CE Unterberg

1

• CE Unterberg
• San Francisco Conference
• August 10, 2005

NASDAQ ZiLG Headquarters San Jose, California
Perry Grace Chief Financial Officer
2
Safe Harbor Disclaimer
The statements set forth in this presentation
include forward-looking statements that involve
risk and uncertainties. The Company wishes to
caution that a number of factors could cause
actual results to differ materially from those in
the forward-looking statements. These and other
factors which could cause actual results to
differ materially from those in the
forward-looking statements are discussed in the
Companys filings with the Securities and
Exchange Commission, including its recent filing
on Form 10-Q.
3
ZiLOG Background

• 1974 - Founded by Federico Faggin as a global
  micro logic supplier
• 1998 - LBO by Texas Pacific Group
• Chased Communications market
• Lost 8-bit focus
• 2001 2004
• Jim Thorburn joined as CEO
• Refocused strategy back to the traditional 8 bit
  microcontroller market
• Converted 300 million debt to equity (via
  Chapter 11 in 02)
• Launched new series of embedded flash
  microcontrollers
• Executed fabless strategy
• Successfully raised 25 million in cash through
  public offering of stock in March 2004

4
Company and market overview

• 8-bit microcontroller market
• Over 4 Billion
• Growing, Diverse and Fragmented
• Traditional ROM OTP converting to Embedded
  Flash
• ZiLOG is a global supplier of 8-bit
  microcontrollers
• Focused on expanding addressable markets through
  its new and growing embedded flash product
  portfolio
• Strong brand and market history
• Established customer base and distribution
  channel presence
• Business model focused on revenue and margin
  growth
• Revenue mix moving toward faster growing market
  segments
• Completed fabless strategy in July 2004

5
Enabling 30 years of Innovation
6
Global Presence

• 500 employees worldwide
• 140 engineering and 250 manufacturing

Design Center Shanghai, China
Design Center Seattle, WA
Foundry partners UMC TSMC Taiwan
Worldwide HQ San Jose, CA
Test Facility Manila, Philippines
Technology Center Meridian, Idaho
Software Design Center Bangalore, India
Foundry partner X-fab Lubbock, Texas
7
Total Sales Trend
103.6
95.6
Millions
20.6
20.2
Note Base business is the combination of
micrologic and other product sales. Base business
excludes foundry sales.
8
Gross Margin Trend Non GAAP

• 2002 excludes fresh start inventory adjustments
• 2004 excludes special charges for inventory
  reserves other charges associated with the
  closure of our 5 wafer manufacturing facility
  in Nampa, Idaho.

9
Investment in Innovation
Micrologic RD investment as a of sales
20.9 m
18.0 m
10
Business Model
Gross Margin R D S, G A Capital
Expenditures

• 2004 gross margin excludes special charges for
  inventory reserves and other charges associated
  with the closure of our 5 wafer manufacturing
  facility in Nampa, Idaho.
• 2003/2004 SGA excludes non-cash stock
  compensation expense

11
8-Bit Microcontroller Segment
TOTAL 7.5 CAGR 2003-2008
Billions
FLASH - 16 CAGR 2003-2008

• Cost effective performance for high volume
  embedded control applications
• Embedded flash is the fastest growing segment of
  the 8-bit market
• Embedded flash provides reprogram ability
  results in improved time to market for
  development minimizes obsolescence risk of
  inventory

Source Semico Research Corp. Market Update April
2004
12
2003 2008 8-Bit Market Growth
Billions
Source Semico Research Corp. Market Update April
2004.
13
ZiLOGs Target End Markets
Excludes foundry services
Comm. 8
Industrial 22
Consumer 67
Transportation 3
14
System on Chip
15
Why we are excited about the future

• Trends driving higher levels of integration

Market Trend Product Need Consumer gtgtgtgt
Convergence in the home Wireless / Control
interfaces Human interfaces mechanical to
electronic High precision analog Health
fitness Peripheral connectivity Portability Pow
er management Improving energy efficiency Low
power Automotive gtgtgtgt More convenience features
in vehicles Integrated sensors Higher
performance High speed analog More electronic
content in vehicles Off-load main
processor Greater emphasis on safety More
sensors Industrial gtgtgtgt Networked factory
automation Integrated networking
capabilities Security, Building
management Sensors, wireless controllers Shorte
r product life cycles Development time
reductions Complexity of software Larger
memory sizes
16
We are rapidly expanding our Product Portfolio

• Network Communication Solutions
• Real-time operating systems
• Ethernet MAC
• TCP/IP stack
• Real-time clock

• Mixed-Signal Device Peripherals
• High speed / high-precision ADC
• Temperature sensors
• Trans-impedance amplifier
• Integrated sensors
• I2C network communications
• Reprogrammable flash memory

Feature Set

• Low-end Analog Peripherals
• Comparators
• Timers
• Watchdog Timers
• GPIO
• OTP

50 MHz
20 MHz
4-8 MHz
Cost / Performance
17
Market recognition of our flash products
Z8 Encore! XP wins Embedded Innovative Product
Award by EEPW China, 2004
eZ80Acclaim! wins Top 10, Hot 100 products of
2003 by EDN
eZ80Acclaim! Wins Top Processor of the Year from
Electron Dor France, 2003
Winner of the Market Penetration Leadership Award
by Frost Sullivan, 2004
Z8 Encore! XP wins Top 10 for Processors
Memory by EE Times, 2003
18
Analog integration offers expanded application
opportunities
Thermal Management(Low Cost Intelligent Fan
Controllers)
Smoke Detector
Battery Charging
Temperature Sensing
19
Growth Indicators Design in cycle time
Cum Tool Shipments
Cum Flash Design Wins ( Millions)
9.0
3,178
2,009
7.4
Flash Revenue (Millions)
Cum New Flash Customers
178
179
NOTE Design wins are the awarding of the
socket win with 2 year revenue projection on the
program by the customer. Additionally the
customer must place minimum purchase orders of
1,000 to qualify in design win measure.
20
Focus of Strategy

• PHASE 1 Expanding our product capabilities
• Faster cores and added embedded flash capability
• Wider range of voltages and additional memory
  sizes
• Increased integrated analog capabilities
• Continuing to add peripheral technology blocks
  for increased functionality
• Expanded software/ database for remote control
  products
• Easy-to-use development tools
• PHASE 2 Customer Market expansion
• Target vertical markets with expanded technology
  portfolio
• Leverage foundry partnerships to reduce product
  costs
• Expanding customer base and leveraging our brand
• Deliver complete solutions
• Close collaboration with targeted vertical
  customers
• Focus on integration of system functionality
• Enhanced performance and reduced system cost

21
SUMMARY

• Top 10 supplier of 8 bit microcontroller
• Market opportunity is large exceeding 4 billion
• Completed significant restructuring
• Now operating under fabless model
• Focused on addressing cost structure to achieve
  break even cash flow
• Launched new families of embedded flash products
• Focused on growing application opportunities
• Growing acceptance of products in the market place

22
(No Transcript)
23
Financials