income (loss) basic..............   $   1.01   $  (1.58)   $   0.45    $  0.37   $  (1.53)
       Weighted average common
         shares diluted.....................     10,474      9,848       8,751      7,882      7,502
 
       Weighted average common
        shares basic........................     10,201      9,848       8,367      7,607      7,502
FINANCIAL RATIOS
   Return (based on net
     income-net loss)
       On sales.............................        8.8%     (18.3%)       3.9%       3.6%     (16.3%)
       On average assets....................       14.5%     (22.1%)       6.0%       6.0%     (23.4%)
       On average equity....................       20.8%     (30.9%)       8.9%      11.0%     (38.3%)
   Current Ratio............................       2.52       2.10        3.35       1.68       1.64
   Debt to Equity...........................        2.9%       8.3%        4.5%      17.1%      19.9%
FINANCIAL POSITION
   Working Capital..........................   $ 26,061   $ 18,409    $ 32,647    $10,983   $  8,981
   Additions to property, plant
     and equipment..........................     11,039      7,951      12,297      5,248      2,939
   Total assets.............................     76,929     65,253      75,423     50,167     44,430
   Long-term debt...........................      1,625      3,606       2,565      4,744      4,826
   Long-term capital lease
     obligations............................        ---          8         565        754        892
   Stockholders' equity.....................     55,822     43,386      57,533     27,674     24,261
OTHER STATISTICS
   New orders (net of cancellations)........    121,100     81,300     103,200     84,900     66,700
   Backlog at year end......................   $ 36,800   $ 32,500    $ 36,500    $30,200   $ 23,500
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       8

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                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================


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

FISCAL 1998 COMPARED TO FISCAL 1997

GENERAL

Fiscal 1998 was a record year for Alpha Industries, Inc. as sales and orders
exceeded $116 million and $121 million respectively. Other significant
improvements included achievements in capacity expansion, margin improvements
and new products introductions. The Company successfully increased the
utilization of its existing GaAs fab in Massachusetts by introducing "continuous
shift" manufacturing. The Company primarily targets the high volume wireless
markets, particularly the wireless telephony, TV distribution and
telecommunications markets. Currently the Company operates in one business
segment while focusing on three different operating groups. The Wireless
Semiconductor Products group provides gallium arsenide (GaAs) integrated
circuits and other semiconductors to the dynamic global market for wireless
telephone handsets. The Application Specific Products (ASP) group provides a
broad range of GaAs and silicon devices and components to satellite,
instrumentation, defense and other communications markets. The Ceramic Products
group provides technical ceramic products for the wireless telephony
infrastructure and other wireless markets.

In the prior year, the Company focused on two operating divisions, Alpha
Microwave and Trans-Tech, Inc.  The current Wireless Semiconductor and
Application Specific Products groups jointly represent Alpha Microwave, and the
Ceramic Products group represents Trans-Tech, Inc.

RESULTS OF OPERATIONS

Sales for fiscal 1998 totaled $116.9 million compared with sales of $85.3
million in fiscal 1997. The increase in sales was primarily the result of higher
sales volumes due to the increased penetration into several handset platforms.
In particular there was significant sales growth in the Wireless Semiconductor
Products group where sales increased by 99%.  Sales also grew strongly in the
ASP group, which had a 21% annual increase.  The Ceramic Products group sales
grew slightly, year over year. Deliveries to one major customer, Motorola, Inc.,
were 25% of total sales for fiscal 1998. The Company continued to increase its
focus on the commercial wireless markets as defense sales declined to 18% of
fiscal 1998 sales, compared with 21% in fiscal 1997.

Gross profit for fiscal 1998 totaled $44.1 million or 38% of sales compared with
$16.7 million or 20% of sales in fiscal 1997. In fiscal 1997, gross profit
included non-recurring costs that, if excluded, the Company's gross profit as a
percentage of sales would have been 27%. See fiscal 1997 management discussion
and analysis for an explanation of non-recurring costs. Gross margins improved
quarter over quarter primarily as the result of increased sales volumes and the
leveraging of capacity of the Company's high volume semiconductor operation, as
well as reduced manufacturing costs and improved operating efficiencies at the
Ceramic Products group.

Research and development expenses for fiscal 1998 were approximately $10.0
million or 9% of sales compared with $9.5 million or 11% of sales in fiscal
1997.  Overall, R&D increased slightly but the increased investment in the
wireless areas was significant since last year's R&D included expenditures for
the digital radio group that was sold in fiscal 1997.  Also as expected, the
Ceramic Products group decreased its R&D expenditures for fiscal 1998 during
the rebuilding of its business. Approximately 75% of the Company's total
research and development expenditures are for the development of processes and
applications related to high volume products in the Wireless Semiconductor 
Products group, which are targeted at the rapidly-growing wireless markets. The
Company is strongly committed to continuing its investment in the GaAs IC and
high volume wireless

                                       9

<PAGE>

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Alpha Industries, Inc. and Subsidiaries
=======================================
 
products to better serve its targeted markets, particularly as it continues to
introduce new products that its key customers need. Customer sponsored R & D was
not material in amount for fiscal 1998 or 1997.

Selling and administrative expenses increased to $22.4 million or 19% of sales
for fiscal 1998, as compared with  $20.4 million or 24% of sales in fiscal 1997.
Fiscal 1997 included approximately $900 thousand associated with severance costs
related to various corporate executives and $626 thousand for recruiting and
consolidation costs associated with  Trans-Tech, Inc.  Overall, selling and
administrative expenses continue to steadily decrease as a percentage of sales,
whereas, the actual selling and administrative spending continues to increase.
These increases in selling and administrative expenses reflect the increased
investments in the sales, marketing and administrative activities namely  the
addition of dedicated account managers for key wireless OEM manufacturers,
improvements to the Company's information systems, training costs and recruiting
costs for key positions.

Interest expense for fiscal 1998 decreased $83 thousand due to a decline in
short term borrowings.  Other expense and income increased $59 thousand in
fiscal 1998 due to losses resulting from the retirement of obsolete equipment.

The Company's effective tax rate for fiscal 1998 was 10% compared to the current
combined federal, state and foreign rate of approximately 40%.  This rate
differed from statutory rates primarily as a result of the utilization of net
operating loss carryforwards.  At March 29, 1998, the Company had available net
operating loss carryforwards of approximately $26 million which expire
commencing in 2004.

The Company reported net income for fiscal 1998 of $10.3 million or $0.98 per
share diluted compared with a net loss for fiscal 1997 of $15.6 million or $1.58
per share diluted.

FINANCIAL CONDITION

At March 29, 1998, working capital totaled $26.1 million and included $15.8
million in cash, cash equivalents, and short-term investments, compared with
$18.4 million of working capital at the end of fiscal 1997.  Cash, cash
equivalents and short-term investments increased $8.8 million during fiscal 1998
as operations generated $21.7 million of cash principally from net income,
depreciation, and a decline in working capital requirements.  Uses of cash
included the $3.0 million repayment of short-term debt and $11 million for
capital expenditures. The Company continued its investments in capital
expenditures particularly for the semiconductor wafer fab operation and the IC
and discrete semiconductor assembly and test areas, as well as for improved
manufacturing capabilities at the ceramics manufacturing facility.  The Company
remains strongly committed to adding the required capacity needed to service the
wireless markets as demand continues to grow.  During fiscal 1999, the Company
anticipates committing approximately $18 million in capital expenditures for the
high volume Wireless Semiconductor Products group since this group is expected
to be the primary engine for growth.  These capital expenditures are expected to
be disbursed over the next 12 to 18 months.

The Company expects to generate sufficient cash from operations to fund the
necessary capital investments needed to support projected levels of growth.
With cash and short term investments of $15.8 million, a $7.5 million line of
credit and a $7.5 million equipment line of credit currently available, the
Company believes it has adequate funds to support its current operating needs.

The Company believes sales of wireless telephone handsets will continue to grow
during fiscal year 1999. The Company's sales of components for wireless
telephone handsets in the first quarter of fiscal 1999 are expected to be flat
compared to quarter four of fiscal 1998 as customers convert to new dual-band
designs and digital standards.  

                                      10

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                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================
 

OTHER MATTERS

Inflation did not have a significant impact upon the results of operations of
the Company during the three-year period ended March 29, 1998.

In June 1997, the FASB issued Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" and No. 131, "Disclosure about Segments of an Enterprise
and Related Information", which are effective for fiscal years beginning after
December 15, 1997.  The Company will comply with the required presentation of
SFAS No. 130 in fiscal 1999 and is currently evaluating the effects of SFAS No.
131.

Management is aware of the potential software anomalies associated with the year
2000 date change.  The Company has been evaluating the potential issues that
need to be addressed in connection with its operations.  The Company  has
determined its products are not date sensitive and does not expect year 2000
exposure for products sold.  A comprehensive review of the Company's computer
systems and software is largely complete  and the Company is not aware at this
time of any significant year 2000 issues in its own systems that will not be
resolved prior to the year 2000.   Over the last several years the Company has
invested heavily in new computer hardware and software to improve its business
operations.   All such systems were required to be year 2000 compliant as a
condition of purchase.  Formal communications have begun with the Company's
significant suppliers, large customers, and financial institutions to ensure
that those parties have appropriate plans in place to properly address the year
2000 issues. Based on preliminary information, costs of addressing the issue are
not expected to have any material effect upon the Company's financial position,
results of operations, or cash flows in future periods. The Company believes it
has adequate plans in place to address the year 2000 issues. However, there can
be no assurances that the systems on which the Company's operations rely, will
be converted on a timely basis and will not have a material effect on the
Company. See the "Year 2000 Issues" paragraph of the "Forward Looking
Statements."

                                      11

<PAGE>

=======================================
Alpha Industries, Inc. and Subsidiaries
======================================= 

FISCAL 1997 COMPARED TO FISCAL 1996

GENERAL

Despite a difficult 1997 fiscal year, in which the Company lost $15.6 million,
changes and improvements completed by the end of the year have strengthened the
Company and positioned it for profitability in the first quarter (ending June
1997) of the 1998 fiscal year.

The Company's losses in the year were largely the result of an industry-wide
over-supply of cellular telephones and related equipment, especially in the
North American cellular telephone market, as well as operational difficulties at
Trans-Tech, Inc. (TTI), the Company's ceramic component subsidiary.  Following a
period of extremely strong demand from the Company's customers, many of the
Company's customers announced, early in the fourth quarter of the 1996 fiscal
year, that they had excessive finished goods inventory, leading them to cut back
on existing component orders to the Company and to delay future orders.

In July 1996, Thomas C. Leonard was asked by the Board of Directors to take over
as President and CEO of the Company.  Mr. Leonard had been a Vice President at
Alpha for almost four years, concentrating on turning around and improving
troubled operations within Alpha Microwave.

Alpha Microwave, the Company's Gallium Arsenide (GaAs) Integrated Circuits (ICs)
and semiconductor division, operated at virtually break-even for the year, as it
continued to invest for increased capacity and market penetration.  In May 1996,
David J. Aldrich became General Manager of Alpha Microwave and began to
institute a series of changes that strengthened the division and prepared it for
fast growth when the market returned.  Throughout the fiscal year, plans
continued to increase capacity, and in the fourth quarter of fiscal 1997,
conversion from 3 inch to 4 inch diameter GaAs wafers and the addition of a
third shift resulted in a 2.5 to 3-fold increase in the division's capacity to
manufacture GaAs ICs.  Restructuring of the sales and marketing organizations in
the division allowed a tight focus on "strategic customers", the largest
original equipment manufacturers in the wireless telephone industry.  As a
result of all of these actions, Alpha Microwave was profitable in the last two
quarters of fiscal 1997.

Trans-Tech was particularly hard-hit by the slump, because of operating
inefficiencies, which had increased costs and adversely affected shipments to
customers.  These problems led the Company to seek new management for Trans-Tech
- -- a process that was completed only late in January 1997, with the arrival of
Richard Langman as the new President and General Manager of Trans-Tech.

Analysis of the Trans-Tech situation first by Mr. Leonard and then by Mr.
Langman, indicated operational problems, made more painful by the loss of orders
from customers who had been disappointed by Trans-Tech's late and unpredictable
deliveries.  This reduction in order volume at Trans-Tech persisted even as
order volume rose in other parts of the Company, which confirmed the decision to
divest or close higher-cost, redundant manufacturing operations in France and
California.  Legal issues in France delayed the sale of the French subsidiary
until the end of the fourth quarter, but both operations were disposed of during
the fiscal year.  These divestitures reduced costs and eliminated excess
capacity, without any reduction of product offerings.

Also in the fourth quarter, Trans-Tech conducted a significant reduction in
force, largely among support personnel and narrowed the focus of its development
activities, in order to bring its cost structure in line with its reduced level
of business.  Also in the fourth quarter, Alpha Microwave sold a small product
line consisting of digital radio subsystems.

At the beginning of the year, the Company's break-even was at approximately $25
million per quarter; by the end of the year, with the completion of all of the
actions described above, the break-even was at $21-22

                                      12

<PAGE>

                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================
 
million. As a result, the Company announced that all non-recurring events were
complete during fiscal 1997 and projected profitability in the first quarter of
fiscal 1998.

RESULTS OF OPERATIONS

Sales for fiscal 1997 totaled $85.3 million compared to sales of $96.9 million
in fiscal 1996.  The decrease in fiscal 1997 sales was primarily the result of
lower sales volumes at Trans-Tech from the factors discussed above.  In
contrast, sales of semiconductors and GaAs ICs at Alpha Microwave were lower in
the first quarter than in the fourth quarter of fiscal 1996, but showed
continued modest growth throughout the year.  The Company continued to increase
its focus on the commercial wireless markets as military sales declined to 21%
of fiscal 1997 sales, compared with 24% in fiscal 1996.  The Company will
continue to participate in military programs with low risk and those that
provide funding for the development of technology that is transferable to
commercial wireless applications.

Gross profits for fiscal 1997 totaled $16.7 million as compared to $30.9 million
in fiscal 1996.  The decrease in gross profit in fiscal 1997 was the result of:
(i) excess manufacturing capacity at Trans-Tech that was adjusted in the fourth
quarter with the divestiture of the French subsidiary and the consolidation at
Trans-Tech; (ii) carrying costs of approximately $2.7 million for the two
divested operations (incurred prior to divestiture);  (iii) a $2.6 million
inventory write-down at Trans-Tech resulting from shifts in demand away from
certain ceramic products; and (iv) decisions to continue expanding capacity at
Alpha Microwave during the year in spite of lower Company-wide sales volumes for
the first half of the year.  Excluding certain non-recurring costs, primarily
the carrying costs and inventory write-down identified above, the Company's
gross profit as a percentage of sales would be 27% for fiscal 1997 and 31% for
the fourth quarter of fiscal 1997.

Company sponsored research and development expenses increased in fiscal 1997 to
$9.5 million, or 11% of sales from $9.1 million, or 9% of sales in fiscal 1996.
The continued level of research and development expenses reflects the Company's
strong commitment to its investment in the GaAs IC product line.  The Company is
dedicated to supporting high volume applications for wireless customers and will
continue to invest in product and process development to better serve its
targeted markets.  The Company expects a reduction in quarterly R&D of
approximately $200 to $300 thousand, due to the refocusing of TTI and the
discontinued investment in the digital radio product group.  However, the
Company will continue to increase investments in high volume wireless products.
Customer sponsored R & D was not material in amount in fiscal year 1997 and was
$4.2 million in fiscal 1996.  This was the result of a shift away from defense
related contracts.

Selling and administrative expenses increased to $20.4 million, or 24% of sales,
in fiscal 1997 compared to $17.2 million, or 18% of sales, in fiscal 1996.  The
increase in selling and administrative expenses for fiscal 1997 reflects
expanded investments in the Company's sales activities.  These investments
included the addition of dedicated account managers for key wireless OEM
manufacturers and improvements to the Company's information systems, such as
adding Electronic Data Interchange (EDI) capabilities.  Also included in fiscal
1997 selling and administrative expenses are non-recurring costs of $900
thousand for severance costs related to various corporate executives and $626
thousand for recruiting and consolidation costs associated with TTI.

Interest expense decreased $189 thousand for fiscal 1997 compared to the same
period last year.  Interest income increased $43 thousand for fiscal 1997
compared to fiscal 1996.  During the third quarter of fiscal 1996, the Company
received funds from a secondary offering that were used to reduce debt and
increase short-term investments which resulted in decreased interest expense and
increased interest income.  Other expense and income decreased $87 thousand in
fiscal 1997 compared with fiscal 1996.  These fluctuations were due to currency
gains and losses.

                                      13

<PAGE>

=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================
 
The Company did not record a tax provision for fiscal 1997.  No federal taxes
were due, and state and foreign taxes were offset by a state loss carryback.
The Company is expected to have a below normal tax rate due to net operating
loss carryforwards of approximately $36 million which expire beginning in fiscal
2004.

The Company reported a net loss of $15.6 million or $1.58 per share diluted
compared with net income of $3.8 million or $0.43 per share diluted for fiscal
1996.

FINANCIAL CONDITION

At March 30, 1997, working capital totaled $18.4 million and included $7 million
in cash, cash equivalents, and short-term investments, compared with $32.6
million of working capital at the end of fiscal 1996.  Cash decreased $5.5
million during fiscal 1997 as a result of a $15.6 million loss, further
investments in capital expenditures and a reduction in accounts payable.

Capital expenditures of approximately $8 million were used primarily for
continued automation of the semiconductor wafer fab operations and the IC and
discrete semiconductor assembly and test areas, as well as for improved
manufacturing capabilities at the ceramics manufacturing facility.  During
fiscal 1997, the Company was successful in converting its existing 3 inch GaAs
wafer line to 4 inch wafers.  A portion of the capital expenditures during the
year was funded by a $5 million equipment line of credit, which was subsequently
converted to a term note.  The Company remains committed to adding the required
capacity needed to service the wireless markets as demand continues to grow.
The Company currently anticipates investing approximately $10 million in capital
expenditures during fiscal 1998.

With cash, cash equivalents, and short-term investments of $7 million and a $7.5
million working capital line of credit available until October 1, 1997, the
Company believes it has adequate funds to support its current operating and
capital investment needs.  At March 30, 1997, $1 million was borrowed under the
line of credit.  As in the past, the Company intends to renew the line of credit
when it matures.  Also, the Company will continue to evaluate other available
sources of financing, such as sale leasebacks or borrowing against its debt-free
Massachusetts facility.

FORWARD-LOOKING STATEMENTS

Except for the historical information contained herein, the discussion in this
Report contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions.  The cautionary statements made in this Report
should be read as being applicable to all forward-looking statements wherever
they appear in this Report.  The Company's actual results could differ
materially from those discussed herein.  Factors that could cause or contribute
to such differences are discussed below.

                                      14

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

VARIABILITY OF OPERATING RESULTS.  The Company's quarterly and annual results 
have varied in the past and may vary significantly in the future due to a number
of factors, including: cancellation or delay of customer orders; market 
acceptance of the Company's or its customers' products; variations in 
manufacturing yields; timing of announcement and introduction of new products by
the Company and its competitors; changed in revenue and product mix; 
competition; changes in manufacturing capacity and variations in the utilization
of this capacity; variations in average selling prices; variations in operating 
expenses; the long sales cycles associated with the Company's customer specific 
products; the timing and level of product and process development costs; 
cyclicality of the semiconductor and ceramic industries; the timing and level of
non-recurring engineering revenues and expenses relating to customer specific 
products; and changes in inventory levels. Any unfavorable changes in these or 
other factors could have a material adverse effect on the Company's operating 
results. The Company's expense levels are based, in part, on its expectations as
to future revenue, and certain of these expenses, particularly those relating to
the Company's capital equipment and manufacturing overhead, are relatively fixed
in nature. For example, the Company expects to commit up to $18 million during 
fiscal 1999 for new equipment and expansion of its GaAs fabrication facility. 
The Company is also investing in new GaAs process development technologies in 
anticipation of customer demands for more efficient products. As a result of the
relatively fixed nature of certain of the Company's expenses, operating results 
would be disproportionately and adversely affected by a reduction in revenue. 
The Company expects that its operating results will continue to fluctuate in the
future as a result of these and other factors.

CUSTOMER CONCENTRATION.  Historically, a significant portion of the Company's 
sales in each fiscal period has been concentrated among a limited number of 
customers. This trend is accelerating, and in recent periods sales to the 
Company's major customers as a percentage of total sales have increased, with 
sales to one customer, Motorola, Inc., accounting for 25% of the Company's total
sales for fiscal 1998. Motorola has publicly reported that it is undertaking a
major reorganization in order to address business issues that have arisen in
certain of its operating units. The Company does not generally enter into long-
term contracts with its customers, and when it does, the contract is generally
terminable for the convenience of the customer. If the Company were to lose one
of these major customers, or if orders by a major customer otherwise were to
decrease, or if major orders were to be canceled or deferred, the Company's
business, financial condition and operating results would be materially and
adversely affected.

DEPENDENCE ON CUSTOMER SPECIFIC PRODUCTS.  Most of the Company's products are
designed to be incorporated into specific end-user products. In light of short
product life cycles in the wireless communications industry, the Company's
future success depends upon its ability to select customer specific development
projects which will result in sufficient production volume to enable the Company
to recover its development costs and realize a profit on the project. There can
be no assurance that the Company will be able to select such customer specific
projects, or that the Company's products will be designed into such projects.
In addition, OEMs require that their suppliers design and manufacture components
very quickly. There can be no assurance that the Company will be able to design,
manufacture in large volumes and deliver to its customers high quality, reliable
products within the required time periods. The Company has experienced delays in
the production of ICs, ceramic products and discrete semiconductors under major
contracts with major OEM customers. There can be no assurance similar problems
will not recur in the future. Any such problems could have a material and
adverse effect on the Company's operating results.

PRODUCT AND PROCESS DEVELOPMENT AND TECHNOLOGICAL CHANGE. The wireless
communications industry is characterized by frequent new product introductions,
evolving industry standards and rapid changes in product and process
technologies. The Company believes that its future success will depend upon its
ability to continue to improve its product and process technologies and develop
new technologies. The success of the Company's new products is dependent upon
many factors, including factors that are outside the Company's control. These
factors include: the Company's ability to anticipate market requirements in its
product development efforts; market acceptance and continued commercial success
of OEM products for which the Company's products have been designed; the ability
to adapt to technological changes and to support established and emerging
industry standards; successful and timely completion of product 

                                       15

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================

development and commercialization; achievement of acceptable wafer fabrication
and ceramic process yields and manufacturing yields generally; and the ability
to offer new products at competitive prices. No assurance can be given that the
Company's product and process development efforts will be successful or that the
Company's new products or those of its customers will achieve or sustain market
acceptance. In addition, the wireless communications industry is characterized
by end-user demands for increased functionality at ever lower prices. To remain
competitive, the Company must obtain yield and productivity improvements and
cost reductions and must introduce new products which incorporate advanced
features and which therefore can be sold at higher average selling prices. To
the extent that such cost reductions and new product introductions do not occur
in a timely manner or the Company's or its customers' products do not achieve
market acceptance, the Company's operating results could be materially and
adversely affected.

MANUFACTURING RISKS.  The manufacturing processes for the Company's products, in
particular its GaAs ICs, are highly complex and precise, requiring advanced and
costly equipment, and are being modified continually in an effort to improve
yields and product performance. The Company expects that its customers will
continue to establish demanding specifications for quality, performance and
reliability that must be met by the Company's products. The Company has limited
experience in high volume manufacturing of certain GaAs ICs and ceramic products
for the high volume commercial applications on which its current product
development, sales and marketing efforts are focused. The Company has
encountered and may in the future encounter development and manufacturing
delays, has from time to time failed and may in the future fail to meet its
customers' contractual specifications, and one or more of its products have
contained and may in the future contain undetected defects or failures when
first introduced or after commencement of commercial shipments. If such delays,
defects or failures occur, the Company could experience lost revenue, resulting
from delays in or cancellations or rescheduling of orders or shipments, product
returns or discounts, or could experience increased costs, including product or
process redesign, warranty expense or costs associated with customer support,
any of which could have a material adverse effect on the Company's operating
results. There can be no assurance that the Company will not in the future
experience significant product quality, performance or reliability problems.

MANAGEMENT OF GROWTH. The growth in the Company's business has placed, and is 
expected to continue to place, a significant strain on the Company's personnel,
management and other resources. In order to manage any future growth
effectively, the Company will, among other things, be required to upgrade and
expand certain manufacturing facilities; attract, train, motivate and manage
employees successfully; and continue to improve its operational and financial
systems. There can be no assurance that the Company will be successful in these
respects. In addition, the Company has determined that anticipated future growth
of its business requires improvement or expansion of the Company's existing
manufacturing facilities. Expansion or upgrade of the Company's manufacturing
facilities will entail substantial capital expenditures. The Company expects to
commit up to $18 million for such efforts in fiscal 1999. Lead times for certain
capital equipment are long, and modification of the Company's facilities and
installation of such equipment is a complex process which could disrupt the
Company's ongoing manufacturing operations. Delays in completion of a planned
expansion or upgrade could limit the ability of the Company to respond to the
rapid design and production cycles required by its customers. Moreover, there
can be no assurance that the Company will be able to secure sources of capital
adequate to fund the necessary expenditures. The Company could experience
product quality, performance or reliability problems and development and
manufacturing delays in connection with any such increase in utilization or such
expansion or upgrade of the Company's manufacturing capacity. The occurence of
any such problems or the inability of the Company otherwise to manage any future
growth effectively could materially and adversely affect the Company's operating
results.



                                       16

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

DEPENDENCE ON KEY PERSONNEL. The Company's future success depends in large part
on the continued service of its key technical, marketing and management
personnel, and on its ability to identify, attract and retain qualified
technical personnel, particularly highly skilled design, process and test
engineers involved in the manufacture of existing products and the development
of new products and processes. The competition for such personnel is intense,
and the loss of key employees could have a material adverse effect on the
Company.

CYCLICALITY OF THE COMPANY'S MARKETS. While the semiconductor and ceramic
markets have in the past experienced overall growth, they have historically been
characterized by wide fluctuations in product supply and demand. From time to
time, these industries have also experienced significant downturns, often in
connection with, or in anticipation of, maturing product cycles and declines in
general economic conditions. These downturns have been characterized by
diminished product demand, production overcapacity and subsequent accelerated
price erosion, and in some cases have lasted for extended periods of time. The
Company's business may in the future be materially and adversely affected by
industry-wide fluctuations. The Company's continued success will depend in large
part on the continued growth of the wireless communications industry. No
assurance can be given that the Company will not be adversely affected in the
future by cyclical conditions in the wireless communications industry.

COMPETITION. Wireless communications markets are intensely competitive and are
characterized by rapid technological change, rapid product obsolescence and
price erosion. Currently, the Company competes primarily with manufacturers of
high performance GaAs ICs, discrete silicon semiconductors, passive components,
ceramic filters and other ceramic products and microwave and millimeter wave
components. The Company expects increased competition both from existing
competitors and others which may enter these markets, as well as potential
future competition from companies which may offer new or emerging technologies,
such as surface acoustic wave filters, silicon germanium and other silicon
technologies. In addition, many of the Company's customers, particularly its
largest customers, have or could acquire the capability to develope or
manufacture products competitive with those that have been or may be developed
or manufactured by the Company. The Company's future operating results may
depend in part upon the extent to which these customers elect to purchase from
outside sources rather than develop and manufacture their own systems. A number
of the Company's competitors have significantly greater financial, technical,
manufacturing and marketing resources than the Company. The ability of the
Company to compete successfully depends in part upon the ability of the Company
to develop price competitive, high quality solutions for OEMs and the extent to
which customers select the Company's products over competitors' products for
their systems. There can be no assurance that the Company will be able to
compete successfully in the future.

YEAR 2000 ISSUES. The inability of certain computer hardware and software to
correctly recognize dates beginning January 1, 2000 may cause problems in the
correct functioning of computerized systems at the Company and its customers,
suppliers, utility service providers, financial institutions and other
organizations (including without limitation government, transportation and
telecommunications) whose correct functioning is necessary to the success of the
Company's business. The Company is not aware at this time of any significant
year 2000 issues in its own systems that will not be resolved prior to the year
2000. There can be no assurance that the Company's systems, and the systems of
other companies on which the Company's systems and operations rely, will be
converted on a timely basis or that year 2000 issues will not have a material
and adverse effect on the Company.

                                       17

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================


I
TEM 8  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
        INDEX TO FINANCIAL STATEMENTS


<TABLE> 
<CAPTION> 
                                                                               PAGE
- ---------------------------------------------------------------------------------------
<S>                                                                            <C>
Consolidated Balance Sheets - March 29, 1998 and March 30, 1997................ 19
 
Consolidated Statements of Operations - Years ended March 29, 1998,
March 30, 1997, and March 31, 1996............................................. 20
 
Consolidated Statements of Cash Flows - Years ended March 29, 1998,
March 30, 1997, and March 31, 1996............................................. 21
 
Consolidated Statements of Stockholders' Equity - Years ended March 29, 1998,
March 30, 1997, and March 31, 1996............................................. 22
 
Quarterly Financial Data (unaudited) - Fiscal 1998 and Fiscal 1997............. 23
 
Notes to Consolidated Financial Statements..................................... 24
 
Independent Auditors' Report................................................... 38

- ---------------------------------------------------------------------------------------
</TABLE>


                                       18

<PAGE>

                                         
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================
 
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                                     March 29,             March 30,
                                                                                       1998                  1997
- --------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                   <C>
ASSETS (NOTE 4)
     Current assets
          Cash and cash equivalents...............................................   $   14,356           $    5,815
          Short-term investments..................................................        1,493                1,218
          Accounts receivable, trade, less allowance
            for doubtful accounts of $634 and $521................................       18,500               17,019
          Inventories (Note 3)....................................................        7,941               10,267
          Prepayments and other current assets....................................          883                  857
                                                                                        -------             --------
               Total current assets...............................................       43,173               35,176
                                                                                        -------             --------
     Property, plant and equipment
          Land....................................................................          437                  437
          Building and improvements...............................................       23,000               22,659
          Machinery and equipment.................................................       70,051               59,962
                                                                                        -------             --------
                                                                                         93,488               83,058
          Less-accumulated depreciation and
          amortization............................................................       60,824               54,450
                                                                                        -------             --------
                                                                                         32,664               28,608
                                                                                        -------             --------
      Other assets................................................................        1,092                1,469
                                                                                        -------             --------
               Total Assets.......................................................   $   76,929           $   65,253
                                                                                     ==========           ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities
          Notes payable, bank (Note 4)............................................   $       --           $    1,000

          Current maturities of long-term debt (Note 4)...........................        1,876                1,939
          Current maturities of capital lease
          obligations (Note 4)....................................................            8                  230
          Accounts payable........................................................        5,725                5,620
          Repositioning reserve (Note 5)..........................................           --                1,106
          Accrued liabilities
            Payroll, commissions and related expenses.............................        6,724                5,359
            Other.................................................................        2,779                1,513
                                                                                        -------             --------
               Total current liabilities..........................................       17,112               16,767
                                                                                        -------             --------
                                                                                    
     Long-term debt (Note 4)......................................................        1,625                3,606
     Long-term capital lease obligations..........................................           --                    8
     Other long-term liabilities..................................................        2,370                1,486
                                                                                        -------             --------
     Commitments and contingencies (Note 9)                                         
     Stockholders' equity (Notes 4 and 7)                                           
       Common stock par value $.25 per share: authorized                            
          30,000,000 shares; issued 10,545,167 and 10,126,413 shares..............        2,636                2,531
       Additional paid-in capital.................................................       56,758               54,640
       Retained earnings (accumulated deficit)....................................       (3,214)             (13,516)
                                                                                        -------             --------
                                                                                         56,180               43,655
       Less - Treasury shares 100,195 and 161,139 at cost.........................          315                  195
          Unearned compensation-restricted stock..................................           43                   74
                                                                                        -------             --------
               Total stockholders' equity.........................................       55,822               43,386
                                                                                        -------             --------
               Total Liabilities and Stockholders' Equity.........................   $   76,929           $   65,253
                                                                                     ==========           ==========
- --------------------------------------------------------------------------------------------------------------------------
 </TABLE>


The accompanying notes are an integral part of these financial statements.

                                       19

<PAGE>

=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


<TABLE> 
<CAPTION> 
                                                                                          YEAR ENDED          
                                                                      MARCH 29,            MARCH 30,          MARCH 31,
                                                                        1998                 1997               1996   
- ------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                 <C>                 <C>      
Sales............................................................      $116,881            $ 85,253           $96,894
                                                                       --------            --------           -------

Cost of sales....................................................        72,799              68,519            65,986
Research and development expenses................................        10,035               9,545             9,148
Selling and administrative expenses..............................        22,359              20,441            17,226
Repositioning expenses (credit) (Note 5).........................           ---               2,074              (320)
                                                                       --------            --------           -------
                                                                        105,193             100,579            92,040
Operating income (loss)..........................................        11,688             (15,326)            4,854
                                                                       --------            --------           -------
Other income (expense)
 Interest expense................................................          (471)               (554)             (743)
 Interest income.................................................           396                 415               372
 Other (expense) income, net.....................................          (166)               (107)              (20)
                                                                       --------            --------           -------
                                                                           (241)               (246)             (391)
                                                                       --------            --------           -------
Income (loss) before income taxes................................        11,447             (15,572)            4,463
Provision for income taxes (Note 6)..............................         1,145                 ---               669
                                                                       --------            --------           -------
Net income (loss)................................................      $ 10,302            $(15,572)          $ 3,794
                                                                       ========            ========           =======

Net income (loss) per share diluted..............................      $   0.98            $  (1.58)          $   .43
                                                                       ========            ========           =======

Net income (loss) per share basic................................      $   1.01            $  (1.58)          $   .45
                                                                       ========            ========           =======

Weighted average common shares diluted...........................        10,474               9,848             8,751
                                                                       ========            ========           =======

Weighted average common shares basic.............................        10,201               9,848             8,367
                                                                       ========            ========           =======
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                       20

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)                           


<TABLE> 
<CAPTION> 
                                                                                                  YEAR ENDED         
                                                                                   MARCH 29,       MARCH 30,     MARCH 31 
                                                                                     1998            1997          1996,   
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>            <C>            <C>         
CASH (USED IN) PROVIDED BY OPERATIONS:                                                                            
 Net income (loss)...............................................................  $  10,302      $ (15,572)     $   3,794
 Adjustments to reconcile net income (loss) to
  net cash (used in) provided by operations:
   Depreciation and amortization of property, plant,
    and equipment................................................................      6,742          5,886          4,628
   Amortization of unearned compensation - restricted stock......................         31             35             61
   Unearned compensation.........................................................        ---            (11)           ---
   (Gain) loss on sales and retirements of property,
    plant, and equipment.........................................................        132             --             (9)
   Noncash portion of repositioning charges......................................        ---            660            ---
   Gain on property, plant and equipment due
    to repositioning.............................................................        ---            ---           (320)
   Decrease (increase) in other assets...........................................        375           (262)          (395)
   Increase in other liabilities and long-term benefits..........................        884            630             62
   Issuance of treasury stock to 401(k) plan.....................................        833            831            220
   Change in assets and liabilities
    Accounts receivable..........................................................     (1,481)           771         (4,140)
    Inventories..................................................................      2,326            770         (2,645)
    Prepayments and other current assets.........................................        (26)           318           (623)
    Accounts payable.............................................................        105         (1,455)         1,869
    Accrued liabilities..........................................................      2,631            818           (241)
    Repositioning reserve........................................................     (1,106)         1,106           (991)
                                                                                   ---------      ---------      --------- 
   Net cash (used in) provided by operations.....................................     21,748         (5,475)         1,270
                                                                                   ---------      ---------      ---------

CASH USED IN INVESTMENTS:
 Additions to property, plant and equipment
  excluding capital leases.......................................................    (11,039)        (7,951)       (11,972)
 Purchases of short-term investments.............................................     (2,335)        (4,030)       (12,113)
 Maturities of short-term investments............................................      2,060          6,955          7,970
 Net proceeds from divestitures..................................................        ---          1,191            ---
 Proceeds from sale of  property, plant and equipment............................        109            ---             31
 Proceeds from sale of property held for resale..................................        ---            ---          2,465
                                                                                   ---------      ---------      --------- 
     Net cash used in investments................................................    (11,205)        (3,835)       (13,619)
                                                                                   ---------      ---------      ---------

CASH (USED IN) PROVIDED BY FINANCING:                                                                          
 Proceeds from notes payable.....................................................        ---          4,952            621
 Payments on notes payable.......................................................     (3,044)        (1,304)        (5,807)
 Payments on capital lease obligations...........................................       (230)          (437)          (441)
 Deferred charges related to long-term debt......................................          2             18              8
 Exercise of stock options and warrants..........................................      1,400            462            392
 Proceeds from sale of stock.....................................................        138            108         25,392
 Repurchase of treasury shares...................................................       (268)           ---            ---
                                                                                   ---------      ---------      --------- 
   Net cash (used in) provided by financing......................................     (2,002)         3,799         20,165
                                                                                   ---------      ---------      --------- 
 Net increase (decrease) in cash and cash equivalents............................      8,541         (5,511)         7,816
 Cash and cash equivalents, beginning of year....................................      5,815         11,326          3,510
                                                                                   ---------      ---------      --------- 
 Cash and cash equivalents, end of year..........................................  $  14,356      $   5,815      $  11,326
                                                                                   =========      =========      ========= 
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Supplemental disclosures:
No new leases were entered into during the years ended March 29, 1998 and March
30, 1997. Capital lease obligations of $325 thousand were incurred during the
year ended March 31, 1996, when the Company entered into leases for new
equipment.

The accompanying notes are an integral part of these financial statements.

                                       21

<PAGE>
=======================================
ALPHA INDUSTRIES, INC. AND SUBSIDIARIES
=======================================

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                            RETAINED                    UNEARNED
                                                             ADDITIONAL     EARNINGS                   COMPENSATION
                                           COMMON STOCK       PAID-IN     (ACCUMULATED)    TREASURY     RESTRICTED
                                        SHARES   PAR VALUE    CAPITAL       (DEFICIT)        STOCK        STOCK
- --------------------------------------------------------------------------------------------------------------------
<S>                                     <C>      <C>         <C>          <C>              <C>         <C>
Balance April 2, 1995.................   7,994    $  1,999    $ 27,921       $ (1,738)       $ (330)      $ (178)               
Net income............................     ---         ---         ---          3,794           ---          ---
Stock offering net of expenses........   1,840         460      24,802            ---           ---          ---
Employee Stock Purchase Plan..........      17           4         126            ---           ---          ---
Issuance of restricted stock..........       9           2          49            ---           ---          (51)
Amortization of unearned                      
 compensation restricted stock........     ---         ---         ---            ---           ---           61
Issuance 18,334 treasury shares               
 to ESOP..............................     ---         ---         197            ---            23          ---
Repurchase 4,500 shares of                    
 restricted stock.....................     ---         ---         ---            ---           (14)          14
Exercise of stock                           79          19         373            ---           ---          ---
 options..............................  ------     -------     -------       --------        ------       ------
Balance March 31, 1996................   9,939       2,484      53,468          2,056          (321)        (154)
                                              
Net loss..............................     ---         ---         ---        (15,572)          ---          ---
Employee Stock Purchase Plan..........      15           4         104            ---           ---          ---
Amortization of unearned                      
 compensation restricted stock........     ---         ---         ---            ---           ---           35
Issuance 100,580 treasury shares              
 to 401(k) plan.......................     ---         ---         702            ---           129          ---
Repurchase 12,667 shares of                   
 restricted stock.....................     ---         ---         (53)           ---            (3)          45
Exercise of stock options.............     172          43         419            ---           ---          ---
                                        ------     -------     -------       --------        ------       ------
Balance March 30, 1997................  10,126       2,531      54,640        (13,516)         (195)         (74)
                                              
Net income............................     ---         ---         ---         10,302           ---          ---
Employee Stock Purchase Plan..........      20           5         133            ---           ---          ---
Amortization of unearned                      
 compensation restricted stock........     ---         ---         ---            ---           ---           31
Issuance 82,780 treasury shares to            
 401(k) plan..........................     ---         ---         685            ---           148          ---
Repurchase 21,836 shares..............     ---         ---         ---            ---          (268)         ---
Exercise of stock options.............     349          87       1,125            ---           ---          ---
Exercise of stock warrants............      50          13         175            ---           ---          ---
                                        ------     -------     -------       --------        ------       ------
Balance March 29, 1998................  10,545    $  2,636     $56,758       $ (3,214)       $ (315)       $ (43)
                                        ======     =======     =======       ========        ======       ======
- --------------------------------------------------------------------------------------------------------------------
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                       22

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

QUARTERLY FINANCIAL DATA
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE DATA)



<TABLE> 
<CAPTION> 
                                   FIRST         SECOND      THIRD      FOURTH
                                  QUARTER       QUARTER     QUARTER    QUARTER    YEAR
======================================================================================================
<S>                               <C>           <C>         <C>        <C>        <C>
FISCAL 1998
  Sales..........................  $ 25,705     $ 28,571    $ 30,751   $ 31,854   $116,881
  Gross profit...................     8,897       10,629      11,823     12,733     44,082
  Net income.....................     1,110        2,344       3,156      3,692     10,302
  Per share data
      Net income diluted.........       .11           .22        .30        .35        .98
      Net income basic...........       .11           .23        .31        .36       1.01
  Market price range:                                        
    High.........................   8-13/16        16-3/8     20-5/8     20         20-5/8
    Low..........................   6-5/8           8-1/4     12-7/8     14-1/16     6-5/8
                                                             
FISCAL 1997                                                  
  Sales..........................  $ 20,066       $20,137    $22,287   $ 22,763   $ 85,253
  Gross profit...................     3,792         2,819      5,241      4,882     16,734
  Net income (loss)..............    (3,424)       (4,728)    (2,075)    (5,345)   (15,572)
  Per share data                                             
      Net income (loss) diluted..      (.35)         (.48)      (.21)      (.54)     (1.58)
      Net income (loss) basic....      (.35)         (.48)      (.21)      (.54)     (1.58)
  Market price range:                                        
    High.........................    11-3/4          9-3/8     9-3/4          9     11-3/4
    Low..........................     7-7/8          6-7/8     5-3/4      5-7/8      5-3/4

====================================================================================================== 
</TABLE>


The Company's common stock is traded on the NASDAQ Stock Market under the symbol
AHAA.  Prior to June 2, 1998, the Company's stock was traded on the American
Stock Exchange under the symbol AHA. The number of stockholders of record as of
May 29, 1998 was approximately 1,000.

                                       23

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
======================================= 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:
   The financial statements include the accounts of the Company and its
   subsidiaries. All significant intercompany accounts and transactions have
   been eliminated in consolidation. The Company's fiscal year ends on the
   Sunday closest to March 31. There were 52 weeks in fiscal 1998, 1997 and
   1996.

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

Revenue Recognition:
   Revenue is recognized when a product is shipped and services are performed.
   Contract revenue is recognized on the percentage-of-completion method, which
   is primarily measured on the ratio of units shipped to the total contract
   number of units. Provisions for estimated losses, if any, on uncompleted
   contracts are made in the period in which such losses are determined.

Foreign Currency Translation:
   The accounts of foreign subsidiaries are translated in accordance with the
   Financial Accounting Standards Board Statement No. 52. Foreign operations are
   remeasured as if the functional currency were the U.S. dollar. Monetary
   assets and liabilities are translated at the year end rates of exchange.
   Revenues and expenses (except cost of sales and depreciation) are translated
   at the average rate for the period. Non-monetary assets, equity, cost of
   sales and depreciation are remeasured at historical rates. Remeasurement
   gains and losses are reflected currently in operations and are not material.

Research and Development Expenditures:
   Research and development expenditures are charged to income as incurred
   unless they are reimbursed under specific contracts.

Cash, Cash Equivalents and Short-term Investments:
   Cash and cash equivalents include cash deposited in demand deposits at banks
   and highly liquid investments with original maturities of 90 days or less.

   The Company's short-term investments are classified as held-to-maturity.
   These investments consist primarily of commercial paper and bonds with
   original maturities of more than 90 days. Such short-term investments are
   carried at amortized cost, which approximates fair value, due to the short
   period of time to maturity. Gains and losses are included in investment
   income in the period they are realized.

Inventories:
  Inventories are stated at the lower of cost, determined on a first-in, first-
  out basis, or market.

                                       24

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant and Equipment:
   Property, plant and equipment are carried at cost. Depreciation is provided
   on the straight-line method for financial reporting and accelerated methods
   for tax purposes.

   Estimated useful lives used for depreciation purposes are 5 to 30 years for
   buildings and improvements and 3 to 10 years for machinery and equipment.

Fair Value of Financial Instruments:
   Financial instruments of the Company consist of cash, cash equivalents,
   accounts receivable, accounts payable and accrued liabilities. The carrying
   value of these financial instruments approximates their fair value because of
   the short maturity of these instruments. Based upon borrowing rates currently
   available to the Company for issuance of similar debt with similar terms and
   remaining maturities, the estimated fair value of long-term debt approximates
   their carrying amounts. The Company does not use derivative instruments.

Income Taxes:
   The Company uses the asset and liability method of accounting for income
   taxes. Under the asset and liability method, deferred tax assets and
   liabilities are recognized for the estimated future tax consequences
   attributable to differences between the financial statement carrying amounts
   of existing assets and liabilities and their respective tax bases. This
   method also requires the recognition of future tax benefits such as net
   operating loss carryforwards, to the extent that realization of such benefits
   is more likely than not. Deferred tax assets and liabilities are measured
   using enacted tax rates expected to apply to taxable income in the years in
   which those temporary differences are expected to be recovered or settled.
   The effect on deferred tax assets and liabilities of a change in tax rates is
   recognized in income in the period that includes the enactment date.

Net Income Per Common Share:
   During fiscal 1998, the Company adopted the provisions of Statement of
   Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share."  Under
   the provisions of SFAS 128, basic earnings per share replaces primary
   earnings per share and the dilutive effect of stock options and warrants are
   excluded from the calculation.  Fully diluted earnings per share are replaced
   by diluted earnings per share and include the dilutive effect of stock
   options and warrants, using the treasury stock method.  All prior period
   earnings per share data have been restated to conform to the requirements of
   SFAS 128.

   A reconciliation of the weighted average number of shares outstanding used in
   the computation of the basic and diluted earnings per share for the three
   years ended March 29, 1998 is as follows (in thousands):


<TABLE>
<CAPTION>
 
                                              1998    1997    1996
                                              ----    ----    ----
<S>                                         <C>      <C>     <C>    
       Weighted average shares (basic)      10,201   9,848   8,367    
       Effect of dilutive stock options        273      --     384    
                                            ------   -----   -----    
       Weighted average shares (diluted)    10,474   9,848   8,751    
                                            ======   =====   =====    
</TABLE>


   The net income (loss) used in the calculation for basic and diluted earnings
   per share calculations agrees with the net income (loss) appearing in the
   financial statements.

                                       25

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
======================================= 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of:
   The Company adopted the provisions of SFAS No. 121, "Accounting for the
   Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of",
   during fiscal 1997. This statement requires that long-lived assets and
   certain identifiable intangibles be reviewed for impairment whenever events
   or changes in circumstances indicate that the carrying amount of an asset may
   not be recoverable. Recoverability of assets to be held and used is measured
   by a comparison of the carrying amount of an asset to future net cash flows
   expected to be generated by the asset. If such assets are considered to be
   impaired, the impairment to be recognized is measured by the amount by which
   the carrying amount of the assets exceeds the fair value of the assets.
   Assets to be disposed of are reported at the lower of the carrying amount or
   fair value less costs to sell. Adoption of this Statement did not have a
   material impact on the Company's financial position, results of operations,
   or liquidity.

Stock Option Plan:
   Prior to fiscal 1997, the Company accounted for its stock option plan in
   accordance with the provisions of Accounting Principles Board ("APB") Opinion
   No. 25, "Accounting for Stock Issued to Employees", and related
   interpretations.  As such, compensation expense would be recorded on the date
   of grant only if the current market price of the underlying stock exceeded
   the exercise price.  During fiscal 1997, the Company adopted SFAS No. 123,
   "Accounting of Stock-Based Compensation", which permits entities to recognize
   as expense over the vesting period the fair value of all stock-based awards
   on the date of grant. Alternatively, SFAS No. 123 also allows entities to
   continue to apply the provisions of APB Opinion No. 25 and provide pro forma
   net income and pro forma earnings per share disclosures for employee stock
   option grants made in 1995 and future years as if the fair-value-based method
   defined in SFAS No. 123 had been applied.  The Company has elected to
   continue to apply the provisions of APB Opinion No. 25 and provide the pro
   forma disclosure provisions of SFAS No. 123.

New Accounting Standards:
   The Financial Accounting Standards Board recently issued SFAS No. 129,
   "Disclosure of Information about Capital Structure."  This statement
   establishes standards for disclosing information about an entity's capital
   structure.  This statement is effective for periods ending after December 15,
   1997.  The Company is in compliance with this standard.

   The Financial Accounting Standards Board recently issued SFAS No. 130,
   "Reporting Comprehensive Income."  This statement establishes standards for
   reporting and display of comprehensive income and its components in a full
   set of general purpose financial statements.  This statement is effective for
   fiscal years beginning after December 15, 1997 and requires reclassification
   of financial statements for earlier periods provided for comparative
   purposes.  The Company will comply with the required presentation in fiscal
   1999.

   The Financial Accounting Standards Board recently issued SFAS No. 131,
   "Disclosure about Segments of an Enterprise and Related Information."  This
   statement establishes standards for reporting operating segments of publicly
   traded business enterprises in annual and interim financial statements and
   requires that those enterprises report selected information about operating
   segments.  This statement supersedes SFAS No. 14, "Financial Reporting for
   Segments of a Business," but retains the requirement to report information
   about major customers.  This statement is effective for financial statements
   for fiscal years beginning after December 15, 1997 and requires that
   comparative information for earlier years be restated.  The Company has not
   yet determined what impact, if any, this standard will have on its financial
   statement presentation.

                                       26

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   The Financial Accounting Standards Board recently issued SFAS No. 132,
   "Employers' Disclosures about Pensions and Other Postretirement Benefits."
   This statement standardizes disclosure requirements for pensions and other
   postretirement benefits, and is effective for fiscal years beginning after
   December 15, 1997.  This statement does not apply to the Company as the
   Company does not currently sponsor any defined benefit plans.

NOTE 2    COMPANY OPERATIONS

The Company operates in one industry segment: the development, production and
sale of microwave materials, devices and components. Sales include export sales
primarily to Europe and to a lesser extent Southeast Asia of $39.2 million,
$26.7 million, and $23.6 million, in fiscal 1998, 1997, and 1996, respectively.

During fiscal year 1998 and 1997, one customer accounted for 25% and 11%
respectively of the Company's total sales, whereas, during fiscal year 1996, no
one customer accounted for 10% or more of the Company's total sales. The Company
is focused on four major OEMs and six other customers that the Company believes
are principal suppliers to these OEMs in the wireless communications market. For
fiscal 1998 sales to the four major OEMs and their suppliers represented
approximately 40% of the Company's total sales. In fiscal 1997 and 1996 sales to
these OEMs and their suppliers represented approximately 26% and 29% of the
Company's total sales, respectively. While the Company believes that these
emerging wireless markets afford great opportunities, such customer
concentration could have an adverse affect on the business.

                                       27

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2    COMPANY OPERATIONS (CONTINUED)

During fiscal 1998, 1997, and 1996, the Company operated a sales subsidiary in
the United Kingdom. At the end of fiscal 1997, the Company sold its ceramic
manufacturing operation in France. During fiscal 1996, the Company closed its
sales subsidiary in Germany and replaced it with an independent sales
representative and distributor. The following table shows certain financial
information relating to the Company's operations in various geographic areas (in
thousands):


<TABLE> 
<CAPTION> 
                                  1998        1997       1996
======================================================================
Sales
<S>                              <C>         <C>        <C>
   United States
      Customers.............     $110,108    $ 76,004   $ 83,078
      Intercompany..........        5,665       6,472      8,526  
   Europe                                                          
      Customers.............        6,773       9,249     13,816  
   Eliminations.............       (5,665)     (6,472)    (8,526) 
                                 --------    --------   --------  
Net Sales...................      116,881      85,253     96,894  
                                 --------    --------   --------   
 
Income (loss) before taxes
   United States............       11,027     (13,520)     3,553
   Europe...................          420      (2,052)       910
                                 --------    --------   --------
Income (loss) before taxes..       11,447     (15,572)     4,463
                                 --------    --------   -------- 
 
Assets
   United States............       72,165      61,547     69,201
   Europe...................        4,764       3,706      6,222
                                 --------    --------   --------
Total Assets................     $ 76,929    $ 65,253   $ 75,423
                                 ========    ========   ========
========================================================================
</TABLE>


Transfers between geographic areas are made at terms that allow for a reasonable
profit to the seller.

NOTE 3  INVENTORIES


<TABLE>
<CAPTION>


                                                              March 29,    March 30,
Inventories consisted of the following (in thousands):          1998         1997
===================================================================================
<S>                                                        <C>          <C>       
Raw materials...........................................       $3,916     $ 4,886 
Work-in-process.........................................        2,259       3,439 
Finished goods..........................................        1,766       1,942 
                                                               ------     ------- 
                                                               $7,941     $10,267 
                                                               ======     =======  
===================================================================================
</TABLE>


During fiscal 1997, the Company recorded a $2.6 million write-down of inventory
resulting from shifts in demand away from ceramic products.

                                       28

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4    BORROWING ARRANGEMENTS AND COMMITMENTS

LINE OF CREDIT

The Company has a $7.5 million Working Capital Line of Credit Agreement which
expires September 30, 1999. This line of credit is collateralized by the assets
of the Company, excluding real property, not otherwise collateralized. A
commitment fee of 1/2% per year is due quarterly under the Agreement. At March
29, 1998, there was no borrowing outstanding under this Agreement. At March 30,
1997, there was $1.0 million outstanding under this Agreement.


As of October 1, 1997, the Company obtained a $7.5 million Equipment Line of
Credit Agreement which expires on September 30, 1998. Prior to October 1, 1998,
the Equipment Line of Credit Agreement may be converted to a four-year term
loan. This equipment line of credit is collateralized by equipment financed.  A
facility fee of $37.5 thousand was paid upon execution of the Agreement. At
March 29, 1998, there was no borrowing outstanding under this Agreement.


LONG-TERM DEBT


<TABLE>
<CAPTION>
                                                          March 29,   March 30,
Long-term debt consisted of the following (in thousands):   1998        1997
================================================================================
<S>                                                       <C>         <C>
    Equipment Term Note (a).............................   $ 2,344      $3,998
    Industrial Revenue Bond (b).........................       444         558
    French Government Sponsored and Start-up Loans (c)..       ---         170
    CDBG Grant (d)......................................       713         819
                                                            ------      ------
                                                             3,501       5,545
    Less - current maturities...........................     1,876       1,939
                                                            ------      ------
                                                            $1,625      $3,606
                                                            ======      ======
================================================================================
</TABLE>


a. The equipment term note is at LIBOR (5.67188% at March 29, 1998 and 5.4375%
   at March 30, 1997) plus 2.5% and 3%, respectively. This note is
   collateralized by the assets of the Company, excluding real property, not
   otherwise collateralized. Principal payments of approximately $138 thousand
   plus interest are due monthly until August 1999.

b. An industrial revenue bond is held by the Farmers and Mechanics National
   Bank. The interest rate on this bond is prime (8.5% at March 29, 1998 and
   March 30, 1997) and quarterly principal payments of approximately $28
   thousand are due until March 2002. The bond is secured by various property,
   plant and equipment with a net book value of $2.3 million at March 29, 1998.

c. The unsecured government sponsored and start-up loans were repaid in full
   during fiscal 1998.

d. The Company obtained a ten year $960 thousand loan from the State of Maryland
   under the Community Development Block Grant program. Quarterly payments are
   due through December 2003 and represent principal plus interest at 5% of the
   unamortized balance.

                                       29

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4  BORROWING ARRANGEMENTS AND COMMITMENTS (CONTINUED)

Aggregate annual maturities of long-term debt are as follows (in thousands):


<TABLE>
<CAPTION>
        FISCAL YEAR
=================================================================
<S>                                                  <C>
        2000........................................ $  918
        2001........................................    234
        2002........................................    240
        2003........................................    135
        2004........................................     98
                                                     ------
                                                     $1,625
                                                     ======
=================================================================
</TABLE>


 
CAPITAL LEASE OBLIGATIONS

At March 29, 1998 included in property, plant and equipment are the following
capitalized leases (in thousands):


        Property, plant and equipment.................. $  1,798
        Accumulated depreciation and amortization......    1,664
                                                       ---------
                                                       $     134
                                                       =========

One year of lease payments totaling $8 thousand remains under the capitalized
lease obligations.

Cash payments for interest were $492 thousand, $470 thousand, and $906 thousand,
in fiscal 1998, 1997, and 1996, respectively.

The bond, lines of credit and term loan agreements include various covenants
that require maintenance of certain financial ratios and balances and restrict
creation of funded debt and payment of dividends. Under the most restrictive
covenants the Company may not pay dividends except restricted payments in an
amount not to exceed $100 thousand in order to redeem shares of capital stock of
the Company under the Company's employee benefit plans.

NOTE 5  REPOSITIONING CHARGE

During fiscal 1997, the Company successfully completed the resizing of Trans-
Tech, Inc. (TTI), its Maryland subsidiary, which included the sale of Trans-Tech
Europe (TTE), its French ceramic manufacturing operation, and the closing of the
TTI California facility. The Company also completed the sale of the digital
radio product line. The above actions resulted in a repositioning charge which
was recorded in the fourth quarter of fiscal 1997.  The charge included the
following items (in thousands):


<TABLE>
            <S>                                     <C>
            Employee severance at TTI.............  $  493
            Lease commitments on unoccupied
               facilities at TTI..................     512
            Write-off of excess equipment at TTI..     263
            Net loss on divestitures..............     806
                                                    ------
               Total repositioning charge.........  $2,074
                                                    ======
</TABLE>


                                       30

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5    REPOSITIONING CHARGE (CONTINUED)

The severance charges were related to a reduction in force of 47 employees,
largely among support personnel, and were completed in the fourth quarter of
fiscal 1997.

The cash payments relating to the repositioning charge totaled approximately
$1.4 million. Cash payments totaling $1.1 million and $308 thousand were made
during fiscal 1998 and 1997, respectively.

During fiscal 1996, the Company sold its Methuen, Massachusetts plant which
resulted in a $320 thousand repositioning credit attributable to the reversal of
certain accruals as a result of an earlier than expected disposition of this
facility.

NOTE 6    INCOME TAXES

Income (loss) before income taxes consisted of (in thousands):


<TABLE>
<CAPTION>
                                                                   1998       1997      1996
==============================================================================================
<S>                                                             <C>       <C>         <C>
    Domestic.................................................   $11,027   $(13,520)   $3,553
    Foreign..................................................       420    ( 2,052)      910
                                                                -------   --------    ------
                                                                $11,447   $(15,572)   $4,463
                                                                =======   ========    ======

The provision for income taxes consisted of (in thousands):

<CAPTION> 
                                                                   1998       1997      1996
==============================================================================================
<S>                                                             <C>       <C>         <C> 
 Current income taxes
    Federal..................................................   $   221   $    ---    $   69
    State....................................................       683       (119)      108
    Foreign..................................................       241        119       492
                                                                -------   --------    ------
                                                                $ 1,145   $    ---    $  669
                                                                =======   ========    ======
</TABLE>
 

The provision for income taxes is different from that which would be obtained by
applying the statutory Federal income tax rate to income (loss) before income
taxes. The items causing this difference are as follows (in thousands):


<TABLE> 
<CAPTION> 
                                                                   1998       1997      1996
==============================================================================================
<S>                                                             <C>        <C>        <C> 
    Tax expense (benefit) at U.S. statutory rate.............   $ 3,892    $(5,294)   $1,517
    Alternative minimum tax..................................       221        ---       ---
    State income taxes, net of federal benefit...............       451         79        71
    Change in valuation allowance............................    (3,375)     5,189      (882)
    Other net................................................       (44)        26       (37)
                                                                -------    -------    ------
                                                                $ 1,145    $   ---    $  669
                                                                =======    =======    ======
==============================================================================================
</TABLE>


                                       31

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6    INCOME TAXES (CONTINUED)

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at March 29, 1998 and
March 30, 1997 are as follows (in thousands):


<TABLE> 
<CAPTION> 
                                                                  1998       1997
=====================================================================================
<S>                                                           <C>        <C> 
Deferred tax assets:
  Accounts receivable due to bad debts......................  $    235   $    195
  Inventories due to reserves and inventory capitalization..     1,238      1,417
  Accrued liabilities.......................................     2,494      1,584
  Deferred compensation.....................................       140        102
  Other.....................................................        24          7
  Net operating loss carryforward...........................     8,723     13,109
  Charitable contribution carryforward......................        30         37
  Minimum tax credits and state tax credit carryforwards....     1,045        555
                                                              --------   --------
   Total gross deferred tax assets..........................    13,929     17,006
   Less valuation allowance.................................   (10,128)   (13,503)
                                                              --------   --------
   Net deferred tax assets..................................     3,801      3,503
                                                              --------   --------
 
Deferred tax liabilities:
  Property, plant and equipment due to depreciation.........    (3,801)    (3,503)
                                                              --------   --------
   Total gross deferred tax liability.......................   ( 3,801)    (3,503)
                                                              --------   --------
   Net deferred tax.........................................  $    ---   $    ---
                                                              ========   ========
=====================================================================================
</TABLE>


The valuation allowance for deferred tax assets as of March 29, 1998 and March
30, 1997 was $10.1 million and $13.5 million, respectively. The net change in
the total valuation allowance for the years ended March 29, 1998 and March 30,
1997 was a decrease of $3.4 million and an increase of $5.2 million,
respectively.

Cash payments for income taxes were $342 thousand, $149 thousand and $241
thousand in fiscal 1998, 1997 and 1996, respectively. As of March 29, 1998, the
Company has available for income tax purposes approximately $26 million in
federal net operating loss carryforwards which may be used to offset future
taxable income. These loss carryforwards begin to expire in fiscal year 2004.
Should the Company undergo an ownership change as defined in Section 382 of the
Internal Revenue Code, the Company's tax net operating loss carryforwards
generated prior to the ownership change will be subject to an annual limitation
which could reduce or defer the utilization of these losses. The Company also
has minimum tax credit carryforwards of approximately $264 thousand which are
available to reduce future federal regular income taxes, if any, over an
indefinite period. In addition, the Company has state tax credit carryforwards
of $781 thousand of which $244 thousand is available to reduce state income
taxes over an indefinite period.

The Company has not recognized a deferred tax liability of approximately $306
thousand for the undistributed earnings of its 100 percent owned foreign
subsidiaries that arose in 1998 and prior years because the Company currently
does not expect those unremitted earnings to reverse and become taxable to the
Company in the foreseeable future. A deferred tax liability will be recognized
when the Company expects that it will recover those undistributed earnings in a
taxable manner, such as through receipt of dividends or sale of the investments.
As of March 29, 1998, the undistributed earnings of these subsidiaries were
approximately $899 thousand.

                                       32

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7    COMMON STOCK

LONG-TERM INCENTIVE PLAN

The Company has Long-Term Incentive Plans adopted in 1986 and 1996 pursuant to
which stock options, with or without stock appreciation rights, may be granted
and restricted stock awards and book value awards may be made.

     Common Stock Options

     These options may be granted in the form of incentive stock options or non-
     qualified stock options.  The option price may vary at the discretion of
     the Compensation Committee but shall not be less than the greater of fair
     market value or par value. The option term may not exceed ten years. The
     options may be exercised in cumulative annual increments commencing one
     year after the date of grant.  A total of 2,000,000 shares are authorized
     for grant under the Company's Long-Term Incentive Plans. The number of
     common shares reserved for granting of future awards is 75,550, 328,500,
     and 214,373, at March 29, 1998, March 30, 1997 and March 31, 1996
     respectively.

     Restricted Stock Awards

     No restricted shares of the Company's common stock were issued during
     fiscal 1998 and 1997. For fiscal 1996, a total of 8,500 restricted shares
     of the Company's common stock were granted to certain employees. The market
     value of shares awarded was $51 thousand for fiscal 1996. This amount was
     recorded as unearned compensation - restricted stock and is shown as a
     separate component of stockholders' equity. Unearned compensation is being
     amortized to expense over the five year vesting period and amounted to $31
     thousand, $35 thousand, and $61 thousand in fiscal 1998, 1997, and 1996,
     respectively.

LONG-TERM COMPENSATION PLAN

On October 1, 1990, the Company adopted a Supplemental Executive Retirement Plan
(SERP) for certain key executives. Benefits payable under this plan are based
upon the participant's base pay at retirement reduced by proceeds from the
exercise of certain stock options. Options vest over a five year period.
Benefits earned under the SERP are fully vested at age 55, however, the benefit
is ratably reduced if the participant retires prior to age 65. Compensation
expense related to the plan was $127 thousand, $106 thousand, and $62 thousand
in fiscal 1998, 1997, and 1996, respectively. Total benefits accrued under these
plans were $308 thousand at March 29, 1998 and $180 thousand at March 30, 1997.

                                       33

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7    COMMON STOCK (CONTINUED)

A summary of stock option and restricted stock award transactions follows:


<TABLE>  
<CAPTION> 
                                                                     WEIGHTED AVERAGE                       
                                                                     EXERCISE PRICE OF                      
                                                           SHARES    SHARES UNDER PLAN                      
=============================================================================================
<S>                                                       <C>        <C>                                    
Balance outstanding at April 2, 1995................      869,225            $ 3.14                         
                                                        ---------                                           
                                                                                                            
  Granted...........................................      115,500             12.36                         
  Exercised.........................................      (78,432)             2.82                         
  Restricted........................................      (22,664)               --                         
  Cancelled.........................................      (44,242)             6.06                         
                                                        ---------                                           
                                                                                                            
Balance outstanding at March 31, 1996...............      839,387              4.38                         
                                                        ---------                                           
                                                                                                            
  Granted...........................................      598,500              8.36                         
  Exercised.........................................     (172,750)             2.73                         
  Restricted........................................      (23,164)               --                         
  Cancelled.........................................     (186,503)             8.61                         
                                                        ---------                                           
                                                                                                            
Balance outstanding at March 30, 1997...............    1,055,470              6.21                         
                                                        ---------                                           
                                                                                                            
  Granted...........................................      260,000             11.37                         
  Exercised.........................................     (345,994)             3.45                         
  Restricted........................................      (11,666)               --                         
  Cancelled.........................................      (29,033)             9.16                         
                                                        ---------                                           
                                                                                                            
Balance outstanding at March 29, 1998...............      928,777            $ 8.47                         
                                                        =========                                            
</TABLE>


The fair value of each option grant was estimated on the grant date using the
Black-Scholes Option-Pricing Model with the following weighted average
assumptions:


<TABLE>  
<CAPTION> 
                                                             1998     1997      1996         
    =========================================================================================
    <S>                                                     <C>      <C>       <C>          
    Expected volatility                                       71%      85%       85%        
    Risk free interest rate                                    6%       7%        7%        
    Dividend yield                                             0%       0%        0%        
    Expected option life (years)                             4.4     9.95      9.95          
    
    Options exercisable at the end of each fiscal year: 
    ==========================================================================================

<CAPTION> 
                                                                              Weighted-average 
                                                            Shares             exercise price  
                                                            ------             --------------  
    <S>                                                     <S>               <S>              
    1998                                                    229,355                $5.93       
    1997                                                    422,936                $3.25       
    1996                                                    486,259                $2.73        
</TABLE>
 

                                       34

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7    COMMON STOCK (CONTINUED)

Weighted-average fair value of options granted during the year:


<TABLE>
     ===========================================================================
     <S>                                <C>
     1998                               $11.37
     1997                               $ 8.36
     1996                               $12.36
</TABLE>


The following table summarizes information concerning currently outstanding and
exercisable options as of March 29, 1998:


<TABLE>
<CAPTION>
                                         Weighted
                                         average       
                                        remaining      Weighted average                      
   Range of            Number          contractual        outstanding          Options       Weighted average 
exercise prices     outstanding       life (years)       option price       exercisable       exercise price 
- ---------------     -----------       ------------     ----------------     -----------      ---------------- 
<S>                 <C>               <C>              <C>                  <C>              <C>
$2.375 - $5.00          121,240            4.2             $ 2.83            111,305               $ 2.77
 $5.01 - $10.00         599,884            8.6             $ 7.99             98,650               $ 8.22
$10.01 - $15.00         139,817            8.5             $13.60             19,400               $12.47
$15.01 - $19.38          50,500            9.7             $16.41                ---                  ---
   Restricted            17,336            0.8                ---                ---                  ---
                        -------                                              -------
                        928,777                                              229,355
                        =======                                              =======
</TABLE>


The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations in accounting for its
stock option and employee stock purchase plans, accordingly, no compensation
expense has been recognized in the consolidated financial statements for such
plans.   Had compensation cost for the Company's stock option plans been
determined based upon the fair value at the grant date for awards under these
plans consistent with the methodology prescribed under SFAS 123, "Accounting for
Stock-based Compensation," the Company's net income (loss) would have been
reduced to the pro forma amounts indicated below.


<TABLE> 
<CAPTION> 
     (in thousands)                                1998        1997       1996
     ===========================================================================
     <S>                            <C>           <C>        <C>        <C>
     Net income (loss)              As reported   $ 10,302   $(15,572)  $ 3,794
                                      Pro forma   $  9,650   $(15,921)  $ 3,655
     Net income (loss) per share    As reported   $   0.98   $  (1.58)  $  0.43
                                      Pro forma   $   0.92   $  (1.62)  $  0.42
</TABLE>


The effect of applying SFAS 123 as shown in the above pro forma disclosure is
not representative of the pro forma effect on net income in future years because
it does not take into consideration pro forma compensation expense related to
grants made prior to fiscal year 1996.

                                       35

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7    COMMON STOCK (CONTINUED)

STOCK PURCHASE WARRANTS

In April 1994, the Company amended its line of credit agreement and issued
50,000 stock purchase warrants to Silicon Valley Bank. The warrants were
exercisable at $3.75 per share and were scheduled to expire on April 1, 1999.
During fiscal 1998 Silicon Valley Bank exercised the 50,000 stock purchase
warrants.

STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

The Company has two stock option plans for non-employee directors.  The 1994
Non-Qualified Stock Option Plan for Non-Employee Directors provides a total of
50,000 options that may be granted. A grant of 5,000 options is granted to each
new director upon becoming a member of the Board. A total of 30,000 options
remain available for grant under this plan. The 1997 Non-Qualified Stock Option
Plan for Non-Employee Directors provides a total of 100,000 options that may be
granted. A grant of 15,000 options (including any options granted under the 1994
plan) is granted to a new director upon becoming a member of the Board. In
addition, a grant of 5,000 options for each continuing director is granted after
each Annual Stockholders Meeting. Under both of these plans the option price is
the fair market value at the time the option is granted. Options are exercisable
20% per year. During fiscal 1998, 75,000 shares were granted at prices of $19.75
or $15.50. No options were granted during fiscal 1997. During fiscal 1996, 5,000
shares were granted at $17.875 per share. At March 29, 1998 a total of 95,000
options have been granted under these two plans. During fiscal 1998, 3,000
options were exercised at an exercise price of $5.875. At March 29, 1998, 8,000
shares were exercisable.

STOCK PURCHASE PLAN

In December 1989, the Company adopted an employee stock purchase plan.  The plan
was amended in October 1992 to provide for six month offering periods. Under the
plan, eligible employees may purchase common stock through payroll deductions of
up to 10% of compensation.  The price per share is the lower of 85% of the
market price at the beginning or end of the offering period.  The plan
originally provided for purchases by employees of up to an aggregate of 300,000
shares through December 31, 1995. During fiscal 1996, the employee stock
purchase plan was amended and extended through December 31, 1998. Shares of
19,760, 15,076, and 16,836, were purchased under this plan in fiscal 1998, 1997,
and 1996, respectively.

NOTE 8    EMPLOYMENT BENEFIT PLAN

On March 31, 1995, the Company merged its Employee Stock Ownership Plan into the
Alpha Industries, Inc. Saving and Retirement Plan also known as the 401(k) plan.
All of the Company's employees who are at least 21 years old and have completed
six months of service (1,000 hours in a 12 month period) with the Company are
eligible to receive a Company contribution. Discretionary Company contributions
are determined by the Board of Directors and may be in the form of cash or the
Company's stock. The Company contributes a match of 100% of the first 1% and a
50% match on the next 4% of an employee's salary for employees with 5 years or
less of service. For employees with more than 5 years of service the Company
contributes a 100% match on the first 1% and a 75% match on the next 5% of an
employee's salary. For fiscal 1998 and 1997, the Company contributed 61,747 and
110,956 shares, respectively of the Company's common stock valued at $833
thousand and $835 thousand to the 401(k) plan. During fiscal 1996, the Company
contributed $101 thousand for the first three quarters and accrued $208 thousand
that was distributed in the form of the Company's stock in fiscal 1997.

                                       36

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9    COMMITMENTS AND CONTINGENCIES

The Company has various operating leases for manufacturing and engineering
equipment and buildings. Rent expense amounted to $1.8 million, $1.9 million,
and $1.6 million in fiscal 1998, 1997, and 1996, respectively. Purchase options
may be exercised at various times for some of these leases. Future minimum
payments under these leases are as follows (in thousands):


<TABLE>  
<CAPTION> 
    FISCAL YEAR
    =================================================================
    <S>                                              <C>
    1999..........................................   $1,001
    2000..........................................      698
    2001..........................................      605
    2002..........................................      619
    2003..........................................      590
    Thereafter....................................    1,244
                                                     ------
                                                     $4,757
                                                     ======
</TABLE>


The Company has been notified by federal and state environmental agencies of its
potential liability with respect to the Spectron, Inc. Superfund site in Elkton,
Maryland. Several hundred other companies have also been notified about their
potential liability regarding this site. The Company continues to deny that it
has any responsibility with respect to this site other than as a de minimis
                                                                 -- -------
party. Management is of the opinion that the outcome of the aforementioned
environmental matter will not have a material effect on the Company's operations
or financial position.

The Company is party to suits and claims arising in the normal course of
business. Management believes these are adequately provided for or will result
in no significant additional liability to the Company.

NOTE 10   RELATED PARTY TRANSACTIONS

The Company has had transactions in the normal course of business with various
related parties. Scientific Components Corporation, currently a beneficial owner
of the Company's Common Stock purchased approximately $8.9 million, $5.1
million, and $4.3 million of products during fiscal 1998, 1997, and 1996,
respectively. In addition, a director of the Company is also a former director
of Scientific Atlanta, Inc.  During fiscal 1998, 1997, and 1996, Scientific
Atlanta, Inc. purchased approximately $471 thousand, $1 million, and $1.2
million of product, respectively.

                                       37

<PAGE>
 

                         INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Alpha Industries, Inc.:

We have audited the consolidated financial statements of Alpha Industries, Inc.
and subsidiaries as listed in the accompanying index under Item 8. In connection
with our audits of the consolidated financial statements, we have also audited
the financial statement schedule as listed in the accompanying index under Item
14. These consolidated financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Alpha Industries,
Inc. and subsidiaries at March 29, 1998 and March 30, 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended March 29, 1998 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.



/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
May 6, 1998

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================


I
TEM 9    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

None.



                                   PART III


ITEM 10   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

See the section entitled "Election of Directors" appearing in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held on September
14, 1998, to be filed within 120 days of the end of the Company's fiscal year,
which section is incorporated herein by reference, and the section entitled
"Executive Officers" under Item 1 of this Annual Report on Form 10-K.


ITEM 11   EXECUTIVE COMPENSATION

See the section entitled "Executive Compensation" appearing in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held on September
14, 1998, which section is incorporated herein by reference.


ITEM 12   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See the section entitled "Securities Beneficially Owned by Certain Persons"
appearing in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held on September 14, 1998, which section is incorporated
herein by reference.


ITEM 13   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See the section entitled "Certain Relationships and Related Transactions"
appearing in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held on September 14, 1998, which section is incorporated
herein by reference.



                                    PART IV


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

(a)  1.  Index to Financial Statements

         The financial statements filed as part of this report are listed on the
         index appearing on page 18.


     2.  Index to Financial Statement Schedules

         The following financial statement schedule is filed as part of this
         report (page references are to this report):

             Schedule II    Valuation and Qualifying Accounts (page 44)

         Other schedules are omitted because of the absence of conditions under
         which they are required or because the required information is
         presented in the financial statements or notes thereto.

                                       39

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================

3.  Exhibits

    (3) Certificate of Incorporation and By-laws.

        (a)   Restated Certificate of Incorporation (Filed as Exhibit 3 (a) to
              Registration Statement on Form S-3 (Registration No. 33-63857))*.
              
        (b)   Amended and restated By-laws of the Corporation dated April 30,
              1992 (Filed as Exhibit 3(b) to the Annual Report on Form 10-K for
              the year ended March 29, 1992)*.
         
    (4) Instruments defining rights of security holders, including indentures.

        (a)   Specimen Certificate of Common Stock (Filed as Exhibit 4(a) to
              Registration Statement on Form S-3 (Registration No. 33-63857))*.

        (b)   Frederick County Industrial Development Revenue Bond, Deed of
              Trust, Loan Agreement and Guaranty and Indemnification Agreement
              dated June 17, 1982 (Filed as Exhibit 4(g) to the Registration
              Statement on Form S-8 filed July 29, 1982)*. Bond and Loan
              Document Modification Agreement dated December 9, 1993 (Filed as
              Exhibit 4(c) to the Quarterly Report on Form 10-Q for the quarter
              ended December 26, 1993)*.

        (c)   Loan and Security Agreement dated December 15, 1993 between Trans-
              Tech, Inc., and County Commissioners of Frederick County (Filed as
              Exhibit 4(h) to the Quarterly Report on Form 10-Q for the quarter
              ended July 3, 1994)*.

        (d)   Stock Purchase Warrant for 50,000 shares of the Registrant's
              Common Stock issued to Silicon Valley Bank as of April 1, 1994
              (Filed as Exhibit 4(i) to the Quarterly Report on Form 10-Q for
              the quarter ended July 3, 1994)*.

        (e)   Amended and restated Credit Agreement dated October 1, 1997
              between Alpha Industries, Inc., and Trans-Tech Inc. and Fleet Bank
              of Massachusetts and Silicon Valley Bank (Filed as Exhibit 4(f) to
              the Quarterly Report on Form 10-Q for the quarter ended December
              28, 1997)*.

   (10) Material Contracts.

        (a)   Alpha Industries, Inc., 1986 Long-Term Incentive Plan as amended
              (Filed as Exhibit 10(a) to the Quarterly Report on Form 10-Q for
              the quarter ended October 2, 1994)*. (1)

        (b)   Alpha Industries, Inc., Employee Stock Purchase Plan as amended
              October 22, 1992 (Filed as Exhibit 10(b) to the Annual Report on
              Form 10-K for the fiscal year ended March 28, 1993)* and amended
              August 22, 1995 (Filed as Exhibit 10(b) to the Annual Report on
              Form 10-K for the fiscal year ended March 31, 1996)*. (1)

        (c)   SERP Trust Agreement between the Registrant and the First National
              Bank of Boston as Trustee dated April 8, 1991 (Filed as Exhibit
              10(c) to the Annual Report on Form 10-K for the fiscal year ended
              March 31, 1991)*. (1)

        (d)   Alpha Industries, Inc., Long-Term Compensation Plan dated
              September 24, 1990 (Filed as Exhibit 10(i) to the Annual Report on
              Form 10-K for the fiscal year ended March 29, 1992)*; amended
              March 28, 1991 (Filed as Exhibit 10 (a) to the Quarterly Report on
              Form 10-Q for the quarter ended June 27, 1993)* and as further
              amended October 27, 1994 (Filed as Exhibit 10(f) to the Annual
              Report on Form 10-K for the fiscal year ended April 2, 1995)*. (1)

        (e)   Master Equipment Lease Agreement between AT&T Commercial Finance
              Corporation and the Registrant dated June 19, 1992 (Filed as
              Exhibit 10(j) to the Annual Report on Form 10-K for the fiscal
              year ended March 28, 1993)*.

                                       40

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

        (f)   Severance Agreement dated January 13, 1997 between the Registrant
              and Thomas C. Leonard (Filed as Exhibit 10(f) to the Annual Report
              on Form 10-K for the fiscal year ended March 30, 1997)*. (1)
              
        (g)   Severance Agreement dated May 20, 1997 between the Registrant and
              David J. Aldrich (Filed as Exhibit 10(g) to the Annual Report on
              Form 10-K for the fiscal year ended March 30, 1997)*. (1)

        (h)   Severance Agreement dated January 14, 1997 between the Registrant
              and Richard Langman (Filed as Exhibit 10(h) to the Annual Report
              on Form 10-K for the fiscal year ended March 30, 1997)*. (1)

        (i)   Consulting Agreement dated August 13, 1992 between the Registrant
              and Sidney Topol (Filed as Exhibit 10(p) to the Annual Report on
              Form 10-K for the fiscal year ended April 3, 1994)*.(1)

        (j)   Master Lease Agreement between Comdisco, Inc. and the Registrant
              dated September 16, 1994 (Filed as Exhibit 10(q) to the Quarterly
              Report on Form 10-Q for the quarter ended October 2, 1994)*.

        (k)   Alpha Industries, Inc., 1994 Non-Qualified Stock Option Plan for
              Non-Employee Directors (Filed as Exhibit 10(r) to the Quarterly
              Report on Form 10-Q for the quarter ended October 2, 1994)*. (1)

        (l)   Alpha Industries Executive Compensation Plan dated January 1, 1995
              and Trust for the Alpha Industries Executive Compensation Plan
              dated January 3, 1995 (Filed as Exhibit 10(p) to the Annual Report
              on Form 10-K for the fiscal year ended April 2, 1995)*.(1)

        (m)   Alpha Industries, Inc. Savings and Retirement 401(k) Plan dated
              July 1, 1996 (Filed as Exhibit 10(n) to the Annual Report on Form
              10-K for the fiscal year ended March 30, 1997)*.

        (n)   Change in Control Agreement between the Registrant and Paul E.
              Vincent dated August 23, 1996 (Filed as Exhibit 10(o) to the
              Annual Report on Form 10-K for the fiscal year ended March 30,
              1997)*. (1)

        (o)   Change in Control Agreement between the Registrant and James C.
              Nemiah dated August 23, 1996 (Filed as Exhibit 10(p) to the Annual
              Report on Form 10-K for the fiscal year ended March 30, 1997)*.(1)
                 
        (p)   Severance Agreement dated April 30, 1996 between the Registrant
              and Jean Pierre Gillard (Filed as Exhibit 10(q) to the Annual
              Report on Form 10-K for the fiscal year ended March 30, 1997)*.(1)

        (q)   Lease Agreement between MIE Properties, Inc. and Trans-Tech, Inc.
              (Filed as Exhibit 10(r) to the Quarterly Report on Form 10-Q for
              the quarter ended September 29, 1996)*.

        (r)   Alpha Industries, Inc., 1997 Non-Qualified Stock Option Plan for
              Non-Employee Directors. (1)

  (11)  Statement re computation of per share earnings. See Note 1 to the
        Consolidated Financial Statements.
  
  (21)  Subsidiaries of the Registrant.

  (23)  Consent of Independent Auditors.

                                       41

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================

   (27) Financial Data Schedules.

        (b)   Reports on Form 8-K

              On January 29, 1998, the Company filed a Current Report of Form 8-
              K, concerning changes to the membership of the Board of Directors
              of the Registrant.

        __________________

*Not filed herewith. In accordance with Rule 12b-32 promulgated pursuant to the
Securities Exchange Act of 1934, as amended, reference is hereby made to
documents previously filed with the Commission, which are incorporated by
reference herein.

(1) Management Contracts.

                                       42

<PAGE>
 

                                  SIGNATURES
                                  ----------


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


                            ALPHA INDUSTRIES, INC.
                                 (REGISTRANT)


                         BY:  /S/ THOMAS C. LEONARD
                            -------------------------------
                              THOMAS C. LEONARD, PRESIDENT


Date:  June 22, 1998


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on June 22, 1998.


SIGNATURE AND TITLE                    SIGNATURE AND TITLE
- -------------------                    -------------------
                                   
                                   
/s/ GEORGE S. KARIOTIS                 /s/ TIMOTHY R. FUREY
- ------------------------------         --------------------------------
George S. Kariotis                     Timothy R. Furey
Chairman of the Board                  Director
                                   
                                   
                                   
/s/ THOMAS C. LEONARD                  /s/ ARTHUR PAPPAS
- ------------------------------         --------------------------------
Thomas C. Leonard                      Arthur Pappas
Chief Executive Officer                Director
President and Director             
                                   
                                   
/s/ PAUL E. VINCENT                    /s/ RAYMOND SHAMIE
- ------------------------------         --------------------------------
Paul E. Vincent                        Raymond Shamie
Chief Financial Officer                Director
Principal Financial Officer        
Principal Accounting Officer       
                                   
                                   
                                       /s/ SIDNEY TOPOL
                                       --------------------------------
                                       Sidney Topol
                                       Director

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================


                                  SCHEDULE II

 
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
 

<TABLE> 
<CAPTION> 
                                                              CHARGED
                                                BALANCE AT    TO COSTS                  BALANCE AT
                                                BEGINNING        AND                      END OF
 DESCRIPTION                                     OF YEAR      EXPENSES    DEDUCTIONS       YEAR

=====================================================================================================
<S>                                             <C>           <C>         <C>           <C> 
Year Ended March 29, 1998                                                           
 Allowance for doubtful accounts..............   $   521      $   257      $   144       $   634
 Allowance for estimated losses on contracts..   $     3      $    33      $    --       $    36   
                                                                                                   
Year Ended March 30, 1997                                                                          
 Allowance for doubtful accounts..............   $   634      $   206      $   319       $   521   
 Allowance for estimated losses on contracts..   $    24      $    --      $    21       $     3   
                                                                                                   
Year Ended March 31, 1996                                                                          
 Allowance for doubtful accounts..............   $   783      $    60      $   209       $   634   
 Allowance for estimated losses on contracts..   $   117      $    --      $    93       $    24    
 </TABLE>






<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================

                                                                   EXHIBIT 10(R)
                                                                                
                            ALPHA INDUSTRIES, INC.
                                        
                     1997 NON-QUALIFIED STOCK OPTION PLAN
                                        
                          FOR NON-EMPLOYEE DIRECTORS
                                        

     1.  Purpose.  The appropriate purpose of this 1997 Non-Qualified Stock
         -------                                                           
Option Plan for Non-Employee Directors is to attract and retain the services of
experienced and knowledgeable independent directors of the Corporation for the
benefit of the Corporation and its stockholders and to provide additional
incentives for such independent directors to continue to work for the best
interests of the Corporation and its stockholders through continuing ownership
of its common stock.

     2.  Definitions.  As used herein, each of the following terms has the
         -----------                                                      
indicated meaning:

         "Annual Meeting" means the Corporation's annual meeting of stockholders
or special meeting in lieu of annual meeting of stockholders at which one or
more directors are elected.

         "Board" means the Board of Directors of the Corporation.

         "Corporation" means Alpha Industries, Inc.

         "Fair Market Value" means the closing sale price quoted on the American
Stock Exchange or such other national securities exchange or automated quotation
system on which the Shares may be traded or quoted on the date of the granting

of the Option.

         "Non-Employee Director" means a person who, as of any applicable date,
is a member of the Board and (i) is not an officer of the Corporation or a
Subsidiary, or otherwise employed by the Corporation or a Subsidiary, (ii) does
not receive compensation, either directly or indirectly, from the Corporation or
a Subsidiary, for services rendered as a consultant or in any capacity other
than as a member of the Board, except for an amount that does not exceed the
dollar amount for which disclosure would be required pursuant to Rule 404(a) of
Regulation S-K ("Regulation S-K") promulgated pursuant to the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended (the "1934
Act"), (iii) does not possess an interest in any other transaction for which
disclosure would be required pursuant to Rule 404(a) of Regulation S-K, and (iv)
is not engaged in a business relationship for which disclosure would be required
pursuant to Rule 404(b) of Regulation S-K.

         "Option" means the contractual right to purchase Shares upon the
specific terms set forth in this Plan.

         "Option Exercise Period" means the period commencing one (1) year after
the date of grant of an Option pursuant to this Plan and ending ten years from
the date of grant.

         "Plan" means this Alpha Industries, Inc. 1997 Non-Qualified  Stock
Option Plan for Non-Employee Directors.

         "Shares" means the Common Stock, $.25 par value per share, of the
Corporation.

         "Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Corporation if, at the time of grant of the Option, each of
the corporations other than the last in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.

     3.  Stock Subject to the Plan.  The aggregate number of Shares that may be
         -------------------------                                             
issued and sold under the Plan shall be 100,000.  The Shares to be issued upon
exercise of Options granted under this Plan shall be made available, at the
discretion of the Board, from (i) treasury Shares and Shares reacquired by the
Corporation for such purposes, including Shares purchased in the open market,
(ii) authorized but unissued Shares, and (iii) Shares previously reserved for
issuance upon exercise of Options which have expired or been terminated.  If any
Option granted under this Plan shall expire or terminate for any reason without

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================


having been exercised in full, the unpurchased Shares covered thereby shall
become available for grant under additional Options under the Plan so long as it
shall remain in effect.

     4.  Administration of the Plan.  The Plan shall be administered by the
         --------------------------                                        
Board.  The Board shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Option issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.

     5.  Eligibility. Options shall be granted only to Non-Employee
         -----------
Directors.


     6.  Grant of Options.
         ---------------- 

     (a) On the effective date of this Plan, each Non-Employee Director
shall be granted an Option to purchase 15,000 Shares.

     (b) Each year, immediately following the Corporation's Annual
Meeting, each then Non-Employee Director shall be granted an Option to purchase
5,000 Shares.

     (c) Upon initial election by the stockholders or appointment by the Board
as a Non-Employee Director, immediately following the Annual Meeting at which
such Non-Employee Director is first elected by the stockholders or immediately
following the meeting of the Board at which such Non-Employee Director is
appointed by the Board, each Non-Employee Director shall be granted an Option to
purchase 15,000 Shares .

     7.  Terms of Options and Limitations Thereon.
         ---------------------------------------- 

         (a)  Option Agreement.  Each Option granted under this Plan shall be
              ----------------                                               
evidenced by an Option agreement between the Corporation and the Option holder
and shall be upon such terms and conditions, not inconsistent with this Plan, as
the Board may determine.

         (b)  Price. The price at which any Shares may be purchased pursuant to
              -----
the exercise of an Option shall be the greater of the Fair Market Value of the
Shares on the date of grant or par value.

         (c)  Exercise of Option.  Each Option granted under this Plan may be
              ------------------                                             
exercised as follows:

         (i)  beginning on the first anniversary of the date of grant, for up
     to 20% of the Shares covered by the Option; and

         (ii) beginning on each anniversary of the date of grant thereafter,
for up to an additional 20% of such Shares for each additional year, until, on
the fifth anniversary of the date of grant, the Option may be exercised as to
100% of the Shares covered by the Option, until the expiration of the Option
Exercise Period.

    Options may be exercised in whole or in part, from time to time, only during
the Option Exercise Period, by the giving of written notice, signed by the
holder of the Option, to the Corporation stating the number of Shares with
respect to which the Option is being exercised, accompanied by full payment for
such Shares pursuant to section 8(a) hereof; provided however, (i) if a person
to whom an Option has been granted ceases to be a Non-Employee Director during
the Option Exercise Period by reason of retirement, death or any reason, other
than termination for cause, such Option shall be exercisable by him or her or by
the executors, administrators, legatees or distributees of his or her estate
until the earlier of (A) the end of the Option Exercise Period or (B) 12 months
following his or her retirement or death or the date on which he or she ceased
to be a Non-Employee Director; and (ii) if a person to whom an Option has been
granted ceases to be a Non-Employee Director of the Corporation by reason of
termination for cause, such Option shall terminate as of the date such person
ceased to be a Non-Employee Director.  Termination for cause shall be defined as
termination on account of any act of (i) fraud or intentional misrepresentation,
or (ii) embezzlement, misappropriation or conversion of assets or opportunities
of the Corporation or any Subsidiary.

         (d)  Non-Assignability.  No Option, or right or interest in an Option,
              -----------------                                                
shall be assignable or transferable by the holder, except by will, the laws of
descent and distribution or pursuant to a qualified domestic relations order (as
defined in the Internal Revenue Code of 1986, as amended, or Title I of the

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================


Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder), and during the lifetime of the holder shall be exercisable only by
him or her.

     8.  Payment.
         ------- 

         (a) The purchase price of Shares upon exercise of an Option shall be
paid by the Option holder in full upon exercise, and may be paid (i) in cash,
(ii) by delivery of Shares valued at Fair Market Value on the date of exercise,
including, to the extent permitted under the Rule 16b-3 as defined in Paragraph
12(c), below, exempting certain transactions from the short swing trading
provisions of Section 16 of the 1934 Act, by way of so-called "cashless
exercise" and the netting of the number of Shares issuable upon exercise against
that number of Shares subject to the Option having an aggregate Fair Market
Value equal to the aggregate exercise price, or (iii) any combination of cash
and Shares, as the Board may determine.

         (b) No Shares shall be granted under this Plan or issued or transferred
upon exercise of any Option under this Plan unless and until all legal
requirements applicable to the issuance or transfer of such Shares, and such
other requirements as are consistent with the Plan, have been complied with to
the satisfaction of the Board, including without limitation those described in
Paragraph 12 hereof.

    9.   Stock Adjustments.
         ----------------- 

         (a)  If the Corporation is a party to any merger or consolidation, any
purchase or acquisition of property or stock, or any separation, reorganization
or liquidation, the Board (or, if the Corporation is not the surviving
corporation, the board of directors of the surviving corporation) shall have the
power to make arrangements, which shall be binding upon the holders of unexpired
Options, for the substitution of new options for, or the assumption by another
corporation of, any unexpired Options then outstanding hereunder.

         (b) If by reason of recapitalization, reclassification, stock split,
combination of shares, separation (including a spin-off) or dividend on the
stock payable in Shares, the outstanding Shares of the Corporation are increased
or decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Corporation, the Board shall conclusively
determine the appropriate adjustment in the exercise prices of outstanding
Options and in the number and kind of shares as to which outstanding Options
shall be exercisable, in such manner as to result in the Options being
exercisable.

         (c) In the event of a transaction of the type described in paragraphs
(a) and (b) above, the total number of Shares on which Options may be granted
under this Plan shall be appropriately adjusted by the Board.

    10.  Change of Control Provisions.
         ---------------------------- 

         (a) Notwithstanding any other provision of the Plan to the contrary, in
the event of a Change of Control, any Options outstanding as of the date such
Change of Control is determined to have occurred and not then exercisable shall
become fully exercisable to the full extent of the original grant.

         (b) A "Change of Control" shall mean:

             (i)   there shall have been consummated (a) any consolidation or
merger of the Corporation in which the Corporation is not the continuing or
surviving entity pursuant to which the Shares are converted into cash,
securities or other property, other than a merger of the Corporation in which
the ownership by the Corporation's stockholders of the securities in the
surviving entity is in the same proportion as the ownership by the Corporation's
stockholders of the stock in the Corporation immediately prior to the merger or
(b) any sale, lease, exchange or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Corporation; or

             (ii)  the stockholders of the Corporation have approved any plan or
proposal for the liquidation or dissolution of the Corporation; or

             (iii) any person (as that term is used in Sections 13(d) and
14(d)(2) of the 1934 Act) has become the beneficial owner (within the meaning of
Rule 13d-3 promulgated under the 1934 Act) of 30% or more of the Corporation's
outstanding Shares; or

<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================


             (iv)  that during any period of two consecutive years, individuals
who, at the beginning of such period, constitute the entire Board shall cease,
for any reason, to constitute a majority thereof, unless the election, or the
nomination for election by the Corporation's stockholders, of each new director
was approved by a vote of at least three-quarters of the directors then still in
office who were directors at the beginning of the period.

    11.  No Rights Other Than Those Expressly Created.  No person affiliated
         --------------------------------------------                       
with the Corporation or any Subsidiary or other person shall have any claim or
right to be granted an Option hereunder.  Neither this Plan nor any action taken
hereunder shall be construed as (i) giving any Option holder any right to
continue to be affiliated with the Corporation, (ii) giving any Option holder
any equity or interest of any kind in any assets of the Corporation, or (iii)
creating a trust of any kind or a fiduciary relationship of any kind between the
Corporation and any such person.  No Option holder shall have any of the rights
of a stockholder with respect to Shares covered by an Option, until such time as
the Option has been exercised and Shares have been issued to such person.

    12.  Miscellaneous.
         ------------- 

         (a) Withholding of Taxes.  Pursuant to applicable federal, state, local
             --------------------                                               
or foreign laws, the Corporation may be required to collect income or other
taxes upon the grant of an Option to, or exercise of an Option by, a holder.
The Corporation may require, as a condition to the exercise of an Option, that
the recipient pay the Corporation, at such time as the Board determines, the
amount of any taxes which the Board may determine is required to be withheld.

         (b) Securities Law Compliance.  Upon exercise of an Option, the holder
             -------------------------                                         
shall be required to make such representations and furnish such information as
may, in the opinion of counsel for the Corporation, be appropriate to permit the
Corporation to issue or transfer the Shares in compliance with the provisions of
applicable federal or state securities laws.  The Corporation, in its
discretion, may postpone the issuance and delivery of Shares, upon any exercise
of an Option, until completion of such registration or other qualification of
such Shares under any federal or state laws, or stock exchange listing, as the
Corporation may consider appropriate.  The Corporation intends to register or
qualify the Shares under federal and state securities laws, but is not obligated
to register or qualify the Shares under such laws and may refuse to issue such
Shares if neither registration nor exemption therefrom is practical.  The Board
may require that prior to the issuance or transfer of any Shares upon exercise
of an Option, the recipient enter into a written agreement to comply with any
restrictions on subsequent disposition that the Board or the Corporation deems
necessary or advisable under any applicable federal and state securities laws.
Certificates representing the Shares issued hereunder may contain a legend
reflecting such restrictions.

         (c) Compliance with Rule 16b-3.  With respect to a person subject to
             --------------------------                                      
Section 16 of the 1934 Act, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors ("Rule 16b-3")
under the 1934 Act.  To the extent any provision of the Plan or action by the
administrators of the Plan fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the administrators of the
Plan.

         (d) Indemnity.  The Board shall not be liable for any act, omission,
             ---------                                                       
interpretation, construction or determination made in good faith in connection
with their responsibilities with respect to the Plan, and the Corporation hereby
agrees to indemnify the members of the Board, in respect of any claim, loss,
damage, or expense (including counsel fees) arising from any such act, omission,
interpretation, construction or determination, to the full extent permitted by
law.

         (e) Options Not Deemed Incentive Stock Options.  Options granted under
             ------------------------------------------                        
the Plan shall not be deemed incentive stock options as that term is defined in
Section 422 of the Internal Revenue Code of 1986, as amended.

    13.  Effective Date; Amendment; Termination.
         -------------------------------------- 

         (a) The effective date of this Plan shall be the date of the approval
of the Board.

         (b) The Board may at any time, and from time to time, amend, suspend or
terminate this Plan in whole or in part, provided, however, that the provisions
of this Plan relating to the amount and price of securities to be awarded and
the timing of such awards may not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.  However, except as
provided herein, no amendment, suspension or

<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================


termination of this Plan may affect the rights of any person to whom an Option
has been granted without such person's consent .

         (c) This Plan shall terminate five years from its effective date, and
no Option shall be granted under this Plan thereafter, but such termination
shall not affect the validity of Options granted prior to the date of
termination.


Date of Board of Directors Adoption: September 15, 1997



             



<PAGE>
 
=======================================
Alpha Industries, Inc. and Subsidiaries
=======================================

                                  EXHIBIT 21


                        SUBSIDIARIES OF THE REGISTRANT



Name                                  Jurisdiction Of Incorporation
- ----                                  -----------------------------

Alpha Industries Limited                          England


Alpha Industries GmbH                             Germany


Alpha Securities Corporation                      Massachusetts


CFP Holding Company, Inc.                         Washington


Trans-Tech, Inc.                                  Maryland


Trans-Tech Europe SARL                            France





<PAGE>
 
                                         =======================================
                                         Alpha Industries, Inc. and Subsidiaries
                                         =======================================



                                  EXHIBIT 23



                        CONSENT OF INDEPENDENT AUDITORS



The Board of Directors
Alpha Industries, Inc.:

We consent to incorporation by reference in the registration statements (No. 33-
32957, No. 33-11356 and No. 33-47901) on Form S-8 of Alpha Industries, Inc. of
our report dated May 6, 1998 relating to the consolidated balance sheets of
Alpha Industries, Inc. and subsidiaries as of March 29, 1998 and March 30, 1997
and the related consolidated statements of operations, stockholders' equity, and
cash flows and related schedule for each of the years in the three-year period
ended March 29, 1998, which report appears in the March 29, 1998 annual report
on Form 10-K of Alpha Industries, Inc.



/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
June 24, 1998





<TABLE> <S> <C>


<PAGE>
 
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALPHA INDUSTRIES, INC. AND SUBSIDIARIES AS OF AND FOR
THE TWELVE MONTHS ENDED MARCH 29, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          MAR-29-1998
<PERIOD-END>                               MAR-29-1998
<CASH>                                          14,356
<SECURITIES>                                     1,493
<RECEIVABLES>                                   19,134
<ALLOWANCES>                                       634
<INVENTORY>                                      7,941
<CURRENT-ASSETS>                                43,173
<PP&E>                                          93,488
<DEPRECIATION>                                  60,824
<TOTAL-ASSETS>                                  76,929
<CURRENT-LIABILITIES>                           17,112
<BONDS>                                          1,625
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                         2,636
<OTHER-SE>                                      53,186
<TOTAL-LIABILITY-AND-EQUITY>                    76,929
<SALES>                                        116,881
<TOTAL-REVENUES>                               116,881
<CGS>                                           72,799
<TOTAL-COSTS>                                  105,193
<OTHER-EXPENSES>                                   166
<LOSS-PROVISION>                                   257
<INTEREST-EXPENSE>                                  75
<INCOME-PRETAX>                                 11,447
<INCOME-TAX>                                     1,145
<INCOME-CONTINUING>                             10,302
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    10,302
<EPS-PRIMARY>                                     1.01
<EPS-DILUTED>                                     0.98
        

</TABLE>






<TABLE> <S> <C>


<PAGE>
 
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALPHA INDUSTRIES, INC. AND SUBSIDIARIES AS OF AND FOR
THE TWELVE MONTHS ENDED MARCH 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          MAR-30-1997
<PERIOD-END>                               MAR-30-1997
<CASH>                                           5,815
<SECURITIES>                                     1,218
<RECEIVABLES>                                   17,540
<ALLOWANCES>                                       521
<INVENTORY>                                     10,267
<CURRENT-ASSETS>                                35,176
<PP&E>                                          83,058
<DEPRECIATION>                                  54,450
<TOTAL-ASSETS>                                  65,253
<CURRENT-LIABILITIES>                           16,767
<BONDS>                                          3,614
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                         2,531
<OTHER-SE>                                      40,855
<TOTAL-LIABILITY-AND-EQUITY>                    65,253
<SALES>                                         85,253
<TOTAL-REVENUES>                                85,253
<CGS>                                           68,519
<TOTAL-COSTS>                                   98,505
<OTHER-EXPENSES>                                 1,967
<LOSS-PROVISION>                                   206
<INTEREST-EXPENSE>                                 139
<INCOME-PRETAX>                               (15,572)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                           (15,572)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (15,572)
<EPS-PRIMARY>                                   (1.58)
<EPS-DILUTED>                                   (1.58)
        

</TABLE>