817720--8/24/2009--SYNAPTICS

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{product, market, service}

{customer, product, revenue}

{acquisition, growth, future}

{regulation, change, law}

{operation, international, foreign}

{property, intellectual, protect}

{tax, income, asset}

{stock, price, operating}

{condition, economic, financial}

{debt, indebtedness, cash}

{provision, law, control}

{stock, price, share}

{product, liability, claim}

{personnel, key, retain}

{capital, credit, financial}

Our historical financial performance is based primarily on net revenue generated from our human interface solutions to the notebook computer market and may not be indicative of our future performance in other markets, including the market for mobile smartphones and feature phones Market acceptance of our customers existing or new products that utilize our human interface solution may decline or may not develop and, as a result, our sales may decline or may not increase. If we fail to maintain and build relationships with our customers and do not continue to satisfy our customers, we may lose future sales and our revenue may stagnate or decline. The loss of revenue from one or more large customers could harm our business, financial condition, and results of operations. We rely on others for our production and any interruptions of these arrangements could disrupt our ability to fill our customers orders. We depend on third parties to maintain satisfactory manufacturing yields and delivery schedules, and their inability to do so could increase our costs, disrupt our supply chain, and result in our inability to deliver our products, which would adversely affect our results of operations. Shortages of components and materials may delay or reduce our sales and increase our costs, thereby harming our results of operations. We are subject to lengthy development periods and product acceptance cycles, which can result in development and engineering costs without any future revenue. We do not have long-term purchase commitments from our customers, and their ability to cancel, reduce, or delay orders could reduce our revenue and increase our costs. We face intense competition that could result in our losing or failing to gain market share and suffering reduced revenue. If we do not keep pace with technological innovations, our products may not be competitive and our revenue and operating results may suffer. Our efforts to develop new technologies may not result in commercial success, which could cause a decline in our revenue and could harm our business. We may not be able to enhance our existing product solutions and develop new product solutions in a timely manner. A technologically new human interface solution that achieves significant market share could harm our business. International sales and manufacturing risks could adversely affect our operating results. Our business may suffer if international trade is hindered, disrupted, or economically disadvantaged. Our operating results could be adversely affected by fluctuations in the value of the U.S. dollar against foreign currencies. A majority of our contract manufacturers are located in China, Taiwan, and Thailand, and most of our customers are located in Asia, increasing the risk that a natural disaster, labor strike, war, or political unrest in those countries or that region would disrupt our operations. Variability of customer requirements resulting in cancellations, reductions, or delays may adversely affect our operating results. Our operating results may experience significant fluctuations that could result in a decline in the price of our stock. If we fail to manage our growth effectively, our infrastructure, management, and resources could be strained, our ability to effectively manage our business could be diminished, and our operating results could suffer. We depend on key personnel who would be difficult to replace, and our business will likely be harmed if we lose their services or cannot hire additional qualified personnel. Our inability to protect our intellectual property could impair our competitive advantage, reduce our revenue, and increase our costs. We may be required to incur substantial expenses and divert management attention and resources in defending intellectual property litigation against us. We may incur substantial expenses and divert management resources in prosecuting others for their unauthorized use of our intellectual property rights. If we become subject to product returns and product liability claims resulting from defects in our products, we may fail to achieve market acceptance of our products and our business could be harmed. Potential strategic alliances may not achieve their objectives, and the failure to do so could impede our growth. Any acquisitions that we undertake could be difficult to integrate, disrupt our business, dilute stockholder value, and harm our operating results. Our target markets are cyclical and may result in fluctuations in our operating results. The valuation of our technology conducted in connection with our international operating structure may be challenged, which could result in additional taxes, interest, and penalties. Repatriation of our foreign earnings to the United States or changes in tax laws, such as those proposed by the Obama administration in May 2009, if enacted, may adversely affect our future reported tax rates and financial results or the way we conduct our business. We expect to incur additional expenses in complying with corporate governance and public disclosure requirements. The accounting requirements for income taxes on certain of our share-based awards will subject our future quarterly and annual effective tax rates to greater volatility and, consequently, our ability to estimate reasonably our future quarterly and annual effective tax rates is greatly diminished. Future changes in financial accounting standards or practices may cause adverse unexpected fluctuations and affect our reported results of operations. We increased our leverage as a result of the sale of our 0.75% convertible senior subordinated notes. As a result of our irrevocable election to cash settle the outstanding principal amount of our convertible senior subordinated notes in April 2007, we may be required to utilize up to $65.3 million of our cash as early as December 2009. Currently our investments in auction rate securities, or ARS, are not liquid, and we may lose some or all of our principal invested or may be required to further reduce the carrying value if the issuers are not able to meet their payment obligations or if we sell our ARS investments before they recover,. Legislation affecting the markets in which we participate could adversely affect our ability to implement our growth strategies. We must finance the growth of our business and the development of new products, which could have an adverse effect on our operating results. Continuing uncertainty of the U.S. and global economy may have serious implications for the growth and stability of our business and may negatively affect our stock price. The market price of our common stock has been and may continue to be volatile. Our charter documents and Delaware law could make it more difficult for a third party to acquire us, and discourage a takeover. Our stockholders rights plan may adversely affect existing stockholders. Sales of large numbers of shares could adversely affect the price of our common stock.

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817720--8/24/2009--SYNAPTICS_INC