2010 Analyst Day by Carolynne Borders

Christine King, President & CEO

SMSC - A Year We Deliver Continuing Top Line Growth Accelerating Bottom Line Growth June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

Safe Harbor Statement Forward Looking Statements

This presentation includes forward-looking statements about expected future events and financial and operating results that involve risks and uncertainties, which may cause actual future results to be materially different from those discussed in forward-looking statements.

Such statements are subject to change, and the Company does not undertake to update such statements, except to the extent required under applicable law and regulation.

See SMSC’s “Other Factors That May Affect Future Operating Results” and “Risk Factors” included within the Company’s filings with the Securities & Exchange Commission and the “Forward Looking Statements” description accompanying the Company’s earnings releases.

Non-GAAP Financial Measures

Non-GAAP financial measures referenced in this presentation are offered to provide additional insight into underlying operating performance.

These non-GAAP measures exclude charges and credits for stock appreciation rights (SARs) and stock options associated with the accounting pursuant to SFAS 123R, the amortization of acquired intangible assets, restructuring charges and related accelerated depreciation on certain test equipment, litigation settlement expenses, goodwill impairment charges and an out-of-period adjustment for the release of an inventory liability.

The Company's management believes that this information assists in evaluating operational trends, financial performance and cash generating capacity. Non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes.

Guidance and the Company’s target operating models are presented on a non-GAAP basis only, given that the GAAP basis charges for equity-based compensation related to SARs cannot be projected reasonably.

A reconciliation of GAAP and non-GAAP measures used through this presentation can be found in the appendix.

SMSC 2010 Analyst Day

Agenda 10:00 AM

SMSC: A Year We Deliver, Chris King, President & CEO

10:20 AM

Growth in Connectivity, Robert Hollingsworth, Senior VP & GM, Computing & Connectivity

10:40 AM

Expanding Automotive Content, Christian Thiel, VP & GM, Automotive Information Systems

11:00 AM

A Successful Analog Portfolio, Mark Beadle, VP & GM, Analog Products

11:20 AM

Growth Through Portable Connectivity, Eric Kawamoto, VP & GM, Portable Products

11:40 AM

A Diverse & Growing Customer Base, Roger Wendelken, VP, Worldwide Sales

12:00 PM

Operations Driving Financial Results, Dave Coller, Senior VP, Operations

12:15 PM

15-minute break for lunch (return to seats)

12:30 PM

Drive for Profitable Growth, Kris Sennesael, VP & CFO

12:45 PM

Closing Remarks, Chris King, President & CEO

SMSC 2010 Analyst Day

SMSC: Building a Connectivity Ecosystem Smart Mixed-Signal Connectivity™ Our Mission Deliver Market-Differentiating Mixed-Signal Solutions Enable our Customers’ Success Generate Attractive Returns

PC Ecosystem

Consumer Connectivity

Automotive Networking

SMSC Facts: $308M Fiscal 2010 Revenue ~$390M revenue run-rate in Q1FY11

55% Gross Margin in Q1FY11 Non-GAAP SMSC 2010 Analyst Day

$193M in Cash and investments 95% Revenue Single Sourced

What's Happened in the Last Year?

Financials 56% year-over-year revenue growth in Q1FY11 ~ ½ market recovery and ½ market share increases* Reached 55% non-GAAP gross margin ~ 430 bps cost reductions Improvement versus Q1FY10 ~ 370 bps scale Positioned to achieve 16% non-GAAP operating margin in Q2/Q3FY11

Product Lines Increased market position and reached record revenue levels in Automotive, Portable and Analog product sales Established leadership in new USB related standards Added Wireless Audio products

Engineering Capability Added low-cost engineering centers Chennai, India and Sofia, Bulgaria >20% of engineering resources dedicated to software/firmware development

* Source: SMSC Estimates SMSC 2010 Analyst Day

Strong Semiconductor Recovery in 1HCY10 Healthy Bookings Environment ■ ■

Record bookings… Book to bill during Q1FY11 = 1.5 ■ 1.2 when normalized for early orders

■

ODM/Distributor inventory remains relatively healthy

End Customer Demand Highlights ■ ■ ■ ■

Automotive sales recovery Strong Industrial demand Moderate enterprise PC recovery PC units expected to grow….

2010 Industry Outlook ■ ■

Strong first half 2010 seasonality may be muted

On Watch ■ ■

SMSC 2010 Analyst Day

European consumer/PC/Automotive Channel inventory levels

Executing on Financial Objectives Q1FY11 Highlights

Exceeded revenue, gross margin and earnings guidance Revenue of $97.2M up 17% sequentially Record non-GAAP gross margin of over 55% Non-GAAP operating margin of 13.1% $0.33 non-GAAP EPS Generated ~$12.1M in cash from operations

Q2FY11 Expectations

Expect revenue to increase 4% to 7% sequentially Growth expected in all product areas Current Q2FY11 OEM backlog coverage >80%

Looking Ahead to 2HFY11

Anticipate muted seasonality Current Q3 OEM backlog coverage at >30% Expect to achieve 16% non-GAAP operating margin by Q3FY11

See reconciliations from GAAP to non-GAAP information at the end of this presentation. SMSC 2010 Analyst Day

Connectivity Is Everywhere & Converging

SMSC 2010 Analyst Day

SMSC Is A Player ~85% of Revenue Related to Connectivity PC ▪ Embedded Controller ▪ USB ▪ Hubs ▪ Graphics ▪ Security ▪ Human Interfaces ▪ Ethernet ▪ RightTouch™

Consumer ▪ USB Connectivity ▪ Battery Charging ▪ Port Protection ▪ Wireless Audio ▪ Ethernet

Q1 FY11 % of Connectivity Revenue

Automotive

▪ Infotainment Networking ▪ MOST® ▪ USB & Ethernet ▪ Wireless Headphones All Data is Unaudited SMSC 2010 Analyst Day

An Expanding Ecosystem USB Connectivity

MOST Networking & Adjacent Devices

Peripheral Interfaces USB 2.0 → 3.0 Graphics Security

A $1.4B Market in 2011 Growing at >20% CAGR

Human Interface Devices RightTouch™ Natural Interfaces Source: SMSC and Third Party Estimates; CAGR represents growth opportunity SMSC 2010 Analyst Day

Wireless Portable Home Audio

Investing In Our Future

Sofia Design Center

Rationale

Business Model

Investment

First SMSC design facility in low-cost geography

■ Broad technical capabilities ■ Drives 2-3X product productivity

$3.4M Sept 8, 2009 ~50 resources

Extends SMSC design capabilities in low-cost geographies

■ World-class analog / mixedsignal expertise ■ Drives 2-3X product productivity

$0 April 1, 2010 ~20 resources

Middleware and framework for MOST® enabled technologies Entrée into wireless audio market with strong IP portfolio Expand consumer presence and solidify position in wireless audio market Investments exclude potential earnout payments; gross margin goals are non-GAAP SMSC 2010 Analyst Day

>60% GM

38% → ~50% GM

35% → ~50% GM

$8.9M Nov 5, 2009 ~30 resources $5.5M Feb 16, 2010 ~15 resources $22M June 14, 2010 ~40 resources

Wireless Audio Systems A High Growth Opportunity June 29, 2010 NASDAQ Market Site – New York SMSC 2010 Analyst Day

The Acquisitions of Kleer & STS Make SMSC a Leader in Wireless Audio

Portable applications Low power RF IP & expertise

CANADA

SMSC 2010 Analyst Day

Home standards Supports HD audio Digital baseband expertise

SINGAPORE

THE NETHERLANDS

Expect >$25M annual revenue run-rate exiting FY11 >30% CAGR market Gross margin opportunity in line with company strategy

Kleer and STS are complementary and positioned for fast growth Kleer Narrow Band

STS Wide Band

▪ Best-in-class, low-operating Power ▪ Full interoperability between products and customers ▪ High QoS RF ICs ▪ Strongly positioned for battery-operated devices ▪ Dedicated architecture for co-existence in crowded 2.4GHz spectrum

~30% CAGR

CY10

CY11

CY12

Source: Gartner press release - 03.04.2010, SMSC Marketing SMSC 2010 Analyst Day

▪ High QoS, scalable platform based on backand forward compatible baseband ICs ▪ Fit for all multi-stream home applications ▪ Dedicated architecture for seamless switching between 2.4G, 5.2 & 5.8Ghz

Major Customers

A Growing Market

CY09

▪ Best-in-class interference robustness & coexistence combined with lowest latency

CY13

Wireless Audio Systems – A Compelling Growth Opportunity

Our Business Model ■ The established leader for Wireless Audio ■ Proven, unique proprietary technology ■ Leadership through complete coverage of all volume audio applications ■ Intimacy with major global customers ■ Leading presence in Home and Portable products

Our Customers ■ Major global brands ■ Major OEMs worldwide

Our Products ■ Full systems & support ▪ Architecture ▪ Hardware ▪ Software ▪ ODM/OEM support ■ Back – and forward compatible products, spanning multiple product life cycles SMSC 2010 Analyst Day

New Market Opportunities are Driven by a Changing Landscape

CD-quality audio content is streamed wirelessly from rear seat displays to wireless headphones Super thin LED TV’s require external speakers systems, while TV-included Skype functionality requests wireless headsets.

Multiple displays show selectable content; vehicle occupants wear wireless headphones to tune into the content on the display they are watching

3-D Portable 3-D screens will fuel penetration of wireless HD Surround Audio SMSC 2010 Analyst Day

Wireless Video link for real streaming wireless video from portable products to TV’s, PC’s etc.

The Wireless Audio Growth Opportunity Infotainment New Applications Video

Addressing a SAM of ~$109M, growing to ~$235M in 2013 (~30% CAGR)

Handheld

PC Audio

LED TV Audio

Ear buds

Desktop

Gaming & Head sets Mobile Stereo & Docking systems

Headphones/sets Television

Automotive Home Audio

Headphones & Ear buds Home Theatre

SMSC 2010 Analyst Day

Gaming

Automotive

Source: SMSC & Third Party Estimates

SMSC: Continued Commitment to Growth 2009

2010

Increasing Market Presence

Expanding Product Portfolio

▪ Automotive Market

▪ USB/HSIC ▪ MOST® Expansion ▪ RightTouch™ ▪ Wireless Audio ▪ Meeting Our Financial

Picking Our Spots

▪ PC Connectivity ▪ USB ▪ Automotive ▪ Rightsized the

2011

▪ PC Customer Base ▪ Analog & Portable Growth

▪ Expanded Software Presence

Targets 16% Operating Margin

Future

Addressing the Connectivity Ecosystem Higher Value Solutions

▪ Greater Percentage of Product System Solutions

Continued Growth in Profitability

▪ Meeting 20%

Operating Margin Target

Business

9 SMSC 2010 Analyst Day

9 18

Continued Corporate Optimization Based on SMSC fiscal years

5 Product Lines Driving Growth Opportunities Computing & Connectivity Products

Low power USB (HSIC)

Our Core Business

Average ASP $1.00

~20%*

Building our Portfolio Average ASP $0.29

>30%*

62% or $61.1M

Wireless Audio

Environmental control

~30%*

Energy management Port Power

Portable connectivity

Average ASP $0.50

Battery charging

~35%*

Wireless Audio Growth through Features Average ASP $4.00

Portables 7% or $6.3M

Audio & video

~30%*

* Percentages reflect anticipated revenue growth opportunity in coming years SMSC 2010 Analyst Day

Analog 11% or $10.3M

USB feature integration

Portable Connectivity Leader

Automotive 19% or $18.3M

RightTouch™

Portable Products

New customer acquisition

TrueAuto™ Products

Analog ASSPs

Computing & Connectivity

MOST® companions

Market Share Leader Average ASP $3.50

Continued PC market recovery

Next speed generation

Automotive Products

USB applications

Hybrid bandwidth Network connectivity

Wireless Audio 1% or $1.2M Pie pieces reflect Q1FY11 revenues

Content Value Provides Growth Opportunities Content value in the car…

Today’s Content Range $7.00

$50.00

Next generation MOST® Companion devices USB & Ethernet Wireless Audio

Average: ~$10/car In the PC… $0.15

$5.00

Embedded controllers USB applications Environmental control RightTouch™

Average: ~$1.15/computer In the smartphone… $0.40

$1.00

USB Subsystem: Increased connectivity Portable power

Average: ~$0.50/phone In the Home Environment… $0.30

$2.50

Average: ~$0.90/environment SMSC 2010 Analyst Day

Ethernet controllers USB Products RightTouch Wireless Audio

Growth Driven by Market Recovery & Share Gains Return to 2008 revenue run-rates

Record revenue levels based on market share gains

PC unit decline primarily in N. America

PC unit decline

Fall in Automotive units worldwide

SMSC 2010 Analyst Day

Increased market share primarily in Asia RightTouch™ ramp

Record revenue levels based on smartphone market share Automotive industry recovery Ramps primarily in Japan & Europe

Expanding the Value Chain Moving to Full Systems Solutions

Automotive Network (MOST®)

Wireless Audio SMSC 2010 Analyst Day

USB Graphics

Portable

Strong Market Share Positions in Our Target Markets SMSC PC SAM (CY10) Embedded Thermal Controllers Management

$269M

$81M

I/O Controllers RightTouch™

$81M

$106M

SMSC Automotive SAM (CY10) MOST® MOST NIC Companion

$72M

$47M

SMSC USB SAM (CY10) Media Hubs Readers

$98M

$35M

TrueAuto™ USB

TrueAuto Ethernet

USB to Ethernet

USB Subsystems in Smartphones

$20M

$5M

$32M

$79M

SMSC Wireless Audio SAM (CY10)

Consumer & Automotive

$109M

Energy Management

$130M CY09

$457M

CY10

$667M

SMSC PC Market Share

25% Q1FY10

20% Q1FY11

CY09

$96M

CY10

$144M

SMSC Auto Market Share

33% Q1FY10

51% Q1FY11

CY09

CY10

$191M

$244M

$109M

SMSC USB Market Share

28% Q1FY10

Source: SMSC and Third Party SMSC & Third Party Estimates; Market shareEstimates calculated by dividing quarterly SAM estimate by Q1FY11 revenue, except for Wireless Audio. SMSC 2010 Analyst Day

SMSC Wireless Audio Market Share

39%

23%*

Q1FY11

Q1FY11 * Based on FY11 quarterly exit revenue run-rate

A Diverse Company with an Evolving Mix Revenues by Product Line

Vertical Market Revenues Future

Future

Now

SMSC Estimates; All Data is Unaudited SMSC 2010 Analyst Day

World Class Customers and Partners PC

Major PC brands worldwide

Major ODM white box PCs

Automotive

Expanding OEM presence

Tier 1 automotive suppliers

Portable

Smartphone OEMs

Major reference designs

Peripherals

Printers/Docks

Monitors

SMSC 2010 Analyst Day

Our Growing Worldwide R&D Presence >500 Engineers Worldwide Phoenix Phoenix Corporate Engineering

Corporate Engineering Portable Engineering Portable Engineering SMSC Corporate Engineering SMSC Corporate Engineering

Ottawa Ottawa Wireless Audio

Gothenburg, Gothenburg,Sweden Sweden Karlsruhe, Germany Karlsruhe, Germany Pforzheim, Pforzheim,Germany Germany

Amsterdam Amsterdam Singapore Singapore Wireless Audio Wireless Audio

Automotive Engineering Automotive Engineering

Wireless Audio

Sofia, Sofia,Bulgaria Bulgaria Analog Engineering

Analog Engineering

New NewYork York PC & Connectivity Engineering

PC & Connectivity Engineering WW Test Engineering WW Test Engineering

Tucson Tucson Analog Engineering

Analog Engineering

Austin Austin Automotive Engineering

Automotive Engineering PC & Connectivity Engineering PC & Connectivity Engineering

A Successful Design Model

Chennai, Chennai,India India SMSC Corporate Engineering

SMSC Corporate Engineering

Design Solutions Execution

Product Line Engineering Architecture High Level Design

SMSC 2010 Analyst Day

Validation & Verification

Continuing to Deliver Expanding Earnings Model at $120M/Q Revenue/quarter

$120M

Milestones to Meet $120M/Quarter Market: Continued PC recovery in line with analyst expectations Ongoing auto recovery – no double dip

Gross Margin

56% Design Wins: Automotive system wins

R&D

19%

SG&A

17%

New USB product wins

Execution: USB Roadmap RightTouch™ ramps

Operating Income Margin

Non-GAAP measures SMSC 2010 Analyst Day

20%

Port Power launches Wireless Audio

SMSC: A Compelling Company Participating in Exciting Markets with New and Differentiating Products

Delivering Top and Bottom Line Growth

Has the Team to Execute SMSC 2010 Analyst Day

Robert Hollingsworth, Senior VP & GM

SMSC Growth in Connectivity June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

Computing & Connectivity: Now a Growth Business Our Products System Management Embedded Controllers Innovative USB solutions Human Interface Device controllers Industrial grade embedded networking and I/O solutions

Our Customers Worldwide PC and Consumer brands Leading ODM manufacturers Major peripheral design companies

Our Business Model A Close Engineering, Strategic Selling relationship with Customers Application-specific Solutions Standard Interfaces plus Architectural content SMSC 2010 Analyst Day

What's Happened in the Last Year?

Market Events Consumer PC sales recovered in 2009 Beginning of Enterprise PC refresh cycle SmartBooks fail to deploy; iPad revives Tablet PCs

Our Products

The FUTURE

SMSC 2010 Analyst Day

Delivered next generation PC Embedded Controllers Ramped production of USB-to-Ethernet Solution New USB 2.0 opportunities continue to be identified Received patent for Inter-Chip Connectivity™ (ICC), a portion of the High Speed Interconnect (HSIC) specification

1st USB 3.0 product sampling (USB Graphics) Architected 3D sensor solutions based on Canesta investment Transaction and Secure Storage application opportunities identified

PC Market Forecast Indicates Robust Growth in 2010 PC Platforms Data Source Commercial Desktop Commercial Notebook Consumer Notebook Netbook Subset PC Totals Year-over-Year Growth

2009

2010

2011

2012

(K units)

Gartner

SMSC

79,800 58,000 108,000 30,000 245,800

81,300 67,000 156,600 60,000 304,900 20%

86,000 75,000 180,000 80,000 341,000 12%

88,000 79,000 200,000 90,000 367,000 8%

Looking back at 2009

6% higher growth than we expected Netbook sales drive the increase SmartBook volumes never materialized Windows® 7 had little if any impact

So what happened? • • • •

All-In-One Desktops proliferate in Consumer Intel and AMD eliminate 3rd party chipsets SmartBooks wait for Google Operating System Muted Enterprise PC sales

SMSC 2010 Analyst Day

Market CAGR

2.5% 8.0% 16.7% 31.6% 10.5%

Looking Ahead in 2010

Pent-up Demand in Enterprise Windows XP replaced by Windows 7 Netbook volumes continue to increase Notebook volumes return to normal

Hinge Factors • • • •

Worldwide economy factor Netbook versus Notebook ratio in Consumer Semiconductor cycle implications Impact of iPad/Tablet sales on PC growth

Successfully Expanding Our Global PC Related Customer Base

2008

Estimates based on major customer forecast SMSC 2010 Analyst Day

Today

Future

Strong Revenue Growth from Core + New Initiatives New Initiatives - USB Graphics, USB3.0, Security Applications, HID USB 2.0 Peripherals - Flash Media Readers, Hubs, Ethernet, Combo Devices PC - Commercial Desktop PCs, Commercial Notebook PCs, Consumer Notebook PCs Embedded / Legacy - Embedded Networking, Ethernet Controllers, Industrial Devices

CAGR Opportunity 20%

FY10 SMSC 2010 Analyst Day

FY11 34

FY12

FY13

New Market Opportunities Driven by a Changing Landscape

Home Entertainment

Automotive

Home & Business Computers

Mobile Applications

Solving big problems with application-specific hardware and software SMSC 2010 Analyst Day

High Value, Differentiated User Experience Innovative Value!

Standard/Custom Interconnect

3D Revolutionary Human Interface Device! “System Interface Controller”

High Performance System Connection

USB Graphics!

SMSC “Display Interface Controller”

Revolutionary Human Interface Device

Data Security! Enable the Cloud! “ID Interface Controller”

SMSC 2010 Analyst Day

What We Do and Where We Are

Today ASP ~$1 SMSC 2010 Analyst Day

Tomorrow ASP ~$6

Green USB, High Speed Inter-Chip (HSIC)

Low-power Interconnect Solution Addresses on-board USB communications in batterypowered portable devices, while preserving software compatibility HSIC incorporates SMSC’s patented Inter-Chip Connectivity™ (ICC) technology SMSC’s US patent for ICC was recently awarded and SMSC has announced a Patent Licensing Program

New Connectivity Possibilities USB 2.0 connectivity has now become THE standard for all new peripheral controllers As many as 15% of USB 2.0 interconnect opportunities will occur inside systems requiring low power HSIC enables a low power USB 2.0 interconnect option, which utilizes the existing USB 2.0 software infrastructure

SMSC 2010 Analyst Day

USB – The Evolution Continues

USB 1.1

USB 2.0

USB 3.0

“USB 4.0".0

Connectivity

I/O Performance

Video Transfer

Video I/O

Legacy replacement Human Interface 1st Regulated Power

Flash Storage MP3 Players Battery Charging

Data Density YouTube High Definition

3D High Definition Chip-to-Chip speed

User Input Devices Printers

1st Generation Storage

SuperSpeed Storage & Connectivity

Ultra High-Speed Storage & Connectivity

1998

2002

2009

~2015

The GOOD NEWS is… USB 2.0 Applications Continue to Expand Power, Battery Charging, Power Management High Speed Inter Chip (HSIC) reduces cost

SMSC 2010 Analyst Day

However… USB 3.0 Deploys Slower than Expected Chipset Integration, OS driver support missing

USB Graphics: USB 3.0 Expands the Market Market Opportunity: Digital World

Universal Display Connectivity

USB interface embedded in display platform Display graphics and video over USB Any device with USB could connect to displays

Proliferation of mobile content & devices USB as universal connectivity standard: -Data, power, graphics Ubiquitous Display Standard

Secondary Displays

($Billion TAM)

($200M TAM)

A Growing Market

Top Applications

USB 2.0 Video ~35% CAGR Opportunity USB 3.0 Video ~358% CAGR Opportunity

USB 2.0

$M USB 3.0

CY10 Source: SMSC Estimates

SMSC 2010 Analyst Day

CY11

CY12

Professional Productivity – 2nd or 3rd Monitor Universal display interface for Projectors Multi User Server Display Interface Digital Signage Remote Display for Consumer Devices

SMSC USB Graphics Solution

Host Systems

Render images – graphic & video 2D/3D acceleration (rendering image)

SMSC Solution ■ ■ ■

Manipulate & compress host rendered images Recompose images on remote display via USB SMSC Deliverables ▪ Host Software Drivers ▪ Selective compression software ▪ USB to Graphics Device ▪ Decompression hardware

Transmitting Over USB

System/Software

Microsoft, MacOS, Linux, Android, Chrome Graphics drivers Frame Buffer

SMSC 2010 Analyst Day

Displayed Image

USB Graphics Futures USB is standard for every display Mobile

Desktop Extension

Remote Display

Consumer

Commercial

Education

Display Replication

Digital Signage

Shared Resource Computing

SMSC 2010 Analyst Day

Natural Human Interface: The 3D Sensor Impact Remote Touch & Gesture Controller

Senses user position and movements

Natural Interaction

Large screen Remote Touch

Natural, gesture-based control

Commercial PC (Remote Touch, Proximity)

Consumer PC (Remote Touch, Gesture)

Industrial/Embedded PC (Control, Remote Touch)

SMSC Positioned to Capitalize

Custom business model

PC ecosystem experts

Top Applications

A Growing Market Remote Touch/Gesture Revenue

~295% CAGR Opportunity

• Remote Touch Screen navigation Virtual Keyboard • Gesture Remote control, Command Gaming, Security

CY11 Source: SMSC Estimates

SMSC 2010 Analyst Day

Market Opportunity: Design Revolution

CY12

CY13

Partnering to Provide Natural Human Interface Solutions

Remote-Touch & Gesturing

Canesta Sensor

Scans 2’ to 10’ field of sensitivity Filters out ambient light

SMSC Solution • Calculates pixel position • SMSC firmware for system customization • SMSC Deliverables: Custom controller to interface to 3D Sensor Firmware to manage pixel position USB interface to system

System/Software

Microsoft, Canesta 3rd party applications

SMSC 2010 Analyst Day

3D: The Future of Human Interaction FY11

FY12-14

Desktop Television Automotive

Gaming

Scalable Technology ■ Spanning home, office, and handheld

SMSC 2010 Analyst Day

Mobile

Handheld

Security Evolution Creates Unique Opportunities Security Transaction Management Strong Authentication Secure Storage

Evolution and Integration USB is the ubiquitous interface Key SMSC customer relationships Revenue ramp in 2011 SMSC 2010 Analyst Day

Computing & Connectivity Core Business Growth Opportunity

Revenue CAGR Opportunity ~20%

FY10

Source: SMSC Estimates SMSC 2010 Analyst Day

FY11

FY12

FY13

Dr. Christian Thiel, Vice President & GM

Automotive Information Systems Expanding Automotive Content June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

Automotive Information Systems – A Compelling Business Model Our Business Model

The leader for “in cabin” networking Unique all-layer capability Leadership through complete system solutions Intimacy with system customers Leading presence in automotive standards

Our Customers

Major OEMs worldwide Global tier 1 suppliers

Our Products

Full systems & support Architechture Hardware Software Tools Training & Consulting 8-10 year life

An Established Business $50M in revenues in FY10

SMSC 2010 Analyst Day

What's Happened in the Last Year?

Automotive Market – Out of the hole but how far?

New Customers Ramping – Expanding the market

23 new car models - ~95 in total Broad Toyota ramp First VW on the road Shipping TrueAuto™ USB and Ethernet products

Acquisitions – Adding to our portfolio

Historic down-turn with slow recovery through 2009 Luxury cars affected especially hard Unexpectedly fast recovery this spring Toyota quality issues

K2L – Connecting automotive networks through software Kleer® - Best-in-class RF Audio

Product Roadmap – Expanding our offering

Infotainment Video Driver Assist RightTouch™ for Automotive

SMSC 2010 Analyst Day

Multiple Vectors for Growth New Applications i.e. Driver Assist Infotainment Video

Wireless Audio

K2L

Ethernet

USB

Car Model Proliferation MOST®

SMSC 2010 Analyst Day

Additional Content per MOST Node

Synergistic Technology Standards SMSC is uniquely positioned to offer all four technologies

Ethernet

MOST®

Ethernet is the mandated standard diagnostic interface by automotive industry regulation (ISO/SAE)

MOST is the de-facto industry standard for high bandwidth infotainment networking

Diagnostics & Software Download

SMSC 2010 Analyst Day

The Infotainment Backbone

Kleer®

Wireless Audio Kleer provides unique combination of low power and high quality wireless audio and control

USB

The Consumer Port USB is rapidly becoming the consumer interface of choice for mobile device connection

K2L – Connecting Networks Through Software Acquired Nov 2009

K2L – The leading provider of Gateway software for BMW, Daimler and other car makers

Expands SMSC automotive opportunities significantly Apply capability across global markets Additional competency in other car networks Middleware and application portfolio

CAN – Car body control network LIN – Local sensor/actor network FlexRay® – Safety network MOST® – Infotainment network Ethernet – Repair shop link SMSC 2010 Analyst Day

Kleer Technology – Best-In-Class RF Audio

Wireless audio technology Key features

Lossless, uncompressed 16-bit, 44Ks/s CD quality audio streaming Lowest power consumption in the industry Best-in-class 2.4GHz ISM band WiFi coexistence Full interoperability between products and manufacturers

Mercedes E & S Classes on the road with Kleer Acquired Feb 2010

Bluetooth SMSC 2010 Analyst Day

Kleer

Working Out of a Deep Automotive Recession Global Light Vehicle sales (JD Powers)

80 25

50 15 40 30

Millions (World)

Millions (Regions)

20 5 10 0t

0 2007

2008

2009

2010

2011

2012

2013

Calendar Year

Americas

Europe

Asia

World

Market inventories cleared by end of CY09 Seeing stronger quarterly automotive sales growth in FY11 (CY10) as new models ramp and market recovers Expected market recovery alone drives 10% YoY growth rate Some risk for attenuated recovery due to European credit crisis

Source: JD Powers and SMSC Marketing SMSC 2010 Analyst Day

MOST Is The Base of Our Business MOST is “the” Standard

Proliferation driven by the “digital revolution” In ~95 car models No competing technology successful Increasing content per car Complete systems solution

Built on SMSC Technology

A founding member of MOSTCO Leading semiconductor company Fundamental technology contribution Joint extension with customers

DATA TRANSPORT USING MOST

Fewer cables Fewer connectors Higher reliability Lower weight Lower volume/space requirements Reducing susceptibility to interference Easier recycling * From a real-world car example

SMSC 2010 Analyst Day

CONVENTIONAL CABLING*

COST: 2.5X WEIGHT: 3.75lbs

MOST® TECHNOLOGY*

COST: 1X WEIGHT: 0.27lbs

MOST Adoption – A Success Story AUTOMOTIVE MOST® ADOPTION OUTLOOK

Further Opportunities

Nodes Per Year

Round-out opportunities in Europe, Asia and the US Initial activity in China

2001

2004

2008

2012

Years 1st Wave: 2nd Wave: 3rd Wave:

2016 First Model Stop

Early Adopters are Luxury European Car Makers First non-European Penetration Including Leading Japanese and Korean Car Makers MOST Continues Global Expansion Including Mid and Low End Volume Brands

Platform ramps are subject to change and may shift. Auto makers may run parallel production during initial transition to MOST up until platform launch. SMSC 2010 Analyst Day

Winning Ground – 23 New Models in Past Year

MOST in ~95 Models on Road Today SMSC 2010 Analyst Day

Status: 2010-03-15

Success at VW/Audi – Next Gen MOST In All Car Models

SMSC 2010 Analyst Day

SMSC Holds An Impressive Market Share SMSC MOST Vehicle Reach

46%

50%

30% 20%

12%

10% 0% Current Share

Recent design wins of VW and GM give MOST a potential reach of close to 50% of cars produced worldwide

40%

Potential with Recent Wins

SMSC serves ~90% of SAM for multimedia networking in cars 100% of network controllers Expecting to keep share in coming years

120 100 $ Millions

Global Light Vehicle Production

60%

SAM Car Multimedia Networks ni t y or tu p p O AGR C 27%

60 40 20 0 2009

2010

2011

Calendar Year

Source: JD Powers and SMSC Marketing SMSC 2010 Analyst Day

2012

2013

New Products Poised for Growth Companion ICs

Added value “around” the MOST® interface Power Companion IO Companion Video Companion

TrueAuto™ USB ICs

Consumer device interface Most cars will offer at least 1 USB port

TrueAuto™ Ethernet ICs

New On Board Diagnostics standard under definition All autos will have Ethernet interfacae

Kleer Transceivers ICs

Quality audio and lowest power Great technology for headphones and remote controls

K2L Software Products SMSC 2010 Analyst Day

High performance gateways Versatile software framework

Multiplying The Size Of The Opportunity Maximum Content Per Device

Average Content Per Car Tomorrow

$20

Infotainment Device (e.g. Headunit)

$30

Ethernet

K2L Kleer

Tomorrow

Gateway Software & Software Framework USB

IO Function Content Protection

Power Management

Video

Today

~$10

MOST Base Node

Additional MOST nodes through video transmission

Displays, Instrument Clusters, Rear Seat Entertainment Units

SMSC 2010 Analyst Day

Today

$2 $4

Outlook Driver Assist – A System without a Network PreCrash / Emergency Brake

Lane Departure Warning

Legislation mandates enhanced side/rear view to avoid accidents New driver assistance systems based on image sensors TAM around 50 100 Million vehicle cameras by 2015* Challenge: Point-to-point today Applications need to share sensors No multimedia network selected MOST® is the ideal candidate!

Night Night Vision Vision * Source: Strategy Analytics SMSC 2010 Analyst Day

SMSC Automotive – Sustainable Growth Opportunity Growth Drivers New Applications Wireless Audio

Revenue

GR A C % 0 >3

po p O

K2L

ity n u t r

USB & Ethernet Companions

MOST Nodes

2009

2010

2011

2012

2013

2014

Existing independent growth vectors drive CAGR opportunity > 30% New vectors in preparation expected to sustain growth rate long term SMSC Automotive revenue expected to be > $100M annually in 2 years CAGR represents growth opportunity

SMSC 2010 Analyst Day

Mark Beadle, VP & GM

SMSC Analog Products and Technology A Successful Analog Portfolio June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

A Successful Analog Business Model

29% CAGR

Revenue

FY06 SMSC 2010 Analyst Day

FY07

FY08

FY09

FY10

An Expanding Product Portfolio

SMSC 2010 Analyst Day

What's Happened in the Last Year?

Market Strong growth in Consumer PC Continued transfer of “Design Control” to Asia Proliferation of “alternative” input methods

Our Products Completed 1st RightTouch™ device Ramped production of RightTouch in several products Sampled first Energy Management device

Our Business Maintained market-share in Consumer PC Secured more sockets in Commercial PC Exceeded expectations for 1st Year RightTouch revenue

SMSC 2010 Analyst Day

Thermal Management - Our Core Business Managing the Thermal Envelope

Sensing temperatures accurately Managing system cooling profiles Driving fans quietly

Market Opportunity: Intelligent Cooling

A Growing Market

Major Customers

32% CAGR

TPF

Controllers Thermal Sensors CY10

CY11

Source: Gartner press release - 03.04.2010, SMSC Marketing

SMSC 2010 Analyst Day

New designs require more control and less power Technology still matters Thermal profiles are a differentiator Three Phase Fan (TPF) offers less power and better acoustics System controllers can now manage more efficiently

CY12

RightTouch™ - Our Growth Business in 2010 & 2011 Many Application Opportunities

Human Interfaces are Changing

Proximity expanding the imagination of interface Industrial design advantages driving incorporation

UB GFX

• Appliance • Handheld • Automotive

A Growing Market

Major Customers

40% CAGR Automotive Portables

$M Appliance

}

CY10 CY11 * Source: Internal Marketing Estimates

SMSC 2010 Analyst Day

CY12

Printer LCD Monitor Mobile PC

RightTouch™ is Replacing Mechanical Buttons

SMSC 2010 Analyst Day

Buttons Waiting to be Replaced

SMSC 2010 Analyst Day

Focusing on Changing the Human Interface 2010

TAM Button Replacement $1.3 Billion

And the application space is growing

* Internal estimate based on several market size studies SMSC 2010 Analyst Day

Proximity will add toys, lighting, security Micro-switches have promise

Energy Conservation is Driving New Opportunities Monitoring Power for a Green Tomorrow

Measuring power instantaneously and over time CPU, GPU, DIMM, System current, LCD Monitor backlighting, etc Analog and digital system interfaces needed

Market Opportunity: Conserving Energy

Consumer demand for monitoring power usage Emphasis on system level monitoring and throttling International legislation driving change

Guidelines for Energy Mgmt •

Meter energy consumption / collect data

•

Find/quantify opportunities

•

Taking action on opportunities

•

Tracking progress by analyzing data

www.energylens.com/articles/energy-management

Major Customers

A Growing Market 32% CAGR Server

Mobile

Desktop CY10

CY11

Source: Gartner press release - 03.04.2010, SMSC Marketing

SMSC 2010 Analyst Day

CY12

Monitoring Power for Better System Management Power Rails run throughout motherboard to supply power to each computing function 12V 5V 3.3V

SMSC Energy Management Devices 1) Measures Voltage and Current off of Power Rails 2) Calculates Power 3) Communicates to System Controller

SMSC 2010 Analyst Day

USB Port Power - A New Standard and Opportunity Power Over USB

Market Opportunity: Universal Charging

Primary power is available from batteries & outlets Many peripherals now charge via USB

UB GFX

270% CAGR Monitor Docking

$M Notebook

Desktop

CY11

* Source: Internal Marketing Estimates SMSC 2010 Analyst Day

USB is becoming the universal charging standard BC1.1 adoption by cell phones Desktop + Note PC

Desktop + Note PC

5% & 20% Adoption

20% & 70% Adoption

($29M SAM FY12)

(SAM $129M in FY14)

Projected Customers

A Growing Market

CY10

CY12

USB – The Charging Port of Choice Sit Down and Plug In! It’s on your desktop PC, docking station, laptop …and charging time will be minimized Industry Problem ■ PC is off or in standby; charging is slow (<100mA) ■ Devices not recognized for proper charging

SMSC Solution USB Port Power provides up to 1.5A (15x more current to charge) USB Port Power recognizes high profile devices

SMSC 2010 Analyst Day

A Solid SMSC Revenue Growth Opportunity

Millions

~30

po p O R G A %C

ty i n rtu

FY10

SMSC 2010 Analyst Day

FY11

FY12

Eric Kawamoto, VP & GM

SMSC Portable Products Growth through Portable Connectivity June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

SMSC Portable Products: A Growth Business

Our Business Model Capitalize on SMSC’s Connectivity Investments Optimize for lowest power & smallest footprint Flexible & nimble to respond to market & customer changes High value & profitability

Our Customers Smartphone + Portable Consumer Electronics

Our Products Feature rich connectivity solutions Highly differentiated mixed-signal portable solutions Centered around USB and its low power derivatives

SMSC 2010 Analyst Day

What's Happened in the Last Year?

Portable Market – Smartphones & eReader Drive Growth

New Product Design Wins – Expanding Market Share

Smartphones continue to increase share of total cell phone TAM Driven by features enabled by new hardware and O/S platforms Introduction of Multiple eReader devices Optimized for long battery life and ease of content access >30 new portable product design wins Includes Amazon Kindle, RIM Tour & Motorola Cliq Multiple design wins in Japan Smartphone Market Portable SAM expansion with eReader and PMP design wins Delivered new USB Transceiver products w/ expanded features

Product Roadmap – Expanding Beyond USB Transceivers

Portable Connectivity Portable Power Sideloader product not needed due to SoC download speed changes

SMSC 2010 Analyst Day

The Components of SMSC Success Reference Design Participation

Portable Engineering & Marketing Expertise

Customers

Reference Designs

SoC Developers

SMSC

Connectivity Intellectual Property and Expertise

Standards Leadership and Participation

USB-IF

SMSC 2010 Analyst Day

SMSC Has Achieved USB Transceiver Market Leadership for Portable Devices SMSC USB Transceiver Market Share ($)*

Source: SMSC Marketing SMSC 2010 Analyst Day

Smallest form factor

~97% smaller and ~98% lower power

Lowest Power

Maximum feature integration Integrated switches & voltage regulators Extreme ESD & Over-Voltage Protection Programmable Receiver Sensitivity

Acquiring Customers Through Design Wins Smartphones

Wireless Modems

SMSC 2010 Analyst Day

Consumer Electronics

eReaders

Demonstrated Success through >100% CAGR

Year over Year Growth Revenue driven by introduction of new USB Transceiver products Design Wins through SoC reference designs Growth driven by smartphone product launches AGR C % >100

Future success will depend on additional: Feature deployment SoC Strategies

Consumer seasonality Potentially volatile growth

FY08

SMSC 2010 Analyst Day

FY09

FY10

Expanding Our Market Enhanced USB Subsystems Added Features & Functions Staying ahead of SoC Integration

SMSC Value Add

SMSC 2010 Analyst Day

Added Content: USB Port Protection & Detection

USB Data Charger Detection Accessories Display

Portable Power Features

Expansion of SMSC Portable Products beyond the USB Transceiver SMSC 2010 Analyst Day

Extreme ESD protection System level over-voltage protection High Speed analog switches Battery charger detection Ultra small footprint

Battery Charging Opportunity: Portable Power

USB HUB SoC

Controller

USB Battery Charging

150% Faster!*

USB HUB

SMSC Port Power

Controller

* Actual charging time will vary by product SMSC 2010 Analyst Day

SMSC Charger Detection

USB-IF Battery Charging 1.1

SoC

What’s Happening with Smartphones Creating

Portable Connectivity Requirements

Smartphones Baseband

Multimedia Phones

Apps Processor

Feature Phones Baseband with Integrated Apps Processor

Baseband

Smartphone Unit Shipments Source: iSuppli , Morgan Stanley and SMSC Marketing

SMSC 2010 Analyst Day

Portable Connectivity Solves Portable Interface Challenges ULPI & HSIC Interfaces on Portable SoC’s Today!

SLPI 2 pins

SMSC HSIC Baseband

2 pins

Apps Processor

ULPI 12 pins

Leverages USB Hub, Analog Switches, ULPI and HSIC Expertise

UTMI/UTMI+ SoC’s Today

22-35 pins Future SoC’s

SMSC 2010 Analyst Day

Driving SAM Growth

Expanding USB Portable Content Add high-performance USB and analog subsystems Increase SMSC content in end product Future penetration in portable CE market

$195M 5% ~3

G CA

$79M $0.50

2010

2013 Source: iSuppli , Morgan Stanley and SMSC Marketing

SMSC 2010 Analyst Day

Portable Connectivity – An Exciting Growth Opportunity

5% 3 ~

FY11 SMSC 2010 Analyst Day

R G CA

po p O

ity n r tu

FY12

FY13

Roger Wendelken, Vice President

SMSC A Diverse and Growing Customer Base June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

What's Happened in the Last Year?

Customer Design Win Focus

Channel Optimization

New large customer in Secure Transaction Won major PC, Printer, and Monitor customers for RightTouch™ Delivered custom PHY to large cell phone customer in Japan MOST® and companion chip design wins at GM and VW. Toyota ramped.

Reset WW distribution margin to reflect industry averages Started plan for Automotive distributor margin reduction Reduced # of distributors in some areas, added in others

Future

Continued optimization of the channel Grow customers with over $10M in sales Significant design win growth in 2HFY11

SMSC 2010 Analyst Day

A Growing Customer Base

Expect FY12 Will Double The Number Of

> $20M/Yr Customers

Expect FY11 Will Double The Number Of

> $10M/Yr Customers ■ Only one >10% customer SMSC 2010 Analyst Day

A Growing & Diversified Customer Base New Wave of Consumer and PC Customers

Traditional PC

46%

22%

Automotive

ODMs

19%

13%

Top 20 Customers By Revenue SMSC 2010 Analyst Day

How Did We Get There?

SMSC 2010 Analyst Day

Design Win Success – Growing SMSC Market Share

Designing in SMSC USB Hubs When the customer wanted to add functionality to existing systems they placed a call to SMSC – the USB Experts From the first call to production ramp was 4 months!

Completed the design and the rigorous testing this customer is known to conduct! SMSC provided value in multiple ways: Application Expertise, Design Experience, Fast Time To Market, Competitive Cost Structure

Customer: “We love SMSC and want to give you more business. I’ve never heard anyone say something bad about SMSC.” SMSC 2010 Analyst Day

Design Win Success – Entering New Markets

European leader in digital security solutions for cashless payments, connected machines and mobile broadband

Over 1 year of visits led to a RFQ for 3 designs

SMSC was a brand new supplier but was awarded all 3 programs – custom silicon!

Opens up a new and growing market for SMSC

New Customer, New Products, New SAM, and New Revenue – We estimate this account will quickly grow to be a top 10 SMSC account!

SMSC Provided Value in Multiple Ways: Application Experience, Customer Experience, Engineering Execution, Innovation and Technology.

SMSC 2010 Analyst Day

Design Win Momentum Is Broad Based FY10 Design Win $ by Region

SMSC 2010 Analyst Day

100

APAC design base growing – includes little automotive today Strategic accounts continue to grow Diversification across customer base and multiple geographies Automotive in Japan is large

We Continue To Hit The Bulls Eye

Operation Excellence Rated 3rd out of 87 suppliers at Strategic Account

Technology Partner Automotive market wins growing as we expand our real estate per MOST® node

Market Leadership

Sole source for embedded controllers for multiple customers

New Product Adoption Awarded sole source for RightTouch™ inclusion with major monitor supplier

SMSC 2010 Analyst Day

101

Sales Structure

On Target for 6% Cost of Sales at $100M/Qtr

Efficient use of Reps and Distributors for WW coverage Focus on winning designs that fuel the growth engine Improving the Quote-to-Cash Process

Channel Optimization and Standardization

SMSC 2010 Analyst Day

102

Our approach: Fulfillment – SMSC does the heavy lifting, limited distributor margins Joint Demand Creation – Joint efforts –higher distributor margins Full Demand Creation – All distribution work – high margins Expect industry standard margins on fulfillment and joint demand creation will generate significant gross margin savings in FY11 (~$2M) and beyond

SMSC Worldwide Sales Model Geographically Positioned to be Close to the Customer Direct Sales

Manufacturerâ&#x20AC;&#x2122;s Representatives

Global & Regional Distribution

54%

46%

Partners WW

40 + SMSC 2010 Analyst Day

Sales Associates

103

40 +

29% Fulfillment 17% Demand Creation

Field Application Engineers

SMSC – A Differentiated Sales Model

Delivers >20% CAGR opportunity Intimate customer relationships Focus on key customers & design wins Technical expertise for solutions-based selling

Supports company financial model Stable ASP product portfolio Optimizing channel costs Structured to scale with revenue

SMSC 2010 Analyst Day

104

Revenue

Sales Cost

Dave Coller, Senior VP

SMSC Operations Driving Financial Results June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

105

A Results Oriented Manufacturing Philosophy Wafer Fabrication

Assembly

Manufacturing strategy Partner with world class vendors Multi source strategy Cost/quality/performance

SMSC 2010 Analyst Day

106

Test

Regular, rigorous business reviews

Gross margin improvement & cost reduction strategy

Driving Non-GAAP Gross Margin to 56% 56% 2011 Initiatives 55%

Offshore Test Cost Other Cost Reduction

Key projects: Business process re-engineering

Sustainable Business Model

Gold reduction program Cost reduction programs

Gross Margin %

Logistics management Cycle time reduction

Increased Business Absorption 47%

Base Line

Yield management Inventory reduction program

Base Line Yield

Q1 2010 SMSC 2010 Analyst Day

107

Q1 2011

Model

Cost

Success in 2010 Ship-To Location

Completed offshoring test operations to Sigurd Microelectronics

Inventory reduction program resulted in >$12M WIP reduction, achieving 4 turns

Cost reduction programs generated >$15M in reductions

SMSC 2010 Analyst Day

108

Gross Margin Improvement Strategy in 2011

Wafer fab

Focusing on the 180nm sweet spot for production Qualifying 65nm (future sweet spot)

Assembly cost reductions

Qualification of additional low cost sources Reduction in gold wire diameters Copper wire introduction SiP integration

Test cost reductions opportunities

Multisite testing deployment up to X16 testing for standard devices Aggressive test time reduction Investigation for new low cost of ownership platform

Continuous yield improvement

Yield SMSC 2010 Analyst Day

109

Implementing new yield management software working across supply chain

Summary – Driving for 56% Gross Margin

The supply chain for wafer fabrication / assembly / test is tight. Guaranteeing assurance of supply for our customer base is being treated as top priority and being managed through a multi-sourcing strategy and strategic vendor management

Driving unlimited growth as a now truly fabless, scalable company

Driving to 56% non-GAAP sustainable gross margins through a continuous, aggressive cost reduction roadmap and ensuring technically / economically smart technologies are targeted for the future

SMSC 2010 Analyst Day

110

Lunch 15-minute break June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

111

Kris Sennesael, VP & CFO

SMSC Drive for Profitable Growth June 29, 2010 NASDAQ Market Site – New York

SMSC 2010 Analyst Day

112

Last Year’s Model Approaching Mid-term Model Model Model at at $100M/Q $100M/Q

Model Model at at $120M/Q $120M/Q

Q1FY11 Q1FY11 Actual Actual

$100M

$120M

$97.2M

Gross Margin

55%

55.3%

R&D

20%

18%

22.2%

21.4%

20.6%

SG&A

19%

17%

20.0%

19.2%

18.7%

Operating Income Margin

16%

20%

13.1%

14.7%

16.0%

Revenue/quarter

Non-GAAP measures; see reconciliation of GAAP and non-GAAP measures in the appendix SMSC 2010 Analyst Day

113

Q2FY11 Guidance $101

$104M

55.3%

Strong Top-line Growth Since Q4FY09 Bottom $120

Steady Market Recovery

$100

Seasonal Consumer Decline

Enterprise PC Rebound, Automotive Recovery and Continued Market Share Gains

$80

$60

$40

$20

Strong sequential growth Unit growth + expanding addressable market + market share gains Expect to beat our mid-term model of $100M in Q2FY11 * SMSC Guidance

SMSC 2010 Analyst Day

114

Operational Excellence: Gross Margin Record Company Gross Margin

Beat the 55% Model in Q1FY11: 55.3% 1,000 basis points of non-GAAP gross margin improvements

~ Half from cost reductions ~ Half from scale

Non-GAAP measures SMSC 2010 Analyst Day

* SMSC Guidance 115

Opex: Keep spending in line with model Downsizing

R&D

SG&A

SG&A on target, R&D up 100 basis points R&D spend increased as a result of acquisitions (K2L, Kleer, STS)

R&D: additions in low cost areas (India, Bulgaria)

Non-GAAP measures SMSC 2010 Analyst Day

* SMSC Guidance 116

Focus on Profitable Growth: Approaching 16% in Q2FY11

Focus on profitable growth Meet the model = mid-term model of 16% operating margin

Non-GAAP measures SMSC 2010 Analyst Day

* SMSC Guidance 117

20% Operating Margin Target Model Model at $120M/Q Revenue/quarter

$120M

Milestones to Meet $120M/Quarter Market: Continued PC recovery in line with analyst expectations Ongoing auto recovery – no double dip

Gross Margin

56% Design Wins: Automotive system wins

R&D

19%

SG&A

17%

New USB product wins

Execution: USB Roadmap RightTouch™ ramps

Operating Income Margin

Non-GAAP measures SMSC 2010 Analyst Day

118

20%

Port Power launches Wireless Audio

Balance Sheet Remains Strong $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0

Cash/ST Investments

Auction Rate Securities

~$8.5 in cash/investments per share … and no debt $40M net cash provided by operating activities in FY10 Low capex model: $8.6M capex in FY10, down from $17.8M in FY09 Cash-out of $19.6M in FY 10 for acquisitions and investments

SMSC 2010 Analyst Day

119

Reached Our Inventory Turns Target $60

$50

$40

$30

$20

$10

Inventory turns at 4.2, beating target of 4X

SMSC 2010 Analyst Day

120

Drive for Profitable Growth

Product/market strategy drives organic top-line growth

Accelerated top-line growth through acquisitions

Focus on PROFITABLE growth Continue gross margin improvements Opex control

Deliver on the 20% non-GAAP operating margin model

SMSC 2010 Analyst Day

121

SMSC 2010 Analyst Day

122

Supplemental Reconciliation of GAAP Results to Non-GAAP Financial Measures (in thousands, except per share amounts) FY09 Q4 Gross profit - GAAP basis Stock-based compensation Amortization of intangible assets Accelerated depreciation on test equipment Release of goods received liability Impact of inventory write-up on acquisition of Kleer Gross profit - non-GAAP basis

Income (loss) from operations – GAAP basis

$ (78,752)

21,753 531 1,022 23,306

Q1 $

27,712 550 1,112 29,374

FY 10 Q3

Q2 $

35,543 904 1,058 1,699 39,204

$ (14,597) $ (10,056) $

45,034 $ (342) 941 2,233 47,866 $ 9,439

44,688 $ 152,923 281 1,394 1,140 4,304 3,932 (1,022) (1,022) 45,087 $ 161,531 1,227

FY 11 Q1

FY 10

$ (13,987)

51,795 782 1,078 45 53,700

1,802

Non-GAAP adjustments: Stock-based compensation included in: Costs of Goods Sold Research & Development Selling, general and administrative Amortization of intangible assets included in: Costs of Goods Sold Selling, general and administrative Other non-GAAP adjustments: Restructuring charges Accelerated depreciation on test equipment Impairment of goodwill Settlement charge Transaction costs - mergers and acquisitions Release of goods received liability Impact of inventory write-up on acquisition of Kleer Executive transition costs Income (loss) from operations – non-GAAP basis

550 1,482 3,393

904 2,384 5,698

(342) (559) (1,889)

281 968 1,717

1,394 4,274 8,918

782 2,224 4,639

5,043

5,425

8,986

(2,790)

2,966

14,586

7,645

1,022 484

1,112 395

1,058 496

941 478

1,140 691

4,304 2,007

1,078 687

1,506

1,507

1,554

1,419

1,831

6,311

1,765

2,123 3,932 2,019 480 (1,022) 14,442

821 182 45 429 12,689

5,197 52,300 $ (14,706)

Net (loss) income – GAAP basis Non-GAAP adjustments (as scheduled above)

221 2,050 (5,394) $

(6,534)

6,806

946

9,203

12,888

1,365

4,974

(3,313)

(4,640)

(4,229)

Net income (loss) per share – diluted GAAP

(3.30)

(0.42) $

(0.54)

(0.15) $

123

860 339 (1,022) 6,201 $

(9,196)

$ (11,826)

Non-GAAP

393 2,233 (31) 141 10,804 $

64,046

Net income (loss) – non-GAAP basis

Weighted average common shares outstanding - diluted: GAAP

649 1,699 2,832

(71,643)

Tax effect of non-GAAP adjustments

Non-GAAP

SMSC 2010 Analyst Day

531 1,558 2,954

21,742 21,742

(3,306) $

21,901 , 21,901

1,714

(491)

(7,978)

(1,791)

10,887

(10,234)

7,680

4,129

(0.30) $

0.30

0.04

0.34

0.18

627

28,429

0.08

10,217

(3,919) $

7,595

(0.36)

0.03

0.46

0.33

22,054

22,442

22,579

22,133

22,787

22,191

22,442

22,579

22,310

22,787