http://www.zarlink.com

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 27, 2002

                           Commission File No. 1-8139

                           ZARLINK SEMICONDUCTOR INC.
             (Exact name of registrant as specified in its charter)

             CANADA                                            NONE
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                        Identification No.)

            400 March Road,
        Ottawa, Ontario, Canada                               K2K 3H4
(Address of principal executive offices)                   (Postal Code)

                                 (613)- 592-0200
              (Registrant's telephone number, including area code)

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 |_|

As at November 1, 2002,  there were  127,191,316  shares of the Common  Stock of
Zarlink Semiconductor Inc., no par value, issued and outstanding.

<PAGE>

                           ZARLINK SEMICONDUCTOR INC.

                                TABLE OF CONTENTS

Item No.                                                                Page No.
--------                                                                --------

PART I - FINANCIAL INFORMATION (Unaudited)...................................3

    ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)...................3
             Consolidated Balance Sheets (unaudited).........................3
             Consolidated Statements of Loss (unaudited).....................4
             Consolidated Statements of Cash Flows (unaudited)...............5
             Notes to the Consolidated Financial Statements (unaudited)......6

    ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS...........................13

    ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
             RISKS..........................................................21

    ITEM 4.  DISCLOSURE CONTROLS AND PROCEDURES.............................22

PART II - OTHER INFORMATION.................................................22

    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............22

    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K...............................23


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION (Unaudited)

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                           Zarlink Semiconductor Inc.
                           CONSOLIDATED BALANCE SHEETS
                    (in millions of U.S. dollars, U.S. GAAP)

                                                       September 27,   March 29,
                                                           2002          2002
                                                       ------------    ---------
                                                       (Unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                                $ 67.9        $ 75.6
  Short-term investments                                     64.8          78.8
  Trade accounts receivable, less
    allowance of $1.5
    (March 29, 2002 - $1.3)                                  27.6          26.9
  Other receivables                                           3.5           5.5
  Inventories                                                27.9          32.6
  Deferred income tax assets - net                            2.3           4.1
  Prepaid expenses and other                                  6.9          11.3
                                                           ------        ------
                                                            200.9         234.8
Fixed assets (net)                                           60.5          60.3
Deferred income tax assets - net                             11.1          11.0
Long-term investments                                        14.6          14.1
Other assets - net of deferred gain of
  $15.2 (March 29, 2002 - $14.7)                              3.7           3.0
                                                           ------        ------
                                                           $290.8        $323.2
                                                           ======        ======
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Trade accounts payable                                   $ 10.8        $ 14.6
  Employee-related payables                                  12.1          12.8
  Income and other taxes payable                              8.7           5.9
  Provisions for exit activities                             14.3          19.8
  Other accrued liabilities                                  14.5          18.9
  Deferred revenue                                            2.5           2.0
  Current portion of long-term debt                           1.1           2.1
                                                           ------        ------
                                                             64.0          76.1
Long-term debt                                                0.3           0.7
Pension liability                                            19.5          17.4
Deferred income tax liabilities - net                         4.2           6.3
                                                           ------        ------
                                                             88.0         100.5
                                                           ------        ------
Redeemable preferred shares, unlimited shares
  authorized; 1,526,000 shares issued
  and outstanding (March 29, 2002 - 1,558,700)               20.2          20.6
                                                           ------        ------
Shareholders' equity:
  Common shares,  unlimited shares authorized;
    no par value; 127,191,316 shares
    issued and outstanding
    (March 29, 2002 - 127,082,123)                          768.1         767.6
  Additional paid-in capital                                  2.1           4.1
  Deferred stock compensation                                  --          (0.8)
  Deficit                                                  (544.6)       (522.9)
  Accumulated other comprehensive loss                      (43.0)        (45.9)
                                                           ------        ------
                                                            182.6         202.1
                                                           ------        ------
                                                           $290.8        $323.2
                                                           ======        ======

        (See accompanying notes to the consolidated financial statements)


                                       3
<PAGE>

                           Zarlink Semiconductor Inc.
                         CONSOLIDATED STATEMENTS OF LOSS
       (in millions of U.S. dollars, except per share amounts, U.S. GAAP)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                     Three Months Ended       Six Months Ended
                                                                    ---------------------   ---------------------
                                                                    Sept. 27,   Sept. 28,   Sept. 27,   Sept. 28,
                                                                      2002        2001        2002        2001
                                                                    ---------   ---------   ---------   ---------
<S>                                                                  <C>         <C>         <C>         <C>
Revenue                                                              $ 46.2      $ 50.5      $ 94.2      $118.3
Cost of revenue                                                        25.5        33.9        51.4        96.6
                                                                     ------      ------      ------      ------
Gross margin                                                           20.7        16.6        42.8        21.7
                                                                     ------      ------      ------      ------
Expenses:
  Research and development                                             23.2        19.5        43.9        43.0
  Selling and administrative                                           11.3        12.8        23.1        25.9
  Stock compensation expense (recovery)                                 0.2         2.4        (1.4)        6.3
  Special charge                                                         --          --          --        34.6
  Amortization of acquired intangibles                                   --         0.8          --         2.2
                                                                     ------      ------      ------      ------
                                                                       34.7        35.5        65.6       112.0
                                                                     ------      ------      ------      ------
Loss from operations                                                  (14.0)      (18.9)      (22.8)      (90.3)
Other income (expense) - net                                            3.0        (0.1)        3.5         7.8
Interest expense                                                       (0.3)       (0.2)       (0.4)       (0.4)
                                                                     ------      ------      ------      ------
Loss before income taxes                                              (11.3)      (19.2)      (19.7)      (82.9)
Income tax (expense) recovery                                          (0.6)       (0.5)       (0.9)        2.7
                                                                     ------      ------      ------      ------
Net loss for the period                                              $(11.9)     $(19.7)     $(20.6)     $(80.2)
                                                                     ======      ======      ======      ======
Net loss attributable to common shareholders
 after preferred share dividends                                     $(12.4)     $(20.2)     $(21.6)     $(81.2)
                                                                     ======      ======      ======      ======
Net loss per common share:
      Basic and diluted                                              $(0.10)     $(0.16)     $(0.17)     $(0.65)
                                                                     ======      ======      ======      ======
Weighted average number of common shares outstanding (millions):
      Basic and diluted                                               127.2       125.6       126.9       125.4
                                                                     ======      ======      ======      ======
</TABLE>

        (See accompanying notes to the consolidated financial statements)


                                       4
<PAGE>

                           Zarlink Semiconductor Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (in millions of U.S. dollars, U.S. GAAP)
                                   (Unaudited)

                                                         Six Months Ended
                                                  ------------------------------
                                                  September 27,    September 28,
                                                       2002            2001
                                                  -------------    -------------
Cash flows from operating activities:
  Net loss for the period                            $(20.6)          $(80.2)
  Depreciation and amortization                         7.1             12.7
  Stock compensation expense (recovery)                (1.4)             6.3
  Special charges, non-cash                              --              1.1
  Loss on disposal of fixed assets                       --              0.4
  Inventory write-down                                   --             29.1
  Deferred income taxes                                  --             (1.5)
  Change in pension liability                            --              0.3
  Equity loss in investment                              --              1.4
  Decrease (increase) in working capital:
      Trade accounts and other receivables              3.0             19.2
      Inventories                                       7.1              3.4
      Prepaid expenses and other                        1.9             (5.3)
      Trade accounts payable and other
        accrued liabilities                           (14.8)           (13.4)
      Deferred revenue                                  0.3              0.1
                                                     ------           ------
Cash used in operating activities                     (17.4)           (26.4)
                                                     ------           ------
Cash flows from investing activities:
      Purchased short-term investments               (146.5)              --
      Matured short-term investments                  161.7               --
      Proceeds from disposal
        of fixed and other assets                       0.4              0.2
      Expenditures for fixed and
        other assets                                   (4.3)           (22.9)
      Increase in long-term investments                (0.4)            (2.0)
      Proceeds from repayment of note
        receivable                                       --              4.5
      Proceeds from sale of discontinued
        operations (net)                                 --              1.3
                                                     ------           ------
Cash provided by (used in)
  investing activities                                 10.9            (18.9)
                                                     ------           ------
Cash flows from financing activities:
      Repayment of long-term debt                        --             (0.8)
      Repayment of capital lease
        liabilities                                    (1.4)            (2.7)
      Payment of dividends on preferred
        shares                                         (1.0)            (1.0)
      Issue of common shares                            0.5              2.1
      Repurchase of preferred shares                   (0.4)            (0.4)
                                                     ------           ------
Cash used in financing activities                      (2.3)            (2.8)
                                                     ------           ------
Effect of currency translation on
  cash and cash equivalents                             1.1              0.6
                                                     ------           ------
Decrease in cash and cash equivalents                  (7.7)           (47.5)

Cash and cash equivalents, beginning
  of period                                            75.6            179.9
                                                     ------           ------
Cash and cash equivalents, end of period             $ 67.9           $132.4
                                                     ======           ======

        (See accompanying notes to the consolidated financial statements)


                                       5
<PAGE>

                           Zarlink Semiconductor Inc.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
       (in millions of U.S. dollars, except per share amounts, U.S. GAAP)
                                   (Unaudited)

1.    Basis of presentation

      These  unaudited  interim  consolidated  financial  statements  have  been
      prepared by Zarlink  Semiconductor  Inc.  ("Zarlink" or the  "Company") in
      United States (U.S.) dollars,  unless otherwise stated,  and in accordance
      with  accounting  principles  generally  accepted in the U.S.  for interim
      financial statements and with the instructions to Form 10-Q and Regulation
      S-X pertaining to interim financial statements. Accordingly, these interim
      consolidated  financial  statements  do not  include all  information  and
      footnotes required by generally accepted  accounting  principles  ("GAAP")
      for complete  financial  statements.  In the opinion of  management of the
      Company, the unaudited interim  consolidated  financial statements reflect
      all adjustments,  which consist only of normal and recurring  adjustments,
      necessary to present fairly the financial  position at September 27, 2002,
      the  results  of  operations  for the three and six  month  periods  ended
      September 27, 2002 and  September 28, 2001,  and cash flows of the Company
      for the six month periods ended September 27, 2002 and September 28, 2001,
      respectively, in accordance with U.S. GAAP, applied on a consistent basis.
      The consolidated  financial statements include the accounts of Zarlink and
      its wholly owned subsidiaries. Intercompany transactions and balances have
      been  eliminated.  Separate  Canadian GAAP  financial  statements are also
      prepared and presented to shareholders.

      These  financial  statements  should  be  read  in  conjunction  with  the
      financial  statements and notes thereto  contained in the Company's Annual
      Report  on Form 10-K for the year  ended  March 29,  2002.  The  Company's
      fiscal year-end is the last Friday in March.

      The results of operations  for the periods  presented are not  necessarily
      indicative  of the  results  to be  expected  for the full  year or future
      periods.

2.    Change in accounting policies

      In July 2001, the Financial  Accounting  Standards  Board ("FASB")  issued
      Statement of Financial Accounting Standard No. 141 ("SFAS 141"), "Business
      Combinations"  and  Statement  of  Financial  Accounting  Standard No. 142
      ("SFAS 142"), "Goodwill and Other Intangible Assets". In October 2001, the
      FASB issued  Statement  of  Financial  Accounting  Standard No. 144 ("SFAS
      144"), "Accounting for the Impairment or Disposal of Long-Lived Assets".

      a)    SFAS 141 requires that business  combinations be accounted for under
            the  purchase   method  of  accounting  and  addresses  the  initial
            recognition and measurement of assets acquired,  including  goodwill
            and intangibles,  and liabilities assumed in a business combination.
            The Company adopted SFAS 141 on a prospective  basis effective March
            30, 2002, the beginning of Fiscal 2003. The adoption of SFAS 141 did
            not have a material  effect on the Company's  financial  statements,
            but will impact the accounting treatment of future acquisitions.

      b)    SFAS 142 requires  goodwill to be allocated to, and assessed as part
            of, a reporting unit. Further, SFAS 142 specifies that goodwill will
            no longer be  amortized  but instead  will be subject to  impairment
            tests  at  least  annually.  The  Company  adopted  SFAS  142  on  a
            prospective  basis  at  the  beginning  of  Fiscal  2003.  As at the
            beginning of Fiscal  2003,  the Company did not have any goodwill or
            intangible  assets  with  indefinite  lives  recorded on the balance
            sheet. Accordingly,  no transition impairment charge is necessary to
            be recognized under SFAS 142, nor was there a material impact on the
            Company's financial statements on adoption of the new rules.

            As there was no  goodwill or  indefinite  lived  intangibles  on the
            balance sheet at the beginning of Fiscal 2002, the comparative prior
            period's  financial results would not have been affected if SFAS 142
            was adopted in Fiscal 2002.

      c)    SFAS 144 supersedes  Statement of Financial  Accounting Standard No.
            121 ("SFAS  121"),  "Accounting  for the  Impairment  of  Long-Lived
            Assets  and  for  Long-Lived  Assets  to Be  Disposed  Of"  and  the
            accounting and reporting  provisions of Accounting  Principles Board
            ("APB") Opinion No. 30 for the disposal of a business segment.  SFAS
            144 establishes a single  accounting  model,  based on the framework
            established in SFAS 121, for long-lived  assets to be disposed of by
            sale. SFAS 144 broadens the presentation of discontinued  operations
            to  include  disposals  of a  component  of an entity  and  provides
            additional    implementation    guidance   with   respect   to   the
            classification  of assets as held-for-sale and the calculation of an
            impairment  loss.  The


                                       6
<PAGE>

            Company  adopted  SFAS 144 at the  beginning  of  Fiscal  2003.  The
            adoption of SFAS 144 did not have a material impact on the Company's
            financial statements.

3.    Recently issued accounting standards

      In July 2002, the FASB issued Statement No. 146 ("SFAS 146"),  "Accounting
      for Costs  Associated with Exit or Disposal  Activities",  which addresses
      financial  accounting  and  reporting  for costs  associated  with exit or
      disposal  activities  and  nullifies  EITF  Issue  No.  94-3,   "Liability
      Recognition for Certain Employee  Termination  Benefits and Other Costs to
      Exit an Activity  (including  Certain Costs Incurred in a Restructuring)."
      SFAS 146 requires that a liability for a cost  associated  with an exit or
      disposal  activity be  recognized  when the  liability is incurred.  Under
      Issue 94-3, a liability for an exit cost was  recognized at the date of an
      entity's  commitment to an exit plan.  SFAS 146 concludes that an entity's
      commitment to a plan, by itself,  does not create a present  obligation to
      others  that meets the  definition  of a  liability.  Therefore,  SFAS 146
      eliminates the definition and  requirements  for recognition of exit costs
      in Issue 94-3. SFAS 146 also  establishes that fair value is the objective
      for initial  measurement of the liability.  SFAS 146 will be effective for
      exit or disposal  activities  initiated after December 31, 2002 and had no
      impact  on  the  Company's  financial  statements,  but  will  impact  the
      accounting  treatment  of future exit or disposal  activities  should they
      occur.

4.    Inventories

                                                    September 27,     March 29,
                                                        2002            2002
                                                    -------------     ---------
Raw materials                                          $  2.7          $  2.4
Work-in-process                                          19.0            20.8
Finished goods                                            6.2             9.4
                                                       ------          ------
                                                       $ 27.9          $ 32.6
                                                       ======          ======

5.    Fixed assets

                                                    September 27,     March 29,
                                                        2002            2002
                                                    -------------     ---------
Cost                                                   $161.5          $153.1
Accumulated depreciation                               (101.0)          (92.8)
                                                       ------          ------
                                                       $ 60.5          $ 60.3
                                                       ======          ======

      The comparative  gross amounts of cost and accumulated  depreciation  have
      each been adjusted by $57.9 to properly reflect the disposition of certain
      fixed  assets.  There was no impact to the  previously  reported net fixed
      assets.

6.    Long-term investments

      As at September 27, 2002, the Company had investments in private companies
      with a carrying  value of $14.6  (March 29,  2002 - $14.1).  On October 3,
      2002,  the  Company  sold  its  investment  in  DALSA  Semiconductor  Inc.
      ("DALSA") for cash proceeds of $4.1. As a result of the sale,  the Company
      will  record a gain of $0.7 in the third  quarter of Fiscal 2003 (see Note
      14).  Following the sale,  the carrying  value of the Company's  remaining
      long-term  investments  approximated $11.2, of which $10.8 represented the
      Company's nine percent interest in Mitel Networks Corporation.

      Management  periodically reviews the Company's investments to determine if
      there has been other than a temporary decline in the market value of these
      investments  below the carrying  value.  When  management  performs future
      assessments of its  investments in the coming  quarters,  a decline in the
      value of these  companies may require the Company to recognize  impairment
      on the remaining value of its investments which could be material.

7.    Provisions for exit activities

                                                    September 27,     March 29,
                                                        2002            2002
                                                    -------------     ---------

Restructuring provisions                                $ 5.5           $ 7.9
Provision for disposal of discontinued operations         3.9             5.8
Provision for disposal of foundry businesses              4.9             6.1
                                                        -----           -----
                                                        $14.3           $19.8
                                                        =====           =====


                                       7
<PAGE>

8.    Redeemable preferred shares

      There were 27,700  preferred  shares purchased during the six months ended
      September  27, 2002 for cash  consideration  of $0.4.  The transfer  agent
      cancelled  32,700  shares in the first half of Fiscal 2003, of which 5,000
      shares  were  repurchased  in the  fourth  quarter of Fiscal  2002.  As at
      September 27, 2002, all repurchased preferred shares were cancelled.

      During  the  second  quarter,  the  dividend  declared  and  paid  on  the
      redeemable preferred shares was $0.32 (Cdn $0.50) per share,  resulting in
      a cumulative  dividend of $0.64 (Cdn$1.00) per share for the first half of
      Fiscal 2003.

9.    Capital stock

      a)    The Company has not  declared  or paid any  dividends  on its common
            shares.

      b)    On June 6, 2002, the Company announced its intention to continue its
            normal course  issuer bid program for up to 6,358,203  common shares
            (5 percent of  127,164,078  common shares issued and  outstanding at
            May  31,  2002)  between  June  10,  2002  and  June  9,  2003.  All
            repurchased  shares will be  cancelled.  During the six months ended
            September  27,  2002,  no shares were  repurchased  under the normal
            course issuer bid program.

      c)    A summary of the Company's stock option activity is as follows:

                                                      Six Months Ended
                                             ----------------------------------
                                             September 27,        September 28,
                                                 2002                2001
                                             -------------        -------------
Outstanding Options:
Balance, beginning of period                  10,914,962           9,464,693
Granted                                          357,300           1,586,500
Exercised                                       (109,193)           (435,689)
Forfeited                                     (1,476,966)           (902,069)
                                              ----------           ---------
Balance, end of period                         9,686,103           9,713,435
                                              ==========           =========

            On August 14,  2002,  1,136,778  unexercised  stock  options held by
            former  employees of the  discontinued  Systems  business expired in
            accordance with the terms of the sales  agreement.  The options were
            returned to the pool of options  available for grant.  Available for
            grant at  September  27,  2002  were  4,930,576  (March  29,  2002 -
            3,810,910)  common shares.  The exercise price on outstanding  stock
            options ranges from $1.77 to $24.95 per share with exercise  periods
            extending to September 2008. The exercise price of stock options was
            based on prices in Canadian  dollars  translated at the U.S.  dollar
            exchange rate on September 27, 2002.

      d)    The net loss per common share figures were  calculated  based on the
            net loss after the deduction of preferred  share dividends and using
            the weighted monthly average number of shares outstanding during the
            respective  periods.  Diluted  earnings  per  share is  computed  in
            accordance  with the  treasury  stock  method  based on the  average
            number of common shares and dilutive common share equivalents.

      The following  potentially  dilutive  common share  equivalents  have been
      excluded from the  computation of diluted loss per share because they were
      anti-dilutive due to the reported net loss for the periods presented:

                               Three Months Ended       Six Months Ended
                              ---------------------   ---------------------
                              Sept. 27,   Sept. 28,   Sept. 27,   Sept. 28,
                                2002        2001        2002        2001
                              ---------   ---------   ---------   ---------
Stock options                   41,054    1,426,875    208,942    1,366,492
Restricted shares                   --      771,120         --      771,120
                                ------    --------     -------    ---------
Total                           41,054    2,197,995    208,942    2,137,612
                                ======    =========    =======    =========

      The following  stock options were excluded from the  computation of common
      share equivalents because the options' exercise price exceeded the average
      market price of the common shares, thereby making them anti-dilutive:


                                       8
<PAGE>

                             Three Months Ended       Six Months Ended
                            ---------------------   ---------------------
                            Sept. 27,   Sept. 28,   Sept. 27,    Sept. 28,
                              2002        2001        2002         2001
                            ---------   ---------   ---------    ---------
Number of outstanding
  options                  9,420,728    5,306,179    8,219,274     5,714,179

Average exercise price
  per share               $     9.03   $    10.47   $     9.65    $    10.35

      Pro Forma financial  information has been determined as if the Company had
      accounted  for its employee  stock options  using the  Black-Scholes  fair
      value option pricing model with the following weighted-average assumptions
      for the three and six month fiscal  periods  ended  September 27, 2002 and
      September 28, 2001:

<TABLE>
<CAPTION>
                                         Three Months Ended         Six Months Ended
                                        ----------------------     ---------------------
                                        Sept. 27,    Sept. 28,     Sept. 27,    Sept. 28,
                                          2002         2001          2002         2001
                                        ---------    ---------     ---------    ---------
<S>                                     <C>           <C>           <C>           <C>
Pro Forma net loss attributable to
  common shareholders
  after preferred dividends             $  (15.8)     $  (27.7)     $  (28.3)     $  (91.7)

Pro Forma net loss per common share:

  Basic and diluted                     $  (0.12)     $  (0.22)     $  (0.22)     $  (0.73)

Weighted average fair value price
  of the options                        $    3.37     $    3.60     $    3.37     $    3.60

Risk free interest rate                     3.69%         4.44%         3.69%         4.44%
Dividend yield                                Nil           Nil           Nil           Nil
Volatility factor of the
  expected market price of
  the Company's common stock                0.628         0.574         0.628         0.574
Weighted-average expected
  life of the options                   3.0 years     4.0 years     3.0 years     4.0 years
</TABLE>

      The  Black-Scholes  option  valuation  model  was  developed  for  use  in
      estimating  the  fair  value  of  traded  options  that  have  no  vesting
      restrictions  and are fully  transferable.  In addition,  option valuation
      models require the input of highly  subjective  assumptions  including the
      expected  stock price  volatility.  Because the Company's  employee  stock
      options have characteristics  significantly different from those of traded
      options,  and because  changes in the  subjective  input  assumptions  can
      materially affect the fair value estimate,  in management's  opinion,  the
      existing  models do not  necessarily  provide a reliable single measure of
      the fair value of its employee stock options.

      For purposes of Pro Forma  disclosures,  the  estimated  fair value of the
      options is  amortized to expense  over the  options'  vesting  period on a
      straight-line basis.

      10.   Accumulated other comprehensive loss

      The components of other comprehensive loss were as follows:

<TABLE>
<CAPTION>
                                         Three Months Ended         Six Months Ended
                                        ----------------------     ---------------------
                                        Sept. 27,    Sept. 28,     Sept. 27,    Sept. 28,
                                          2002         2001          2002         2001
                                        ---------    ---------     ---------    ---------
<S>                                      <C>          <C>           <C>           <C>
Net loss for the period                  $(11.9)      $(19.7)       $(20.6)      $(80.2)
Other comprehensive income (loss):
Unrealized net derivative gains
  (losses) on cash flow hedges             (3.2)         0.6          (3.6)        (0.6)
Change in cumulative translation
  adjustment                               (5.8)        (0.3)          6.5          3.1
                                         ------       ------        ------       ------
Other comprehensive loss for
  the period                             $(20.9)      $(19.4)       $(17.7)      $(77.7)
                                         ======       ======        ======       ======
</TABLE>


                                       9
<PAGE>

      The changes to  accumulated  other  comprehensive  loss for the six months
      ended September 27, 2002 were as follows:

<TABLE>
<CAPTION>
                                         Cumulative      Minimum     Unrealized Net
                                        Translation      Pension        Loss on
                                          Account       Liability      Derivatives     Total
                                        -----------     ---------    --------------   --------
<S>                                      <C>             <C>            <C>            <C>
Balance, March 29, 2002                  $(43.0)         $(2.5)         $(0.4)         $(45.9)
Change during the three months ended
  June 28, 2002                            12.3             --           (0.4)           11.9
                                         ------          -----          -----          ------
Balance, June 28, 2002                   $(30.7)         $(2.5)         $(0.8)         $(34.0)
Change during the three months
  ended September 27, 2002                 (5.8)            --           (3.2)           (9.0)
                                         ------          -----          -----          ------
Balance, September 27, 2002              $(36.5)         $(2.5)         $(4.0)         $(43.0)
                                         ======          =====          =====          ======
</TABLE>

      The Company  recorded an increase in other  comprehensive  loss in the six
      months ended  September  27, 2002 of $3.6 (six months ended  September 28,
      2001 -  $0.6)  which  was  attributable  to the  change  in the  value  of
      outstanding  foreign currency forward  contracts  related to the Company's
      hedging  program that were  designated  as cash flow  hedges.  The Company
      estimates that $4.0 of net derivative loss included in other comprehensive
      loss will be reclassified into earnings within the next 12 months.

11.   Inventory write-down and special charge

      First Quarter of Fiscal 2002

      In the first  quarter of Fiscal 2002,  the Company  reviewed its inventory
      requirements  for the  succeeding 12 months in light of the  semiconductor
      industry-wide slowdown and higher channel inventories. As a result of this
      review,  the Company  recorded an excess inventory charge to cost of sales
      amounting  to $29.1 for  inventories  estimated to be beyond its needs for
      the following 12 months.

      In the  first  quarter  of Fiscal  2002 and in  response  to the  industry
      downturn,  the Company  implemented  a  cost-containment  plan in order to
      preserve cash resources.  The  cost-containment  plan included a workforce
      reduction of the Company's total employee base by 439 employees,  globally
      across all job categories,  which was completed by the end of Fiscal 2002.
      The total  cost of the  first  quarter  Fiscal  2002  workforce  reduction
      program was estimated to be $26.7.

      As a result of the workforce  reduction program and  consolidating  design
      activity,  the Company took steps to provide for excess leased  facilities
      in Canada,  the United States,  the United Kingdom,  and the Far East. The
      cost of the lease and contract  settlements  amounted to $7.9 in the first
      quarter of Fiscal 2002.

      The total of these pre-tax special charges  amounted to $34.6 in the first
      quarter of Fiscal 2002. In the fourth quarter of Fiscal 2002,  $3.1 of the
      first quarter  special charge was reversed due to savings on the workforce
      reduction  program and to the  subsequent  sub-letting  of vacant space in
      Irvine, California.

      The  following  summarizes  the  activity  related  to the March 29,  2002
      restructuring liability during the first half of Fiscal 2003:

                                               Workforce   Excess Lease
                                               Reduction      Costs       Total
                                               ---------   ------------  -------
Provision balance as at
  March 29, 2002                                 $ 2.9       $ 5.0       $ 7.9
  Cash draw-downs during
    Q1 2003                                       (0.5)       (0.3)       (0.8)
  Cash draw-downs during
    Q2 2003                                       (0.4)       (0.7)       (1.1)
  Non-cash draw-downs during
    Q2 2003                                         --        (0.5)       (0.5)
                                                 -----       -----       -----
Provision balance as at
  September 27, 2002                             $ 2.0       $ 3.5       $ 5.5
                                                 =====       =====       =====

      All of the liability relating to the workforce  reduction is in respect of
      the fourth quarter Fiscal 2002 restructuring program.


                                       10
<PAGE>

12. Other income (expense) (net)

                                  Three Months Ended         Six Months Ended
                                 ----------------------   ---------------------
                                 Sept. 27,    Sept. 28,   Sept. 27,    Sept. 28,
                                   2002         2001        2002         2001
                                 ---------    ---------   ---------    ---------
Interest income                     $1.0      $ 1.5         $1.9         $ 3.6
Foreign exchange gain (loss)         2.0       (0.7)         1.6           5.6
Equity loss in Optenia, Inc.          --       (0.9)          --          (1.4)
                                    ----      -----         ----         -----
Other income (expense) (net)        $3.0      $(0.1)        $3.5         $ 7.8
                                    ====      =====         ====         =====

13.   Information on business segments

      The  Company's   reportable   business   segments  are  comprised  of  the
      Communications and Medical groups.  Reportable segments are business units
      that offer different products and services,  sell to different  customers,
      use  different  production  and  distribution  processes,  and are managed
      separately because of these differences.

      The  Communications   business   specializes  in  broadband   connectivity
      solutions  over wired,  wireless  and optical  media.  The  Communications
      business includes network access products that provide connectivity to the
      enterprise and metro segments such as feeder, aggregation and transmission
      applications  and those  that  address  the  multi-protocol  physical  and
      network layers.  In addition,  the  Communications  business includes user
      access products that allow users to connect to the network. These products
      include  wireless and infotainment  applications.  Network access products
      accounted for $29.4 and $57.8 in revenue in the three and six months ended
      September 27, 2002, respectively (three and six months ended September 28,
      2001 - $26.6 and $62.4, respectively).  User access products accounted for
      $10.4 and $23.0 in revenue in the three and six months ended September 27,
      2002,  respectively (three and six months ended September 28, 2001 - $16.4
      and $39.1, respectively).

      The  Medical  business   provides  ultra  low  power  ASIC  solutions  for
      applications such as pacemakers, hearing aids and portable instruments.

      The Chief Executive Officer ("CEO") is the chief operating  decision maker
      in  assessing  the  performance  of the  segments  and the  allocation  of
      resources to the segments.  The CEO evaluates the financial performance of
      each business segment and allocates  resources based on operating  income,
      which  excludes  any  intersegment  sales of products  and  services.  The
      Company does not allocate stock compensation  expense,  special charges or
      gains,  interest  income  or  interest  expense  or  income  taxes  to its
      reportable segments.  In addition,  total assets are not allocated to each
      segment;  however,  depreciation  of  fixed  assets  is  allocated  to the
      segments  based  on  the  asset  usage.  The  accounting  policies  of the
      reportable  segments  are the same as those of the Company as reflected in
      the consolidated financial statements.

<TABLE>
<CAPTION>
                                                                  Unallocated
Three Months Ended Sept. 27, 2002      Communications    Medical     Costs       Total
                                       --------------    -------  -----------   ------
<S>                                       <C>             <C>        <C>        <C>
Revenue                                   $ 39.8          $ 6.4      $  --      $ 46.2
Depreciation of fixed assets                 3.2             --         --         3.2
Stock compensation expense                    --             --        0.2         0.2
Segment's operating loss                   (12.5)          (1.3)      (0.2)      (14.0)

                                                                  Unallocated
Three Months Ended Sept. 28, 2001      Communications    Medical     Costs       Total
                                       --------------    -------  -----------   ------
Revenue                                   $ 43.0           $7.5      $  --      $ 50.5
Depreciation of fixed assets                 4.4             --         --         4.4
Amortization of acquired intangibles         0.8             --         --         0.8
Stock compensation expense                    --             --        2.4         2.4
Segment's operating income (loss)          (19.1)           2.6       (2.4)      (18.9)
</TABLE>


                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                                  Unallocated
Six Months Ended Sept. 27, 2002        Communications    Medical     Costs       Total
                                       --------------    -------  -----------   ------
<S>                                       <C>             <C>        <C>        <C>
Revenue                                   $ 80.8          $13.4      $  --      $  94.2
Depreciation of fixed assets                 6.4            0.1         --          6.5
Stock compensation recovery                   --             --       (1.4)        (1.4)
Segment's operating loss                   (22.8)          (1.4)       1.4        (22.8)

                                                                  Unallocated
Six Months Ended Sept. 28, 2001        Communications    Medical     Costs       Total
                                       --------------    -------  -----------   ------
Revenue                                   $101.5          $16.8     $   --      $118.3
Depreciation of fixed assets                10.4            0.1         --        10.5
Amortization of acquired intangibles         2.2             --         --         2.2
Stock compensation expense                    --             --        6.3         6.3
Special charge                                --             --       34.6        34.6
Segment's operating income (loss)          (54.4)           5.0      (40.9)      (90.3)
</TABLE>

14.   Subsequent events

      (a)   On  October 3,  2002,  the  Company  sold its  entire  19.9  percent
            interest in DALSA  Semiconductor  Inc. to DALSA for cash proceeds of
            $4.1 (Cdn$6.5). The Company will record a gain of approximately $0.7
            in the third quarter of Fiscal 2003.

      (b)   On October 17, 2002,  the Company  announced  that it is withdrawing
            from the VDSL (Very high rate  Digital  Subscriber  Line)  market in
            order to concentrate  its R&D resources on higher and more immediate
            growth  opportunities.  The  company  is  ceasing  all VDSL  product
            development,  resulting  in certain  layoffs in its  Network  Access
            group,  based in Ottawa.  Costs  related to these and other  layoffs
            approximate $3.6? and will be expensed and paid in the third quarter
            of Fiscal  2003.  The company  does not expect this action to impact
            revenues.

15.   Comparative figures

      Certain of the Fiscal 2002 comparative  figures have been  reclassified to
      conform to the presentation adopted in Fiscal 2003.


                                       12
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

            (in millions of U.S. dollars, except per share amounts,
                        and in accordance with U.S. GAAP)

Overview

Zarlink is a global  provider  of  microelectronics  for  voice,  data and video
networks and for medical applications.  Zarlink's  semiconductor  Communications
business specializes in broadband  connectivity  solutions over wired,  wireless
and  optical  media.   Zarlink's   semiconductor   Medical   business   provides
applications  specific integrated circuit solutions (ASIC) for applications such
as pacemakers, hearing aids and portable instruments. At September 27, 2002, the
Company employed approximately 1,440 people worldwide,  including  approximately
500 designers.

The following  discussion and analysis  explains  trends in Zarlink's  financial
condition and results of operations for the three and six months ended September
27, 2002, respectively,  compared with the corresponding periods in the previous
fiscal year. This discussion is intended to help  shareholders and other readers
understand the dynamics of Zarlink's business and the key factors underlying its
financial  results.  This  discussion  should  be read in  conjunction  with the
consolidated  financial  statements and notes thereto included elsewhere in this
Form 10-Q, and with the Company's audited consolidated  financial statements and
notes thereto for the fiscal year ended March 29, 2002.

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q contain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform  Act") that are based on current  expectations,  estimates and
projections  about the  industries in which the Company  operates,  management's
beliefs and assumptions made by management.  These statements are not guarantees
of future performance and involve certain risks,  uncertainties and assumptions,
which are  difficult to predict.  Accordingly,  actual  outcomes and results may
differ materially from results  forecasted or suggested in such  forward-looking
statements.

Such risks,  uncertainties and assumptions include, among others, the following:
increasing  price  and  product/service  competition  by  foreign  and  domestic
competitors,  including  new  entrants;  rapid  technological  developments  and
changes;  the ability to continue to  introduce  competitive  new  products on a
timely,  cost-effective  basis;  delays  in  product  development;  the  mix  of
products/services;  changes in  environmental  and other  domestic  and  foreign
governmental   regulations;   protection   and  validity  of  patent  and  other
intellectual  property  rights;  import  protection  and  regulation;   industry
competition;  industry  capacity and other industry  trends;  the ability of the
Company to  attract  and retain key  employees;  demographic  changes  and other
factors  referenced in the  Company's  Annual Report on Form 10-K for the fiscal
year ended March 29, 2002.

The above factors are representative of the risks, uncertainties and assumptions
that could affect the outcome of the  forward-looking  statements.  In addition,
such statements could be affected by general industry and market  conditions and
growth rates,  general domestic and international  economic conditions including
interest  rate  and  currency   exchange  rate  fluctuations  and  other  risks,
uncertainties  and  assumptions,  as described in the Company's Annual Report on
Form 10-K for the fiscal year ended March 29, 2002,  including those  identified
under   "Forward-Looking   Statements  and  Risk   Factors".   In  making  these
forward-looking  statements,  which  are  identified  by words  such as  "will",
"expects", "intends",  "anticipates" and similar expressions, the Company claims
the protection of the safe-harbor for  forward-looking  statements  contained in
the Reform Act. The Company  undertakes  no  obligation  to update  publicly any
forward-looking statements whether as a result of new information, future events
or otherwise.


                                       13
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 27, 2002

<TABLE>
<CAPTION>
Summary of Results from Operations                        Three Months Ended       Six Months Ended
                                                         ---------------------   ---------------------
(millions of U.S. dollars,                               Sept. 27,   Sept. 28,   Sept. 27,   Sept. 28,
except per share amounts)                                  2002        2001        2002        2001
                                                         ---------   ---------   ---------   ---------
<S>                                                       <C>         <C>         <C>         <C>
Consolidated revenue                                      $ 46.2      $ 50.5      $ 94.2      $118.3
   Communications segment revenue                           39.8        43.0        80.8       101.5
   Medical segment revenue                                   6.4         7.5        13.4        16.8

Operating loss                                             (14.0)      (18.9)      (22.8)      (90.3)
   Communications segment operating loss                   (12.5)      (19.1)      (22.8)      (54.4)
   Medical segment operating income (loss)                  (1.3)        2.6        (1.4)        5.0
   Unallocated recoveries (costs)                           (0.2)       (2.4)        1.4       (40.9)

Net loss for the period                                    (12.4)      (20.2)      (21.6)      (81.2)
Net loss per common share - basic and diluted              (0.10)      (0.16)      (0.17)      (0.65)
Weighted average common shares outstanding - millions      127.2       125.6       126.9       125.4
</TABLE>

Revenue in the second  quarter of Fiscal  2003 was $46.2,  a decrease  of 9%, or
$4.3,  from the  second  quarter  of Fiscal  2002.  Revenue in the first half of
Fiscal  2003 was $94.2,  a  decrease  of 20%,  or $24.1,  from the first half of
Fiscal  2002.  Semiconductor  sales  volumes  continue  to be  affected  by  the
prolonged downturn impacting the entire semiconductor  industry.  Higher channel
inventory  levels and lower  end-customer  demand  continue to keep sales levels
suppressed.

In the second quarter of Fiscal 2003, the Company  recorded a net loss of $12.4,
or $0.10 per share,  including stock compensation expense of $0.2. This compares
to a net loss of $20.2,  or $0.16 per  share,  in the  second  quarter of Fiscal
2002, after amortization of acquired  intangibles of $0.8 and stock compensation
expense of $2.4.

During the second quarter of Fiscal 2003,  the Company  reduced its workforce by
73 employees and incurred  severance  costs of $1.3,  undertaken in a continuing
effort to streamline  operations.  Of this charge,  $0.6 was included in cost of
revenue,  negatively  impacting gross margins by one percentage point during the
second  quarter  and first  half of Fiscal  2003.  The  remainder  of the charge
increased research and development expense and sales and administration  expense
by $0.3 and $0.4, respectively.

For the six months ended September 27, 2002, the Company  recorded a net loss of
$21.6, or $0.17 per share, including a stock compensation recovery of $1.4. This
compares to a net loss of $81.2,  or $0.65 per share,  for the six months  ended
September  28, 2001,  after a special  inventory  write-down  of $29.1,  special
charges of $34.6 related to workforce  restructuring,  amortization  of acquired
intangibles of $2.2, and stock compensation expense of $6.3.

Zarlink's  operations  are  comprised  of two  reportable  business  segments  -
Communications  and Medical.  Zarlink targets the  communications  industry with
offerings  that  specialize  in  broadband  connectivity  solutions  over wired,
wireless and optical media.  Zarlink's Medical business provides ultra low power
ASIC solutions for  applications  such as pacemakers,  hearing aids and portable
instruments.  Zarlink  sells its  products  through  both  direct  and  indirect
channels of distribution.  Factors affecting the choice of distribution include,
among others,  end-customer type, the level of product complexity,  the stage of
product  introduction,  geographic presence and location of markets,  and volume
levels.

Communications

                                                   Six Months Ended
                                       ----------------------------------------
                                       Sept. 27,     % of    Sept. 28,     % of
(millions of U.S. dollars)               2002       Total      2001       Total
                                       ---------    -----    ---------    -----
Revenue:
Network Access                          $ 57.8        72%     $ 62.4        61%
User Access                               23.0        28%       39.1        39%
                                        ------       ---      ------       ---
Total Communications                    $ 80.8       100%     $101.5       100%
                                        ======       ===      ======       ===
As a % of total revenue                               86%                   86%

Communications operating  loss          $(22.8)               $(54.4)
                                        ======                ======

Network  access  and  user  access  products  represent  the  two  major  growth
categories in the Company's  Communications  business  segment.  Network  access
products include products that provide  connectivity to the enterprise and metro


                                       14
<PAGE>

segments such as feeder,  aggregation and transmission applications and products
that address the  multi-protocol  physical and network layers.  In simple terms,
network access semiconductor  products connect network equipment together.  User
access  products allow users to connect to the network.  These products  include
wireless (for example,  cellular  chipsets) and infotainment  applications  (for
example, set-top boxes and digital TV).

Revenue for the first half of Fiscal 2003  totaled  $80.8,  down 20% from $101.5
for the same period in Fiscal 2002.  Revenue was adversely  affected by customer
and channel  inventory  adjustments  in the  Company's  network  access and user
access business, a trend that began during the second half of Fiscal 2001 and is
continuing  into Fiscal 2003.  Revenue also  decreased in Fiscal 2003 due to the
loss of foundry revenue resulting from the disposal of two  complementary  metal
oxide  semiconductor  ("CMOS")  fabrication  facilities in the fourth quarter of
Fiscal 2002.

With customers  currently  placing orders to meet their  short-term  needs,  the
"turns"  business  (customers  placing  orders for  shipment  in the same fiscal
quarter) has been steadily increasing since the second quarter of Fiscal 2002 to
represent  approximately  40% of the orders  shipped in the three  months  ended
September 27, 2002.

The segment's  operating loss declined to $22.8 in the first half of Fiscal 2003
from an  operating  loss of $54.4 in the first half of Fiscal  2002.  The Fiscal
2002  operating  loss  included an  inventory  write-down  of $29.1 in the first
quarter of that year.  The balance of the  improvement  is due to the effects of
cost reduction programs implemented since the first quarter of Fiscal 2002.

Medical

                                                   Six Months Ended
                                        ---------------------------------------
                                        Sept. 27,    % of     Sept. 28,   % of
(millions of U.S. dollars)                2002      Total       2001      Total
                                        ---------   -----     ---------   -----
Revenue:
Medical                                   $13.4      100%       $16.8     100%
                                          =====      ===        =====     ===
As a % of total revenue                               14%                  14%

Medical operating income (loss)           $(1.4)                $ 5.0
                                          =====                 =====

Zarlink's   Medical  business  provides  ultra  low  power  ASIC  solutions  for
applications such as pacemakers, hearing aids and portable instruments.

Revenue  decreased in the first six months of Fiscal 2003 to $13.4 from $16.8 in
the first  six  months of Fiscal  2002 due to higher  customer  inventories  and
reduced demand by customers in the analog audiologic business.

The "turns" business has also increased within the Medical Segment, to represent
approximately  20% of the orders shipped in the three months ended September 27,
2002.

The  segment's  operating  results  declined from the same period last year as a
result of lower revenues  combined with reduced  margins on the medical  segment
products.

GEOGRAPHIC REVENUE

Revenue,  based on the  geographic  location of customers,  was  distributed  as
follows:

                                                Six Months Ended
                                   ------------------------------------------
                                   Sept. 27,    % of       Sept. 28,     % of
(millions of U.S. dollars)           2002       Total        2001       Total
                                   ---------    -----      ---------    -----
Revenue:
Asia / Pacific                       $34.7       37%        $ 27.2       23%
Europe                                31.0       33%          41.9       36%
United States                         19.7       21%          37.7       32%
Canada                                 6.5        7%           8.6        7%
Other Regions                          2.3        2%           2.9        2%
                                     -----      ---         ------      ---
Total                                $94.2      100%        $118.3      100%
                                     =====      ===         ======      ===

For the six months ended  September 27, 2002, the net movement in exchange rates
from the corresponding period in Fiscal 2002 favorably impacted total revenue by
2% ($2.3).  The  favorable  foreign  exchange  impact in the first six months


                                       15
<PAGE>

of Fiscal 2003 was  primarily a result of increases in the U.K.  pound  sterling
and Swedish Krona against the U.S. dollar exchange rate.

Asia/Pacific

Asia/Pacific  sales  increased  by 28% in the  first six  months of Fiscal  2003
compared to the first six months of Fiscal  2002,  due to higher  communications
product  sales  in both of the  network  and  user  access  product  categories,
partially  offset by reduced  medical sales.  The increase  partly  reflects the
movement of certain customers'  manufacturing operations from other parts of the
world to the Asia/Pacific region.

Europe

European sales  decreased by 26% in the first six months of Fiscal 2003 compared
to the first six months of Fiscal 2002 due to lower communications segment sales
of both network access and user access products.

United States

Sales into the United  States  decreased  by 48% during the first half of Fiscal
2002  compared to the first half of Fiscal 2003.  The decrease was due primarily
to lower medical and user access product sales.

Canada

Canadian  sales  decreased by 24% in the first half of Fiscal 2003 over the same
period in Fiscal 2002 due to lower communications segment sales.

GROSS MARGIN

                                      Three Months Ended      Six Months Ended
                                      --------------------  --------------------
                                      Sept. 27,  Sept. 28,  Sept. 27,  Sept. 28,
(millions of U.S. dollars)              2002       2001       2002       2001
                                      ---------  ---------  ---------  ---------
Gross Margin                            $20.7     $16.6      $42.8      $21.7

As a percentage of revenue                45%       33%        45%        18%
As a percentage of revenue,
  excluding excess Q1
  Fiscal 2002 inventory
  charge of $29.1                         45%       33%        45%        43%

Gross margin  improved by 12 percentage  points in the second  quarter of Fiscal
2003 compared to the same period in Fiscal 2002.  Although  still being impacted
by lower sales volumes,  a favorable product mix in the  communications  segment
has  benefited  the margin  percentages  in the  quarter  relative to last year.
Compared to the first  quarter of Fiscal  2003,  gross  margin  decreased by one
percentage point.

Gross margin improved by two percentage points in the first six months of Fiscal
2003 compared to the same period in Fiscal 2002,  excluding the excess inventory
charge recorded in the first quarter of Fiscal 2002. The improved product mix in
the  second  quarter  of  Fiscal  2003  has  improved  the  year-to-date  margin
percentages,  as compared to the same period last year.  However,  gross  margin
continues to be impacted by low sales volumes.

Fiscal 2002 Inventory Charge

During the first quarter ended June 29, 2001, the Company reviewed its inventory
requirements  for  the  following  12  months  in  light  of  the  semiconductor
industry-wide  slowdown  and  higher  channel  inventories.  As a result of this
review,  the Company recorded an excess inventory charge to cost of sales in the
first quarter of Fiscal 2002 amounting to $29.1 for inventories  estimated to be
beyond its needs for the following 12 months. Excluding the effect of the excess
inventory  charge of $29.1,  the Company's  gross margin as a percent of revenue
was 43% for the six months ended September 28, 2001.


                                       16
<PAGE>

OPERATING EXPENSES

Research and Development ("R&D")

                                Three Months Ended      Six Months Ended
                                --------------------  --------------------
                                Sept. 27,  Sept. 28,  Sept. 27,  Sept. 28,
(millions of U.S. dollars)        2002       2001       2002        2001
                                ---------  ---------  ---------  ---------
R&D Expenses                      $23.2      $19.5      $43.9      $43.0

As a percentage of revenue          50%        39%        47%        36%

R&D  expenses  increased by 19%, or $3.7,  in the second  quarter of Fiscal 2003
from the same period a year ago,  primarily due to new product  development  and
increased  headcount  in  certain  R&D  projects  to  accelerate  time to market
initiatives.  During the first six months of Fiscal 2003, R&D expenses increased
by 2%, or $0.9, compared to the same period in Fiscal 2002.

During the second quarter of Fiscal 2003, the Company  released 24 new products,
putting  the total for the first  six  months of Fiscal  2003 at 28 new  product
releases.  New  communications  circuits released during Fiscal 2003 target high
performance in network access  processing and data  switching,  and also include
industry  leading  tuner chips for cable set top boxes.  The  Company's  medical
segment has also released various pacemaker protection circuits during the first
half of Fiscal 2003.

The Company continues to refocus its R&D resources on programs and products that
demonstrate  superior  potential for near- and medium-term  revenue.  Management
expects that R&D  spending  will  decrease  over the balance of Fiscal 2003 as a
result of this exercise.  The Company announced on October 17, 2002, that it was
withdrawing  from the VDSL (Very high rate  Digital  Subscriber  Line) market in
order to  concentrate  its R&D  resources  on higher and more  immediate  growth
opportunities.  Management decided to cease its VDSL product development, within
it  communications  segment,  due to revised  expectations of unacceptably  long
time-to-revenue and volume deployment.

In the Network  Access  product line,  R&D  activities  focused on the following
areas:

      o     Building network timing and synchronization  products for high speed
            applications;

      o     Delivering   multi-channel   carrier-class   convergence  solutions,
            including time division  multiplex ("TDM")  switching,  asynchronous
            transfer  mode  ("ATM")  convergence,  or internet  protocol  ("IP")
            switching;

      o     Providing  high quality voice in packet  switching  applications  to
            metro and enterprise markets; and

      o     Very Short Reach  ("VSR")  parallel  optical  solutions  targeted at
            terabit speeds and higher.

In the User Access product line, R&D activities focused on the following areas:

      o     Providing a multi-mode cell phone radio transceiver chip,  compliant
            with   2/2.5G   standards   for  Time   Division   Multiple   Access
            ("TDMA")/Global  System for Mobile  communications  ("GSM")/Enhanced
            Data rates for GSM Evolution  ("EDGE")/General  Packet Radio Service
            ("GPRS")/Advanced   Mobile  Phone   Service/System   ("AMPS"),   and
            developing a 2-chip radio solution for 3rd  generation  GSM/Wideband
            Code Division Multiple Access ("WCDMA") cell phones.

      o     Providing  Tuner,  demodulator  and peripheral  chips for Satellite,
            Cable and Terrestrial Digital Set Top boxes, integrated Digital TV's
            and adapter boxes; and

      o     Development of the most highly integrated  system-on-a-chip solution
            for integrated Digital Terrestrial Televisions,  Digital Terrestrial
            Set Top Boxes,  adapter boxes and media centers,  compliant with the
            Digital Video Broadcasting - Terrestrial ("DVB-T") standard.

In the  Medical  business  segment,  R&D  activities  focused  on  semiconductor
solutions  and   technologies   for  a  variety  of  in-vivo  and   audiological
applications, including:

      o     Implantable   pacemakers  and   defibrillators  for  cardiac  rhythm
            control, hearing aids, cochlea implants (auditory nerve stimulators)
            for  restoring   hearing  in  the   profoundly   deaf,  and  medical
            instruments   for  a   variety   of   diagnostic   and   therapeutic
            applications;

      o     Ultra low power radio frequency  ("RF")  communication  with medical
            devices that have increasing diagnostic capability;

      o     Ultra low power  audio  processing  and  digital  signal  processing
            ("DSP") to support  digital  hearing aids  providing  improved sound
            quality that can be better  matched to the  patient's  hearing loss;
            and

      o     Application-specific  standard  products  ("ASSPs")  as  opposed  to
            ASICs.


                                       17
<PAGE>

Selling and Administrative ("S&A")

                                      Three Months Ended     Six Months Ended
                                     --------------------  --------------------
                                     Sept. 27,  Sept. 28,  Sept. 27,  Sept. 28,
(millions of U.S. dollars)             2002       2001       2002       2001
                                     ---------  ---------  ---------  ---------
S&A Expenses                          $11.3      $12.8      $23.1      $25.9

As a percentage of revenue              24%        25%        25%        22%

S&A  expenses  decreased  in the second  quarter of Fiscal 2003 by $1.5,  or 12%
compared  to the second  quarter  of Fiscal  2002.  During the six months  ended
September 27, 2002,  S&A expenses  decreased by $2.8, or 11%, as compared to the
first  half  of  Fiscal  2002,  principally  as  a  result  of  cost  reductions
implemented  in Fiscal  2002 in response to the  industry  downturn.  Management
expects that S&A expenses will continue to show moderate cost savings throughout
Fiscal 2003 in absolute dollar amounts.

Stock Compensation

The  Company  records  stock  compensation  expense  or  recovery  arising  from
retention  conditions  associated with the stock awarded to certain employees of
Vertex  Networks,  Incorporated  ("Vertex") which was acquired in July 2000, and
from certain stock options subjected to option exchange programs.

During the three months ended  September 27, 2002,  the Company  recorded  stock
compensation expense of $0.2, related to the vesting of restricted stock awarded
to  certain  employees  of Vertex  (September  28,  2001 - $2.4,  related to the
vesting  of  restricted  stock  and  the  amortization  of  intrinsic  value  of
unexercised stock options modified by the option exchange programs).

For the six months ended  September 28, 2002,  the Company  recorded a net stock
compensation  recovery of $1.4, as compared to a stock  compensation  expense of
$6.3 for the six months ended September 28, 2001. The  compensation  recovery in
the first six months of Fiscal 2003 is a result of the  decrease in market price
of the underlying common stock in Fiscal 2003. The reduced market price resulted
in a reduction of the intrinsic value being amortized over the term of the stock
option and a recovery  of  previously  recorded  stock  compensation  expense on
outstanding unvested options.

Special Charge Recorded in the First Quarter of Fiscal 2002

In the first  quarter of Fiscal 2002 and in response to the  industry  downturn,
the  Company  implemented  a  cost-containment  plan in order to  preserve  cash
resources.  The  cost-containment  plan  included a workforce  reduction  of the
Company's  total  employee  base  by 439  employees,  globally  across  all  job
categories, which was completed by the end of Fiscal 2002. The total cost of the
first quarter Fiscal 2002 workforce reduction program was estimated to be $26.7.

As a  result  of  the  workforce  reduction  program  and  consolidating  design
activity,  the Company  took steps to provide for excess  leased  facilities  in
Canada, the United States,  the United Kingdom,  and the Far East. The estimated
cost of the lease and contract settlements amounted to $7.9 in the first quarter
of Fiscal 2002.

The  total of these  pre-tax  special  charges  amounted  to $34.6 in the  first
quarter of Fiscal 2002. In the fourth quarter of Fiscal 2002,  $3.1 of the first
quarter  special  charge was  reversed  due to savings of $2.3 on the  workforce
reduction program and $0.8 related to the subsequent sub-letting of vacant space
in Irvine, California.

Amortization of Acquired Intangibles

Amortization of acquired intangibles decreased in the three and six months ended
September  27,  2002 to nil in each  period  from  $0.8 and  $2.2 in the  second
quarter and first half of Fiscal  2002,  respectively.  The  remaining  acquired
intangibles,  including  goodwill,  resulting from the  acquisition of Vertex on
July 28, 2000 were  expensed  in the third  quarter of Fiscal 2002 to reduce the
carrying value to nil. With the adoption of SFAS 142 in Fiscal 2003,  intangible
assets with indefinite lives will no longer be amortized, but will be subject to
periodic impairment tests.

OTHER INCOME (EXPENSE)

Other income (expense) was comprised of interest income,  foreign exchange gains
or losses,  and, in Fiscal 2002,  equity losses from the  investment in Optenia,
Inc.


                                       18
<PAGE>

Interest  income  was $1.0 for the three  months  ended  September  27,  2002 as
compared to $1.5 in the same period of Fiscal 2002. The decrease from the second
quarter of Fiscal 2002 was mainly due to lower  interest  rates and reduced cash
balances.  During the first six months of Fiscal 2003,  interest income was $1.9
as compared to $3.6 in the first six months of Fiscal 2002.  The  decrease  from
the first six months of Fiscal  2002 was also due to the reduced  cash  balances
and lower interest rates.

Foreign  exchange gains in the second quarter of Fiscal 2003 amounted to $2.0 as
compared  to a loss of $0.7 for the same period in Fiscal  2002.  During the six
months ended  September 27, 2002,  foreign  exchange  gains  amounted to $1.6 as
compared to a gain of $5.6 for the six months ended  September  28, 2001.  Gains
(losses)  relating to external  foreign  exchange  contracts  are  recognized in
income  as  they  mature.   Gains  (losses)  are  also  realized  on  short-term
investments according to month-end market rates.

There were no further  equity  losses  recorded  during the three and six months
ended September 27, 2002, as the investment in Optenia,  Inc. was written off to
nil in the fourth quarter of Fiscal 2002 following its bankruptcy. Equity losses
of $0.9 on the investment in Optenia, Inc. were recognized in the second quarter
of Fiscal  2002.  During the first  half of Fiscal  2002,  equity  losses on the
investment in Optenia, Inc. amounted to $1.4.

INTEREST EXPENSE

Interest  expense  was $0.3 for the  three  months  ended  September  27,  2002,
compared with $0.2 for the second quarter of Fiscal 2002.  During the first half
of Fiscal 2003,  interest  expense of $0.4 was  recognized,  unchanged  from the
first six months of Fiscal 2002.  The interest  expense  relates  principally to
capital leases.

INCOME TAXES

Income tax expense for the second quarter of Fiscal 2003 was $0.6,  comprised of
domestic  income and  capital  taxes,  compared  with an expense of $0.5 for the
corresponding period in Fiscal 2002.

Income tax expense  for the first six months of Fiscal 2003 was $0.9,  comprised
of domestic  income and capital taxes,  compared with a recovery of $2.7 for the
corresponding  period in Fiscal  2002.  The income tax recovery in the first six
months of Fiscal  2002 was due  principally  to tax  allowances  on the  special
inventory charge recorded at June 29, 2001.

The Company has a valuation  allowance at September 27, 2002 of $98.2 (March 29,
2002 - $75.8).  The increase  relates mainly to losses incurred in the Company's
foreign  jurisdictions  and  temporary  differences  in the  Company's  domestic
operations.  Management  has  determined  that  sufficient  uncertainties  exist
regarding the realization of certain of its deferred tax assets.

BACKLOG

                                                      As at
                              --------------------------------------------------
(millions of U.S. dollars)    Sept. 27, 2002     June 28, 2002    March 29, 2002
                              --------------     -------------    --------------
90 Day Backlog                     $31.5              $28.0            $33.5

Generally,  manufacturing  lead  times for  semiconductor  products  are  longer
because  of the  nature  of the  production  process.  However,  as  orders  are
sometimes  booked and shipped within the same fiscal quarter (often  referred to
as "turns"),  order backlog is not necessarily indicative of a sales outlook for
the quarter or year.

The  backlog  decrease  from last year has been  attributable  to the  continued
downturn in the communications  semiconductor  industry,  described elsewhere in
this Management's Discussion and Analysis.

NET LOSS

The  Company  recorded a net loss of $12.4,  or $0.10 per  share,  in the second
quarter  of Fiscal  2003.  This  compares  to a net loss of $20.2,  or $0.16 per
share, in the same period in Fiscal 2002. For the six months ended September 27,
2002, the Company  recorded a net loss of $21.6, or $0.17 per share, as compared
to a net loss of $81.2,  or $0.65 per  share,  in the first six months of Fiscal
2002.

The net losses for the three and six  months  ended  September  27,  2002,  were
primarily  a result of lower  revenues  across the  communications  and  medical
segments. The net loss in the quarter also included a stock compensation expense
of $0.2, while the year-to-date net loss included a stock compensation  recovery
of $1.4.


                                       19
<PAGE>

The  comparative net loss for the six months ended September 28, 2001 included a
charge  to  cost  of  revenue  for  excess   inventory   of  $29.1  and  special
restructuring  charges  of $34.6.  The loss  also  included  stock  compensation
expense of $6.3 and amortization of intangibles of $2.2.

LIQUIDITY AND CAPITAL RESOURCES

At September 27, 2002, cash, cash equivalents and short-term investment balances
totaled $132.7, down from $154.4 at March 29, 2002. Cash and cash equivalents at
September 27, 2002,  included in the amount above,  amounted to $67.9 (March 29,
2002 - $75.6).

Cash flow used in operations  before working capital  changes  amounted to $14.9
during  the first six  months of Fiscal  2003 as  compared  to $30.4 used in the
first six months of Fiscal 2002 when the Company began to carry out  significant
restructuring  activities.  Since March 29, 2002, the Company's working capital,
as reflected in the  consolidated  statements of cash flows,  decreased by $2.5,
mainly as a result of  inventory  reductions,  principally  in  finished  goods,
amounting  to $7.1 and  lower  receivables  by  $3.0.  This  was  offset  by the
reduction of trade accounts payable and other accrued  liabilities in the amount
of $14.8.  Management  expects to further draw down  inventory  levels in Fiscal
2003 by reducing cycle times and managing inventories on a build-to-order basis.

Cash flows provided by investing  activities were $10.9 for the six months ended
September 27, 2002, primarily from matured short-term investments of $161.7, net
of purchased  short-term  investments  of $146.5,  offset by $4.3 of fixed asset
purchases.  The fixed asset additions were primarily related to design tools and
continuing improvements to information technology resources.  Management expects
capital spending in the second half of Fiscal 2003 to remain relatively flat, as
compared  to the  second  quarter of this  year.  Cash  flows used in  investing
activities  were $18.9 for the six months ended  September  28, 2001,  primarily
from $22.9 of fixed asset additions,  offset by proceeds from the repayment of a
note  receivable  in the amount of $4.5.  Additions to fixed  assets  during the
first  six  months  of Fiscal  2002  mainly  consisted  of  construction  of the
Company's new headquarters in Ottawa, Canada. The building was subsequently sold
in the fourth quarter of Fiscal 2002.

Cash flows used in  financing  activities  during the first six months of Fiscal
2003 were $2.3.  The use of cash was  primarily  the result of the  repayment of
$1.4 of capital  leases,  the  repurchase of $0.4 of preferred  shares,  and the
payment of $1.0 for  dividends on the  preferred  shares,  offset by $0.5 of new
common  shares  issued  from  exercised  stock  options.  The cash flows used in
financing  activities in the first six months of Fiscal 2002 were $2.8.  The use
of cash was primarily the result of the repayment of $3.5 of long-term  debt and
capital leases,  the repurchase of $0.4 of preferred shares,  and the payment of
$1.0 for dividends on the preferred shares,  offset by $2.1 of new common shares
issued from exercised stock options.

During  Fiscal  2002,  the  Company  took steps to wind up the  defined  benefit
pension plan in the United  Kingdom and replaced it with a defined  contribution
plan. The cost to settle the pension plan is expected to be approximately  $6.0.
The Company  expects to make this  payment in the fourth  quarter of Fiscal 2003
after the appropriate approvals are received and the plan is ultimately settled.

During  the first six  months of Fiscal  2003,  the  Company  declared  and paid
dividends amounting to $1.0 on its redeemable  preferred shares based on a $0.32
(Cdn$0.50)  per share  dividend.  In  addition,  the  Company  purchased  27,700
preferred  shares  under its  purchase  obligation  during the six months  ended
September 27, 2002. All of the repurchased preferred shares were cancelled as at
September 27, 2002. The cost to repurchase the preferred shares amounted to $0.4
in the first half of Fiscal 2003.

On June 6, 2002, the Company announced its Board of Directors had authorized the
continuation  of its normal  course  issuer  bid  program  to  repurchase  up to
6,358,203 common shares, representing 5% of the 127,164,078 common shares issued
and  outstanding  at May 31,  2002.  The  purchases  will take place on the open
market  through the stock  exchanges of New York and Toronto over a twelve-month
period beginning on June 10, 2002 and ending on June 9, 2003, or on such earlier
date as the  Company  may  complete  its  purchases  pursuant  to the  notice of
intention  to make a normal  course  issuer  bid filed  with The  Toronto  Stock
Exchange. The Company, which intends to cancel the repurchased shares,  believes
that at present no director, senior officer or insider of the Company intends to
sell any common  shares under this program.  No common  shares were  repurchased
under the program  during the period  from March 30,  2002 to June 8, 2002,  nor
under the renewed program for the period ended September 27, 2002.

In addition to cash,  cash  equivalents  and short-term  investment  balances of
$132.7 as at  September  27,  2002,  the Company had a revolving  global  credit
facility of approximately  $15.8 (Cdn$25.0),  of which $3.1 in letters of credit
were outstanding.  Accordingly, the Company had unused and available demand bank
lines of credit amounting to $12.7 as at September 27, 2002. Management believes
the Company is in a position to meet all foreseeable  business cash


                                       20
<PAGE>

requirements  and  capital  lease and  preferred  share  payments  from its cash
balances on hand, existing financing facilities and cash flow from operations.

OTHER

Critical Accounting Policies and Significant Estimates

The Company's  consolidated  financial statements are based on the selection and
application of significant accounting policies, which require management to make
significant  estimates  and  assumptions.  There is no change  in the  Company's
critical  accounting  policies included in Item 7,  Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations,  of the  Company's
Annual Report on Form 10-K for the year ended March 29, 2002.

As at September 27, 2002, the Company had investments in private  companies with
a carrying  value of $14.6  (March 29,  2002 - $14.1).  Management  periodically
reviews these  investments to determine if there has been other than a temporary
decline in the market value of these  investments below the carrying value. When
management  performs  future  assessments  of these  investments  in the  coming
quarters,  a decline in the value of these  companies may require the Company to
recognize  impairment on the remaining value of its  investments  which could be
material.

Foreign Currency Translation

Management periodically evaluates the financial and operational  independence of
its foreign operations. Should a foreign subsidiary's local currency cease to be
its functional  currency,  then translation gains or losses on consolidating the
foreign subsidiary's financial statements subsequent to the change in functional
currency would be charged to operating income instead of a separate component of
accumulated other comprehensive income.

Recently issued accounting standards

In July 2002, the Financial Accounting Standards Board ("FASB") issued Statement
No. 146 ("SFAS 146"),  "Accounting  for Costs  Associated  with Exit or Disposal
Activities",  which  addresses  financial  accounting  and  reporting  for costs
associated  with exit or disposal  activities and nullifies EITF Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity  (including  Certain  Costs  Incurred in a  Restructuring)."
Statement 146 requires that a liability  for a cost  associated  with an exit or
disposal  activity be  recognized  when the  liability is incurred.  Under Issue
94-3,  a liability  for an exit cost was  recognized  at the date of an entity's
commitment to an exit plan.  Statement 146 concludes that an entity's commitment
to a plan, by itself,  does not create a present obligation to others that meets
the definition of a liability. Therefore, SFAS 146 eliminates the definition and
requirements  for  recognition  of exit  costs  in  Issue  94-3.  SFAS  146 also
establishes  that fair value is the  objective  for initial  measurement  of the
liability.  SFAS 146 will be effective for exit or disposal activities initiated
after December 31, 2002 and had no impact on the Company's financial statements,
but will impact the accounting  treatment of future exit or disposal  activities
should they occur.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Market Risk.  Market risk represents the risk of loss that may impact  Zarlink's
financial  statements due to adverse  changes in financial  markets.  Zarlink is
exposed to market  risk from  changes in  interest  rates and  foreign  exchange
rates.  To  manage  these  risks,  Zarlink  uses  certain  derivative  financial
instruments,   including  interest  rate  swaps,  forward  contracts  and  other
derivative  instruments from time to time, that have been authorized pursuant to
board-approved policies and procedures. Zarlink does not hold or issue financial
instruments for trading or speculative purposes.

Foreign Exchange Risk. The Company  currently uses forward  contracts,  and to a
lesser  extent  foreign  currency  options,  to reduce the  exposure  to foreign
exchange risk. The most significant  foreign exchange  exposures for the Company
relate to the U.S.  dollar and the U.K. pound  sterling.  At September 27, 2002,
there were unrealized losses of $0.1 on the forward contracts relating to Fiscal
2003.  The unrealized  loss is calculated as the  difference  between the actual
contract  rates and the  applicable  current  market rates that would be used to
terminate the forward contracts on September 27, 2002, if it became necessary to
unwind these  contracts.  Management  believes that the  established  hedges are
effective  against  its known and  anticipated  cash flows,  and that  potential
future  losses from these hedges being marked to market would be largely  offset
by gains on the underlying hedged transactions.

Interest Rate Risk. The Company's primary exposure to interest rates is expected
to be in the rollover of its short-term investment portfolio. In accordance with
Company  policy,  cash  equivalents  and  short-term   investment  balances  are
primarily  comprised  of  high-grade  money  market  instruments  with  original
maturity  dates  of  less  than  one  year.  The  Company  does  not  hedge  the
re-investment risk on its short-term investments.


                                       21
<PAGE>

Management  does not foresee any  significant  changes in the strategies used to
manage interest and foreign exchange rate risks in the near future.

As at September 27, 2002,  there were no material  changes in information  about
market risks as disclosed in the  Company's  Annual  Report on Form 10-K for the
fiscal year ended March 29, 2002.

ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES

As of October 25, 2002, an evaluation was performed  under the  supervision  and
with the participation of the management of Zarlink Semiconductor  ("Zarlink" or
"the Company"),  including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), of the effectiveness of the design and operation of the Company's
disclosure  controls and  procedures.  Based on that  evaluation,  the Company's
management,  including the CEO and CFO, concluded that the Company's  disclosure
controls and procedures were effective as of September 27, 2002. There have been
no significant  changes in the Company's  internal  controls or in other factors
that could  significantly  affect internal controls  subsequent to September 27,
2002.

PART II - OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual  Meeting of  Shareholders  was held on July 31,  2002 at the  Chateau
Laurier Hotel, Ottawa, Canada. At the Annual Meeting, the following matters were
presented to shareholders for approval:

Motion 1:  In respect of the election of directors;

Motion 2:  In respect of the appointment of Ernst & Young, LLP as auditors;

Motion 3:  Approval of  the amendments to  By-law No. 16 of the Company relating
           to  Canadian  residency  requirements of  members  of  the  Board  of
           Directors and committees thereof.

Motion 4:  Approval of all other amendments By-law No. 16.

The results of matters submitted to a vote of shareholders were as follows:

Motion 1:                       Shares
For                           85,679,313
Withheld                         429,542

Motion 2:                       Shares
For                           83,114,913
Withheld                       2,993,942

Motion 3:                       Shares
For                           85,668,392
Against                          440,463

Motion 4:                       Shares
For                           82,067,644
Against                        4,041,211

The following  nine directors were  re-elected at the 2002 Annual  Meeting:  Mr.
Andre Borrel, Mr. Patrick J. Brockett,  Mr. Jean-Jacques  Carrier, Mr. Hubert T.
Lacroix,  Mr. Kirk K. Mandy, Mr. Donald G. McIntyre,  Mr. Kent H.E. Plumley, Dr.
Henry Simon, and Dr. Semir D. Sirazi.


                                       22
<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a)    Exhibits

99.1  Selected  Consolidated   Financial  Statements  in  U.S.  Dollars  and  in
      accordance with Canadian Generally Accepted Accounting Principles

99.2  Management's Discussion and Analysis of Financial Condition and Results of
      Operations - Canadian Supplement

b)    Reports on Form 8-K

There were no reports on Form 8-K filed during the three months ended  September
27, 2002.

SIGNATURES

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

Zarlink Semiconductor Inc.
(Registrant)

Name                            Title                        Date
-----------------------------   --------------------------   -------------------

/s/ Jean-Jacques Carrier        Director, Senior Vice        November 6, 2002
------------------------        President of Finance and
                                Chief Financial Officer
                                (Principal Financial and
                                Accounting
                                Officer)


                                       23
<PAGE>

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002

I,  Patrick  J.  Brockett,  President  and Chief  Executive  Officer  of Zarlink
Semiconductor Inc., certify that:

      1.    I have  reviewed  this  quarterly  report  on Form  10-Q of  Zarlink
            Semiconductor Inc. (the "registrant");

      2.    Based on my knowledge,  this quarterly  report on Form 10-Q does not
            contain any untrue  statement of a material  fact or omit to state a
            material fact necessary to make the statements made, in light of the
            circumstances  under which such statements were made, not misleading
            with respect to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the  registrant as of, and for, the periods  presented
            in this quarterly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining  disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant
            and we have:

            a)    designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this quarterly report is being prepared;

            b)    evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing  date of this  quarterly  report  (the  "Evaluation
                  Date"); and

            c)    presented in this quarterly  report our conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

      5.    The  registrant's  other  certifying  officers and I have disclosed,
            based on our most recent  evaluation,  to the registrant's  auditors
            and the audit  committee  of  registrant's  board of  directors  (or
            persons performing the equivalent function):

            a)    all  significant  deficiencies  in the design or  operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

            b)    any fraud,  whether or not material,  that involves management
                  or  other  employees  who  have  a  significant  role  in  the
                  registrant's internal controls; and

      6.    The registrant's  other certifying  officers and I have indicated in
            this quarterly report whether or not there were significant  changes
            in internal  controls or in other  factors that could  significantly
            affect internal  controls  subsequent to the date of our most recent
            evaluation,   including  any  corrective   actions  with  regard  to
            significant deficiencies and material weaknesses.

            Date: November 6, 2002
                  ----------------

                                           /s/ Patrick J. Brockett
                                           ---------------------------------
                                           Patrick J. Brockett
                                           President and Chief Executive Officer


                                       24
<PAGE>

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                SECTION 302 (a) OF THE SARBANES-OXLEY ACT OF 2002

I, Jean-Jacques  Carrier,  Senior  Vice-President of Finance and Chief Financial
Officer of Zarlink Semiconductor Inc., certify that:

      1.    I have  reviewed  this  quarterly  report  on Form  10-Q of  Zarlink
            Semiconductor Inc. (the "registrant");

      2.    Based on my knowledge,  this quarterly  report on Form 10-Q does not
            contain any untrue  statement of a material  fact or omit to state a
            material fact necessary to make the statements made, in light of the
            circumstances  under which such statements were made, not misleading
            with respect to the period covered by this quarterly report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this quarterly report, fairly present in all
            material respects the financial condition, results of operations and
            cash flows of the  registrant as of, and for, the periods  presented
            in this quarterly report;

      4.    The registrant's other certifying officers and I are responsible for
            establishing and maintaining  disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-14 and 15d-14) for the  registrant
            and we have:

            a)    designed  such  disclosure  controls and  procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this quarterly report is being prepared;

            b)    evaluated the  effectiveness  of the  registrant's  disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing  date of this  quarterly  report  (the  "Evaluation
                  Date"); and

            c)    presented in this quarterly  report our conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

      5.    The  registrant's  other  certifying  officers and I have disclosed,
            based on our most recent  evaluation,  to the registrant's  auditors
            and the audit  committee  of  registrant's  board of  directors  (or
            persons performing the equivalent function):

            a)    all  significant  deficiencies  in the design or  operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

                  b)    any  fraud,  whether  or  not  material,  that  involves
                        management  or other  employees  who have a  significant
                        role in the registrant's internal controls; and

      6.    The registrant's  other certifying  officers and I have indicated in
            this quarterly report whether or not there were significant  changes
            in internal  controls or in other  factors that could  significantly
            affect internal  controls  subsequent to the date of our most recent
            evaluation,   including  any  corrective   actions  with  regard  to
            significant deficiencies and material weaknesses.

            Date: November 6, 2002
                  ----------------

                                           /s/ Jean-Jacques Carrier
                                           ---------------------------------
                                           Jean-Jacques Carrier
                                           Senior Vice-President of Finance
                                           and Chief Financial Officer


                                       25
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number                        Description                                 Page
-------  -------------------------------------------------------          ----

99.1     Selected  Consolidated  Financial  Statements  in U.S.            27
         Dollars  and in  accordance  with  Canadian  Generally
         Accepted Accounting Principles

99.2     Management's  Discussion  and  Analysis  of  Financial            36
         Condition   and  Results  of   Operations  -  Canadian
         Supplement


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