Exar Corporation

Q2 Fiscal 2016 Earnings Release November 5, 2015

Safe Harbor Statement and Notice to Investors

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Forward-Looking Statements Except for historical information contained herein, this press release and matters discussed on the conference call contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In particular, the statements regarding the demand for our products and the anticipated trends in our sales and profits, future opportunities that are available to the Company, the Company’s financial outlook expectations for the third quarter and year ending December 27, 2015 and March 27, 2016, respectively, existence of any viable strategic alternatives and whether any future decisions by the Company will enhance stockholder value, are forward-looking statements. The forward-looking statements are dependent on certain risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed herein. For a discussion of these risks and uncertainties, the Company urges investors to review in detail the risks and uncertainties and other factors described in its Securities and Exchange Commission, or SEC, filings, including, but not limited to, the “Risk Factors”, “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our public reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended March 29, 2015, which is on file with the SEC and available on our Investor webpage and on the SEC website at www.sec.gov, and the risks and uncertainties of whether any strategic alternative will be identified by the Board of Directors, whether it will be pursued, whether it will receive Board of Directors and stockholder approval if necessary, whether it will be consummated and, if consummated, whether it will enhance value for all stockholders of Exar. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. There can be no assurance that Exar’s review of strategic alternatives will result in any specific action. Exar does not currently intend to disclose further developments with respect to this process unless and until its Board of Directors approves a specific action or otherwise concludes the review of strategic alternatives.

Generally Accepted Accounting Principles The Company’s non-GAAP measures exclude charges related to stock-based compensation, amortization of acquired intangible assets and inventory step-up, impairment charges, technology licenses, restructuring charges and exit costs which include costs for personnel whose positions have been eliminated as part of a restructuring or are in the process of being eliminated as part of the discontinuation of a product line, provisions for & proceeds received from dispute resolutions, merger and acquisition and related integration costs, certain income tax benefits and credits, certain warranty charges, net change in the fair value of contingent consideration, the write-down of deferred revenue under business combination accounting, and related income tax effects on certain excluded items. The Company excludes these items primarily because they are significant special expense and gain estimates, which management separates for consideration when evaluating and managing business operations. The Company’s management uses non-GAAP net income and non-GAAP earnings per share to evaluate its current operating results and financial results and to compare them against historical financial results. Additionally, we disclose below the non-GAAP measure of free cash flow, which is derived from our net cash provided (used) by operations, less purchases of fixed assets and IP, plus proceeds from the sale of IP. Management believes these non-GAAP measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in evaluating the Company and provides further clarity on its profitability. In addition, the Company believes that providing investors with these non-GAAP measurements enhances their ability to compare the Company’s business against that of its many competitors who employ and disclose similar non-GAAP measures. This financial measure may be different from non-GAAP methods of accounting and reporting used by the Company’s competitors to the extent their non-GAAP measures include or exclude other items. The presentation of this additional information should not be considered a substitute for net income or net income per diluted share or other measures prepared in accordance with GAAP.

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Introduction and Opening Remarks

Richard Leza Chairman of the Board, Interim President & Chief Executive Officer

The Way Forward: Focused Initiatives

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!  Focus on Core Products: Focus our efforts and resources on core product families and technologies, while simplifying our management structure to yield maximum agility in the marketplace.

!  Focus our Sales Efforts: Focus our sales organization to target Tier 1

accounts and lever our channel strengths, while implementing sales tools and analyzing data to unleash opportunities.

!  Focus on COGS Reduction: Focus our efforts on expanding back-end operations in China and transferring business from higher cost regions and providers in order to lower COGS and improve time to market.

We are focusing on these initiatives to deliver a “50/50 (Quarterly Sales/Gross Margin) Target Model”

Note: Based on Non-GAAP financial data.

Financial Review

Ryan Benton Senior Vice President & Chief Financial Officer

Industrial 48% High End

Consumer 35%

Infrastructure 17% Eur

Amer Asia

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Fiscal 2016 Q2 $37.2M Non-GAAP Revenue

! Q2 End-Market Q/Q Notes: "  Industrial: Down due to weak

broad-based sales and IP license revenue reflected in prior quarter

"  High End Consumer: Lower Korean and Taiwan Display sales partially offset by growth in China

"  Infrastructure: Essentially flat

! Channel Sales Mix: "  26% Direct "  74% Distribution

! Geographic Sales Mix: "  77% Asia "  12% Americas "  11% Europe

Note: Based on Non-GAAP financial data.

End Market vs. Geography

Second Quarter FY16 Financial Highlights

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Q2FY16 (Sep-15)

Q2FY15 (Sep-14) Y/Y Change Q1FY16

(Jun-15) Q/Q Change

Revenue $37.2M $43.3M 14% $40.4M 8%

GM % 45.6% 46.8% 124 bps 49.5% 388 bps

Opex. $14.1M $17.8M 21% $14.7M 4%

Oper. Income $2.9M $2.5M 17% $5.3M 45%

EBITDA $4.4M $4.1M 7% $6.9M 36%

EPS $0.06 $0.05 20% $0.10 40%

Note: Based on Non-GAAP financial data.

Q/Q Comments !  IP license revenue reflected in prior quarter

comparison impact revenue and margin.

!  Migration of Display sales to China impacting GM; majority of parts shipped are Gold wire with likely cost down opportunities.

!  GM impacted by seasonal product mix and larger than normal inventory scrap.

Y/Y Comments !  Sales decline in Display business and

broad market weakness in China Industrial and Infrastructure markets.

!  Profitability increase due to significant OPEX savings driven by operating synergies achieved post iML integration.

COGS Reductions Focus: Strategic and Tactical

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!  Increased engineering focus on cost downs for high volume business

"  Convert legacy IML parts from Gold wire bond (currently above 80%) to Copper

"  Cost reductions with existing suppliers "  Improve Operations efficiencies

!  Shift focus towards China "  Currently only about 25% back-end in China "  Hired VP of Asian Operations (Shanghai) "  Expand and transfer business from higher

cost regions and providers

!  Identify strategic suppliers and consolidate "  Increase turnkey products "  Foundry supplier negotiations on-going "  Cost reduction roadmaps defined

Identified over $1 million in COGS savings

0%

10%

20%

30%

40%

50%

60%

MRQ COGS

Identified COGS

Reductions

Pro Forma COGS

Quarterly, % Revenue

Sales & Marketing Update

James Lougheed VP Sales & Marketing

Marketing Focus: Leverage IP Breadth to Unleash Value

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!  Utilize functionality from existing IP portfolio to meet customer needs !  Exar’s growing IP portfolio enables flexible development !  Industry consolidation creating opportunities for Exar

Interface High Perf Analog

Power Mgmt

Other

Revenue Mix IP Domain

Product Lines

Key New Products

Interface UARTs, Bridges,

Serial Transceivers, Multi-Protocol Transceivers

USB/Ethernet Bridge LV Logic Serial Transceivers

High Performance

Analog

Amplifiers (VCOM & Industrial) Signal Conditioning/AFE

P-Gamma, DVR

P-Gamma / PMIC Force Sense Touch

Power Management

Linear, Switchers, Modules, PMICs (Display & Industrial)

LED Lighting

Power Modules HV Universal PMIC

HV Powerblox LED AC Step Driver

Sales Focus: Design Wins Drive Revenue Growth

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!  Focus on Tier 1 Opportunities: Improve sales execution by focusing resources on Tier 1 accounts that can yield high value socket opportunities.

!  Lever Channel Strengths: Duplicate technology successes at Tier 1 accounts across our broad geographic and end-market horizontal channel.

!  Structural Changes: Sales and Marketing management consolidated to improve execution. New CRM & analytics tools implemented to improve closure rates.

Significant revenue from new product design wins expected in FY17

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

MRQ Revenue

New Design Wins

Normal Declines

Target Model

Quarterly, $mm

FY16 Forecast and Target Model

Ryan Benton Senior Vice President & Chief Financial Officer

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Actual Q2FY16 (Sep-15)

Forecast Q3FY16 (Dec-15)

Forecast Q4FY16 (Mar-16) Forecast FY16

Quarterly Target Model

Revenue $37.2M $37.2M to $38.4M $38.0M to $40.0M $153M to $156M $50M

GM % 45.6% 46% to 48% 47% to 49% 47% to 48% 50%

Opex. $14.1M $14.0M to $14.5M $14.0M to $14.5M $57M to $58M $17.5M

EPS $0.06 $0.06 to $0.08 $0.08 to $0.10 $0.30 to $0.34 $0.15

Note: Based on Non-GAAP financial data.

Fiscal Year 2016 Non-GAAP Guidance & Target Model

!  Quarterly Revenue expected to grow sequentially for remainder of FY16. China stabilizing. Q4 Revenue growth forecast based upon orders currently in backlog.

!  Quarterly Gross Margin is expected to improve sequentially for remainder of FY16. New product adoption and manufacturing cost initiatives are accelerating.

!  Quarterly OPEX is expected to be in-line with Q2 with seasonal upticks. Curtailing Video ASIC investment. Data Compression at lower cost footprint.

!  Cash From Operations target is at least 15% of revenue.

!  50/50 Target Model: $50M in quarterly revenue with 50% GM within 2 years.

Concluding Remarks

Richard Leza Chairman of the Board, Interim President & Chief Executive Officer

Focus and Streamline

!  Focusing on our technology core strengths and shedding non-core products and initiatives which are dilutive

!  Streamlining and consolidating management and internal processes to increase agility

!  Continuing to gain sales and marketing momentum by focusing on strategic Tier 1 engagements that can be leveraged across our channel

!  Operating expenses remain under control with focus on improving supply chain optimization and COGS reduction

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Strategy Implementation and Execution will Improve Considerably

Q & A

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