Lattice Semiconductor Charts Growth With Strong Performance And Market Expansion

By Patrick Moorhead - July 12, 2023

Lattice Semiconductor recently hosted its 2023 Analyst & Investor Day event. Although I could not attend the event in person as I was traveling in France, I could stream it and see how Lattice is strengthening and growing its position as a low-power programmable leader. You can also watch a special episode of The Six Five Podcast—“On The Road at Lattice Analyst and Investor Day 2023”—embedded below.

My biggest takeaway from this year’s event is that Lattice continues to expand its product offerings after encouraging success. It was the first in-person Investor Day for Lattice since the beginning of the pandemic. In this article, I want to analyze the event, focusing on Lattice’s product strategy and how the company plans to be the absolute best at making power-efficient programmable semiconductors.

From repositioning to growth

I want to start off as Lattice CEO Jim Anderson started his keynote by pointing out the four specific goals that Lattice has accomplished in the past two years.

  1. Expand and build Lattice’s portfolio of small-field programmable gate arrays (FPGAs)
  2. Double Lattice’s addressable market by expanding into the mid-range part of the FPGA market
  3. Enable Lattice’s customers to adopt solutions through software
  4. Accelerate top-line growth and profitability

I was impressed to see Lattice exceed the goals it set out in its last investor day back in 2021. (You can read my analysis of Lattice’s Investor Day 2021 here.) Exceeding expectations, Lattice doubled its small FPGA portfolio with the Lattice Nexus platform, expanded into mid-range FPGAs with its Lattice Avant platform in December last year, built out its software portfolio and recorded its fourth straight year of double-digit growth.

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Not only did Lattice exceed these expectations, but these goals put Lattice in a great position to move from a repositioning phase to a growth and expansion phase. Lattice raised its long-term financial model targets, increasing its target gross margin expansion, lowering its target operating expenses, and raising its target operating income.

At the same time, Lattice has situated itself into four core markets so that 90% of its revenue comes from communications, computing, industrial and automotive. Lattice hit the nail on the head in identifying these four target markets, all of which are expected to grow substantially in the next decade.

These four markets are also not mutually exclusive; they share some of the same growth drivers, including the accelerated use of AI, the increased demand for secure computing and the ongoing need for more performance and efficiency. AI is becoming a key part of the automotive industry thanks to autonomous driving and advanced driving assistance systems (ADAS). It also has a big role to play in industrial automation and robotics.

Lattice is positioned well to take advantage of the growth of AI. FPGAs are versatile devices that can be programmed and reprogrammed as AI algorithms evolve and iterate. They are also more power-efficient than CPUs and GPUs for running specific tasks—in the case of AI, processing large amounts of data. Power efficiency and versatility are also two valuable enablers for edge computing.

Security is also becoming a key growth driver for FPGAs, especially in servers. FPGAs provide a unique level of security because of their innate reprogrammability and hardware isolation. Any FPGA can be reprogrammed when exposed to security threats, and each device performs tasks in isolation at the hardware level.

Lattice is also positioned well for a high-growth phase because of its emphasis on software solutions and the adoption of mid-range FPGAs for customers that already use the company’s small FPGAs. Good hardware follows good software, and as Lattice expands its software stack to include more software-based solutions such as Lattice Automat and Lattice ORAN, it is making FPGAs easier to program, giving customers a faster time to market. Customers that program small FPGAs then have a familiar solution to use when adopting Lattice’s Avant FPGAs for mid-range market applications.

In my previous analysis of Lattice’s 2021 Investor Day, I said that software stacks will help Lattice go from “making” the market to “taking” the market as a better alternative to controllers and ASICs. I would attribute Lattice’s “taking” the market to its emphasis on software solutions for its small and mid-range FPGAs.

Embracing the growth

Lattice’s strategy moving forward involves rapidly expanding its small and mid-range FPGA portfolio and software solution stack. I liked it when chief strategy and marketing officer Esam Elashmawi said that product portfolio expansion drives customer intimacy by helping Lattice define the product. I believe this customer engagement helps Lattice take hold of market opportunities by better understanding what is needed in the market.

Earlier this year, Lattice launched the Lattice MachXO5TNX FPGAs for advanced system control; at its Investor Day, it also announced the new Nexus-based Lattice CrossLinkU-NX small FPGAs for embedded vision. Beyond that, Lattice says it is improving its offerings by adding more AI capabilities, new interfaces and lower power capabilities. It would have been easy for Lattice to cruise at its current pace based on the leadership it has in small FPGAs, but the expansion of its portfolio of small FPGAs is a testament to how Lattice is not taking its foot off the gas. The new Nexus-based CrossLinkU-NX is expected to launch later this year and further drive Lattice’s leadership in small FPGAs.

Lattice

Lattice also announced new Avant mid-range FPGAs, adding to the mid-range portfolio it launched in December of last year. Launching the Avant product portfolio doubled Lattice’s total addressable market and introduced mid-range FPGAs with twice as much performance, less than half the power and six times smaller compared to its competitors. Both the Avant-G family of general-purpose mid-range FPGAs and the Avant-X family of advanced connectivity FPGAs are set to debut later this year.

While Lattice did not go into specifics of these new FPGAs, the key for these announcements is that Lattice engaged its customers and delivered. Lattice developed these new FPGAs through customer engagement, and as mentioned above, customers can now use them by leveraging the same software tools they’re already familiar with. This stickiness is a huge win for Lattice. Even more, revenue growth is expected to to accelerate over time with the addition of the mid-range portfolio of products which will be additive to the top line.

Lattice is also expanding its solution stack portfolio. It announced Lattice Drive for growing automotive technologies, including bridging and processing for ADAS sensors and infotainment and low power in-vehicle monitoring. I believe there is considerable potential for Lattice in the automotive industry, especially with the rise of autonomous vehicles and richer in-cabin experiences. The industrial and automotive sectors are expected to make up 50% of Lattice’s $10 billion expanded market opportunity by 2028, and Lattice Drive is critical for taking hold of that opportunity.

Lattice

Wrapping up

Lattice continues to strengthen its position as a leader in low power programmable solutions. It has successfully achieved its goals by expanding its product portfolio, entering new markets and driving growth and profitability. The strategic repositioning into four core markets has put Lattice in a great place to grow, especially with the rise in AI applications and the need for more secure solutions.

The expansion of its small FPGA portfolio and the introduction of new mid-range FPGAs demonstrate Lattice’s commitment to innovation and customer engagement. Lattice Semiconductor is poised to continue its growth trajectory and solidify its position as a leader in the semiconductor industry.

I wish I had more holes to poke in the strategy or execution, but the company’s executive leadership team made it hard.

Note: Moor Insights & Strategy co-op Jacob Freyman contributed to this article.

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.