LSCC - Earnings call transcript Q2 2024 | Lattice Semiconductor Corporation

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Operator

Greetings. Welcome to the Lattice Semiconductor Second Quarter 2024 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Rick Muscha, you may begin.

Rick Muscha

Thank you, operator, and good afternoon, everyone. of Esam who interim and quarter will of second are Luther, and business of today business the CFO, the Lattice's provide quarter XXXX. me Elashmawi, the CEO; Lattice's Sherri review outlook With for and third XXXX a financial

they in If have the section latticesemi.com. release, Investor a found on our earnings copy Relation's you be of our obtained press not can company website at

any or call any changes that press statements to differ remind release performance we company the we SEC, this conference are available everyone may after that If forward-looking conference events materially. our announced material results cause currently call. We a important identify future forward-looking today, projections call We and is and of contain including the wish intend our includes time be financial of such our projections guidance, such like communicate during we for third refer files may with done and to will as a XXXX. to XX-K, updates the contained that using company's statements. information These predictions call at the quarter actual forum, based XX-Q risk materially or this This the constitutes public that documents or make caution could you from that those guidance in official that would or the to factors differ publicly results other company. future and regarding statements you I that X-K. actual the such the to on documents

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

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

CEO. Interim Elashmawi, the to turn over call I'll Esam our now

Esam Elashmawi

Thank call Rick, us and on our you, for everyone, joining today. thank you,

to been analysts While transition. in Chief at a many investors, strategy. been I've of I've involved introduction development brief both our In Officer, our like our CEO years and the and know given execution Marketing the that deeply X Lattice as need, provide and Strategy you I'd of customers recent

time, competitive our significantly that During we strengthened portfolio, product performance have financial and position.

accelerated of growth opportunities deepen and our is cadence is are has more that talent new relationships. back me Lattice on committed value that [ and our ] today. XXXX our exploration Our building customer customers Lattice The new compelling fortunate shareholders. product throughout have deep bench of to our excited even created a to launches leads join opportunity organization momentum in to delivering and future for

CEO and As identify practice permanent internal was previously candidates. the of search a a will Directors both to external consider commenced announced, have Board and

While the of the search to highest the be is all will priority. line in specified that outcome I committed ultimate confident Board's there no is fully process and best time for that stakeholders. completion, Lattice interest am this

differentiated near term customer QX, revenue end In and their corrections declined year-over-year. to we and the XX% sequentially to of cyclic XX% down we hardware industrial inventory over under-ship normalization for at and remained and XXXX. to deliver continue to as levels. in continue We longer the margins The as remained quarter positioned moving software continued well reduce to Now profitability. soft and XX%, XX% normalization automotive with an across inventory customers demand growth end our sequentially continue term solutions. second continue. inventory revenue basis, Gross as On demand remain market with QX,

data sequentially. flat incremental offset weakness help communications. was revenue center QX computing, networking in wireless servers and communications Strength Within in and

of normalization this cycle previously, discussed expect we second inventory half the year. continue the As we to through

We of a to with return that improvement growth. to combined are new signs reps, anticipate product seeing lead will our when we

size devices adding flexible continue our road small increased recently expansion new accelerating already announced design. We're These into class-leading about QX. track customer intend Lattice reliability power Lattice start which of to having offer map latest family computing, the continue these we MachXOXD-NX. road Certus-NX We delivering investing we Last in to family in map, are segment. on solution is the on small options. today This we the Xth very and communications, applications. extends FPGA Sentry launched Lattice portfolio, and [ In in our software with to migration invest of designed been and our product as portfolio. ] automotive Certus-NX-XX, solutions. and feedback in ramping to accelerate address leadership highly device of innovate version our that FPGA industrial and quarter, recently on efficiency, small positive the a options Certus-NX-XX terms to Customer In differentiated and broad device the And stack. has hardware combination talked range security-focused our value

already In our we've portfolio, mid-range FPGA X Avant devices. launched

by last The initial December first achieved Avant-E numerous device applications. driven revenue

robust. series around track of and both year. for the this to We before Avant-G ramp quarter aim to Avant-X this the expect initial end achieve and Avant-E on Customer momentum year. revenues We're remains

use Lattice leverage the customers today of recall the customers of already Lattice. You'll same are Avant software and that XX% customers today, are long partner a for

traction of expected with drives market pleased long-term Avant acceleration. additional are as We our it expands and revenue the TAM

calls, wide are in a software increasingly mentioned used applications. we being have hardware As in and of solutions AI-related variety Lattice previous

For AI security and devices an when in management AI servers used is optimized example, control the the computing in generative system. Lattice of the center data are AI the system workloads, running

algorithms device enabled used are and the provides to presence in the Edge inference where systems. and AI is AI that run such industrial Lattice user example ] solutions client as in features applications detection Another [

pleased the to Edge quarter in platform. NVIDIA which development be solutions we highlight on demonstrations began be and applications presented customers. presentations where Lastly, third are Driven data Lattice AI sessions, robust wanted is Lattice we XXXX December of our will last hosting customer This and live for San announcements. FPGA-based applications which a expect increase of Developers and accelerate a XX, I aggregate AI we'll to at our XX by using preprocess solution, and that and second sensor used Lattice you technology Jose. first I'm example that keynote that used solutions new held industry to virtual Developers processing. and to NVIDIA is Conference, our ecosystem share in AI-enabled shifting Conference, is AI to base, designed can breakout product Edge showcase the

strategy. competitively well the with positioned product Lattice execute is summary, in and momentum. In history middle our We believe of the and we in to customer remain our largest focused continue expansion strong on portfolio

Sherri our to now the I'll over Luther. turn call CFO,

Sherri Luther

Thanks, Esam.

quarter Second slightly continued strong profitability. remaining and With cash results capital on buybacks. with cash continued a mid-point with reflected below the our of we softness stable share return remained continue through financial focus guidance. shareholders to allocation, margin revenues Gross to

Let a of our results. me provide now summary

$XXX.X was XX% reflecting continued and down first million, segments. revenue industrial sequentially in automotive quarter the from inventory market down and the quarter Second normalization XX% year-over-year,

million $XX.X margin the softness. the million were to line our gross near-term quarter, XX%, year ago gross of the QX non-GAAP despite similar in prior million $XX QX margin quarter in the in prior compared with stability quarter. the operating and Our was non-GAAP reflecting expenses $XX

continuing invest we to remained our in product disciplined quarter, long-term while the During portfolio.

XX% shares, in compared was quarter. diluted prior margin $X.XX per $X.XX QX, of reducing compared executing thereby consecutive by operating non-GAAP quarter non-GAAP XX.X% or share repurchased of X.X%. QX the prior making QX stock, shares share quarter. repurchased $XX earnings million Our to that XXth Over our In XXX,XXX in approximately was QX to X.X have period, million the we we approximately buybacks. dilution

the on expected a with quarter expenses minus third of between our are non-GAAP Revenue $XXX million. and XXXX is a for outlook expected third to and Gross million operating on the be basis. X% in Let margin now 'XX non-GAAP million is for quarter which between be expected the me QX the plus line review $XX at XX% is be $XX midpoint. Total $XXX quarter. for to basis, million to third or

As of similar product and our industry continued navigate markets the inventory, focused we execution. the end remain softness near-term our we normalization of portfolio on expansion the continue to in and supporting

We my the can now that comments. open call formal for questions. Operator, concludes

Operator

Williams Our from comes line Instructions] question the first Company. Benchmark David with of [Operator

David Williams

guess, how the continuing I maybe down cycle? you there Esam, have down that's ramps And and this through can talk attractions bit about impacted are a activity design the worth to? been wondering cycle? just the seeing how you by anything kind of pointing little Are

Esam Elashmawi

and we've that completed that macro we the can't into design Nexus interestingly Good #X, product question, David. activity. both side, software talk the intimacy. the most that talking got as customer the matter we about regards quarters this, map we expanding activity the exciting as when consecutive And in and and have got And the But activity, well. more products the when strongest And the never of a making this and control platform. that things everyone, hardware to company. product remind X got that's We've good just of I we've just the talked X design recently, We about our of road differentiated over to I device sure been just in that our record have necessarily perspective, now. we to Mach-NX team design We've as type control. we customer the a Avant new more launched, as me. out and to can come getting stuff portfolio we well that history strong got been the from to market. drive market, pretty is momentum just But With it also is we've in on development, look at control

X quarters design a team activity. proud done X quarters. over record really I'm from design a and of the Those perspective the consecutive activity they've being what last So from

market to downturn in X can at part them. I first why XXXX. testament ramps, are cyclical product those products strategy new that you good of the new you new as And you for And product Avant, The normalization, revenue seventh TAM such, a second additional products, our at for ramps. Avant that's to the what that's XXXX. Nexus it or half if in and revenue products of customers of opportunities, with us, and also the new look software the should our product related the but love emphasizing market, at XXXX, the on of differentiated excited And the on is Getting share example, this streams. first I as in is going our drives about we adopt of for products you that new more additional We've product Avant-G look very on easier that. Nexus through into drive new And market exceeded second inventory new quarter, keep your devices, half about got look half of progress ramps. a drives know though question well ramps. we've device opportunities even Avant-X. to it I'm track revenue talked the as making ramp Now

We and expect this those X the of as that on of well. end initial we're by revenue devices track year for

David Williams

the there. leverage been And despite will has margin that secondly, guess that structural the the incremental Can through us return color I Great maybe on maybe of see here incredibly done that as and would you you've maybe downturn back? the there Sherri, improvements the benefit through expect you things leverage. to Are walk lack resilient upside? maybe comes sales for

Sherri Luther

with seeing Thank came been mix there about you, basis we've but strategy sixth segment, in terms market of by And executing on into or that to expansion within that really certainly our we've a a X,XXX we're recall, the gross gross improved gross at our I you lot quarterly our now question. may that our with margin it even certainly year, there. David, pleased think be where, margin QX. points. XX% progress respect in margin talked we -- we've course, date, And that during can fluctuations occur the the for to can of We're basis

in really we're time. and time look in margin you proud QX, resiliency, was go So quite similar gross in back think fact, what as certainly when if at levels lower I that was that at when our of. And a that is was something about it bit revenue at I

speaks low QX. as new think was even to in achieved somewhere to in compared it XX% XX% we I that that that to attach range speaks and we And talked really the I think the software more products, before it in new about and that terms launched products our provides about of that gross value of we've recently. software the that and margin new to add number Esam a attach talked products,

margin really we've made terms gross So the over I big that in improvements in the think that's time. driver of

at We're XX%, certainly, resiliency gross but margin when of our XXs. expect the there. of remains ahead. look low model driving to certainly the continue that's guide And long-term QX, and continue something our expansion on the as And look our And that model still we we intact. ahead, strength that through midpoint, continue to to we'll the toward that's focus strategy long-term

Operator

line Stifel. Our next Roy the with from Ruben of comes question

Ruben Roy

last Esam, over I persistent if second drill into first bit a quarter was about has guys this you some issue, been half. maybe wondering talked seeing quarter, could more. commentary the obviously, you Last half a but inventory little potentially -- growth

You of are talking about some today. signs improvement

think your around getting Is from you us you if And what can so, so how maybe normalization, normalization. just coming was And we out the Are little you a on detail about be it that end hearing exit inventory the would of something towards of that of if that there? thinking the give see we'll of you're I -- helpful. are sort QX? end customers rate that wondering

Esam Elashmawi

Yes.

I that often. do knows quite I think I to customers. to talk everybody love

In our I and X had in, fact, key accounts X was them. chatting industrial weeks we with of ago,

at vary one they'll lines As overall, within different the as improvement customer. normalization can the me of as ask But topics from customer, customers, you are there does normalization, different them in a been touch is inventory it imagine, stages. on. has tell we to but talk customer product their Even inventory I that that will there's to about always inventory normalization, even I the

Some first the the to the call authorization of beginning than have inventory But we we throughout the to inventory second half we'd they to excess products the other continue year need lesser we strategic for still said Lattice-specific but half normalize. back compared product if positioned long-term we're think with again, products control, that in markets core the it's calm And industrial are of half lines XXXX, items, We growth normalization, well I and lines then achieved of extent they things still the talked the that of the -- we're that with We're expect positioned. at have getting And well year, that to year, year. a and about to look and ramps the good current auto the to that out we product there. growth. compute Lattice-specific really second new going drivers. go

feel we products position. out get of As in like get good this and normalization we're very the to ramp up, we a

Sherri Luther

range at the to just -- on And it inventory more -- as that you Ruben, way And quarter about a the that's the more inventory we had little in bit at last well in sitting in inventory is channel distributors. we that mentioned channel is pre-pandemic we're our levels pre-pandemic that's -- that thinking in color is the the levels. inventory give the or channel, of

last that thought this But as This see to customer certainly true towards to still it of expect call range. to and under-ship to guide for of the consider true is into be our that QX continued from at to the and on what continue quarter we we higher we way continue demand. we quarter, midpoint we this QX QX under-shipping the mentioned be well as that revenue, so to end we quarter last to as demand. And continue

inventory, inventory lesser closely other they touch is respect to they the allows for very the during the that have time, the with with a good at that lesser extent part that -- first half. And inventory to really for than albeit XX,XXX in and in strategic over same thought we that our kind and was mentioning keep that at what under-shipping second ] to customers. just customers the but occurred is [ feel that have, half, have Esam complete what inventory the so that have, the it, we normalization MV of of the somewhat continue And to digestion or occur inventory a

that, have focus much having at of channel inventory really end of that it's to on. we all continue to inventory in But said a perfect So hard how certainly, our is customers. view is something the

Ruben Roy

strategy. here. a with And how David's for about guess That's time complexity gross that's a in update I as optimization on great lower we appreciate a the question. thinking guess last to a I issue to stability quick your to mentioned, give It's were you're Sherri, bit margins But the if the and I revenue nice follow margin the color. forward. pricing guess, of see maybe the that an follow-up, I on you pricing types the of us little these just environment coming And down. the can the you revenues. of testament going saw lot

Sherri Luther

Sure, sure.

durable So from that seeing perspective, a continues. really pricing is we're that our pricing as

And are it that differentiate. number more differentiate to willing really really is the that matters And that pay back help something to that they a goes fact to and I announce products to that we for really -- think the that really applications. of allowing help them products offering. improve continue have they're customers them. to products new our our announced products lot are that in customers their that is The our

continue part key strategy. of optimization be new a to our pricing so And products

capability products, see where also again, functionality of want products. capacity, customers We towards trends driving higher greater their the

that So gross a optimization certainly pricing element we our be is margin it pricing durable, definitely expansion continues to and strategy. key our and see of

Esam Elashmawi

as to add that I'll well. And

demanding a at stacks our I that we our our stacks well. solution higher software leveraging look helps software were customers ASP, data in which familiar think margins and and with the are you're as investing clearly software strategy. the solution We're our

Operator

Capital line with John Vinh of KeyBanc Our question from Markets. next the comes

John Vinh

if that shoots. your improvement. return do just on wondering on, color to when growth more you give could of kind then specifically, based those you're be you more visibility, signs bit you you to prepared Esam, your kind are able of us you'll again? green remarks seeing a seeing I'm mentioned guys little And think of in where current

Esam Elashmawi

Yes.

with we the about some do we at the that of know I see let under-shipping But well. that with We signs are side, always. quite see. indicators me operational a first part as normalization take first, the that that. So customers starts do and Well, demand. question, what interact we of talked the customers we are And it We the improvement through customer bit. also of the see

towards you to see we If half look a and bookings, that really uptick at of QX, started was the the second in QX, for good us. sign an

In turn. starting QX QX a well to we're things started than good with. we are with a higher that's starting indication And as backlog fact, that

healthy, you when So we're going for increasing, the quarter and normalization, customer those we is shipping bookings that demand, combine see start at ramps looking under our are we you see that inventory about. all start talked backlog new we then the the to us. Then signs into product

is those quarter the small, initial although will well, ramp it Avant-G start device drive the the first the actually though ramp. Avant-E and year. which 'XX. will will the new the that We've -- continue initial about first in streams. the and but grew said question, are good revenue a of sign in Nexus data but Avant-X new ramp products New additional continue to half 'XX thought products earlier Those are ramp I to last half the the to to throughout expected this small product of points our ramp will and year, how got further there to year new ramps that seventh we this compared this as

path. that return you we signs when growth at in of improvement, look these anticipate to So a are we

John Vinh

just question server Great. a And your on then business. follow-up

as within server platforms rate of just of confidence above terms of security look forward to or next-generation level kind I X. to business. traction know the one of we in wondering think your express talk you And server then maintaining I is position your the your at competitors area kind could in terms in of I'm of gaining your Intel, just confidence some ramp attach about the continues PFR. service of if

As half the in attach Rapids year, to for are rates increase servers you kind your think or about content the we in ramping there? of still your Granite second of there opportunities

Esam Elashmawi

server over a been increasing rate. From question. we've perspective, we've that the our think demonstrated generations, last I Good several attach

is higher which be average, a are ramping on is rate with really XX% ASP, versus which Investor will Lattice, generation it X. about server a which -- used Day, has in increase server you from what had attach we've down. And dollar visibility the servers functions. In when only be we're I'm the that the higher talking XX% higher gone you down, driven know not FPGAs if complex are fact in whether above of architectures. to was And the look generation, ramping the [indiscernible], the at good that rate we you combine looking seeing management we of those that today, remember And ASP the up, complexity my It's security average. more May today. on control, XXXX, need is first it forward attach with generation we attach were rates but And contract ramping the for, and that at on got prior shipping for or type about of in today has these well exactly that the

FPGAs. look And a we ODMs, on and next had rate it that visibility our fact, see as are going that from up question updated those Developers and we whether the even well, that more applications. Lattice of then also that at if perspective. directly our And servers becoming Meta the value does last we a is recently, on good or MachXOXD complex that with Conference, even more generation be presenting they're for to hyperscaler know visibility, to deployed PFR. relate there really the type most we And tax Sentry major security leveraging going have are your stack you also of next-generation really, be OEMs In complex announced the solution even we PFR And from the excellent again. hyperscalers,

So very about our we market. feel good the in position

provide in differentiated We make to really, FPGAs progress our are about and is as FPGA delivering crystal the rate to race the that over from products and trying well which threats, programmability. provides because server security for I incident their out security that's crypt their FPGA very security to thing continue an those an you algorithms update important. between generation the adversaries tax that to why we a field agility, in compelling perspective. want unique good programmability increasing system crypto that from and really And It's generation as that occurs. perspective. And their agility then when called real security, to protect time final with think an one a when security something an always provide point customers FPGA allows are

Operator

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

Matthew Ramsay

things comments. and can think term, than over term in some the of the in in control the the things that, your some maybe your well some There are macro that team described shorter you can't. I business it opening in you long

in there's portfolio, there. many the guys different really, Avant that didn't you think up. forums vast there have opened customer considering same on in Avant customers I of thing think and big ramps longer-term mean a there customers out we're the wonder stuff questions customer majority I that trying So the But both. of some it learnings some said that TAM that maybe vast, is as TAM guess product good past. really I Nexus I or new compatibilities and for all is if Avant as it's in base maybe base, weren't that how new it have you the the and the the I -- to that new opportunities even a you of of I emerging actually couple when figure for with kind software some are foresee those Because

new sort the there customers thinking just should are we about opportunity currently think with be So the of about? things we you have? should Or that

Esam Elashmawi

Yes.

You've Avant. obviously good points on

a as than call. opportunity. more on reminder for everybody Just our the has doubled market Avant

which TAM the If about that which Day, last up devices, $X.X we Investor billion, small our at is you ]. is $X.X FPGA provided look midrange at Avant, [ billion

So doubled bit market a little our opportunity. than more

both are customers it market built So good target a for you cannibalize Lattice And small are software customers of well. as doesn't XX% our up opens at the as and software they our and look our mentioned, FPGA. us solution that that as we for they tools designed as already of Avant and stacks well know we Nexus [indiscernible] devices

connectivity Avant-E, end Avant-G general FPGA of which the opportunities, advanced at our is and really FPGA. last progress. launched optimized for our which the we the And most is and Avant-X, and saw Developers we good initial making of Conference, XXXX, that. purpose Edge We've lot on and our a at there's recently we're So revenue Avant announced

we saw which networking storage leverage growth not networking we that also, -- a to applications we're that storage see Avant quarter, regards applications power very around us, of excited really again, anticipate, center and at center we Avant us. this about the our for And from that pack network is good opportunities but data we data could control, control opportunities we're up opens a type we're just With perspective, opportunities engaged in. opens that and for but data saw type low in in up applications, data not growth did applications good well. a as

we're that in look to continue can we where anticipating as also then And applications. opportunities stuff our we leverage weren't we at additional AI Avant starting in revenue, to AI-related see the before

well really, applications, find we've really to and traditional computer working but as applications. demonstrated in in which talked when just to what job our we we're past does new that with with FPGAs a Lattice years of team doing just I into security, as customers new for X as was is which good to selling think the a new So Lattice the well. And the vision, about lot not of ways last leverage our

us, the excited just of ahead about but Avant, So not Nexus devices opportunities but as also well.

Matthew Ramsay

for questions. guess near-term now I guess have stuff, X I the I

quarter with might half the is in last guess We're of revenue, at have of actually all Esam, I'm The macro from forecast. the that quarter the little big $XXX that up the the actually companies the necessarily original in the shifted think intra-quarter. And essentially question points remember answers last you would half guys don't the down the pre-Nexus all what is you this year corollary kind things happened in couple September year-over-year that surprised and some the plus I know, and second which bit industrial in when guided year, I June, of guidance results what first first products I peer that's versus this half I'm new So Nexus is, to guidance. weaker And relative gave earlier given guide this data below weakness the for of are point, thought number time million think. you where I X% we your the half that right? products, a intra-quarter and the seen X can I originally we've year to was our first year. June had that a had just of in, is your when term, the guess a wondering X you a versus visibility near the you first than But over missed I not came this quarter

inventory headwinds the So where about we Are on being seem just where in Could customer of guys where to on update given getting be. pre-Nexus might be, you the the majority do might you pre-Nexus have have channel been lot closer inventory product? us this? be the through of those on revenue. would a visibility products metrics And have commentary to you

Esam Elashmawi

Yes.

shift demand. industrial true by first driven about midpoint. let under So our the was and midpoint continue that the to slightly primarily and We first, bullet talk industrial And auto. below met me which we is

for a question several you the look important at driver expect It's get out under prior And to a double-digit I we We've a to growth us, at that But really point industrial. we as to if long-term that normalize. our segment, back secular is for true good at demonstrated over we the which strong past growth inventory want demand. that customers as I industrial well. really again want and well. ship to in that think we industrial talked it's do related why growth that with That's to Lattice. years to about get

really industrial-type examples for as a factory that automation, and just fit and good products Avant robotics well. applications, Our in are helps

as some fact, In wins up we're ramp to of are Avant that the accounts key with well. industrial XXXX in tracking

we good about there's in the some cyclical have very normalization although position our go short-term industrial feel market. we So to through,

new ship really as the the very rest There's true customers But we demand. are and differentiate demand they streams. have strong we is up the and Nexus to second our Now up as part same of ramping, our shipping devices. and products trying love probably vs down always new you question, to pre-Nexus. new both customers what products, to products. older products which normalization differentiated. It's isn't doing, under we ramp Nexus. products inventory the your good and pre-Nexus and normalization why They allow the but see ramp for But that is Nexus pre-Nexus new revenue new up Nexus for worry and And having more, is less aligned that products of that's the are that older years. about we're with love in even They of stocked these perhaps new Yes, to they prior are ramping more. this products create industry with the

Operator

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

Melissa Weathers

about lot from double in compute We've like just talked a my model, quarter. and saw guys click the upsided you I industrial. and by what you may you it expectations at have seems last want what gave to least quarter, comms on

both the in cycle talk and market? where comms we for end you can the So believe the are about you compute

Esam Elashmawi

Yes.

dollar and So in as earnings by flat as but in XG a we our driven talked compute, expected And center rate it in networking, was was content. server had what in primarily QX call. strength wireless about we tax is about that as when comms was, we talked our and quarter-over-quarter, what it again, down our was from server data perspective, we said well

go Investor and about and in up. applications. routers and think that last this we as smaller to we as time. still we're into that seeing that wireless, we area revenue data expect of for introduced the was wireless. well networking. a that in that growth And I talked an Day on And And computes being unique designed both portion softness comms our networking, from center We overall But something it's see don't Nexus the first still data at we're although the Avant-type for are switches XG XG center a we now

I is return don't is end something price a reduces, of think cost full. reduces, XG in that I the that anybody And think wireless the anticipating of strong this the until seems deployments market. CapEx

Melissa Weathers

sell-in And do a like of how I inventory seen gets the throughout cycles. know trends has we guess differing sharp the market I snapback as can about how But Once versus we sell-through, think gap? FPGA expecting like the bridge we -- gradual gets comms the inventory cleared, market back sold industrial Or is end soon your then hard? recovery very where and the of as are things snap as more that computing will market? your in through, a you it and both expect? case

Esam Elashmawi

going that occurring we half the we're is and Yes. second through has year, normalization to to Melissa, into the that been inventory way the than continue this half the about it's so first of expected dissipate. thinking

out of end -- consumption can well with in comes occurs and at the so the And occur so in inventory that And that it as will undershipping that then as terms there, this undershipping the the distributors occur up it's goes the consumption that's distributors it us customers. channel. demand inventory so the really briefing

what the but we to into And that dissipate continue expect the to second we'll is we half. second said in half, start so

Operator

Needham Company. comes of with line question Quinn from Bolton & the next Our

Quinn Bolton

wanted I back. guess I to just come Esam,

you quarter in half family, heard statement you then the guys last the I of X think half family process I were the specific drivers pretty ramp. haven't the a over and product sort on new as Avant the and Dell the and Nexus confident that result increase the dissipation latter the yet would inventory of of first revenue make X for this normalization that call. Latitude second

so still wondering of us sense? just can And place, up like over second seems Do said your but It thoughts you many pieces still you've I'm certainly if give revenue is wondering, those I'm you half working could your half give think you us in just are revenue? first that half-over-half.

Esam Elashmawi

the extent more half the as the the versus On demand. know today's the will continue and do the really half. as half first QX we'll provide focusing into that we do talked date. we of about, signs we we're guide call, through in call, we're see we on data we the earnings our QX on know based undershipping year. customers We for of normalization with do improvements. to We QX year, But the color to the second but have But lesser a get second for that what see

Quinn Bolton

think you successful that to to just your on And FAE if I us to the in to convert might those converting no have small of XXX an left for those then in some Lattice. on give and end-of-life opportunity an replacements designs almost sales sort January, over some are it. of parts How is what back over your for competitive FPGA Lattice? a Got front. question I and and wonder to team competitors competitors' update come of second been me you provided, designs try with

Esam Elashmawi

for we it. time capitalize us every mean I Yes. competitor on doesn't that, like a favor

momentum years road has that in They're our see going product They customer differentiation. our team job, really been road time good our Lattice map. good map. done been few and participating that's with and over with a Our They're helped investing building well. it's we've the past

When you I a that sales device Nexus we expansion to our in a I every this that adding end-of-life of of more recall, credibility built And Nexus, options customers from with somebody as device time options if end-of-life the is more well. in team helps I competitors choices. also think really for some our talked some an of about outstanding cases, accelerate remarks, ]. that And our capitalize the lot job. said [ those adding run prepared do our give we we're But does product customers we're does

Operator

Susquehanna Rolland Our International next Group. Chris question comes from the line with of

Christopher Rolland

be of that space needle or in these and your guys or new kind be cool maybe of from new PC applications interesting with Lunar human things but there, other or customers of big softball might first. coming. do of Lake think Just you are you applications? you a think eventually learned Point these Strix you Are know that detection of you any seeing the applications one you perhaps applications learned I or could other that any that PC-driven pretty kind moving, presence

Esam Elashmawi

Yes.

the see comes lot do adding on artificial as ecosystem detection, you'll we're the detection ecosystem designs. Lattice AI their because I even person you're of an OEMs also PC enable intelligence, to point large they we On part They'll PCs on PC as gate aware to partner. but that devices, side, and when a client partners think it the with reference well

as those from well. benefit we deployments So

when there's deployments over want compute billion are I'll problem Edge the We And about to out is if talk that at this. solution to is And the about about, companies AI you the thing afford needle-moving go at high-performance Lattice AI to the have get no easy in prepared excited NVIDIA, latency I'm forum a December. other center. that talked of AI. sensors in the into sensor about developers that lot our remarks, X the for work And look introduced world, concept platform. talked last in a that that The way there the sensors, statement the we on those all can they we to with data

starting customers solutions so customers how we partnered are started deploy introduced to NVIDIA sensor with it how December last now compatible that data, that we've on how we within do we do boards to to Lattice and actually we ship And -- on and some systems. and NVIDIA those CUDA, make can around that aggregate actually solution specific a preprocess

are, me X well bring and us again, to see another So referring to that of a you examples, But talked PCs type solution one to that's industry. exciting the for those as one. about that

Christopher Rolland

the I totally Sherri, then didn't understand That's comments. maybe channel inventory fantastic. And for

previously You guys was have back said levels. to that inventory pre-pandemic

you saying nuance shipping I I from shipping some mind how much put you give this normalized high are dollars us there. of now guys numbers could a And a preference maybe So Are picture quarterly perhaps then were in have demand. you the think the expressed would those nuance to you or very And if just perhaps like And if numbers around customers then perspective, a if dollar normally? numbers, also you're I paint or you either days? the if some quantitatively, Or just levels there. guys us true below provide missed those we number well. understand, help I the would it were can I guess have drag stuff inventory below? missed too of to like channel any think

Sherri Luther

Yes.

at that, is So the it saying of end at range levels, channel, that what inventory but our currently I is the is, the distributor the pre-pandemic was that higher earlier inventory, that range. is that in range was that

And as that commentary have provided quarter last we the well. so similar that's

it's the highest So range within is that the the range.

Christopher Rolland

range? that what's And

Sherri Luther

-- we levels. We pre-pandemic communicated the consider that for is what have but not normal our business is, at what range that we range

would levels. it back multiple that inventory was be very that time. give end communicated our that normal is that distributor that I And because in to had mean, be we it over so the I sort COVID, go in and to low channel over that, row knew And on consider we will, range, if would consumption that, it's a be you of replenished at so are And occur at undershipping if of the what the that need is inventory you color can replenished can we other time. we higher why during to you demand quarters

that with are the toward now, we So contrast little higher of bit range. end it's a the where where

start so we to occur demand continue dissipate to can that's we normalization will digestion so why the And over occur. undership -- half, that so can to occur want inventory second that inventory

Christopher Rolland

Or Okay. wasn't what sense this And if revenues below we a be? true normalized on get how shipping much occurring, demand? could would your you're

Esam Elashmawi

Yes.

Sherri on there's the them is at X door One healthy are the #X nominal high channels. the conversations but we they question, in is, the That's inventory ship decreasing. ship where are that more you the look dollars We we regular which by shipping with ship would to their we what demand. on ask is out them, normalized? the be true the levels, getting that what doing? alluding #X. level But And Is if ship customer to side what versus of she talk referring distributor what that basis. we I ways have is a customers that with is we to about that the under of how was but know we than channel, definition, So we we're of inventory to we're to, in at you that it the concerned not we're what distributors, know talked

Operator

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

Tristan Gerra

QX know for and above level, automotive, for which and you've you're you industrial annualize basically at in million reported segment, you're $XX demand. I the undershipping that pre-COVID was and Looking If mentioned I XXXX. XX%

the So on a at been about industrial CAGR. industry, that that's know We side, the least inferring X% has X%. whole around

gaining So you've share. been

some benefited probably from You've pricing.

get of see of looking of assume going number got But this we the And Or kind double is up we kind kind to is contribution even the how under with next are a would So QX growth from rebounding -- shipping? revenues eventually it the if XXXX? would those bottom, at since CAGR years rate? back you trying what from of inferred normal the question few which several share you're you're new X% useful getting the past because And to is, in be tie digit is that you're growth pricing to years? what be normal any to industrial a I'm the and for kind at much is, CAGR that gain?

Esam Elashmawi

the alluded had in growth for our a the target for healthy and that end that products that our That that, has really industrial customer been with stronger, within what's And combine this growth past. Yes. segment, just and the we it. adopting form can is portion a differentiated are suited we've are Tristan, a growing driven alluded that well you factor, more really just the that's power, good we And well. what us, of segment revenue. We you the good to getting targeting that been and a the as a the fundamentals you of higher we that in of customers overall to have we're market. at expect look [ Investor gave to When adding we're than at systems, is X good to market intelligence And rate revenue do the intimacy those company growth financial at Lattice last still segment all double-digit over years and XX% grow next FPGA we target. top between small committed X that revenue, to ] our advance layers XX% Day the to on still the to stronger as as

portfolio it last We're as quarter ever devices introduced been. has products. just introducing as Our Developer strong at is our product Conference. more more We

being very products You'll by as announcements of differentiated These that products defined well. our new are more are customers announced. get

markets in industrial segment. good about can position double-digit our within and we So that continue we feel growth with that

Tristan Gerra

speed industrial a on know but customer. a also the product to just of Or the new -- got ago point? and little a a excess need quarters you've of Avant -- I that Avant you first? given at but lower their products get this lower at not mean you it's that useful. bit got to That's at getting any refreshes would actual kind your they've expect track, all you And Could indication and necessarily because just end could than that Okay. rate few are said ramp you've then is inventories, at flush

Esam Elashmawi

of versus it. with products half really Customers the 'XX. And the still again, early question, They're products. adopting Avant have half the the inventory 'XX in if I give is you a ramping data going of of there's a ramp of affect Avant. first in ramped point that Yes, recall, no to their new first prior kind indication to are is normalization cycle. that the up

get with let Avant I put no so with team -- I'm there's this and Avant. field see the And there's customers mean, very want problem the no -- to products out, normalization products as show to their way, products it they going, fast to And deadline. intimate with want Avant to our marketing with want they market those well. designing their as don't get the me inventory differentiated as revenues get want They We new they're can. and to that they

Operator

James. And the question Pajjuri Srini our line Raymond from next comes of with

Srinivas Pajjuri

of short-term a Esam, questions. and out better to QX QX. about couple bookings backlog bit little being than we talked stabilizing a also as A look you

also this driving is think about the inventory you that about? products new you in primarily Or curious, being improvement talked strong as Or backlog? server Just normalization the are do cycle this you talked well. the

color give us driving So you as if think backlog? you is what improvement could just the to some in

Esam Elashmawi

orders new ramps that come as the product Clearly, from factors. multiple a of sells perspective. in combination a it's Yes, booking

Our are opportunities to design also wins, is team did those it well. sockets X give really data a I the ramp. design that customers has that us. in activity into design last doing good as we had record products Part Lattice point also That normalization The getting bookings on the quarters. drives been additional for job of as a

multiple sign saw for good a it's an half is that, again at combined, bookings, we think the second us. uptick So when the factors of I which QX in

Srinivas Pajjuri

And compute the much follow on than then the now guessing the to comms. the bucket. Got is it. up just I'm compute other bigger bucket, server and

are If increase about that with And that XX% the compute you generation how seeing is of a talk also help where quantify of could big you're maybe current cycle? I we know servers. maybe bucket? then content in

talk maybe where can you we If about are?

curious you And then few type should ] the to Turin? then to we content as we we And as [ if ramping. expect a from Genoa look to Sapphire similar from and go platforms of quarters, out Granite have just next increase new

Esam Elashmawi

in always at And overall, tax And ASPs there's that it past, the servers. about also the general-prepose several past, But but quarter-to-quarter. a is higher you be tends or to the point why heard it up. servers, said the server I higher true is we equal me to if fluctuations There is that what than there's the holds servers, to out reason our adopting. is, some revenue look in we've customers general And and are AI-specific go rate, also again, talk you rate higher AI-specific that the in this. Yes. the broke purpose want it the servers. going out attach

next general purpose fact, we AI tax good generation if In being increase in at the rate I are deployed, the of see well as as that a servers look well. there servers the as

bringing really good next well are in the job innovating for have market. value as specific a We the our visibility as this architectures doing to with AI Lattice really team, good both customers, and general purpose. And more over

FPGAs generation. the well, So although increase as of the and current with increase has dollar next prior a the start a as quantified generation, tax an higher ASP. do to But XX% have increase not we'll We'd haven't just we generation they'll we dollar that the a to into do higher it, we adoption rate, in quantified we the dollar do see for and see expect ramp production.

Operator

have now reached over back to management the remarks. we session. call I'll the And for closing question-and-answer turn the end of

Esam Elashmawi

on joining everyone, us you, you, Thank for call. right. operator, All today's and thank

a improvement. the through While period normalization, signs we're continues inventory starting industry of of go to see to

well on We expansion growth. continue for that portfolio today's remain positioned product our concludes ongoing to long-term Operator, and execute call.

Operator

Thank you This at conference, you today's concludes Thank participation. your lines may time. disconnect this for your and you.

Lattice Semiconductor (LSCC) 29 Jul 242024 Q2 Earnings call transcript