SEMTECH CORPORATION (NASDAQ:SMTC), a leading producer of high performance analog and mixed-signal semiconductors, today announced financial results for its third quarter that ended October 31, 2004.

Net sales for the third quarter of fiscal year 2005 were $65.0 million, up 35 percent from $48.1 million in the prior year third quarter. Fiscal year 2005 third quarter net sales were down 5 percent sequentially from the second quarter. Net income for the third quarter was $14.6 million or 19 cents per diluted share, which was up from net income of $9.3 million or 12 cents per diluted share in the prior year period. The third quarter of fiscal year 2005 consisted of fourteen weeks as compared to thirteen weeks in all other quarters presented.

Quarterly operating cash flow for the third quarter of fiscal year 2005 was at its highest level in the last nine quarters. Semtech generated $24.2 million of operating cash flow in the third quarter and spent $11.5 million to buy back 611,700 shares of its common stock. The Company ended the third quarter with $295.7 million in cash and investments and no long-term debt.

For the first three quarters of fiscal year 2005, net sales were up 43 percent to $195.2 million and net income was up 135 percent to $46.8 million or 60 cents per diluted share. Net sales in the first nine months of fiscal year 2004 were $136.7 million and net income (which included a pre-tax charge of $6.8 million or net-of-tax 7 cents per diluted share impact related to the Company's calling of its convertible subordinated notes) was $19.9 million or 26 cents per diluted share.

New orders for the third quarter of fiscal year 2005 were below shipments, resulting in a book-to-bill ratio of less than 1:1. New orders and net sales in the third quarter were impacted by broad-based weakness in end-market demand. Signs indicate that the Company's distributors and OEM customers were working aggressively in the quarter to reduce their inventory levels. The automated test equipment was the weakest end-market segment, as demand for new test platforms declined significantly. The communications end-market, which includes cellular phones and telecom equipment, showed modest sales growth in the third quarter.

Jason Carlson, Semtech's President and Chief Executive Officer, commented, "Despite the near-term decline in order patterns from customers, design win data and new product development were positive for the third quarter. Semtech continues to find opportunities in the traditionally strong areas of cellular phones and notebooks, and has also seen good design win traction in PDA, set-top box, digital TV and networking gear."

Mr. Carlson added, "We took several steps in the third quarter to better focus our development resources, reduce internal inventory levels and trim discretionary spending. While certain near-term cost savings should be realized from these steps, the real benefit is expected to be in long-term sales growth and margin expansion. The Company's three focus end-markets over the next several years will likely be portable devices, wireline communications and the broadly defined industrial end-market."

Fourth Quarter Outlook

Semtech estimates that net sales for the fourth quarter that ends January 30, 2005 will be approximately $59.0 million. Turns orders (orders received and shipped in the same quarter) of approximately 40 percent are required to achieve this forecast. Earnings in the fourth quarter are forecasted to be 16 cents per diluted share. For all of fiscal year 2005, operating cash flow should exceed $65.0 million.

About Semtech

Semtech Corporation is a leading supplier of analog and mixed-signal semiconductors used in a wide range of computer, industrial and communication applications.

Safe Harbor Provision

Statements contained in this release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including projections and forecasts for revenue and gross margin, involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include worldwide economic and political conditions, the timing and duration of semiconductor market upturns or downturns, demand for cellular phones, personal computers and automated test equipment, demand for semiconductor devices in general, demand for the Company's products in particular, competitors' actions, supply from key third-party silicon wafer foundries and assembly contractors, manufacturing costs and yields, relations with strategic customers, and risks associated with the businesses of major customers. Other factors that may cause actual results to differ from the forward-looking statements contained in this press release and that may affect the Company's prospects in general are described in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise forward-looking statements to reflect subsequent events or changed assumptions or circumstances.