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

                                                          Three Months Ended
                                                        June 25,       June 27,
(millions of U.S. dollars)                                2004           2003
                                                        --------       --------
Income (loss) before income taxes - US GAAP             $  6.5        $ (5.9)
                                                        =======       =======
Loss before income taxes - CDN GAAP                     $ (0.8)       $ (5.8)
                                                        =======       =======
Net income (loss) for the period - US GAAP              $  7.5        $ (6.2)
                                                        =======       =======
Net income (loss) for the period - CDN GAAP             $  0.2        $ (5.9)
                                                        =======       =======
Net income (loss) per common share - US GAAP:
      Basic and diluted                                 $  0.05       $ (0.05)
                                                        =======       =======
Net loss per common share - CDN GAAP:
      Basic and diluted                                 $  --         $ (0.05)
                                                        =======       =======

The  difference  in 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 first quarter of Fiscal 2005 there was
$0.4 of

<PAGE>

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

stock  compensation  expense  recorded in the Company's  earnings under Canadian
GAAP,  as compared to  compensation  expense of $0.1  recorded  under U.S.  GAAP
(three months ended June 27, 2003 - no expense under Canadian or U.S.  GAAP). As
a result,  the net income under Canadian GAAP as compared to U.S. GAAP was lower
by $0.3 for the three  months  ended June 25, 2004 (three  months ended June 27,
2003 - no difference).

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 June 25, 2004 (three months ended June 27, 2003 - higher by $0.2).

The  Canadian  GAAP other  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 other income
under  Canadian  GAAP by $0.2 for the three  months  ended June 25,  2004 (three
months ended June 27, 2003 - $0.5).

Under U.S. GAAP, a gain on sale of business of $7.0 was recorded, resulting from
a payment on a 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 $7.0 higher than the net income under  Canadian GAAP
for the three months ended June 25, 2004 (three  months ended June 27, 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 three months ended June 25, 2004, there
was no  material  difference  between  the U.S.  and  Canadian  GAAP  income tax
recovery.  For the three months ended June 27, 2003, the Canadian GAAP operating
loss was higher, and income tax expense was lower by $0.2.