(In millions of U.S. dollars, except per share amounts, CDN GAAP)

Exhibit 99.2

ZARLINK SEMICONDUCTOR INC.
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS - CANADIAN SUPPLEMENT

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

The following  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations - Canadian Supplement (Canadian Supplement) should be read
in conjunction with Zarlink's Management's  Discussion and Analysis of Financial
Condition and Results of Operations included in Item 2 of this Quarterly Report.
The Canadian  Supplement  should also be read in conjunction  with the unaudited
consolidated  financial statements and notes thereto prepared in accordance with
U.S.  GAAP  (included  in  Item  1 of  this  Quarterly  Report),  the  unaudited
consolidated  financial statements and notes thereto prepared in accordance with
Canadian generally accepted accounting  principles  (Canadian GAAP) (included in
Exhibit  99.1)  and the  audited  consolidated  financial  statements  and notes
thereto  included in the Company's  Annual  Information Form for the fiscal year
ended March 26, 2004.

Certain  statements  in  this  Canadian  Supplement  constitute  forward-looking
statements.  Such  forward-looking  statements  involve known and unknown risks,
uncertainties  and other factors that may cause the actual results,  performance
or achievements of Zarlink, or industry results, to be materially different from
any future  results,  performance or  achievements  expressed or implied by such
forward-looking  statements.  Such risks, uncertainties and assumptions include,
among others, the following: 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;
product mix; the ability to ensure continuity of supply from outside fabrication
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 26, 2004.

The Canadian  Supplement  has been prepared by management to provide an analysis
of the material  differences between Canadian GAAP and U.S. GAAP with respect to
Zarlink's financial condition and results of operations.

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                Three Months Ended      Nine Months Ended
                                                               --------------------   --------------------
(millions of U.S. dollars, except per share amounts)           Dec. 24,   Dec. 26,    Dec. 24,  Dec. 26,
                                                                 2004       2003        2004      2003
                                                               --------   --------    --------   --------
<S>                                                            <C>        <C>         <C>        <C>
Net income (loss) before income taxes - U.S. GAAP              $  (7.5)   $  (12.6)   $   2.2    $  (37.7)
                                                               ========   =========   ========   =========
Net loss before income taxes - CDN GAAP                        $  (8.0)   $  (12.5)   $  (9.0)   $  (37.6)
                                                               ========   =========   ========   =========
Net income (loss) for the period - U.S. GAAP                   $  (7.6)   $  (11.2)   $   3.1    $  (36.3)
                                                               ========   =========   ========   =========
Net loss for the period - CDN GAAP                             $  (8.1)   $  (11.1)   $  (8.0)   $  (35.8)
                                                               ========   =========   ========   =========
Net income (loss) per common share - U.S. GAAP:  Basic and
    diluted                                                    $  (0.06)  $   (0.09)  $   0.01   $   (0.30)
                                                               ========   =========   ========   =========
Net loss per common share - CDN GAAP:  Basic and diluted       $  (0.07)  $   (0.09)  $  (0.08)  $   (0.29)
                                                               ========   =========   ========   =========
</TABLE>

The  difference  in income  (loss) before income taxes between U.S. and Canadian
GAAP was principally  due to differences in the treatment of stock  compensation
expense,  the  treatment  of imputed  interest  income on the  valuation  of the
long-term  note  receivable,  the method  used to record a gain on the sale of a
business,  and the method used to record an impairment charge for long-lived and
intangible assets in previous years.

During Fiscal 2004,  Zarlink began  expensing  stock options under Canadian GAAP
using the fair value method. Zarlink uses the intrinsic method of accounting for
stock  options  under U.S.  GAAP.  In the third quarter of Fiscal 2005 there was


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<PAGE>

        (In millions of U.S. dollars, except per share amounts, CDN GAAP)

$0.4 of stock  compensation  expense  recorded in the Company's  earnings  under
Canadian  GAAP, as compared to  compensation  expense of nil recorded under U.S.
GAAP (three  months ended  December 26, 2003 - $0.1 under both Canadian and U.S.
GAAP). As a result,  the net income under Canadian GAAP as compared to U.S. GAAP
was  lower by $0.4 for the  quarter  ended  December  24,  2004  (quarter  ended
December  26,  2003 - no  difference).  In the first nine  months of Fiscal 2005
there was $1.2 of stock compensation  expense recorded in the Company's earnings
under Canadian GAAP, as compared to stock compensation  expense of $0.1 recorded
under U.S. GAAP (nine months ended  December 26, 2003 - $0.1 under both Canadian
and U.S. GAAP).  As a result,  the net income under Canadian GAAP as compared to
US GAAP was $1.1 lower for the nine months ended  December 24, 2004 (nine months
ended  December 26, 2003 - no  difference).  Under U.S. GAAP stock  compensation
expense has been included in S&A expense.

Under  Canadian  GAAP there are  differences  in the net book  values of certain
tangible  and  intangible  assets  as a  result  of  different  methods  used to
determine fair values  resulting from their  impairment in previous  years.  The
different net book values of tangible and intangible assets resulted in a higher
depreciation and  amortization  expense under Canadian GAAP by 0.2 for the three
months ended December 24, 2004 (three months ended December 26, 2003 - higher by
$0.2).  For the first nine months of Fiscal 2005, the differences  resulted in a
higher  depreciation and amortization  expense under Canadian GAAP by $0.6 (nine
months ended December 26, 2003 - higher by $0.6).

The Canadian GAAP interest  income was higher than the  corresponding  U.S. GAAP
amount due to  differences  in the treatment of imputed  interest  income on the
valuation of a long-term  note  receivable.  Under  Canadian  GAAP, the interest
income has been  recorded in the Company's  earnings,  as compared to under U.S.
GAAP,  where the income has been  deferred  and netted  against the value of the
note  receivable.  The  difference in accounting  resulted in a higher  interest
income under  Canadian GAAP by $0.1 for the three months ended December 24, 2004
(three  months  ended  December  26, 2003 - higher by $0.3).  For the first nine
months of Fiscal 2005, the difference resulted in a higher interest income under
Canadian GAAP by $0.5 (nine months ended December 26, 2003 - higher by $1.1).

Under U.S.  GAAP,  a gain on sale of business  of $9.9 was  recorded in the nine
months  ended  December  24, 2004 as a result of  payments  received on the note
receivable  from X-FAB.  Under  Canadian GAAP, the gain was recognized in Fiscal
2002 at the time of the sale of the business.  As a result of this difference in
the treatment of the sale of the business,  Zarlink's net income under U.S. GAAP
was $9.9  higher  than the net income  under  Canadian  GAAP for the nine months
ended December 24, 2004 (nine months ended December 26, 2003 - no difference).

Under  Canadian  GAAP,  capital taxes and investment tax credits are included in
operating income.  Under U.S. GAAP, capital taxes and investment tax credits are
included in income tax expense. For the nine months ended December 24, 2004, the
Canadian  GAAP  operating  loss was higher and income tax recovery was higher by
$0.1,  and for the nine months  ended  December  26,  2003,  the  Canadian  GAAP
operating loss was higher and income tax recovery was higher by $0.4.


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