Molly Plyler, Investor Relations, Blueshirt Group Francis Lee, President, Chief Executive Officer Russell Knittel, CFO, Principal Accounting Officer, Chief Admin. Officer, Sr. VP, Sec. and Treasurer

Joel Wagonfeld, First Albany Jason Pflaum, Thomas Weisel Partners Rob Stone, S.G. Cowen and Company Andrew Neff, Bear Stearns Derek Wagner, Jefferies & Company

Good afternoon, ladies and gentlemen, and welcome to the Synaptics Third Quarter 2006 Conference Call. At this time, all participants are in a listen-only mode. Following today’s presentation, instructions will be given for the question and answer session. If anyone needs assistance at anytime during the conference, please press the “*”, followed by “0”. As a reminder, this conference is being recorded today, Thursday, April 20, 2006. I would now like to turn the conference over to Molly Plyler with the Blueshirt Group. Please go ahead, Ma'am. Molly Plyler, Investor Relations, Blueshirt Group: Good afternoon and thank you for joining us today on Synaptics Third Quarter Conference Call. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the company’s website at www.synaptics.com. With me on today’s call are Francis Lee, President and Chief Executive Officer of Synaptics, and Russ Knittel, Chief Financial Officer. We 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 the company’s SEC filings, including Form 10-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 the forward-looking statement. 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, Chief Executive Officer: Thanks, Molly, and thanks everyone for joining us on the call today. Revenue for the third quarter was $40.4 million below our guidance range of $42 to $45 million. This shortfall was primarily due to lower than expected demand from the digital music player market. This reflects similar reports from other suppliers and OEMs in the MP3 sector, and there is speculation that this may signal more normal seasonality in the sector moving forward. As a percentage of total revenue, non-PC applications contributed approximately 10% during the quarter. Revenue from PC applications declined approximately 18% sequentially, coming off the strong holiday period. Our performance was within our anticipated range, but at the lower end of our expectations, consistent with some of the current industry commentary. Excluding the impact of non-cash share-based compensation, non-GAAP operating margin was 13.2%, and non-GAAP net income was $4.1 million, or $0.15 per share, at the lower end of expected range. We continue to experience lower than historical backlog, relative to forecast from our customers, resulting in a higher turns business within a quarter. Our backlog entering the June quarter was approximately $15.2 million, down slightly from $15.5 million last quarter. We believe these trends are largely representative of overall industry dynamics, as our customers continue to closely monitor orders. We expect order patterns in the June quarter to be similar to the March quarter and we are prepared to execute in this environment of reduced visibility. Now, I’d like to make a few comments about the progress we have made in our markets over the past three months. On the local front, we are pleased that Dell recently announced the XPS M1710, which is their flagship gaming notebook. The notebook contains a custom Synaptics Touchpad, which uses a lux-pad technology to illuminate XPS logo in the notebook’s signature red color. The Dell XPS logo pad is another example of how Synaptics’ custom solutions can enhance the industrial design. Over the past two quarters, I have spoken about a Dual Mode Touchpad which offers both a cursor navigation mode and a mode for multimedia controls and quick launch buttons. I am happy to say that Toshiba has expanded the launch of its Dynabook Notebook using our Dual Mode Touchpad into the U.S. market. We are pleased to see such a positive response to this innovative new interface solution. In PC peripherals, Logitech recently announced a new look, a revolutionary new peripheral device geared towards PC design applications. The new look utilizes Synaptics touch ring interface that provides drawing and shortcuts to design tools. On the cell phone front, we are pleased to report that Samsung has released another new design which utilizes Synaptics solution. The Samsung SPH-E 3100 is targeted for the Korean market and uses a custom Synaptics MobileTouch solution to provide music controls on the outside of the clamshell form. This solution is a fertile illustration of the industrialist Synaptics stability our technology offers our customers. During the quarter, Microsoft announced its ultra-mobile PC, a new category of mobile devices with full PC capabilities, including wireless connectivity, computing and entertainment. We feel that this category fits well within Synaptics’ capabilities, and we are pleased to announce that our solutions have been incorporated into a number of upcoming ultra mobile PC releases. Moving to other corporate developments, I would like to take this opportunity to welcome Tom Tiernan to Synaptics as our Senior Vice President and General Manager. Tom comes to us from Symbol Technologies, where he was Vice President and General Manager of the Mobile Computing Division. Prior to that, Tom was at HP, where he most recently served as Vice President and General Manager of HP’s Network Storage business. We are very pleased to have Tom on board. Now, I’d like to update you on the intellectual property front. On March 10th, an infringement complaint was filed in the U.S. by Elantec Devices Corporation. We believe this is in response to actions taken by Synaptics against companies in the U.S. for selling notebook computers in copyrighting Elantec Touchpads. This claims was settled during the fiscal third quarter as the companies agreed to consent orders, enjoying them from further selling the infringing products in the U.S. We intend to vigorously defend ourselves against the Elantec's claims and have filed a counter-claim against them in the U.S. We did not intend to discuss intellectual property issues in the public domain and are sharing this information because public filings have been made. I want to assure you that we take our intellectual property seriously and we’ll protect this valuable asset. Looking ahead, we believe the business fundamentals and growth prospects within our core notebook markets are solid, and we continue to leverage our systems up to speed to innovate new solutions that allow our customers to enhance both the usability and industrial design of their products. We also believe that we’ll continue to see steady progress from our efforts in PC peripheral and mobile applications. The dynamics in the MP3 market represents a challenge we face today, relative to how our business will look in the short intermediate term. We have just finished our quarter where, for the first time, this factor seems to have taken a pause. In addition, competitive dynamics among the OEM’s make it tough to predict where market shares will ultimately pan out. For Synaptics, these industry dynamics are compounded by customer specific issues which further impact our visibility. While we cannot address speculation about specific customers, I’ll remind you that, as in the notebook market, we compete on a design-by-design basis. There are multitude of skills within each of our markets, and we feel confident that our technology will continue to be incorporated in a large number of them. One thing that’s becoming more and more clear is the capacity precision sensing technology will be adopted by an increasing number of vertical markets. Validating that view is the fact that competition is increasing as the size of the market opportunity expands. We continue to closely monitor the various competitive approaches to our target market, and are actively working on internal initiatives in the leveraging our system knowledge to ensure that we can compete effectively. Before I turn the call over to Russ, I want to say that we are more confident than ever in our position in the PC market, which is expected to drive strong sequential revenue growth for Synaptics over the next two quarters. While it’s not atypical to encounter bumps along the way in new markets, like the portable audio and video markets, we remain well entrenched with a number of customers with a variety of unique customized solutions. Finally, we continue to make promising headway in our newest target market with a steady stream of initial cell phone design wins, continued traction for a new product, and the PC peripheral markets, and opportunities surrounding the emerging ultra mobile PC products. Our business fundamentals remain strong and a shift to mobility and multimedia application continue to move in the direction favorable for Synaptics. I will now turn the call over to Russ who will review our detailed financial results for the third quarter and provide guidance on the near-term outlook. Russell Knittel, Chief Financial Officer, Principal Accounting Officer, Chief Admin. Officer, Sr. VP, Sec. and Treasurer: Thank you, Francis. As we discussed last quarter, in addition to our GAAP results, I will also provide supplementary results on a non-GAAP basis, which excludes the compensation expense and tax effects associated with expensing stock options under FAS 123R. Revenue for the third fiscal quarter was $40.4 million, down approximately 17% sequentially, as seasonality impacted demand from both the PC and non-PC markets, which were down approximately 18% and 9% respectively. Within the notebook market, the sequential declines in both our single and dual pointing solutions were similar, and as a result, dual pointing revenue for the quarter represented approximately 15% of total revenue, essentially unchanged from the December quarter. Gross margins for the quarter, including the impact of FAS 123R, was 44.9%, compared with 45.7% in the December quarter. Non-GAAP gross margins was 45.2% compared to 46% in the December quarter. Non-GAAP gross margin was slightly above the high end of our guidance range, reflecting higher turns business weighted towards a richer product mix, in addition to better-than-expected manufacturing yields during the period. Total operating expenses for the quarter were $16.1 million, compared to $15.3 million in the preceding quarter, including non-cash share based compensation charges of $3.1 million and $3.2 million respectively. Excluding the impact of FAS 123R in the March quarter, non-GAAP operating expenses were up approximately 7% from the preceding quarter at $12.9 million. This was lower than anticipated, primarily resulting from lower than expected staffing levels reflecting the timing of our recruiting efforts. Total employee headcount at the end of March was 235, an increase of 2 compared with the December quarter. We expect our headcount to continue to grow based on planned staffing initiatives to fill positions required by our increased operating levels, and to add skill sets necessary to meet our business objectives. Net interest income was $1.7 million compared with $1.4 million in the prior quarter, reflecting both higher average cash balances and higher average interest rates. Based on year-to-date results and current expectations regarding geographic operating performance for the year, both the GAAP and non-GAAP tax rates reflect a true-up to a higher expected annual tax rate, resulting in a 56.7% GAAP tax rate and a 41.2% non-GAAP tax rate for the quarter. As we pointed out in our earlier conference calls and in our SEC filings, we expect to continue to see substantial volatility in our GAAP effective tax rate, primarily due to the accounting treatment associated with our incentive stock options. Net income for the quarter was $1.6 million, or $0.06 per diluted share. Non-GAAP net income, which excludes $3.3 million of non-cash share based compensation charges, and the associated tax benefit of $771,000, was $4.1 million, or $0.15 per diluted share. This compares to non-GAAP net income of $7.5 million or $0.27 per diluted share in the preceding quarter. Now, few comments on our balance sheet. We ended the March quarter with total cash of short-term investments of $237.5 million, up from $230 million at the end of the December quarter. Our cash flow from operations was approximately $328,000 for the quarter, as our inventory levels increased by 3.7 million. Stock option exercises contributed $4.2 million in cash. Capital expenditures in the quarter were $325,000, and capital depreciation was $427,000. Receivables at the end of March were $29.7 million, compared to $31.9 million at the end of December. DSOs at the end of the quarter were 66 days compared with 59 days at the end of the prior quarter. The increase in DSOs is primarily a reflection of the back-end loaded revenue we experienced in the March quarter, as the aging is essentially unchanged compared with the December quarter. Inventories at the end of March were $10.6 million compared with $6.9 million at the end of December. We increased our wafer starts on a one-time basis to take advantage of some favorable pricing and do not believe this actual increase or obsolescence exposure, as our ASICs are designed to be used broadly across our product lines. The combination of the higher inventory levels and the lower than anticipated revenue in the quarter resulted in inventory turns of 8 times, down from 15 times in the December quarter. Now, I’d like to make a few comments regarding our near-term business outlook. As you can tell from Francis’s earlier comments, we are currently in a challenging environment where we continue to experience relatively low backlog levels, leading to increased turns business coupled with the limited visibility in the MP3 market, where there are additional dynamics in play. Considering all the data points we have today, our current outlook for the June quarter calls for sequential revenue growth of up to 10%. This outlook is predicated on expected seasonality and continued strength within our core PC market. As we look out into the September quarter, we believe we will continue to experience strong demand for our PC solutions, where we see increasing interests for our multimedia oriented products that provide dual functionality in notebook computers, and anticipate that our revenue may grow 10% to 20% over our June quarter guidance. Any meaningful increase in demand from the portable digital entertainment sector would represent upside to our current outlook. We expect gross margins to decline, reflecting anticipated product mix changes and are forecasting non-GAAP gross margins to be in the range of 43% to 44%. This range is above the midpoint of our target model and reflects the combination of our backlog and expected turns business during the quarter. We expect non-GAAP operating expenses in the June quarter to be up sequentially as we anticipate increased head count from our ongoing staffing initiatives. For the June quarter, we expect the impact of FAS 123R on both gross margins and operating expenses to be similar to the March quarter. Non-GAAP net income per diluted share for the June quarter is expected to be in the range of $0.12 to $0.15. In closing, we continue to be extremely well-positioned in our core notebook market, for which industry analysts are projecting unit growth of 20% plus in 2006, and where we continue to differentiate ourselves through innovative new solutions. At the same time, our systems level know-how is enabling us to make in-roads in engineering exciting new applications, ensuring our ability to compete in our expanding addressable markets. We believe that our solid operating fundamentals combined with our strong balance sheet provides a sound foundation for achieving our diversification and growth objectives. That concludes our formal remarks and we’ll now turn the call over to the operator to start the Q&A session.

Q - Joel Wagonfeld: Thank you. Two questions. Number one, could you just comment on your view of your market share in MP3’s and notebooks in absolute terms or relative to last quarter and prior quarters? And then secondly, you said you were in a number of ultra-mobile PC’s. Does that include the Microsoft one? Thanks. A - Russell Knittel: Joel, with regards to the market share, we don’t really, as you know, predict market share on a quarter-to-quarter basis because it’s a little misleading, given the lead lag time between when we ship products and when the (technical difficulty) ship through in the channel, but our view today in notebooks is we, our market share continues to be above the 55% range. And again, we don’t see anything near-term that will change that positioning. MP3 market is a little bit more problematic. Again, that’s a market today where you have one dominant player. We believe we’re well-positioned within that market, and how those competitive dynamics work out, and how customer relationships between Synaptics and those customers develops over time in terms of how our market share positioning within that segment will develop. A - Francis Lee: With respect to the ultra-mobile PC, Joe, you know, I think I talked about how our solutions are being incorporated in a number of upcoming ultra-mobile PC releases. So again, you know, our product has been designed into this particular platform and it’s being incorporated in a number of OEM’s. Q - Joel Wagonfeld: Thanks very much.

Thank you. Our next question is from Jason Pflaum with Thomas Weisel Partners. Q - Jason Pflaum: Hi, good afternoon guys. I guess my first question here, it seemed in the commentary, Francis, you made some comments suggesting that you were more confident than ever in the prospects of your PC business. I’m just curious if you could flesh that out a little bit more. Are those comments coming more from confidence in perhaps your share position, or more so in the fact that you have a potential increase in your penetration of some of these new dual mode applications? A - Francis Lee: Sure, Jason. You know, we basically have the same kinds of methodology as we normally do in terms of how we look at and triangulate, you know, potential forward-looking businesses. And Jason, there are combination of factors, right? Like, you know, our new design wins and when it gets into the market, we have rolling the six months of forecasts from a number of the OEM’s and ODM’s, you know we obviously have the readily assessable industry-wide reports that everybody reads, okay? It’s from a combination of these factors and a lot of that is obviously related to our belief in terms of how our new product designs have depended on those markets together with forecasters, both from our customers and from industry. We feel very good in terms of our position in both upcoming June quarter as well as the September quarter, Jason. Q - Jason Pflaum: Okay, maybe to focus again on the dual mode opportunity there. Any sense for, or give us a flavor for the breadth of some of your design activity? A - Francis Lee: Well, I mean, the fact that Toshiba is moving the Dynabook into the U.S. which, as you know, Jason, is a lot larger market for notebook computers than in Japan, and the fact that Dell, which is putting a variety of this product into their flagship gaming notebook, I mean, those are really good signs in terms of the adoption of this new kinds of technology. You know, it’s very difficult obviously for us to gauge what is eventually the run-rate and sell-through of this product is, but the fact that two of the largest OEM’s have been backed it, pretty reasonable programs using this technology, I’m very optimistic about it. Q - Jason Pflaum: Okay, and then last question is from the handset side, if you could give us an update there. It sounds like you have another design with Samsung. If you could just talk generally about any activity outside of Samsung, and can we expect some more activity by year-end? Thank you. A - Francis Lee: Yeah. One of the things that I talked about a couple of calls ago was I mentioned the fact that we can expect incremental revenues coming off additional design wins, and some of those recent design wins that we are talking about shipping in the market is basically a follow-up to that previous discussion a few quarters ago. We do believe that the handset market, okay can utilize and will utilize the Synaptics technology, Jason, but it is also not our practice to talk about incremental specific OEM’s and products until those products come into the market, or until we have become reasonably sure that those products will come to the market. So, I would still tell you that we are very bullish in this sector and we believe our technology fits well with this sector, and we still have very high hopes for it. Q - Jason Pflaum: Okay, very good. Thank you.

Thank you. Our next question is from Rob Stone with S.G. Cowen and Company. Q - Rob Stone: Hi, guys. Two quick questions, if I may. One, you commented in the past about your typical price ranges for single pointing interface versus the dual mode, dual pointing notebooks. Can you give us some sense of where the new dual mode multimedia type interface is in your range of ASP’s? And the second question, if you could just give us a sense of how much of the PC revenue is coming from applications that are not notebooks? A - Russell Knittel: Okay, with regard to pricing ranges, Rob, the single pointing solutions today again are generally within the $3 to $6 range. The dual mode products that we’re selling today that essentially give additional functionality inside the same real estate, those are going to be at the high end of that, so maybe slightly above that range. Q - Rob Stone: Okay. A - Russell Knittel: And your second question, Rob, had to do with…? Q - Rob Stone: How much of -- you now divide the market between PC and non-PC. At one point in the past it used to be notebook and everything else, and then there were some PC applications that moved from everything else into the PC category. So I’m just trying to get a sense of how much of the PC, the revenue that you describe as PC, is something other than a notebook computer? A - Russell Knittel: Well, the bulk of the revenue we’re reporting today continues to come from the notebook marketplace. We are pleased with the progress we’re making with the PC peripheral and desktop applications, but on the greater scheme of things, aren’t terribly meaningful relative to notebooks. Q - Rob Stone: So, less than 5%, less than 2%? Any sense of proportion? A - Russell Knittel: Again, the bulk of the revenue today is coming from notebooks, Rob. Q - Rob Stone: Okay, thanks.

Thank you. Our next question is from Andrew Neff with Bear Stearns. Q - Ted Chong: Yeah, hi. Actually, this is Ted Chong. Just quickly, can you just elaborate on your comments regarding the MP3 player market, especially the September quarter, will lead to September quarter funds? A - Russell Knittel: I’m sorry, Ted, what was the last part? Q - Ted Chong: Your comment in your press release where we have seen your prepared remarks, you were talking about potential significant upside coming from the music player market. Can you elaborate on that? Is there a specific design window you’re looking out for, or is it just seasonality wise, market share gains? A - Russell Knittel: Again, we talked about the dynamics in that particular segment, and it relates to I think seasonality trends that may be developing as the industry matures a little bit. There’s also the customer specific dynamics there, but as we’ve said, our guidance is predicated primarily upon strength in the notebook market, and we’re not expecting to see any significant movement in the non-PC applications, of which MP3 is the major component there for us. And so any significant or meaningful increase in demand from any of the OEM’s within that marketplace is going to represent upside to our guidance. Q - Ted Chong: Okay. And just on the going back to the third quarter results, did you see the weaknesses sort of later in the quarter or was it throughout? Or can you explain in terms of, sort of timing-wise? A - Russell Knittel: Well, we really did have a back-end loaded quarter. So, the orders developed very late in the quarter, which wasn’t something we had expected going in, but again, we did fall below our guided range for revenue, but we’re within our guided range for EPS, so all in all, given the way the quarter developed, from the two major industries today that we participate in, we’re actually pretty pleased with the way the quarter turned out. Q - Ted Chong: Okay, great. Thanks.

Q - Derek Wagner: Yes, thank you for taking the question. Was there any amortization in the quarter, and what is the capital expenditure outlook for fiscal year 06/06 and fiscal year June ’07? A - Russell Knittel: Amortization for us within the current quarter was -- it was $427,000 in the quarter. Capital expenditures for us typically are going to be in the $1 million to $2 million range. Fiscal year ’05 was a little bit of an anomaly for us because we actually bought the headquarters that we’re in today, but just typical CapEx for operating activities is in the $1 million to $2 million range. In ’07, we’ll probably step that up a little bit, because we’re currently evaluating new ERP systems, and it’s likely we will make that investment sometime in fiscal year ’07. Q - Derek Wagner: Okay, I thought you said depreciation was $427,000 -- is it both combined? A - Russell Knittel: No, depreciation was $427,000. Q - Derek Wagner: And amortization is nothing? A - Russell Knittel: Amortization was $325,000. Q - Derek Wagner: Okay, so combined it’s over $750,000, roughly? A - Russell Knittel: Yes. Q - Derek Wagner: Okay, thank you. Capital expenditures were exactly the same, $325,000? A - Russell Knittel: No, capital expenditures were 325, capital depreciation was 427. Q - Derek Wagner: And is there any amortization? A - Russell Knittel: Depreciation is the amortization, the 427. Q - Derek Wagner: Okay, there’s no -- okay, thank you.

Thank you. Our next question is from Joel Wagonfeld with First Albany. Q - Joel Wagonfeld: Thank you, two follow-up questions. One, can you just refresh our memory and quantify your expectations for head count over the remainder of the year? I think you said it was up two people sequentially this quarter. What had you expected and what you expect for subsequent quarters? And secondly, just try and get it a question asked earlier a little differently. You mentioned that you’re confident as ever in PC’s. How would you characterize your corresponding confidence level in MP3’s? Thanks. A - Russell Knittel: Okay, well, head count growth for us quarter to quarter was disappointing. Based on the open requisitions we have today, I would guess in the next 6 to 12 months we can add 20% to our heads, depending on the success we have in, you know, defining qualified people and bringing them on board. Q - Joel Wagonfeld: It’s not dependent on design wins? A - Russell Knittel: It’s not dependent on design wins at this point. I mean, again, we’re a company that we believe is in growth mode. We’re servicing markets today that represent unit growth opportunities in excess of 20% per year, and so, not only are we staffing to manage that increased design activity but also to continue to broaden our skill-sets within the company to address those additional vertical markets. With regards to confidence in the PC market, again I think we’re just very well-positioned in that market. It has been our core market. It was the first product that we -- the first application that we commercialized our technology for. The MP3 market, again, as we’ve said, we just have very limited visibility there today. There’s a number of OEM’s who are actively trying to compete in that market. There’s clearly one dominant player today, and so how the competition rolls out between the devices being offered by those different OEM’s and how our relationships develop amongst that group of companies will depend on, you know, the revenue we’ll see there in the future. But that’s why, from a guidance viewpoint, we have not counted on any significant increase in demand from that segment. Q - Joel Wagonfeld: And any major changes with any of those major OEM’s, without going into specific details of which ones, that you’ve experienced recently? A - Russell Knittel: We can’t comment on specific customers. Q - Joel Wagonfeld: Okay, thanks.

Thank you. At this time, I’d like to turn the call back to management for additional remarks. Francis Lee, President, Chief Executive Officer: Well, thank you for being on the call with us today, and we look forward to updating you again next quarter. Bye-bye.

Thank you. Ladies and gentlemen, this concludes the Synaptics Third Quarter 2006 Conference Call. Thank you for your participation today and you may now disconnect.