EZchip Semiconductor Ltd.

Reconciliation of GAAP to Non-GAAP Measures

(U.S. Dollars in thousands, except per share amounts)

(Unaudited)

                              Three Months Ended              Twelve Months Ended
                     --------------------------------------  -----------------------                                                        
                      December     September      December    December      December
                         31,           30,           31,         31,           31,
                        2011          2011          2010        2011          2010
                     ----------   ----------     ----------  ----------   ----------
 
    GAAP gross
    profit               $ 945      $ 14,194      $ 12,222    $ 38,513      $ 44,415
    Stock-based
    compensation            73            73           133         359           302
    Amortization
    of purchased
    technology              --            --           453         597         1,915
    Repayment of
    OCS grants*          9,938            --            --       9,938            --
 
    Non-GAAP gross   ----------   ----------     ----------  ----------   ----------
    profit            $ 10,956      $ 14,267      $ 12,808    $ 49,407      $ 46,632
                     ----------   ----------     ----------  ----------   ----------
 
    GAAP gross
    profit as
    percentage of
    revenues              6.6%         75.9%         71.3%       60.7%         71.6%
                     ----------   ----------     ----------  ----------   ----------
    Non-GAAP gross
    profit as
    percentage of
    revenues             76.8%         76.3%         74.7%       77.9%         75.2%
                     ----------   ----------     ----------  ----------   ----------
 
    GAAP operating
    expenses           $ 7,449       $ 7,008       $ 6,194    $ 28,754      $ 23,666
    Stock-based
    compensation:
      Research and
      development       (1,094)       (1,107)         (782)     (4,446)       (2,941)
      Selling,
      general and
      administrative    (1,051)       (1,012)         (717)     (3,801)       (2,587)
    Amortization
    of intangible
    assets
      Selling,
      general and
      administrative       (95)          (95)         (193)       (380)         (773)
 
    Non-GAAP
    operating        ----------   ----------     ----------  ----------   ----------
    expenses           $ 5,209       $ 4,794       $ 4,502    $ 20,127      $ 17,365
                     ----------   ----------     ----------  ----------   ----------
 
    GAAP operating
    income (loss)    $ (6,504)       $ 7,186       $ 6,028     $ 9,759      $ 20,749
 
    Non-GAAP
    operating        ----------   ----------     ----------  ----------   ----------
    income             $ 5,747       $ 9,473       $ 8,306    $ 29,280      $ 29,267
                     ----------   ----------     ----------  ----------   ----------


    GAAP net
    income (loss)    $ (5,953)       $ 7,650       $ 4,026     $ 7,942      $ 13,643
    Stock-based
    compensation         2,218             2,192                  1,632              8,606                  5,830
        Amortization
        of  purchased
        intangible
        assets                                    95                        95                      646                  977                  2,688
        Repayment  of
        OCS  grants*                    9,938                        --                        --              9,938                        --
        Taxes  on
        income**                                --                          3                  2,314              3,530                  8,236
  
        Non-GAAP  net          ----------      ----------          ----------    ----------      ----------
        income                          $  6,298              $  9,940              $  8,618        $  30,993            $  30,397
                                          ----------      ----------          ----------    ----------      ----------
        Non-GAAP  net
        income  per
        share  -  Diluted          $  0.22                $  0.35                $  0.31            $  1.09                $  1.14
        Non-GAAP
        weighted
        average  shares                                                                                    
        -  Diluted***        28,605,559        28,577,753        27,596,018    28,432,175        26,616,453