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 28, 2003.

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;  the
mix of  products/services;  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 28, 2003.

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

                                                            Three Months Ended
                                                           June 27,     June 28,
(millions of U.S. dollars)                                   2003         2002
                                                           ---------------------

Loss from operations before income
  taxes - US GAAP                                          $ (5.9)       $ (8.4)
                                                           ====================
Loss from operations before income
  taxes - CDN GAAP                                         $ (5.8)       $(11.2)
                                                           ====================
Net loss for the period - US GAAP                          $ (6.2)       $ (8.7)
                                                           ====================
Net loss for the period - CDN GAAP                         $ (5.9)       $(11.4)
                                                           ====================
Net loss per common share - US GAAP,
  basic and diluted                                        $(0.05)       $(0.07)
                                                           ====================
Net loss per common share - CDN GAAP,
  basic and diluted                                        $(0.05)       $(0.09)
                                                           ====================

The  difference  in loss from  operations  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,  and the method used to record an impairment  charge for  long-lived
and intangible assets in previous years.

In the first  quarter  of Fiscal  2004 there was no stock  compensation  expense
recorded in the Company's earnings under Canadian or U.S. GAAP, as compared to a
stock compensation  recovery of $1.6 recorded under U.S. GAAP in the same period
of  Fiscal  2003.  As a  result,  the loss from  operations  and net loss  under
Canadian  GAAP as compared to U.S.  GAAP was higher by $1.6 for the three months
ended June 28, 2002.


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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.  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 June
27, 2003 (three months ended June 28, 2002 - higher by $1.0).

The  Canadian  GAAP other  expense was lower 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 was recorded in the Company's  earnings,  as compared to under U.S. GAAP,
where  the  income  was  deferred  and  netted  against  the  value  of the note
receivable. The difference in accounting resulted in a lower other expense under
Canadian  GAAP by $0.5 for the three  months  ended June 27, 2003 (three  months
ended June 28, 2002 - no difference).

Under Canadian GAAP, unrealized gains and losses on forward contracts identified
as hedges may be  deferred  as long as there is  reasonable  assurance  that the
hedge will be  effective.  Under U.S.  GAAP,  deferral is allowed for  contracts
meeting  the  requirements  for cash flow  hedging  under FAS 133.  Prior to the
adoption of FAS 133,  deferral was allowed  only on contracts  intended to hedge
identifiable firm commitments.  The difference in accounting  resulted in higher
Canadian  GAAP net loss by $nil for the three  months ended June 27, 2003 (three
months ended June 28, 2002 - lower by $0.1)

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. As a result of these differences in presentation
under Canadian GAAP, Zarlink's operating loss was higher, and income tax expense
was  lower by $0.2 in the three  months  ended  June 27,  2003 and for the three
months ended June 28, 2002,  the Canadian GAAP  operating  loss was higher,  and
income tax expense was lower by $0.1.


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