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Investor PresentationQ3 FY11

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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 and economic conditions, which 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; customer inventory management in some

end-markets; 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

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Who we are

Communicationproducts

Medicalproducts

World leading mixed signal

chip technology

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Delivering results and setting the stage for continuing growth

Focusing on Growing MarketsFocusing on Growing Markets

Strengthening Financial ProfileStrengthening Financial Profile

Increasing Revenue from New ProductsIncreasing Revenue from New Products

~ 14% year-on-year revenue

growthTargeting growing timing, line circuit and medical wireless markets

~ 70% revenue from new products

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

~ $124M cash position

Increasing cash position used to augment growing timing business, improving gross margins and strong customer design pipeline

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• >1B chips installed worldwide

• World’s largest equipment manufacturers are customers

• >400 customers in more than 100 countries

• 100M chips shipped per year

• >900 active products

• 30+ year operating history

Our market leadership

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US$204.6M revenue in F2010*

*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

Our business summary

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Communicationproducts

Medicalproducts

• Timing products enabling multimedia, data and voice services over wireless and wired networks

• Line circuits for voice-over-broadband deployments

• Low-power radios for new wireless medical devices and therapies

~ 78% of revenue

~ 12% of revenue

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1. Smartphones & Mobile Internet

2. Packet Network Evolution

3. Wireless Healthcare

• Higher bandwidth mobile video and data services driving wireless carriers to packet networks

• Network timing to ensure service quality

• Telcos and cable network investments to deliver triple play voice, video and data services

• Line circuits at subscriber locations & network timing to ensure quality

• Improve patient care, reduce physician visits, eliminate surgeries

• Standards-compliant, low-power, medical-grade radios

key trends

Driving Growth3

High-bandwidth smartphone services driving timing opportunity

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

• T1/E1 lines connecting base stations with network backbone unable to meet bandwidth demands created by new content & expensive to operate

Packet Network Timing for Wireless 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

Ethernet Backhaul

New High Bandwidth Content Overwhelming Traditional Networks

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Growing market opportunity for timing portfolio

Packet timing focused on wireless evolution, ClockCenter targets core network upgrades

• New ClockCenter platform supports all communication services over optical networks to help solve capacity and bandwidth issues in the core

• Carriers deploying optical networks to support greater number of services on least amount of infrastructure

CPE & ACCESS METRO CORE

Wireless base station

OTN

Packet Timing

ClockCenter

Base station controller

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DSL

FTTx

Hybrid

Cable

fiber

FTTx

fiberfiber

fiber

cable

copper

copper

NTT & Verizon

Belgacom

AT&T

China Telecom

Comcast & Rogers

Line circuit opportunities in telco and cable networks

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fiber

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Fiber deployments driving demand for new line circuit solutions

Growing opportunity for line circuits in developing and under-developed countries

Zarlink Next Generation Carrier Chipset (NGCC)

• Deployed in Multi-Service Access Nodes (MSAN) “pizza boxes” or pedestal at the subscriber in developing and under-developed countries, greenfield fiber deployments

• Field programmable, upgradable & remote line diagnostics support lower operating costs by reducing technical service calls

High-quality voice

over broadband

Line circuit at subscriber replaces functions traditionally supported at Central Office

Remote diagnosticslower operating costs

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

With wireless patient monitoring and device programmingReplace 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

Deep brain stimulation

Hearing assistance Neuro-stimulator

Cardiac pacemaker/Energy harvesting

Defibrillator

Drug delivery/Insulin pump

Bladder control

Functional stimulation

Wireless endoscopy

Gastric stimulator

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Zarlink has long-term joint R&D projects with lead customers

Blood pressure

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Financial review

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Year-on-year revenue growth of 14%

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

$0

$10

$20

$30

$40

$50

$60

$70

Q3 F2009 Q4 F2009 Q1 F2010 Q2 F2010 Q3 F2010 Q4 F2010 Q1 F2011 Q2 F2011 Q3 F2011

0%

10%

20%

30%

40%

50%

60%Revenue OPEX Gross Margins

(In

mill

ions

)

$49.7 $49.8 $50.0 $55.2 $58.7 $59.9

$17.8 $20.0 $20.7$21.6 $20.2$18.9

50%

53%52%51% 52%

50%

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$46.9$48.3

$19.3 $23.6

48%49%

$56.9

$22.3

51%

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

New products driving revenue growth

0%

10%

20%

30%

40%

50%

60%

70%

80%

Legacy Products New Products

Per

cent

age

of r

even

ue

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Income statement highlights*

$USD Q3 F’11 Q2 F’11 Q3 F’10

Revenue $56.9M $59.9M $50.0M

Gross Margin 52% 51% 52%

R&D $9.9M $10.7M $9.5M

SG&A $12.4M $9.6M $10.5M

Net Income* $34.6M $7.2M $0.6M

Non-GAAP Net Income** $7.4M $9.4M $6.1M

Basic EPS* $0.28 $0.06 $0.0

Non-GAAP Basic EPS* $0.06 $0.07 $0.05

**For a full definition, see Company’s MD&A and Financial Statement and notes filings for the period ended December 24, 2010.

*Includes reduction in valuation allowance of $17.5M related to deferred tax assets in Canada and a gain of $14.1 million related to the previously announced sale of real estate in Sweden

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2008 2009 2010

2008 2009 2010

Revenue by product segment

z

$7.2M

$4.3M

$45.4M

Custom Products

Medical Products

Communication Products

Medical Products

Custom Products

$33.2M$24.2M $29.7M

Communication Products

$30.0M$28.0M $34.7M

Diversified and growing product opportunities

Q3 Fiscal 2011

2008 2009 2010

$141.4M

$115.4M

$140.0M

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

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$USD

As at December 24,

2010

As at September 24

2010 As at March

26 2010

Cash and cash equivalents* $124.2M $109.7M $74.4M

Total current assets $172.5M $158.6M $152.7M

Total current liabilities $36.9M $38.5M $41.7M

Long-term debt (convertible debentures)

$70.4M $69.0M $68.9M

Balance sheet highlights

• During the quarter the Company:• Announced the sale of real estate in Sweden, for $13.5 million in cash • Invested $5.0 million in in Multigig, a private company developing advanced

timing technologies• Used $1.7 million to repurchase 870,000 common shares

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Cash position increased by $62 million over past four quarters

Generating strong cash flow

$124

$45 $45 $47$56

$62

$74

$99$109

$40

$50

$60

$70

$80

$90

$100

$110

$120

$130

Q3 F2009 Q4 F2009 Q1 F2010 Q2 F2010 Q3 F2010 Q4 F2010 Q1 F2011 Q2 F2011 Q3 F2011

($ in

mill

ions

)

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Outlook: F2011 fourth quarter guidance*

Revenue $51M-$55M

Gross Margin 50%-52%

Operating Expenses $20M-$21M

Net Earnings Per Share1 $0.01-$0.03*All values in USD unless otherwise stated1 Excluding any potential impact of f/x gains/losses related to the Company’s Canadian dollar denominated debenture

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Appendix

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Market data

Trading Symbol TSX: ZL

Market Cap. ~$238M

Share price $1.95 (01/21/11)

Shares outstanding 122M

52 week range $1.00- $2.24

Management, board and employee ownership

~3.0M common shares or ~2.5% of shares outstanding

Fiscal Year end March 31

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Management team

Kirk Mandy President and CEO

Andre Levasseur Sr. VP Finance & CFO

Gary Tanner Chief Operating Office

Dr. Stan Swirhun Chief Technology/Marketing Officer

Steve Swift Sr. VP & GM, Medical Products Group

Renato Pontello VP & General Counsel and Corporate Secretary

Eileen Speirs VP Human Resources

Board of directors

Dr. Adam Chowaniec Semiconductor Industry Advisor

Oleg Khaykin President and CEO, International Rectifier

Hubert T. Lacroix President and CEO, CBC/Radio Canada

Spencer Lanthier Management Consultant

Kirk Mandy President and CEO, Zarlink Semiconductor

Jules Meunier General Manager, Alcatel-Lucent 3G Wireless Division

Dennis Roberson Professor and Administrator, Illinois Institute of Technology

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Detailed management & board ownership

Kirk Mandy, CEO 788,500

Gary Tanner, COO 400,000

Stan Swirhun, CTO and CMO 322,210

Steve Swift, Sr. VP & GM, Medical Products 91,648

Renato Pontello, VP & General Counsel 26,000

Eileen Speirs, VP Human Resources 7,309

Andre Levasseur, Sr. VP Finance & CFO 14,001

Adam Chowaniec, Director 136,000

Hubert Lacroix, Director 100,000

Jules Meunier, Director 85,000

Dennis Roberson, Director 50,522

Spencer Lanthier, Director 45,000

Oleg Khaykin, Director 25,000

*Insiders and employees combined own ~3.0M common shares or ~2.5% of shares outstanding