LATTICE SEMICONDUCTOR CORP earnings calls

Why you expect 2027 revenue

Q (Sebastien Naji · William Blair): He asked what gives management confidence in the 2027 revenue guidance. He also asked which of the four joint AMI solutions has the strongest traction and when revenue will show up.

A: Management listed multiple concrete drivers: long backlog visibility into 2028, continued CapEx and multi-year customer agreements, AI-driven content expansion, industrial embedded demand recovering, a full year of AMI, and strong new-product revenue like Nexus and small FPGA. For the AMI solutions they said the security retrofit has the strongest traction, is going to production this quarter, many customers will produce in 2027, and revenue should inflect meaningfully in 2028.

"The strongest one by far is the security retrofit that allows operators to upgrade the fleet without changing the hardware, and that would allow them to upgrade the fleet to the latest security post-quantum cryptography right away." — Ford Tamer (CEO)

2027 timing, backlog, pricing

Q (Ruben Roy · Stifel): He asked about the revenue linearity through 2027 and how much of the 60%+ growth is already in backlog versus dependent on new design wins. He also asked about pricing and server unit trends and how fast Compute & Communications could grow.

A: Management said they took a conservative view of the second half and expect stronger growth in Q1 and Q2, while Q3 and Q4 may not match that same rate, but they remain confident in 60% or higher growth. They said pricing is a small part of the story (passing on some supplier cost increases and expedite fees) and emphasized unit growth and new applications; they also said server units are about 20 million this year and should grow to about 25 million next year, with AI server share rising from roughly 25% to about 40%.

"We do expect server units to be about 20 million this year. We do expect them to grow to about 25 million next year." — Ford Tamer (CEO)

AMI revenue and margins

Q (Gary Mobley · StoneX): He asked whether AMI is performing above the prior $200 million annual expectation and how AMI affected gross margin, including the non-core asset sale impact. He also asked about OPEX and whether a 45% non-GAAP operating margin in 2027 is possible.

A: Management said AMI revenue in the partial quarter was slightly higher than expected with a better mix of higher-margin business, helping margins. They still see AMI around a $200 million± run rate through the year, expect meaningful growth next year as part of 2027 planning, and said the non-core business will be gone with margins expanding into the high 70s; on OPEX they said the objective is to grow EPS faster than revenue and they will plan OPEX to support that.

"We still, at the aggregate level, think it is around the $200 million± run rate business through the year." — Lorenzo Flores (CFO)

Long-term deals and inventory plans

Q (Tristan Gerra · Robert W. Baird): He asked how long-term agreements differ from a year ago, whether management can disclose what percent of next year's revenue is covered by LTAs and if pricing is embedded. He also asked if channel inventory will rebuild, notably in industrial.

A: Management declined to provide LTA details on the call. They said they will keep channel inventory close to current levels to match distributor-to-end-customer demand and avoid overhang, so they do not expect a meaningful strategic rebuild next year; separately, they are deliberately building internal inventory to respond to expected growth in late 2027.

"Channel inventory, we are going to try to maintain close to the levels we are at." — Lorenzo Flores (CFO)

Supply and delinquencies

Q (Quinn Bolton · Needham & Company): He asked if the comment about moderating growth in the back half was year-on-year or sequential. He also asked for an update on delinquencies and whether management can bring on additional capacity to support demand.

A: Management said the comment applied to both year-on-year and sequential views, but growth remains strong and they are being prudent in planning. They said supply is in good shape with multi-year supplier agreements and secured supply for multiple years, and that delinquencies are going down significantly with lead times also decreasing.

"So our delinquencies are going down significantly, and our lead time has gone down." — Lorenzo Flores (CFO)

Double ordering and data center momentum

Q (Melissa Weathers · Deutsche Bank): She asked if there are signs of double ordering and what steps management is taking to scrub demand, especially in Industrial & Embedded. She also asked about FPGA per rack metrics, breadth of design engagements, new hyperscaler customers, and the role of memory pooling.

A: Management said they triple-checked bookings with customers and the channel and see no signs of double ordering in Industrial & Embedded; bookings extend well into 2028 and are being scheduled out. They pointed to many new server, networking, and storage applications described in their slide deck and introduced Lattice Prompt, a tool that integrates with customers' preferred LLMs and IDEs to speed development and expand the developer base, which they expect will drive attach-rate growth and many new applications.

"Industrial & Embedded is just starting to ramp again, so there are no signs of any double ordering there." — Ford Tamer (CEO)

Five-year growth and balance sheet

Q (Srini Pajjuri · RBC): He asked what underpins the five-year ~30% growth view and whether the FPGA industry is structurally better now. He also asked about quarter linearity, inventory and receivables, and whether the company is positioned to support incremental demand given its balance sheet and supply.

A: Management said Lattice is exposed to many diverse end markets and customers (they cited 11,000 customers) and they believe this is an early innings multi-year expansion across servers, industrial, robotics, aerospace, and more. They also said the Q3 inclusion of AMI affected AR levels but days are down and cash conversion looks good; they are investing in inventory arriving late in the quarter to support upside, expect linearity to smooth over coming quarters, and see minimal risk in holding extra parts to capture demand.

"I do believe that Lattice is a perfect industry barometer because we are exposed to all the various sectors here, all the various customers, 11,000 customers, very broad-based, very varied segments across Compute & Communications, Industrial & Embedded." — Ford Tamer (CEO)

FPGA attach rate and TAM cap

Q (Joshua Buchalter · TD Cowen): He asked how far the FPGA-per-server attach rate has progressed and whether there is any cap on content or TAM as rack-scale heterogeneous architectures spread. He also asked how much of next year's growth is from unit growth versus new products and AMI.

A: Management said FPGA revenue will be well over $1 billion next year and that attach rates have steadily grown from one to two to three and are now starting with a four, with no further detail provided. They said the primary driver is unit growth of existing products, followed by new-product growth, and then AMI and associated solutions.

"The first order of magnitude that is really driving this is unit growth of existing product." — Ford Tamer (CEO)

Lattice Prompt vs competitors

Q (Sajal Dogra · Rosenblatt): He asked how Lattice Prompt differentiates from competitors' AI-assisted FPGA tools and why these tools will work now. He also asked whether supply challenges at competitors are translating into design-win gains for Lattice.

A: Management said Lattice announced Prompt first and that their tools integrate with customers' preferred language models and IDEs, which makes development much faster now than in the past. They said they have secured supply and are gaining market share in small FPGAs, noting Lattice presence across many server and switch boards at OCP.

"The reason I think these AI-assisted tools are going to work now better than in the past is they are integrated with the IDE that people are using already today." — Ford Tamer (CEO)

Backlog and possible M&A use of cash

Q (Christopher Rolland · Susquehanna International Group): He asked whether the conservatism for the back half is driven by backlog/customer conversations or by market worries. He also asked what management might do with growing cash — M&A, software, hardware, or other areas.

A: Management said the conservatism is data-driven and that they have backlog well into 2028 (covering Q1–Q4 2027 and into Q1–Q2 2028), and while growth could be higher than 60% they see no benefit in raising the guide now. On cash, management said they are generating cash and will pay down debt aggressively while focusing on AMI integration; they remain open to inorganic opportunities but the near-term focus is debt paydown and integration.

"No, we have backlog well into 2028. Yes, Q1, Q2, Q3, Q4 of 2027, and into 2028, means Q1, Q2 2028." — Ford Tamer (CEO)

Call end and closing

Q (Speaker 14): No question; the operator closed the call.

A: The operator concluded the conference and a participant said goodbye. There was no management answer in this exchange.