Raleigh Glue, Investor Relations Officer Francis Lee, President and Chief Executive Officer Russell Knittel, Chief Financial Officer

Joel Wagonfeld, First Albany Capital Andrew Neff, Bear Stearns Aalok Shah, DA Davidson Jason Pflaum, Thomas Weisel Partners Chris Kinkade, Americas Growth Capital Joel Wagonfeld, First Albany Capital Darick Wigno, Jefferies &Company

Good afternoon ladies and gentlemen, and welcome to the Synaptics Second Quarter 2006 Conference Call. At this all participants are in listen-only mode. Following today’s presentation, instructions will be given for the question and answer session. If anyone needs assistance during today’s conference, please press the ‘*’ followed by the ‘0’. As a reminder, this conference is being recorded Thursday, January 19, 2006. I would now like to turn the conference over to the host Raleigh Glue (ph). Mr. Glue. Please go ahead sir. Raleigh Glue, Investor Relations Officer: Good afternoon, and thanks for joining us today on Synaptics second quarter conference call. This call is also being broadcast live over the web, and it can be accessed from the investor relations section of the Company’s website at synaptics.com. With me on today’s call are Francis Lee, President and Chief Executive Officer of Synaptics, and Russ Knittel, the Company’s Chief Financial Officer. I would like to remind you that during the course of this conference call, Synaptics will make forward-looking statements including predictions and estimates that involve a number of risks and uncertainties. Actual results may differ materially from any future performance suggested in the Company’s forward-looking statements. We refer you to Company’s SEC filings, including Form-K for the fiscal year ended June 30, 2005 for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. We expressly disclaim any obligation to update this forward-looking information. And now, I would like to turn the call over to Francis Lee. Francis? Francis Lee, President and Chief Executive Officer: Thanks Raleigh (ph). Thanks everyone for joining us on the call today. We had another quarter of solid execution, as revenue for the second quarter was $40.6 million within our expected guidance range. Excluding the impact of non-cash share based compensation, non-GAAP operating margin was 21.2%, and non-GAAP net income was $7.5 million or $0.27 cents share. During the December quarter, revenue from PC applications grew 17% sequentially. As anticipated, strong demand for solutions in PC based applications was offset by lower demand in portable music applications. Revenue from non-PC applications represents approximately 9% of total revenue. I’d now like to make a few comments about the progress we have made in our markets over the past three months. At CES this year we are pleased to see some of the shows’ most popular product utilizing our solutions. Two products in particular, the Logitech MX 5000 Laser Keyboard, and a Creative Zen Vision:M both won CNET Best of CES Award, which honor innovations in consumer electronics. In addition to the Best of CES products, there were a number of other Companies highlighting products utilizing Synaptics solutions throughout the show. Samsung demonstrated their Keysonic Flash based music player, which uses a Synaptics Prostrip Tepson to navigate through the play list and adjust volume. Thomson, enhanced Lyra.exe 3000, a portable multimedia recorder which plays video and music files. It plays photos and live shows, and includes a MPEG-4 recorder that hooks up to a TV, DVD or Satellite box to record content real time. The device uses Synaptics touch ring interface to navigate on screen menu and content. Bortoflair enhanced their free space resting design who wins those visitor’s FAS show, which offers the Synaptics interface to navigate through menus and content on secondary display located at top of a notebook computer. Toshiba prominently displayed its new Linux notebook computers, which uses Synaptics’ new Dual Mode TouchPad. The solution incorporates our lux pad elimination technology to provide Dual Mode TouchPad for both cursor navigation and quick launch application buttons with multimedia controls. Prior to CES, Medion enhanced MD 96500 notebook computer, which was the first to offer our leading edge dual mode solution. In a recent adoption of this interface solution for both Medion and Toshiba are excellent examples of Synaptics email innovation in creating interfaces to provide both unique design possibilities and access functionalities. The Medion MD 96500 notebook also ships with every more controlled and corporate Synaptics cutstring interface allows the user to navigate through a multimedia things and access movie, music and multimedia content. We are excited about interface technology is enabling an improved user experience in a remote control environment and see the opportunity to expand to other peripherals to control and access multimedia content. On Sales front, we are pleased to see two new design enhanced by Samsung which utilize the Synaptics solution. The Samsung has PH-V6800 and SPH-V330 mobile phones are built targeted for domestic carrier market. The V6800 uses a mobile Touch interface consist of a personal keypad and provide both full navigation and easy internet access a Wi-Fi networks. Additionally, the keypad provides access to carrier services such as application downloads, string video and live broadcast, as well as short cut to the phones thin applications. The V330 uses an outer thin mobile Touch handset in a innovative industrial design to provide music on demand controls on the outside of a clam cell phone. With this additional design wins, we have further demonstrate the design flexibility of our mobile touch technology with several different implementations whereas a keypad or scroll Samsung varies shapes and sizes. We continue to be encouraged by the response to our technology in a strong design activity in the mobile space. We look forward updating you on new designs in this market throughout the fiscal year. Now I would like to make a few comments regarding the general business environment. It appears that inventory levels are generally inline with expected seasonality. But it is evident, there are customers continue to closely monitor orders. This combination of seasonality in cautious order pattern have resulted in further decline of our backlog as we entered the March quarter, we has approximately $15.5 million, and from $19 million entering the December quarter. Moving to industry trends, there is a CES show highlight enhancements from content providers such as Yahoo and Google illustrating that the margins successfully moving multimedia content into portable formats. As mobile content increases, portable media sensors and players requiring easy way to access and manipulate ever increasing amount of music and video files that are available. It is very clear, that portable audio and video devices are gaining wide spread acceptance among consumers and we expect this strength continue to 2006 and beyond. We feel more strong than ever that the combined functionality and industrial design possibility, that Synaptics in the phase solution offer paid directly into this chain and we are very excited about unique ways to conserve this market. This development have let to multiple new rapidly growing market opportunities. And not surprisingly have resulted in new interest within the competitive landscape. Today this consist mostly a single chip providers, Synaptics continues to differentiate itself as a portable solution provider with over ten years of experience in the phase system design, usability and innovation. With a track record of reliability of performance and proven ability to meet our customers needs. I will now turn the call over to Russ who will review our detail financial results for the second quarter and provide guidance on our near term outlook. Russell Knittel, Chief Financial Officer: Thank you, Francis. As in the last quarter, an addition for our GAAP results, I will also provide supplementary results on a non-GAAP basis, which exclusive compensation expense and tax effects associated with expensing stock options in our employee stock purchase plan under FAS 123R. As Francis mentioned, revenue for the second fiscal quarter of 2006 was inline with our expectations at $48.6 million down 6% sequentially as revenue from PC applications grew approximately 17% that was offset by a 68% decline in non -PC application, reflecting reduced demand for our solutions from the MP3 player market. As a result, revenue from non-PC applications represented 9% of revenue down from 27% in the prior quarter. Within the notebook market demand continues to be driven by consumer purchases relative to corporate buying, and as a result our revenue from dual point solutions which are used in notebooks targeted for corporate applications was now approximately 7% from the previous quarter that was roughly unchanged as a percentage of the total revenue at 15%. Gross margin for the quarter including the impact in FAS 123R was 45.7% compared to 45.8% from the September quarter. The non-GAAP gross margins was 46.0% compared to 46.1% from the September quarter. Total operating expenses for the quarter were $15.3 million including non-cash share-based compensation charges of $3.2 million. Excluding the impact of FAS 123R in the December quarter non-GAAP operating expenses were up slightly from the preceding quarter at $12.1 million. This was lower than expected primarily reflected timing of our stock initiatives and lower than anticipated project related expenses. Turning to specific line items, R&D expenses were $8.3 million including $1.2 million of non-cash share-based compensation. Non-GAAP R&D expenses were $7.1 million, compared to $7 million in the preceding quarter. SG&A cost were $6.9 million including approximately $2 million of non-cash share-based compensation. On a non-GAAP basis SG&A expenses were approximately $5 million compared to $4.9 million in the preceding quarter. Total head count at the end of December was 233 compared with 224 at the end of September. Going forward though, we continue to expect our head count to increase since we’re actively creating to staff both internal and external initiatives. Net interest income was $1.4 million compared with $1.1 million in the prior quarter reflecting the combination of higher average invested balances and higher average interest rates of those invested balances. These sort of results for the first half in our current outlook for fiscal 2006, we have lowered our estimated effective tax rate slightly. Our effective tax rate for the first half was 42.9% resulting in a 42.3% effective tax rate for the current quarter. On a non-GAAP basis the effective tax rate for the first half was 37% resulting in a 36.3% effective tax rate for the quarter. Net income for the quarter was $4.8 million or $0.18 per diluted share. Non-GAAP net income which excludes $3.4 million of non-cash share-based compensation charges and the associated tax benefit of $724,000 was $7.5 million or $0.27 per diluted share. This was at the high end of our guidance range in comparison to non-GAAP net income of $8.1 million or $0.29 per diluted share for preceding quarter. Now few comments on our balance sheet. We ended the December quarter with total cash and short-term investments of $230.2 million up from $219.8 million at the end of September quarter. Our cash flow from operations was $9.1 million for the quarter and stock option excises contributed $1.1 million. Capital expenditures in the quarter were $398,000 and capital depreciation was $404,000. Receivables at the end of December were 31.9 million compared with $32.9 million at the end of September. DSOs at the end of the quarter were 59 days compared with 57 days at the end of the prior quarter. Inventories at the end of December were $6.9 million compared to $7.1 million at the end of September and inventory turns in the December were 15 times down slightly from the 16 times in the prior quarter. I would like to give few comments regarding our near term business outlook. Based on the comments Francis made earlier to reduce level of visibility from our backlog and customer forecast entering the March quarter will result in much higher trends business and more backend load is typical resulting in a revenue outlook of $42 million to $45 million. This guidance is based on anticipated seasonal declines in our market coming of to strong holiday period. We are anticipating that our gross margin percentage will decline reflecting expected product mix changes and our forecasting non-GAAP gross margins to be in the range of 44% to 45%. This range whereas remains at the high end of our target model reflects reduced visibility resulting from both the lower backlog and the higher than average trends business I mentioned earlier. We expect non-GAAP operating expenses in the March quarter to be up sequentially as we anticipate increased head count from our ongoing stock initiatives. This March quarter, we expect the impact of FAS 123R on both gross margins and operating expenses to be similar to the December quarter. Non-GAAP net income per diluted share for the March quarter is expected to be in the range of $0.15 to $0.18. Our visibility beyond the March quarter is limited. We currently anticipate that revenue in the June quarter to be up sequentially from March quarter levels. This current snapshot of our business is relatively inline with our earlier view for fiscal 2006 with revenue often more than 10% from fiscal year 2005’s record levels. In closing, we are pleased with our execution and solid operating results for the second quarter which had further strengthened our balance sheet. The array of products in new design win highlighted on today's call and further evidence of the broad-based applicability for our technology. And our continued focus on innovation that allows customers to differentiate their products in the market place through a unique industrial design, while at the same time enhancing end-user experience interacting with intelligent electronic devices. We believe our technology and capabilities are well suited to take advantage of the growing product trends that feature mobility, wireless connectivity and expanding digital content. That concludes our formal remarks and I will now turn the call over to the operator to start the question and answer session.

Q - Joel Wagoneld: Thank you, two questions if I could, first your guidance suggests that you are not seeing a big recapture or incremental volume from that because what I think that many of us had speculated, you may see in the December quarter and the tone of your commentary for June suggested that you may not be definitive either, I was wondering if you could comment on the accuracy that statement, and then secondly are you seeing any incremental competition in your core notebook segment from some of the new entrance that you have alluded to that may offer a single chip solution, and how are you competing against them given that you have obviously a full solutions whereas they only have part of the solution, thanks. A - Russell Knittel: Okay Joel, I mean our guidance has really come from the backlog and our forward-looking view, that we have done, and this one for customers that Joel, you talk about typically we don’t like to comment on any particular level of business, any particular customers, so I just leave it at that. As far as the incremental competition is concerned you absolutely are right, that there is a lot more new interest in the market place, but we feel that our capability to offer the entire solution especially in the area of both when we have a lot of applications, specific patterns and no house remains to be a pretty tough areas for few of the cracked upon the market job. Q - Joel Wagonfeld: Thanks, can I follow up with one question? A - Russell Knittel: Sure. Q - Joel Wagonfeld: On the gross margin, was it you allowed to, I think two factors, one was a mix as well as the higher cards business, could you just elaborate a little bit on both of those, given that that the mix already kind of a giving downward this quarter, and what are the dynamics in terms of the lower gross margin on the high returns business, thanks. A - Russell Knittel: Okay, with the lower gross margins, it is the backlog, it is a proxy for predicting gross margins for the current quarter, when I look at the backlog going into this quarter, certainly in that case that gross margins will be down around the 46% range that we've been running, and the reason for the fairly broad range in 44% to 45% is just that we have less visibility given that we are going to have to depend on more returns business in actual closing of the quarter since the combination of those two factors. Q - Joel Wagonfeld: Thanks a lot.

Andrew Neff with Bear Stearns, please start with your question. Q - Andrew Neff: Thanks, two questions. One can you comment about the low gross margin to that mix shift. What sort of mix shift you are talking about here? A - Francis Lee: Well, again as we enter each quarter, Andy, somewhere between 15% to 25% of our revenue in that quarter will be from new designs that were won in prior quarter. So as we have all designs going into the line and new designs coming on board you have to factor in the impact of that mix shift, and each quarter we see that generally our backlog in the way our customers are forecasting their business going forward, so it’s really a combination of those factors. Q - Andrew Neff: Second question is, does all of your business go into backlog, or the customers where you might be shipping to that doesn’t look like a backlog? A - Francis Lee: Well generally, we are building to order, so our business will go through our backlog at any one point in time and generally our cycle time or lean time for delivering product is in the 40 we claim so. Generally all orders are reflected in backlog at some point during the quarter. Q - Andrew Neff: And then, I guess another question, as you look at the music player market, either you have the opportunity to build that business that you look out beyond the current quarter? A -Russell Knittel: Well, we have talked about the OEMs that we’ve been designed into in the past, in effect if we work real hard everyday to engage in design activity of those accounts whenever we have the opportunity. So we still feel very bullish about that market place, clearly it’s growing, and we think we have the opportunity to continue to participate in that market. And again it just, it ends up being reflection of the actual design wins that you get at any point in time that ends up being built into the revenue that we see on a forward basis. So the design activity or leading indicators for us and as Francis said design activity remains strong. It is a market that’s characterized by a dominant player and it’s the question of how those competitive dynamics develop over time and our ability to participate on a broad based customer foundation. Q - Andrew Neff: And then lastly, you made a statement on last call that you were not on the new Apple products, can you update us on that statement and all? A - Russell Knittel: We cannot comment specific to customers. Q - Andrew Neff: So you did comment on that previously -- you put out [a statement] where you did comment. A - Russell Knittel: At this point, we cannot comment. Q - Andrew Neff: Thank you.

Aalok Shah with DA Davidson, please go ahead with your question. Q - Aalok Shah: Hi guys, just a couple of quick questions. One is on the compensation front, Francis have you taken a look at the competitors products out there and determined whether you has been might be sending any of your patents at this point, and is there something that we should be paying attention to you on that front, are you going forward that may be somebody might be doing something, would that might be using your patents come forward and I have a follow up on that. A - Francis Lee: Yeah, I mean I was typically, we do pay a lot of attention and closer attention on all the competitive activities and to the extent that we feel individuals infringing our patents, we do take actions as evidenced by their, action that was probably disclosed sometime ago last year. So we do take - defend on intellectual properties as seriously. Q - Aalok Shah: Do you feel like there is somebody out there that might be offering today a situation were it may be a product is where somebody or yesterday. A - Francis Lee: We don’t like to comment on specifics, Aalok as you know any particular actions that we might be taken as probably taken in private confidence first, okay, it’s build into the public domain so it's not something that we like to talk about this time. Q - Aalok Shah: Again, Francis going forward, I mean let's step out beyond the quarter, but in longer term how do you see this business going and is it, are we going to see more margin pressure, I mean it is about a year or so do you expect people to come down on prices and how do you think you can build the affect we can compete on that. A - Francis Lee: Well, certainly what for my opportunity perspective, okay we are seeing actually more and more opportunities to apply the kind of Synaptic technologies you know into intuitively into many of those emerging devices, so I am actually pretty excited about opportunities now. Clearly, a number of other suppliers are also seeing the same kind of opportunities and they have been entering into the market was so called, the same kind of technologies. I think one thing that the franchise ask from the other people here is most of those entrance coming in today are really chip suppliers, and what we really offer is a subsystem, so we continue to differentiate ourselves for our subsystem, so there is an expertise okay, and Apple-2 with our proven track record as you can see just from the this quarter’s announcement. We have a solution implemented in a number of ways in different kinds of product and market, so I think moving forward you are going to see that there is going to be a lot more opportunities in Synaptics, but you also going to see because of the wide open opportunities a lot more people claiming that they have to do this business, and we have to continue to execute by bringing out new innovative solutions and share those opportunities. Q - Aalok Shah: Great, one last question for you, can you give us any kind of metrics that you have right now in the design wins and the noble space beyond the two that you have heard, beyond the software you may have so far. A - Francis Lee: Well, I mean, we certainly have talked about of as Samsung enhanced the two more product using our solutions, there is a lot of design activities going in there. We have not talked of specifically about a number of design win per say in the mobile sector. Mainly because frankly, it’s really such a new sector and there is increase complexity in the change in the sense that, it’s not just OEM, that you have to deal with, there is also a carrier that you have to deal with us well, so we have refrained from talking about specifically design wins in a particular sector, but it issue that design activity continues to be pretty strong in the sector. Q - Aalok Shah: Okay great thank you.

Thank you. Jason Pflaum with Thomas Weisel Partners, please put up your question. Q - Jason Pflaum: Yes good afternoon, may be just to start on the guidance again, if you could talk again about your visibility in the Q1. Is Q1 this year it’s really perhaps have normally backend unloaded maybe four perspective, you can talk about your backend backlog covered this year relative to say last year. A - Francis Lee: Okay. Well not only you do expect seasonality into the March quarter, but clearly our backlog is $10.5 million is below what we would typically expect in terms of visibility or hard visibility for the third quarter, I think backlog year-over-year is down more than a factor of the two for more we were last year at this point in time. And so as a result of that, it means that we will see high returns business this quarter, and based on the visibility we have as it relates to customer forecast it suggest that we will be back and loaded in terms of being able to deliver against that forecast. Q - Jason Pflaum: Okay, and may be you could price some guidance by notebooks, if I say unit expectation generally in the non-PC for Q1? A - Francis Lee: We don’t provide unit forecast if you look at the total notebook units over the last three years, sequential December into the March quarter I think the range is some where between 2% to 7% sequential decline in the last 3 years so that would suggest in lot of to meet single digits from a industry view of point and we are coming half of a very, very strong December quarter this year so I don’t think its clear to that anybody how much it drop off we will see in the March quarter but I think its pretty flat we anticipate that we will see a decline in demand for notebooks in the March quarter. Q - Jason Pflaum: Current may be few venture GAAP as far as your current share of notebooks how do you see that trending over the next 6 months you have this as far as seemed to be your settlement momentum. A - Francis Lee: Well our current view on market share is that we continue to be greater than 55%of the market and you know within the next 6 months I don’t see that share shifting much one way or the other. Q - Jason Pflaum: Okay, that’s great. Thank you very much.

Chris Kinkade with Americas Growth Capital. Please go with your question. Q - Christopher Kinkade: Hi guys, just wondering if you can quantify what sort of unit growth you saw in the notebook segment just in Q2. A - Russell Knittel: Synaptics specifically. Q - Christopher Kinkade: Yes. A - Russell Knittel: You know our units in the current in the most recent quarter we were up more than 20%. Q - Christopher Kinkade: Okay. Great thanks a lot.

Joel Wagonfeld with First Albany Capital. Please go with your follow-up question. Q - Joel Wagonfeld: Thank you. On the mobile handsets, I think in the past you had characterized the ramp to materiality has been kind of a longer term that was an event given the recent announcements all of the announcements of the additional handset, suggest that handsets may be become material sooner than previously anticipated. A - Francis Lee: Joe not really I mean I think when we make the pervious discussions you know about that you know we are seeking that account of the size of the current Synaptic business is also you know doing quite well, so is actually within the knowledge that some of those products is really going to hit the market on this fiscal year and therefore you know during the pervious earnings call we had talk about you can expect to see incremental revenues in our company, you know this fiscal year coming from the segment so our view remains to be bullish on this trend but we also pretty repeating the same claim that you know some news settlement for us, is exciting segment but really found that be alive before this comes meaningful. Q - Joel Wagonfeld: Okay thanks.

Q - Darick Wigno: Yes, thank you could you just give the Capital Expenditure outlook for the fiscal year ending September ‘06? A - Russell Knittel: I am not sure, we are year-to-date but generally we spend somewhere between $1million and $2 million on CapEx. This year, we will be a little bit higher than that because we still had some expenditures related to our facilitation of our new headquarters in Santa Clara, but on an ongoing basis generally we are in the $1million and $2 million range for CapEx. Q - Darick Wigno: Okay, thank you.

I am sorry no further questions at this time please continue with any comments that you may have. Francis Lee, President and Chief Executive Officer: Well thank you for being on the call with us today, and we look forward to update you again on the next quarter. Bye, bye.

Ladies and gentlemen, this does conclude the Synaptic Q2 conference call. You may now disconnect and thank you for using AT&T teleconferencing.