ANALOG ALCHEMY (Volume VI, Issue 5)

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1 Tore E. Svanberg, Sr Research Analyst , Jeremy L. Kwan, Research Analyst , Reason for Report: Industry Overview Related Companies: Share Price: ADI AMIS FCS ICST ISIL LLTC MCHP MCRL 9.40 MPWR 6.53 MXIM NSM OIIM PDSN 9.81 POWI SLAB STM SUPX TXN VLTR Technology ANALOG ALCHEMY (Volume VI, Issue 5) KEY POINTS: RECENT INDUSTRY DEVELOPMENTS: - PowerDsine Announces Distribution Agreement with Ingram Micro - Emerson Partners with AMI Semiconductor for Mixed-Signal ASIC - O2Micro Awarded Key Inverter Patent SELECT PRODUCT ANNOUNCEMENTS: - Silicon Labs' fourth-generation ISOmodem Product Family - Impinj's AEFuse Memory (multiple-times-programmable fuse NVM) - Semtech's SC606 (six-output charge-pump white/color LED driver) 100,000 10,000 Piper Jaffray Analog Index (PJAI) Stock Price Performance PJAI INTC : +4,750% : +2,134% SOX : +275% NASDAQ : +354% January 2, 1990 = 100 1, Source: FactSet and Piper Jaffray. RISKS: Among the risks are those generic to the semiconductor industry, including a high degree of cyclicality, technology changes, pricing, inventory levels, and product cycles. Piper Jaffray Co. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst certification, found on pages 5-8 of this report or at the following site: Customers of Piper Jaffray in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research by visiting piperjaffray.com or can call to request a copy of this research. Page 1 of 8

2 RECENT INDUSTRY DEVELOPMENTS PowerDsine Announces Distribution Agreement with Ingram Micro On February 15, PowerDsine announced that it had signed a distribution agreement with Ingram Micro, a leading global technology distributor. Under this agreement, Ingram Micro will offer PowerDsine's Power-over-Ethernet (PoE) Midspan solutions, including its 1-, 6-, 12-, 24-, and 48-port products, to its enterprise customers throughout the United States, with sales efforts focused initially on those resellers, systems integrators, and VARs that target the wireless LAN, IP telephony, and IP surveillance markets. PowerDsine will partner closely with Ingram Micro in promoting the benefits of PoE technology in these and other applications to its targeted customer base. Consistent with PowerDsine's Midspan strategy, we believe this new distribution agreement strengthens the company's sales channel capabilities for its Midspan products while helping the company maintain gross margin stability in this business segment. Emerson Partners with AMI Semiconductor for Mixed-Signal ASIC On February 22, AMI Semiconductor announced that it had partnered with Emerson Process Management, a leading supplier of industrial automation products, to deliver a mixed-signal sensor interface IC in less than 50 weeks, a record turnaround time for Emerson. Utilizing AMI's leading-edge mixed-signal ASIC design flows and methodologies, design teams working together from both companies were able to develop a replacement for a critical IC in Emerson's strong-selling Rosemount 3051C pressure transmitter within a very tight deadline. Reportedly, the short time between hand-off from Emerson and device tape-out benefited from Emerson's prior well-established relationship with AMI's ASIC business, including closely aligned toolsets and design methodologies. We believe this successful, record-breaking ASIC turnaround underscores AMI's deep customer relationships, as well as its ability to work closely with its customers' in-house ASIC design teams to develop complex solutions within a short time frame. In addition, we believe it highlights the company's significant expertise in the general industrial end market, and more specifically, in mixed-signal sensor technology. O2Micro Awarded Key Inverter Patent On February 22, O2Micro was awarded 7 claims under United States patent number 6,856,519 for its Royer Raptor inverter controller invention. Reportedly, this invention reduces the total system cost and design complexity of an LCD system by using a multi-tasking pin technique to reduce pin count and overall external component count. Targeting multi-ccfl (Cold Cathode Fluorescent Lamp) applications in LCD monitors and LCD TVs, we believe the Royer Raptor invention and this latest patent strengthens the company's positioning in the inverter arena for such applications. In particular, we believe the LCD TV market could prove to be an attractive and highly profitable growth opportunity for the company in 2005 and therefore view any patent awards surrounding its solutions to be important in the company's ability to capture meaningful share of this market. SELECT PRODUCT ANNOUNCEMENTS ISOmodem Product Family (Silicon Labs) On February 14, Silicon Labs expanded its ISOmodem product family for embedded modem solutions with its latest devices based on the company's fourth generation direct access arrangement (DAA) technology. Utilizing its small footprint (8-pin package) Si3008 line-side DAA, the new ISOmodem family is designed for embedded modem applications such as set-top boxes, point of sale (POS) terminals, digital video recorders, and digital TVs. The company's ISOmodem products feature a UART interface, integrated ROM, RAM, DSP, and AT command support for speeds ranging from 2.4 kbps to 56 kbps. As a result, the ISOmodems reportedly allow for a 30% reduction in components and board space. In addition, the devices are compliant with FCC and other country standards. Sampling now, the ISOmodem product family is priced at $6.48 in 10 KU quantities, with full production slated for the June 2005 quarter. We believe this latest offering from Silicon Labs highlights the company's ability to deliver highly integrated, cost-effective mixed-signal CMOS-based products for the communications markets. AEFuse Memory (Impinj) On February 7, Impinj introduced its Advanced Erasable Fuse (AEFuse) memory architecture, which provides up to 1000 re-write cycles targeting analog/mixed signal solutions that require a few hundred bits of reprogrammable nonvolatile memory. Providing chip Piper Jaffray Co. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst certification, found on pages 5-8 of this report or at the following site: Customers of Piper Jaffray in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research by visiting piperjaffray.com or can call to request a copy of this research. Page 2 of 8

3 designers with the first multiple-times-programmable (MTP) fuse for standard logic CMOS processes with 10-year retention, Impinj's AEFuse memory is optimized for a diverse array of low bit count storage applications such as on-chip analog trim, product calibration, customer-specific configuration, and encryption key storage. Specifically, nonvolatile storage applications include LCD drivers, radio frequency (RF) chips for wireless LAN, RF headsets and speakers, and dedicated-function microcontrollers. Building on the company's AEON nonvolatile memory, the AEFuse memory blocks are currently available in over 100 configurations and operate over a temperature range of 40 degrees C to 125 degrees C. Available now, Impinj's AEFuse hard IP blocks are fully characterized in TSMC's 0.25-micron and 0.18-micron logic CMOS processes, with qualification currently underway with completion expected in the June 2005 quarter. SC606 (Semtech) On February 10, Semtech expanded its advanced fractional charge pump family with the introduction of its SC606 charge pump white/color LED driver, which is able to power up to six LEDs and is optimized for multi-display handheld devices such as PDAs and cell phones. Key features include independent programming of each of three pairs of LEDs, with output power for each pair adjustable from 0mA to 32mA in 500uA increments and maximum total device output guaranteed up to 120mA. In addition, the device incorporates an Inter-Integrated Circuit (I2C) serial bus to control LED brightness, dimming, or blinking. Based on Semtech's patented mahxlife inductorless technology, the SC606 features three charge pump modes, 1x voltage conversion for high input voltages to reduce power drain, 1.5x at lower voltages, and 2x as necessary, resulting in more than 90% power efficiency and current accuracy of +/- 6.5% (2% typical) over a wide input voltage range. Available in a 4mm x 4mm MP-16 package, the SC606 is priced at $1.30 in 1 KU quantities. In addition, an evaluation board is available as well as design assistance. Piper Jaffray Co. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst certification, found on pages 5-8 of this report or at the following site: Customers of Piper Jaffray in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research by visiting piperjaffray.com or can call to request a copy of this research. Page 3 of 8

4 Exhibit 1: Analog Semiconductor Companies Comparable Valuation Table 2/25/05 Mkt Cap EV Price/Earnings EV/Sales Price Last Quarter D 52-wk Company Ticker Rating Price (MM) (MM) Book Q/Q Gwth. GM High Large Cap Analog Devices ADI UP $37.47 $14,542 $12, x 30.2x 4.8x 5.0x 3.9x -8% 57.8% -28% Linear Technology LLTC OP $39.18 $12,373 $10, x 29.9x 11.2x 10.1x 6.4x -1% 78.5% -5% Maxim MXIM OP $43.29 $14,858 $13, x 25.8x 8.2x 7.6x 6.2x 0% 72.6% -18% STMicroelectronics STM UP $17.91 $16,748 $16, x 38.7x 1.9x 1.8x 1.9x 4% 36.6% -30% Texas Instruments TXN NR $26.95 $47,405 $41, x 23.8x 3.3x 3.1x 3.9x -3% 42.3% -15% AVERAGE 27.5x 29.7x 5.9x 5.5x 4.5x -2% 57.6% -19% Mid Cap AMIS Holdings, Inc. AMIS MP $11.30 $986 $1, x 19.7x 2.1x 2.1x 3.4x -6% 49.1% -39% Fairchild Semiconductor FCS MP $17.07 $2,200 $2, x 25.7x 1.5x 1.6x 1.8x -7% 25.6% -37% Integrated Circuit Systems ICST OP $20.21 $1,444 $1, x x 4.7x 4.8x 4.0x -8% 58.3% -29% Intersil ISIL OP $17.11 $2,407 $1, x 31.2x 3.2x 3.1x 2.6x 0% 55.2% -31% Micrel MCRL OP $9.51 $866 $ x 34.3x 2.8x 2.8x 3.0x -12% 46.3% -38% Microchip MCHP OP $27.91 $5,909 $5, x 26.2x 6.4x 6.0x 4.1x -7% 56.9% -16% National Semiconductor NSM OP $19.93 $7,458 $6, x 27.1x 3.2x 3.5x 3.8x -18% 50.6% -18% ON Semiconductor ONNN NR $4.66 $1,186 $2, x 29.1x 1.7x 1.7x NM -4% 32.1% -49% Semtech SMTC NR $19.50 $1,511 $1, x 23.2x 5.8x 5.4x 3.5x -9% 57.0% -23% Silicon Labs SLAB MP $35.38 $1,933 $1, x 29.4x 3.6x 3.6x 4.8x -21% 54.8% -40% AVERAGE 24.1x 12.2x 3.5x 3.5x 3.5x -9% 48.6% -32% Small Cap Microsemi MSCC NR $16.65 $1,068 $1, x 27.4x 3.9x 3.3x 5.4x 3% 41.1% -12% MPS MPWR MP $6.35 $177 $ x 21.5x 2.7x 1.9x 2.8x 3% 63.8% -46% O2Micro OIIM OP $10.58 $421 $ x 27.6x 3.2x 2.9x 2.5x 8% 60.2% -45% Pericom Semiconductor PSEM NR $8.80 $241 $98 NM NM 1.3x 1.2x 1.3x -3% 36.6% -26% Power Integrations POWI OP $21.28 $678 $ x 33.2x 4.0x 3.8x 3.2x 2% 48.3% -36% PowerDsine PDSN OP $9.80 $201 $ x 28.2x 3.2x 2.6x 2.6x 5% 52.2% NA Sipex SIPX NR $2.21 $75 $75 NM NM 1.0x 0.8x 0.5x 6% 37.5% -72% Supertex SUPX MP $19.67 $264 $ x 29.1x 3.0x 2.6x 2.5x -4% 52.8% -20% Volterra VLTR OP $14.86 $395 $ x 34.1x 8.0x 5.6x 7.9x 16% 57.8% -44% AVERAGE 39.4x 28.7x 3.4x 2.7x 3.2x 4% 50.0% -37% Ratings Key: OP = Outperform, MP = Market Perform, UP = Underperform, NR = Not Rated. Source: ILX, company reports, First Call, IBES, and Piper Jaffray estimates. About ANALOG ALCHEMY : The purpose of this report is to monitor and update the investment and corporate communities on developments in the analog industry over the preceding fortnight. Close attention will also be paid to the performance of the Piper Jaffray Analog Index (PJAI) during this period. The PJAI is a market cap weighted index, beginning at 100 on January 2, 1990, comprising the following analog semiconductor companies: Analog Devices, Linear Technology, Maxim, Micrel, Semtech Corporation, and Texas Instruments. The "science" of alchemy goes back to the medieval ages when ancient researchers sought to transform more abundantly available metals like iron into gold. Clearly, while the original alchemists were not successful in their endeavor, the theory and concept of alchemy has certainly been a source of human intrigue for the past several centuries. The title of this report, ANALOG ALCHEMY, stands testament to the many successes that semiconductor analog/mixed-signal companies have been able to achieve as a result of the modern day alchemist the analog design engineer. Today, leading analog companies can boast amongst the best operating models in the semiconductor industry. They typically self-finance their own growth and are also known as "money machines" for the amount of cash that they generate from operations. Al.che.my A medieval chemical philosophy having as its asserted aims the transmutation of base metals into gold, the discovery of panacea, the preparation of the elixir of longevity. (Source: The American Heritage Dictionary.) Piper Jaffray Co. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decisions. This report should be read in conjunction with important disclosure information, including an attestation under Regulation Analyst certification, found on pages 5-8 of this report or at the following site: Customers of Piper Jaffray in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research by visiting piperjaffray.com or can call to request a copy of this research. Page 4 of 8

5 Important Research Disclosures Piper Jaffray Distribution of Ratings/IB Services Firmwide IB Serv./Past 12 Mos. Rating Count Percent Count Percent BUY [OP] HOLD [MP] SELL [UP] Notes: The boxes on the Rating and Price Target History chart above indicate the date of the Research Note, the rating, and the price target. Each box represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the first Note written during the past three years. Distribution of Ratings/IB Services Firmwide shows the number of companies in each rating category from which Piper Jaffray received compensation for investment banking services within the past 12 months. Legend: I: Initiating Coverage D: Discontinuing Coverage S: Suspending Coverage R: Resuming Coverage T: Transferring Coverage SB: Strong Buy (effective 01/12/04, Equity Research eliminated the SB rating) OP: Outperform (prior to 12/12/01, OP stocks were rated "Buy") MP: Market Perform (prior to 12/12/01, MP stocks were rated "Neutral") UP: Underperform (prior to 12/12/01, UP stocks were rated "Sell") NA: Not Available UR: Under Review GP On: Listed on one of the Guided Portfolios maintained by Piper Jaffray GP Off: Removed from the Guided Portfolios maintained by Piper Jaffray Page 5 of 8

6 Important Research Disclosures Analyst Certification Tore E. Svanberg, Sr Research Analyst The views expressed in this report, including the Key Points and Risk sections in particular, accurately reflect my personal views about the subject company and the subject security. In addition, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Research Disclosures Piper Jaffray was making a market in the securities of Analog Devices, Inc. at the time this research report was published. Piper Jaffray will buy and sell Analog Devices, Inc. securities on a principal basis. Piper Jaffray has received compensation for non-investment banking securities-related services from Analog Devices, Inc. within the past 12 months. Piper Jaffray was making a market in the securities of AMIS Holdings, Inc. at the time this research report was published. Piper Jaffray will buy and sell AMIS Holdings, Inc. securities on a principal basis. Piper Jaffray was making a market in the securities of Fairchild Semiconductor International, Inc. at the time this research report was published. Piper Jaffray will buy and sell Fairchild Semiconductor International, Inc. securities on a principal basis. Piper Jaffray was making a market in the securities of Integrated Circuit Systems, Inc. at the time this research report was published. Piper Jaffray will buy and sell Integrated Circuit Systems, Inc. securities on a principal basis. Piper Jaffray was making a market in the securities of Intersil Corporation at the time this research report was published. Piper Jaffray will buy and sell Intersil Corporation securities on a principal basis. Piper Jaffray has received compensation for investment banking services from Intersil Corporation within the past 12 months. Piper Jaffray has received compensation for non-investment banking securities-related services from Intersil Corporation within the past 12 months. Piper Jaffray was making a market in the securities of Linear Technology Corporation at the time this research report was published. Piper Jaffray will buy and sell Linear Technology Corporation securities on a principal basis. Piper Jaffray has received compensation for non-investment banking securities-related services from Linear Technology Corporation within the past 12 months. Piper Jaffray was making a market in the securities of Microchip Technology, Incorporated at the time this research report was published. Piper Jaffray will buy and sell Microchip Technology, Incorporated securities on a principal basis. Piper Jaffray has received compensation for non-investment banking securities-related services from Microchip Technology, Incorporated within the past 12 months. Piper Jaffray was making a market in the securities of Micrel, Incorporated at the time this research report was published. Piper Jaffray will buy and sell Micrel, Incorporated securities on a principal basis. Piper Jaffray has received compensation for non-investment banking securities-related services from Micrel, Incorporated within the past 12 months. Piper Jaffray was making a market in the securities of Monolithic Power Systems, Inc. at the time this research report was published. Piper Jaffray will buy and sell Monolithic Power Systems, Inc. securities on a principal basis. Piper Jaffray has received compensation for investment banking services from Monolithic Power Systems, Inc. within the past 12 months. Within the past 12 months, Piper Jaffray was a managing underwriter of an offering of, or dealer manager of a tender offer for, the securities of Monolithic Power Systems, Inc. or the securities of an affiliate. Piper Jaffray was making a market in the securities of Maxim Integrated Products, Inc. at the time this research report was published. Piper Jaffray will buy and sell Maxim Integrated Products, Inc. securities on a principal basis. Piper Jaffray has received compensation for non-investment banking securities-related services from Maxim Integrated Products, Inc. within the past 12 months. Piper Jaffray was making a market in the securities of National Semiconductor Corporation at the time this research report was published. Piper Jaffray will buy and sell National Semiconductor Corporation securities on a principal basis. Piper Jaffray has received compensation for non-investment banking securities-related services from National Semiconductor Corporation within the past 12 months. Piper Jaffray was making a market in the securities of O2Micro International Limited at the time this research report was published. Piper Jaffray will buy and sell O2Micro International Limited securities on a principal basis. Piper Jaffray has received compensation for non-investment banking securities-related services from O2Micro International Limited within the past 12 months. Piper Jaffray was making a market in the securities of PowerDsine Ltd. at the time this research report was published. Piper Jaffray will buy and sell PowerDsine Ltd. securities on a principal basis. Piper Jaffray has received compensation for investment banking services from PowerDsine Ltd. within the past 12 months. Within the past 12 months, Piper Jaffray was a managing underwriter of an offering of, or dealer manager of a tender offer for, the securities of PowerDsine Ltd. or the securities of an affiliate. Piper Jaffray was making a market in the securities of Power Integrations, Inc. at the time this research report was published. Piper Jaffray will buy and sell Power Integrations, Inc. securities on a principal basis. Piper Jaffray was making a market in the securities of Silicon Laboratories, Inc. at the time this research report was published. Piper Jaffray will buy and sell Silicon Laboratories, Inc. securities on a principal basis. Piper Jaffray was making a market in the securities of STMicroelectronics, N.V. at the time this research report was published. Piper Jaffray will buy and sell STMicroelectronics, N.V. securities on a principal basis. Piper Jaffray was making a market in the securities of Supertex, Inc. at the time this research report was published. Piper Jaffray will buy and sell Supertex, Inc. securities on a principal basis. Piper Jaffray was making a market in the securities of Texas Instruments Incorporated at the time this research report was published. Piper Jaffray will buy and sell Texas Instruments Incorporated securities on a principal basis. Page 6 of 8

7 Piper Jaffray has received compensation for non-investment banking securities-related services from Texas Instruments Incorporated within the past 12 months. Piper Jaffray was making a market in the securities of Volterra Semiconductor Corporation at the time this research report was published. Piper Jaffray will buy and sell Volterra Semiconductor Corporation securities on a principal basis. Piper Jaffray has received compensation for investment banking services from Volterra Semiconductor Corporation within the past 12 months. Within the past 12 months, Piper Jaffray was a managing underwriter of an offering of, or dealer manager of a tender offer for, the securities of Volterra Semiconductor Corporation or the securities of an affiliate. Piper Jaffray research analysts receive compensation that is based, in part, on the firm's overall revenues, which include investment banking revenues. Piper Jaffray research analysts who follow this Company report to the Head of Investment Research who, in turn, reports directly to the Chief Executive Officer of Piper Jaffray. Rating Definitions Investment Opinion: Investment opinions are based on each stock's return potential relative to broader market indices*, not on an absolute return. Outperform (OP): Expected to outperform the relevant broader market index over the next 12 months. Market Perform (MP): Expected to perform in line with the relevant broader market index over the next 12 months. Underperform (UP): Expected to underperform the relevant broader market index over the next 12 months. Suspended (SUS): No active analyst coverage, however coverage expected to resume. * Russell 2000 and S&P 500 Volatility Rating: Our focus on growth companies implies that the stocks we recommend are typically more volatile than the overall stock market. We are not recommending the "suitability" of a particular stock for an individual investor. Rather, it identifies the volatility of a particular stock. Low: The stock price has moved up or down by more than 10% in a month in fewer than 8 of the past 24 months. Medium: The stock price has moved up or down by more than 20% in a month in fewer than 8 of the past 24 months. High: The stock price has moved up or down by more than 20% in a month in at least 8 of the past 24 months. All IPO stocks automatically get this volatility rating for the first 12 months of trading. Page 7 of 8

8 Disclaimers This material regarding the subject company is based on data obtained from sources we deem to be reliable; it is not guaranteed as to accuracy and does not purport to be complete. This information is not intended to be used as the primary basis of investment decisions. Because of individual client requirements, it should not be construed as advice designed to meet the particular investment needs of any investor. It is not a representation by us or an offer or the solicitation of an offer to sell or buy any security. Further, a security described in this release may not be eligible for solicitation in the states in which the client resides. Notice to customers in the United Kingdom: Circulation of this report in the United Kingdom is restricted to investment professionals and high net worth individuals falling within Articles 19 and 49 of the Financial Services and Markets Act (Financial Promotion) Order 2001 as amended. No one else in the United Kingdom should read, rely on or act upon the information in the report. The investments and services to which the report relates will not be made available to others in the United Kingdom. Securities products and services offered through Piper Jaffray & Co., member SIPC and NYSE, Inc., a subsidiary of Piper Jaffray Companies. Additional information is available upon request. No part of this report may be reproduced, copied, redistributed or posted without the prior consent of Piper Jaffray & Co. Copyright 2005 Piper Jaffray & Co., 800 Nicollet Mall, Suite 800, Minneapolis, Minnesota Page 8 of 8