13th Annual Needham Growth Stock Conference January 2011

Forward-looking statements

Certain statements in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and assumptions include, among others, the following: our dependence on the successful development and market introduction of new products; our ability to integrate any business, technologies, product lines or services that we have or will acquire; our dependence on revenue generation from our legacy products in order to fund development of our new products; current market conditions, including the lack of liquidity in the markets and economic slowdown, may increase our operating costs or reduce our revenue, thereby negatively impacting our operating results; our ability to operate profitably and generate positive cash flows in the future; the impact of the current economic crisis on our suppliers and customers and our ability to transfer parts to other suppliers; our dependence on our foundry suppliers and third-party subcontractors; order cancellations and deferrals by our customers; our substantial indebtedness could adversely affect our financial position; the cost and accounting implications of compliance with new accounting standards; and other factors referenced in our Annual Report on Form 20-F. Investors are encouraged to consider the risks detailed in this filing. 2

Todays Presenters

Kirk Mandy

President and CEO

Andre Levasseur Senior VP Finance and Chief Financial Officer

Who we are

Communication products

Medical products

World leading mixed signal chip technology

4

Our market leadership

>1B chips installed worldwide Worlds largest equipment

manufacturers are customers

>400 customers in more than 100 countries 100M chips shipped per year >900 active products 30+ year operating history
5

Our business summary

US$204.6M revenue in F2010*

Communication products
~ 78% of revenue
Timing products enabling multimedia, data and voice services over wireless and wired networks Line circuits for voice-over-broadband deployments

Medical products
~ 12% of revenue

Low-power radios for new wireless medical devices and therapies

*Company sold optical business May 17, 2010, so results have been reported as discontinued operations for current and comparative periods **~10% of revenue derived from custom products

Delivering results and setting the stage for continuing growth

Focusing on Growing Markets Focusing on Growing Markets

~ 20% year-on-year revenue growth

Targeting growing timing, line circuit and medical wireless markets

Increasing Revenue from Increasing Revenue from New Products New Products

~ 70% revenue from new products

Transition from legacy products nearing completion, with growth from new products outpacing decline in legacy portfolio

Strengthening Financial Profile Strengthening Financial Profile

~ $120M cash position

Growing cash position, stronger gross margins and demonstrated operating leverage with strong customer design pipeline
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1. Smartphones & Mobile Internet

Higher bandwidth mobile video and data services driving wireless carriers to packet networks Network timing to ensure service quality

key trends
Driving Growth

2. Packet Network Evolution

Telcos and cable network investments to deliver triple play voice, video and data services Line circuits at subscriber locations & network timing to ensure quality

3. Wireless Healthcare
Improve patient care, reduce physician visits, eliminate surgeries Standards-compliant, low-power, medical-grade radios

High-bandwidth smartphone services driving timing opportunity

Growth opportunity for timing less than 5% of cell sites in U.S. converted to packet backhaul

New High Bandwidth Content Overwhelming Traditional Networks T1/E1 lines connecting base stations with network backbone unable to meet bandwidth demands created by new content & expensive to operate

Ethernet Backhaul Higher bandwidth, lower cost packet networks to connect cellular sites and network backbone Requires timing at base stations and routers to synchronize network and ensure services for new and existing communication applications 9

Higher operating costs driving service providers to IP/Ethernet backhaul

Annual mobile backhaul costs per connection

Stay on TDM
Annual cost per connection

or move to Ethernet

Source: Mobile Backhaul Equipment and Services Market Size, Share and Forecast, Infonetics Research Inc., April 2010

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Growing market opportunity for timing portfolio

CPE & ACCESS

METRO

CORE

Base station controller Wireless base station

Packet Timing ClockCenter

OTN

New ClockCenter platform targets core network upgrades ClockCenter supports all communication services over optical networks to help solve capacity and bandwidth issues, allow carriers to deliver services over least amount of infrastructure Single-chip devices competing solutions require multiple devices, increasing design complexity and cost 11

Timing chip market opportunity

Wireless network upgrades driving immediate growth, new platforms expand opportunity in adjacent communications markets
1200

(in millions)

900

AG C

15% R

600

$936
300

$1,037

$699 $532

$782

2011

2012

2013

2014

2015

Source: Databeans, Databeans and Infonetics 2010

12 12

Line circuit opportunities in telco and cable networks

DSL FTTx NTT & Verizon Belgacom
cop p
fiber

er

FTTx China Telecom Hybrid AT&T

fiber fiber

cop p

er

Cable Comcast & Rogers

fiber
cab le

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Total available market for line circuits

Sources: Dell Oro, Infonetics, ITU, Company Reports, Company data

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Only supplier of medical-grade, low-powered, wireless radios for in-body applications

With wireless patient monitoring and device programming

Replace this

Improves patient care

- Always-on home monitoring sends patient health and device data to physician

Reduces healthcare costs

- Extended wireless range allows programming equipment to be located outside sterile operating field

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Growth opportunities for our wireless medical expertise

Zarlink has long-term joint R&D projects with lead customers
Deep brain stimulation Hearing assistance Neuro-stimulator Blood pressure Functional stimulation Defibrillator Wireless endoscopy

Cardiac pacemaker/ Energy harvesting Drug delivery/Insulin pump

Gastric stimulator

Bladder control

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Wireless radio technology opportunity

(Total Available Market)

Penetration of wireless technology expected to outpace overall market growth as new therapies and devices come to market

Neuro-stimulator Cardio Diagnostics

500 400

Revenue ($USM)

300 200 100 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: BMO Capital Market Report on Medical Technology; Global Industry Analysts Neurostimulation report; Weston Bioconsulting Research; ZL data

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Financial review

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Emerging as a stronger company after extensive rebuilding process

$4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 Jan-05 Jan-06 Jan-07 Jan-08
4 5 6 7 1 2 3 4 5 6 7

Jan-09

Jan-10

1 Divests consumer business to Intel 2 Acquires line circuit business from Legerity 3 Exits fab business with sale to MHS

Proxy contest Financial crisis, stock hits C$0.22 low Divests optical business to Tyco Sells Swedish campus
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Year-on-year revenue growth of 20% and cost containment

Revenue $70
52% 53% 51% 51% 50%

OPEX

Gross Margins 60%

$60

48%

49%

50%

50%

$50 40%
(In millions)

$40
$48.3 $46.9 $49.7 $49.8 $50.0 $55.2 $58.7 $59.9

30% $30 20% $20

$19.3 $23.6 $17.8 $18.9 $20.0 $21.6 $20.7 $20.2

$10

10%

$0 Q3 F2009 Q4 F2009 Q1 F2010 Q2 F2010 Q3 F2010 Q4 F2010 Q1 F2011 Q2 F2011

0%

All values in USD unless otherwise stated *Company sold optical business May 17, 2010, so results have been reported as discontinued operations for current and comparative periods

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New products driving revenue growth

Approximately 70% of revenue from new timing, line circuit and medical wireless products
80% 70% 60%
Percentage of revenue

50% 40% 30% 20% 10% 0%

09 10 10 10 09 10 F2 00 F2 00 20 20 20 20 20 20 20 20 Q 2 F 11 11 Q 1 F 9 9

Q 1

Q 2

Q 3

Q 3

Q 4

Q 4

Q 1

Q 2

Legacy Products

New Products

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Income statement highlights*

$USD

Q2 F11
$59.9M 51% $10.7M $9.6M $7.2M $9.4M $0.06 $0.07

Q1 F11
$58.7M 51% $10.6M $10.1M $10.3M $8.6M $0.08 $0.06

Q2 F10
$49.8M 50% $9.4M $9.5M $0.7M $6.2M $0.0 $0.05

Revenue Gross Margin R&D SG&A Net Income Non-GAAP Net Income* Basic EPS Non-GAAP Basic EPS*

**For a full definition, see Companys MD&A and Financial Statement and notes filings for the period ended September 24, 2010.

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Balance sheet highlights

$USD

As at September 24 2010
$109.6M $158.6M $38.5M $69.0M

As at June 25 2010
$98.9M $165.6M $54.9M $68.3M

As at March 26 2010
$74.4M $152.7M $41.7M $68.9M

Cash and cash equivalents* Total current assets Total current liabilities Long-term debt (convertible debentures)

* Subsequent to quarter-end, on September 29, 2010, the Company announced the sale of real estate in Sweden, adding an additional $14 million to the cash balance

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Generating strong cash flow

Cash position increased by $62.5 million over past four quarters
$109 $99
$100 $90 $80 $70 $60 $50 $40 Q3 F2009 Q4 F2009 Q1 F2010 Q2 F2010 Q3 F2010 Q4 F2010 Q1 F2011 Q2 F2011

$110

($ in millions)

$74 $62 $56 $45 $45 $47

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Outlook: F2011 third quarter guidance*

Revenue Gross Margin Operating Expenses Net Earnings Per Share1

$54M-$58M 50%-51% $20M-$21M $0.03-$0.05

*All values in USD unless otherwise stated 1 Excluding any potential impact of f/x gains/losses related to the Companys Canadian dollar denominated debenture, and the impact of the sale of real estate in Jarfalla, Sweden

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Growth strategy

Communication products

Leverage network evolution required to support new services to grow timing and line circuit business

Medical products

Enable new wireless applications and therapies that improve patient quality-of-life and reduce healthcare costs
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