LSCC - Earnings call 4 2023 | Lattice Semiconductor Corporation

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Operator

Greetings, and welcome to the Lattice Semiconductor Fourth Quarter 2023 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Muscha, Vice President of Investor Relations. Thank you.

begin. may You

Rick Muscha

of and of Jim operator, Luther, everyone. me for business With CFO. and of Thank business the Lattice's good President are outlook review and financial Anderson, provide first Sherri fourth and today quarter We'll XXXX quarter you, the a afternoon, the XXXX. CEO; Lattice's and

currently section like press SEC, official you not results and actual identify or call constitutes be XXXX. events obtained website press files statements with remind factors will our first be and contain or These from contained the risk can done may it cause our results materially. company's during that future changes have we publicly communicate in includes including company. call using a statements X-Ks. that We We to and the statements. This time those company earnings could financial public the projections that our differ to important the guidance any differ documents to the would release materially of refer If updates other to after a for If quarter forward-looking today, or make found XX-Qs XX-Ks, such and our company material regarding the is that announced intend this any performance the in at at this everyone a that Relations as such call, conference guidance, we call. such Investor forum, release, to of we on the documents available projections copy the future of latticesemi.com. I based that are actual forward-looking at you conference our or caution predictions you wish that information may

information By underlying company's We information, certain analysis permit non-GAAP intends primarily investors non-GAAP call. this disclosing to trends. the performance financial management will and to with to during provide further additional measures refer of

financial latticesemi.com. website non-GAAP measures of found we Investor our historical can be periods, the reconciliations measures on at that financial to of For these provided GAAP section Relations

Let me over the Jim to our CEO. turn call now Anderson,

James Anderson

year and XX%, product Rick, today. marking our margin results. Annual you, delivered our Full strong XXXX as to expanded portfolio for us on double-digit the Thank growth. by we grew record joining third financial year and you, for delivered was increased we revenue EPS. consecutive XX% record call in non-GAAP growth XX.X%, thank Lattice of another basis gross year-over-year year and a points non-GAAP XXX everyone,

hardware X continued our our mid-range We product new new with solutions, software expansion multiple families rapid also based device including launch FPGA and portfolio on of platform. the Avant new

although While by end computing weaker year-over-year progress in market, demand I'm in this growth grew as by across with automotive cyclic wired XXXX industry. In correction communications was affecting revenue deployments. driven was the declined computing lower by sequentially wireless and inventory semiconductor in as industrial declined reduced customers our QX their full the growth data XXXX, and wireless the QX, market offset in XX% sequentially market, revenue center for impacted the of broader infrastructure year demand softened in QX the XX% X% revenue pleased telecommunications revenue as by levels. In and

as levels driven levels. 'XX, as Lattice end higher expect half end be be At markets rebound down end improving the XXXX customer Nexus of and by well revenue product conditions as revenue demand we sequentially inventory from of first normalize end to than Avant end new inventory as in half expect ramps. second 'XX, 'XX market the driven forward, we Looking this QX customer our point, to QX softer across customers by their

production with portfolio. FPGA Nexus X device later families production X families launched, and this we product our ramping entering year. our portfolio, in to the and have small now Turning In now X customers

are pleased overall company the major a growth in as contributor was of Nexus very growth. to it the strong We with revenue XXXX

of Nexus 'XX a Nexus primarily a and of the competitor applications. win with achieved Nexus and pipeline combination also growth level We in as as revenue design to record was of wins design of due in adoption new continues opportunities in XXXX, well our displacing devices to grow. Nexus greenfield

hands Turning have to new based We of December, portfolio. Developers X At in Conference launched FPGA Avant platform. our our in mid-range device X Avant now we on families Lattice new families the device the numerous gateways, first end LiDAR XXXX communication and Avant-E, the generating device Avant controls, at was applications revenue as family, of more. applications by initial the with industrial the as engine customers such revenue driven planned. initial our

series Avant-E more continued second years. of and ramp the the significant year half contribution the year growth expect throughout a in following this the of in this course We to with

We from X the this expect and Avant-G launched end initial before the revenue newly year. Series of

provide market-leading device the Our families customers lineup of mid-range a X Avant solutions FPGA market. for in

for leverages Lattice customers Avant customers are and XX% today of same Avant use As customers Nexus. reminder, software the a on already today, the target that of

Given of the grow the competitive opportunities pipeline of point in relative same and Nexus Avant to the at Avant, design of exceeds of significantly time. overall use and differentiation continues adoption the pipeline

also We key software refreshed stacks. of solution our X

XX%. We continue rate strong at software an over to see adoption attach of

get them enhance and our products We to to the to for of continue Lattice market capabilities make expand to it customer easy software portfolio the to and adopt quickly. experience and design performance

date stack variety which applications. a most Our AI to widely stack, supports has of adopted our been SenseAI solution

past frequent the overall the One gotten AI-related months over Lattice been we've from has opportunity. the around investors questions of

used solutions Lattice hardware applications. So I'd software to can some provide like of that additional wide on AI-related color be variety in a topic. and

where of AI-optimized center the for in workloads, system. generative Lattice in are the devices security computing example, used system AI data example, in management the AI is controlled and For servers running the

crossover third systems, and solutions where provides used is data gaze preprocess AI Lattice ThinkPad. A the Lattice user that such example Lenovo to systems are solutions automotive algorithm example for PC of that There AI aggregate SUVs. we recently markets, solutions that like the Another end ADAS across in Lattice processing. detection examples used Lattice sensor as many well. When revenue. amongst applications the are our to presence AI AI-enabled other are used estimate included in is XXXX look inference PCs, features about $XXX systems AI-enabled are revenue run being all million We used we and that in the the announced across are AI-related in as where ADAS

growing the execute product more biggest strong revenue margin and wins. In achieved over We and history. our our company's with AI-related AI-related years record progress next revenue as design the in double expect the summary, of we on I'm to the expansion gross based pleased XXXX, few pipeline in on continued to than

While well some the headwinds the we cycle in for short-term through our and long to be a industry and correction mid moves term. markets, over growth continue positioned temporary we end experienced cyclic

We our have to expand the call now product momentum. I'll product customer CFO, to strongest our over rapidly and our accelerate portfolio turn Sherri our in and we lines history, continue the Luther.

Sherri Luther

Thank you, Jim.

debt are and returned XXXX year cash cash double-digit the to margin pleased for operations, continued share shareholders We We growth buybacks the completely full free flow cash third expanded margin, of profitability. a gross from year, outstanding results. our balance. with increased record expansion consecutive revenue We down strong level our drove paid through generated and

Fourth a end XXXX consecutive revenue fourth XXXX. and for was year market, end X% full XXXX the quarter by market now their the growth end third $XXX.X end representing summary of growth year-over-year softened was and and in me customers the was revenue as results. XX% industrial million, XX% growth inventory. up from of our demand double-digit this million, $XXX.X provide Full from down Let reduced quarter sequentially automotive year double-digit down in Revenue revenue year driven market. our

quarter mix compared the was the XX and gross Our compared declined to basis to non-GAAP to margin XX.X% ago due basis year QX points points XX quarter. up to prior

our were $XXX increased XX.X%, and in XXXX. quarter. long-term basis well was as margin full expenses Our customer year expenses. Non-GAAP year increased as million compared primarily support. sequential disciplined QX of operating management million to by prior in The ago the in was in and million XXX from million the XXXX of operating product year non-GAAP by million, gross expenses full certain non-GAAP the the as decline investment well the R&D driven XXXX timing our $XXX.X $XX.X in to operating $XX.X map up for programs road the from quarter $XX.X expenses prudent driven SG&A as for points

Our and quarter operating to basis margin points was down XXX compared to prior QX points non-GAAP to decreased ago XX.X% quarter. the basis the year XXX compared

and year full Our was non-GAAP XXXX. XX.X% XXX from for XXXX the basis record points up margin a operating

share $X.XX the for with $X.XX update non-GAAP taxes. valuation totaling in earnings provide We XXXX. the XX% This quarter. full EPS year-over-year $X.XX. earnings released as to compared XXXX impact represents an continued to $XX tax the due was growth GAAP related year our to $X.XX is income diluted statement. growth. I per Non-GAAP of to our benefit This now year would $X.XX which to disciplined the growth In for reflected compared we diluted share per full balance million, our year-ago a a margin to consistent investing a allowance GAAP profitability, to our and had company. QX QX, of like in in continue long-term approach was the operating

flow, digits. Demonstrating of repurchased we repurchased shares a a are high X.X%. the rate of of million for allowance, cash the increase our Free tax QX record our As in in have XXXX. XX% effective an range to margin making to of the by result cash we Over be approximately generated the release buybacks. increased generated $XX in from share we a cash focus XXXX quarter to XXX,XXX we record consecutive XXth XXXX. In to of on million from represents X.X approximately million our continued thereby This expecting XXXX. XX% dilution the shares, single period, that cash executing in operations operations of reducing valuation in stock, compared $XXX QX, flow mid-

share $XXX a approved recently Board authorization. million Our

business We but organic in the investing will intend growth our repurchases. share to continue our of capital returning through to shareholders prioritize

from seeing our non-GAAP a to be in Due correction the X% our to our on revenue expected for expected million. is line between margin or expenses we XX%, end first review markets. Total basis, me sequentially well million midpoint. of the minus absorption to first Let plus first is demand with markets, end at the are operating all to $XX be $XXX quarter which favorable 'XX basis decline for as less expected XXXX mix and and Gross outlook non-GAAP of for quarter to due and QX now the $XXX that headwinds as $XX is million on cyclic quarter. a million between are the to across roughly a lower

the to cautious approach OpEx of still are while expansion prudent near-term We our and a and portfolio. taking growth enabling product long-term

financial progress across many made continued the am with I we in Overall, very pleased key metrics. XXXX

As including inventory cyclic XXXX softness we near-term are we end in enter levels. of our their experiencing rebalancing markets, customers'

concludes for However, to are well We that the we open continue now positioned long-term believe comments. can formal my call for we questions. growth. Operator,

Operator

[Operator Instructions] Quinn comes of Bolton Our question the from line with Needham. first

Quinn Bolton

low I pretty you XXXX, I'm guess, as but at look is X sure questions. Jim, visibility out

ramp to sort the of down? flattish, guided gives of the just Is second you guess half? March the when You've second whether Is year any on? the sense expressed backlog, that ] revenue patterns being have you June it [ to than half. based would up first based midpoint order based would or better you the in digested? win then first What Do that in as than of be that quarter. XXXs be expect that better And current half on the confidence confidence is best for traction, you half on design to inventory Avant? your What's

James Anderson

Yes. Thanks, Quinn.

was to QX, on think question all, first relative expect I point, be to -- roughly line of would with At first QX around in your this So QX. we QX.

seen be QX. we've than QX historically, stronger Now

a that QX. QX. QX in little this higher at than So there But at roughly line see some potential in point, is come we -- with QX would

second into of the as headwinds well. Some the that to continue expect QX, quarter we're we in seeing

really the year, yes, the this do point, expect be first we of on That's half than half things. X based second half. second the the to at stronger On

we be rebalancing and continue seeing which digestion quarter this first in one inventory to year. end our second quarter expect the the we're of would year, the by of customers kind into first of The that this

be of the of to dissipate factor in dissipate to of We year. year the effect rest kind -- a second and to expect that the through less of half the that

being half second the of part that's So stronger.

The in this they essentially to ramps. mentioned, products other do half. got they number of new it's is than half that We've you is, first in the a X year, ramping Nexus. are the this production of as second product already new but contribute and throughout We've device into production, based that more year. on of those couple Nexus. X families launched on go there's A examples X families device of more

production other One the QX, in of and production in goes into those goes QX. into

expect revenue from And us this benefit in terms the so the first the we platform of of revenue second past we at year. achieved then end also, half. And to those in Avant, Avant

throughout next And significant Avant second the expect Avant year. ramp more the year We than is and to in contribution from half half. first into this the

So yes, it's customer Lattice. dissipation product the combination ramps new of with of at with from effects end inventory -- that, a combined the our

Quinn Bolton

Perfect. question. just And then follow-up a

you see distis most inventory disti so coming have pretty going keep to seeing from an the levels that guys kept of the given potentially how end where with tight half? pretty inventory But second are Is You you that is I the opportunity in tight, Are And customers. imagine channel? pretty you this do the you're the uncertain digestion disti inventory environment? disti still restock lean? to --

James Anderson

Yes. I Thanks, the digestion Quinn. rebalancing. was customer referring inventory and digestion is end Yes, to inventory

characterize And would to we inventory at in levels. very to of would channel, of if of it ended in where back held it as disti -- amount be kind back levels if normal so at we pre-pandemic look disti, kind the pre-pandemic pre-pandemic XXXX, goal at keep much the those yes, look levels. to And our normal the I it

Operator

of comes Securities. with Hans question Rosenblatt line Our next from the Mosesmann

Hans Mosesmann

server and and of the workloads $XXX what get maybe question ADAS. I that the the at the that products, look accelerated the I on? markets industrial puts on suspect things inference-related the give more Can there lot. million as this forward? AI business. But year to by for Jim, you asked go some last a part driven how color was going takes thanks opportunity to us and so type about on

James Anderson

before forward, history just context of the actually, maybe more Yes. I as talk little go give Thanks, about little a the bit around of color Hans. And a maybe this I'll and well. bit

So first as area. Lattice Day Hans, workloads was management the AI AI team. you'll help a one potential the that a of the Investor flagged with we did in XXXX in new things of back our was Investor that as that Actually, to remember Day, growth XXXX we and back ability

customers making back And ago, so applications. about investments devices to and years organic Lattice then use even AI X were we to enable

introduced customers of one products developed solution that into fact, we processing. which solution inference then the help network, vision -- applications. stack was was enable at software Lattice In the SenseAI, was AI first And inferencing. to around computer stacks solution AI called was we which around the edge of another all to And mVision, design

And between for the was in them, We well. little stream, this the which on focused small brought we've years edge revenue basically a acquired on came also AI Mirametrix, that -- growing vision we inorganic the -- processing the technology. A with organic bring investments company over vision computer they made and area revenue or X as at focused, Lattice called ago, -- been acquired since they certainly they synergy we computer well as existing as software devices. an software

And so over making number years. we've of there's a the investments been been past

mentioned and grow see data you when continue my in forward, AI-optimized we different in and in where yes, we applications mentioned Lattice remarks, center. participate. so to can And as is, a servers number look of prepared One the I

of servers. server content have those than equal on a have an type And dollars higher good to level an per higher in a or server. generally, general-purpose server position of the of and We AI-optimized very traditional management security we control a of --

in used really computer tasks type prepared vision and but devices I application industrial where industrial of those the AI-enabled industrial PCs, is also Another different ThinkPads. are to today processing Lenovo PCs, and already applications. doing AI is in particular, as Lattice remarks, And on lots robotics, of there's technology such in applications, automation. important ADAS, mentioned

software that's growth the computer made couple devices used And years see more we and in lattice a position so acquisition with on vision where synergy place a from technology industrial of applications. to ago great we gain Lattice

a the our is AI-related next end applications and really our AI-related few years. remarks, And all yes all across see. roughly expect frankly, look we number double growing over And across we of in it's all as So of that to is when my growth. I that across applications prepared the markets, of the revenue end we model fastest said different of case, our application markets, usage our

Operator

the of TD Our next comes line Matt Ramsay from with Cowen. question

Matthew Ramsay

us really -- you helpful the of gave it as little well. just a to wanted see it's quarter now Jim, you as that June I preview,

if bit I get sold customer bit the on long-term demand revenue going road us like of through for high teens levels revenue to Analyst sort as true inventory that to digested, there I little guys, for what the Day, you you you as, that. I'm the maps to we're growth support sell-through of a and a So give of mean, talked sort for wonder is the to trying the be back a quarter represent going the feel guys like these if second get end to an little that quarter estimate in mid- you all levels an about ensure around could and first and understanding product. the level company a product are basis of

a consumption of you're the steady looks business as any actually like this burning end quarter, sort a to customers? sense $XXX at state point? inventory through Lattice's much at what for with million how So And

James Anderson

really good XX,XXX with end have so that's have Yes. the inventory distributors, visibility we visibility of the and Thanks, channel because, Matt. levels don't of to just customers, our across perfect It's answer all over question we customers. those on a in we have while inventory tough

And we the of it's that's we consumption is $XXX our guide, to they're below that level inventory usage But midpoint million hard drawing of believe that end judge natural And difference so the at that the the that. customers. believe our down. was and

we exactly well that QX And is, but effect believe of of second customers. our in we're consumption. continue normal -- much in do the first how natural dissipates half into seeing the so from not year, that of the -- and the And that we dampening levels we half believe back that we're year, below that's we're consumption inventory that to demand as sure the but into the will we in more believe get and shipping

Matthew Ramsay

it. Got That sense. makes

Just behaviors disti do a quick you to just strategic markets if is much relative strategy you sell-in I Are follow-up, anything was bit at through disti a inventory to or burning versus past. by is think there's follow-up changing of normal inventory think your they revenue out was first that in rate? end or if dictated feel I'm of you disti are or Or quarter, to things of to kind and -- change? guess, than One, seasonal like seasonality? who Is happened well not. level direct back as for strategic trying I the consumption there the burn, to this shipment some of below what look percentage couple a for just the how first Sherri. been the inventory The different of it's the kind of at sort second normal if much you was is how are question. your sort where -- one the under end guess the business? And x would this

James Anderson

is are beyond seasonality really from that I of was demand beyond forecast the for normal we're X quarter. the inventory well QX seasonality, normal of seeing Yes, well. our part is their and Typically, and customers is question Matt, QX about the Yes. But that factors. to decline as first business that QX normal on It's lower digestion your that a talking as that rebalancing as seasonally giving forecasting. is seasonality. we're lower QX the part definitely on

they're -- down time. it's inventory also demand, same drawing So lower they're and the seeing at

them those as X QX is well. customer drawing combination things: lower a of seasonality, levels down demand that inventory and normal their then So

Sherri Luther

Matt, at XXXX, second disti the you then, And Yes. your of full look in you to percentage of part on direct the percentage very it's revenue, 'XX, of compare that when and the versus similar. question year XXXX, terms a

whole sort see basis, the can year see any of the versus revenue. historically wouldn't I in you But XXXX. a range more a full fluctuations back of for expect seen what even of So just really It's quarterly of year. if full to don't to read percentage lot see there look typical On -- difference you you in into have we that the that.

Operator

comes Weathers Our question Melissa Deutsche with next of Bank. from line the

Melissa Weathers

I question, first and base compute your to specifically wanted communications my touch on on segment, for So the compute side.

overall signals for mixed I non-AI we're think XXXX. on servers hearing some demand in

people talking seasonally. being about down Some are March

So this I higher the you next-generation in guys content year. know servers have

level computing how of we So should in half that we should growth second think XXXX? What look the like about in for the for would you be looking guys?

James Anderson

yes, dollars drove higher generation that generation level down the new the the overall we server. that of significantly per we'll see is computing we but per remarks, QX that Melissa. of of a the Thanks, might server segment mentioned from of of see level about in granularity, now did prepared new as color servers in it sequentially did on to -- communications within more I that -- It's XX% did of have a up did helpful. of that computing down, but go we at we really bit that little and We although was communications provide content a one benefits don't in in We XXXX prior QX, additional that sequentially content was dollars guidance see It sequentially. And ramping see generation. than that's QX. be Yes.

would the growth because of to basis, year-over-year center content. segment server server level even in So a -- exactly remained data on expect the that see units we of if still flat higher

year. it throughout year to server ramps, a shipments benefit of generation a percentage of servers this new that as that's the the us as throughout overall becomes So certainly higher

Melissa Weathers

conference you customer drive qualitatively share? I for developers that kind anecdotally wanted want that up about the And you the guys to any engagement I enthusiasm that either did takeaways What on? that Can December. your you it follow-up, to Avant? on was of that interest or in levels? my towards had talk follow event Just and it from brought guess event

James Anderson

had thanks XX Thanks, different sessions. We I X,XXX and but We as Lattice's had Actually, registrations. partners. asking. the and XX Yes. was Melissa. not ever And different technology actually a lattice from of Meta conference. had with had our our just for developers We lot the excited demonstrations. really had were from developers BMW, really keynotes over about partners conference was Those pleased We results. demonstrations we first great NVIDIA That done. were well. customers demonstrations like We

the not best mid-range my platform customer activity that we FPGAs. partner based just for from Avant was but our newest the and perspective, also on it families Actually, launched conference, of part the generated, X the the device

and Avant-G X. was that the So

with of X the we the or year initial year exited so from and hands and before revenue the device customers, well. families end generated G last the last the as next different -- E, of And in Avant X

revenue And for It's streams. you any might way. streams so It recall, ramp. doesn't is doubles the of small entirely in market. the FPGA And about beginning the revenue company. Avant our the that's revenue really creates It stream the exciting revenue what's Avant existing additive new to addressable an as cannibalize existing that

do conference, will of of the X was to developers yes, the that of tremendous this best the the which of and a we a certainly start customer G as and was before versions year. developers and viewed of we lot generate revenue we later the one conference there this end activity launching so And And that. is year. success, of overall, excitement believe to event expect But Avant, around parts another

Operator

with Our of comes the Tristan from Gerra question Baird. line next

Tristan Gerra

gross Obviously, communication, Looking at the guidance, more is be tends as it still XX% is I healthy because decline? it the QX shouldn't related? be But mix decline sequential recall, very first your driving 'XX. to margin level. Is lower margin. would What since

still -- seems -- So or industrial to be and resilient. fairly

component mix other gross I'm some much pricing how there not this of related? is And that impacting margin? be seeing is So could that

Sherri Luther

for the question. Yes. Thanks, Tristan,

gross decline, So those year for let XX.X%, a we was that first, sequential margin couple so us, the mix, basis mentioned full gross bit that, things results. really pleased record our margin little from at me we're that In XXXX, a perspective, due is QX, with another point year of to for say that XX a decline.

more to the And majority rest the the from at mix, so and X it then question, little is lower a it's it XX% midpoint, It's of of bit specifically The mix. then things. is your absorption.

we when So talk our segment. industrial gross highest typically margin about mix, and that's automotive,

when that softness so there, see we in And margin. gross we see certainly, impact

bit by that things. compute in it, of being a And Jim all offset the we're seeing so QX in and -- of side softness little but the terms industrial automotive communications, and softness mentioned, of the

So see and where you'd in automotive margin, industrial down sequentially QX. the higher have coming gross the impact and that's mix would in

expansion back, is going strategy. gross other thought that into it's margin margin look complete The year our to sixth our that on thing, just when gross about you of like

that since about almost our So gross margin X,XXX we've increased basis points. by time,

margin we'll gross continue year and the focus focus to an XXs. to so to that we be for out continues of us, And our last on at put area model low long-term that target

James Anderson

of very pricing I'll quite end asked question. question. piece Maybe I your durable. you the Tristan, our of think as at pricing would describe your that I also about take

ASPs conditions, that Part over of go remained pricing our X pricing up been have years strategy margin has in quite mentioned, different since And market optimization, gross pricing fact, improvement our we've durable. Sherri year. optimization. of of XXXX. types in had place those last As has And continued a each to through multiple

higher XXx product towards up ASPs higher ASPs with we introduced products range content Avant that the and when ramp we're goes capacity, than pre-Nexus of mix And more at products pulled with capability, think those over ASPs. Nexus we've capability wider a the especially software devices, to time. capacity, continue, and and naturally beginning more more our about as expect Avant higher to As being revenue of the more that has and you XX of especially our now trend

As to years. grow the Avant revenue expect the we would ASPs over coming to mixes into base, continue

Tristan Gerra

then and at did than wanted over. well And have roll down to a lot. industrial a to would communication expected revenue that follow-up, my revenue but a for higher bit came breakdown. still a ago, go year run rate the back that's It to little it's I

percentage a So percent sequentially. communication as also And seasonality And last is, really come computing. last yet. percentage haven't you've computing, in a the the communication if -- industrial we as question and and some leg of -- that QX to then seen of in us you remind of showed the is industry year of down could

So understand of top of actually how expect gave wanted much this moving QX could hint but you security I line. So densification where root-of-trust versus chips help server in but together by data the have pieces us within also more with we second equate and if the more driven weakness to us what industrial. center computing units better of put which all an the half should for year, the also know will this GPUs is you impact? a

James Anderson

Tristan. Thanks, Yes.

different X I was questions. least think that at

best answer those. I'm my So to going do to

decline So on we on some industrial Yes, and sequential one did QX to QX. see auto, first the from

I decline think it X% sequential about industrial, auto. was in

a We see from deeper decline expect QX. that than QX to to

QX we QX. has saw originally and last later We been automotive, -- and decline the that in be down see first started the expect automotive in of to computing that really space. started really decline QX, year and communications we yes to markets impacted and from has to we see last than half year. In that end the and later industrial QX what towards to -- of of those industrial been into so And

that's the segments. why so of of And of industrial rest said on a declines earlier automotive, highest margin the also that's gross segment, more part It's of kind why Sherri margins. impact than our changes our negative -- and the part mix of

component. of qualitatively, compute. question compute that years on don't is versus grown compute, those what Now you're the of on think comms the has the is out your Compute asking is portion second segment. communications and component past separately, significantly but and part bigger We I the break over bigger just

So I would just is there. a of we terms you a just we're bit computing what higher have your on was if -- on aside say in new question an was -- and little units is -- And put more servers, of what then think third basis bit the I part seeing little of generation about apples-to-apples content. a

hope the market at well. the server as as So on that unit certainly, the we changes we overall part I the would to generation content end would on new of question in your but any based same greater generation new answered growth percentage higher have well, shipments, higher that shipments. But we as us a becomes see of that levels those server. from per that affect that server of the content time of would dollars benefit third expect

Operator

line question next of SIG. comes Christopher from Rolland with the Our

Christopher Rolland

or to was VR/AR win? anything outside their a know, get iCEXX headway And headset. a is decision? bit surprised Or else more you there might for that went a this again of Was Do And even I'd I'm this purely after more They a what OEM? you that into for. into love OEM your of the appear about Nexus. high-profile using price in using products win be possible, excited consumer that guys then that? if to a beachhead versus actually be this an that mention didn't guys

James Anderson

customer is also that is customer related Yes. long to a sensitive Thanks, and anything about very them. of Chris. That us particular but very customer good very Lattice, discussing

I So topic. that particular won't discuss

Christopher Rolland

Okay.

in general? Just more about this consumer get consumer? how Does excited you about

James Anderson

couple -- sorts gosh, all of devices Sentry reasons. great has used, added there processing. And you're AI-enabled consumer, of and sensor-enabled consumer more and all right? the different obviously, seeing types can In a applications those in where those consumer applications, Lattice There's to really many Yes. in -- sorts vision, be consumer those of of all Lattice computer for devices, types devices in are technology ability to all more in in of more places AI-related and play devices applications certainly segment, a

battery our power, is devices, And in important. whether is Whether they're all efficient, they're to power important. power power devices all, incredibly are really efficiency of First connected powered right? efficiency or almost those

ability cetera. consumer upgraded software and rapid for They Lattice changed The great It's devices to for we've more stack year. that in. developed, on helps we've design solutions applications, are and very features other number even software FPGAs change a vision in a the third is the market to definitely the devices a the new may Lattice may get get design instance, with those quickly is as relevant every SenseAI changed of to et other Second frequent features, basis, use right? those changed being get into computer software the, on a to stack solution that than the They able get consumer then frequently that same add inference algorithms. for that basis. And that's software developing and been stacks customers well. segment that

segment, the believe we're all for Now segment. our bring big long-term areas can unique and that we to in Lattice participate and computing that. customers. We industrial But segment do excited always about and are some growth believe consumer that still automotive said, the value we where the we the communications

Christopher Rolland

perhaps long-term that question, have the particularly Xilinx, And Do can is second that you XX% versus you terms outgrow your And be or product, product top is still which rolling reasonable your target, you that is overall believe revenue XX% new Microsemi? considering of could at you think think revenues because setback? you XX%, Altera, to on? for Great. do them new about do a about you a the And year? in this line, how growth

James Anderson

Chris. Thanks, Yes.

been or, segment we In we across that revenue share FGPA can and stream. revenue gain to Nexus Avant markets. into us use Avant those we for on mid-range And beginning and in that we devices, can FPGA, grow example. gained all, they yes, in general, FPGA, penetrating in that customers Lattice But a the Avant the both that Avant already software at we an in that midrange, today, target years. share device, gain past small is first And believe for of of continue customers additive already would are So they certainly the the we've believe very program that of small the to over using and share of are on believe completely haven't today It's just revenue. past. in we that XX% we're segment. Look,

another So just these from are already existing customers portfolio. their using adding they're with, software product to Lattice line that familiar

the for are the So shared yes, long-term long-term part are, we growth targeting the committed targets Investor growth your company. and we of targets Day. question the on in then the right those we -- certainly we the grow space. And mid-range to still around targets, at Those believe believe, can last that last we

year management which was you the for that over years to of about the growth period the full new And X period. over the as CAGR our the about last look time growth mid-teens, year, of end FPGA it's If segment the small was market. XXXX, think in from last I first over that XX% company only team -- was average the that

the terms and market. to the grow size think to that ability headroom we've SAM small of of in FPGA total still to I the demonstrated the market We revenue in of market grow. that have of continue consistently part And the so

to we're where small market. And in So in growth completely market. then revenue we doubling we grow that long over term, in now additive addition, top is and believe, portion on the can the of that continue where still adding of addressable the our FPGA midrange,

greater that believe we the in us helps drive growth So future.

-- target yes, that we so put out investments those goals to -- at the our continue or we last Investors those certainly And Day.

Christopher Rolland

a so, get you ever we might we that number And think an if update, get number? do like for when Will Avant?

James Anderson

of to more future ramp. right? the Remember, We Avant some would we last -- end point, our revenue the ramps had we're of bit be provide year. color at at it's Yes, a little that, as to beginning possible in revenue begin on the the of Avant a very Avant of portion bigger before

Now that on schedule. was

on We fact, into it this some provide it But we on as point. becomes a was of Avant little portion. end what the next more may the more projected. bit year, early year at of quantity significant In that a ramps had through color

Operator

of of line Blake from comes the question Friedman Bank America. with next Our

Blake Friedman

the I you're And of still have -- the is revenue contribute wanted circle guess to at term? X X long I objective, believe about your to anything to total of quantifying to XX% Avant back at that mentioned objective Day, Avant you've to generating I well. with not company the today. long-term years. much an that Analyst model know in I as XX% Avant to But that

James Anderson

objective, that's Yes, yes. truly our Blake,

Blake Friedman

little bit term. a And maybe near then more

should those drivers you be you guess details the revenue -- of I drive there for your for relatively of June half helpful. the through more -- working help any more You drive customers inventory would what second year the of the a that half and end the thank the picture second some on the confidence clear by towards pickup. quarter, gives of inventory be growth? can Just catalysts outlining given the are that to still

James Anderson

on -- customer based That's Yes. that's Blake, based on the forecasts.

customers for down terms of customers and shared second own the analysis. levels plans us placed internal in year what their backlog our the have inventory half own have of We and that for draw instance, have the our with to

that But half that this the And this factor ramps effect we based stronger. on factor but an to product think earlier inventory and certainly half is that's the the So digestion first that of us in leads we that talked point the year. one second I through as the those all that, dissipates at in other the of is believe about said, is call. rebalancing rest

or at to point. subject color, change can change. Macroeconomic conditions on this unfolding. we end business business at color what conditions market But conditions want we how obviously change. That's year that's the qualitative provide to change. can so at least point, look, macroeconomic we expect what this That's conditions and seeing if see we're Now

Operator

next Our line Benchmark. David question Williams comes with the of from

David Williams

I geographically to of terms maybe the And anything the noticed weakness quarter? wanted mean or of in different categories see quarter you're was I into there segments? First, that maybe if this ] [ that heading just first about among kind feeling how or softness you

James Anderson

David. Thanks, Yes.

year, recent which the the of down of QX kind of year, we've just in the in segment seen end but QX into primarily perspective, last segment, industrial last geo saw not and for in into we towards a of saw the weakness initial how extend of is slowed some from that that that it softness in China. is, Asia, was So that we most really that as Europe us, especially just well. the softness, the evolved In has more Asia particular, recently extended auto

as in industrials So as weakness in European saw QX well customers. we European communications

America saw the increase North held from And as Europe Asia, to would from expect starting America-based be in now revenue last down Americas the North into automotive quarter, of we through sequential through up, end Now the well customers to down some softer current again our QX. we and of as we're to industrial going But and QX as actually Americas a well. year QX, to we the really sequentially. -- Americas to see demand be expect be

David Williams

And automotive of the you're talk design any the or traction around over the about maybe think platform, early-stage market activity where on for automotive we can play, that Avant side. your in next few about design then auto about Avant. seeing do win And specifically addressable maybe just you total think how If years?

James Anderson

Yes. Thanks, David.

around really see positioned certainly Avant move applications. company to area. That's So able believe We ahead adoption growth we've And of first electronics years that Avant. talk past represents automotive the the Solutions, over of seen systems, areas the underexposed that we all, electronics through ramp, but to variety area we many Avant the for is We'll We well we that a long Avant a believe in we're be of one believe more in believe we space. about ADAS, see of wide that Lattice automotive auto the term. fastest growth as over the for great even infotainment of we'll electronics. applications in of

we in usages think recent highlighted those the of I conference developers And most potential December. some at

would segment. I in about hear automotive So the to expect more say stay tuned, Avant

Operator

Instructions]. [Operator

Pajjuri from line next Raymond the will with come question of Srini Our James.

Srinivas Pajjuri

of Jim, a questions. couple

First inventory. your disti one on

bigger ramping. you you levels. think back I'm said top than that, pre-pandemic then of new pre-pandemic it's is SAM, guessing, products on have many Obviously, are to time that I the periods. And

curious you to think when the as kind increase next the So disti we start through few just quarters? go as inventory I'm of you'll to

James Anderson

Thanks on to for clarify, basis, levels, weeks And perspective. prepandemic I for a Yes. say back mean, a inventory when just I the question. of to relative instance,

So that accounts seen pre-pandemic. in the since the growth for we've business that

a to basis. selling the a inventory and out quarter-to-quarter level relative healthy into distis basis, our keep So we've that normal stable, back level of levels sales inventory same our is trying at is is match forward the got sales as our do distributors distributors the it's our to yes, to trying a to we're if customers. pre-pandemic. And goal on levels our are Ultimately, our on we at then goal distributors, moving our with what a what were do to right? That's end we're

Srinivas Pajjuri

And hand, that on hand, a excitement of product the then, the et on I it. especially in the lot one great. about given Got the it. macro, other cetera. But On Avant is think not environment. Got Jim, new industrial ramp,

on what's if going out any design on So I'm just or curious that's negative, given impact, either there. positive the activity itself having

James Anderson

year, and win growth was an points all for last a couple and have And significant Nexus, question, Yes, we is, design haven't level seen record year in it products, it's wins the 'XX activity. good 'XX. just in a from a pre-Nexus and pipeline totality And had we company, opportunity on really Avant. that design qualitative of win last impact data to across design the our

of customers' of time which, ramping design at the teams Now software on is team the thank in on quite goals Avant, time goal Avant actually for just the the to Nexus the get primary pace to the -- win given design or on to future a the rate year. And the win at Nexus, I the as gate product that to view for great the of into customers. opportunity it of for qualifications, to point ability actually Avant governor in clearly, year, significantly at customers, year of for do it the the -- same the exceeds the the the And in which pleased how I same And I Nexus And rate goal the to design relative their Avant. And the other we to exceeded make design ability opportunity pipeline we is opportunity again, provide of work lines positive once look pretty in aggressive would to we at in Avant team and phase that this look last the main I wins. software their in the is put that was total design to Avant the really same overall, their the to for last last as easy time. indicator or own just driving that our if to customer last want the with. to And I we pipeline, of really the Avant and terms growth relative relative their compared take point thing Lattice Avant of year tracking their relative system-level had, with But their another as market. say, Avant possible hands pace actually, do system, total is ramp. health Lattice end

Operator

the to Anderson, floor closing at over you. Jim I'd turn There questions this further back Thank no CEO, comments. like for time. And to are

James Anderson

today's we call. for thank to XXXX. into Yes. actually XXXX company's with joining the headwinds, And be well. concludes the that take forward pleased we've execution everyone continue to Thank some with very very the as had and as expanding rapidly strongest Operator, want for product and thanks for in our opportunity we the call. but great and in And us ever history look a in XXXX. Lattice to you, positioned product macro the today's beyond, portfolio long-term results growth operator, well I near-term for strong again portfolio team on And clearly, navigating we're

Operator

you. Thank

this You may now Goodbye. disconnect Thank you your for time. lines your at participation.

Lattice Semiconductor (LSCC) 12 Feb 242023 Q4 Earnings call transcript