Lattice Semiconductor Corporation

What they do

Lattice designs and sells differentiated FPGAs, silicon-enabling products, system solutions, design services, and IP licenses. Its products are used for control, connect, compute, and security functions in markets such as data centers, 5G infrastructure, industrial automation, automotive, and smart devices. The company emphasizes low power, small size, and ease of use.

Revenue drivers

• Compute and Communications — Record segment revenue in Q2 2026, driven by AI-optimized servers, data center networking, and 5G infrastructure. This is the largest growth area, with increasing adoption of companion FPGAs to AI processors.
• Industrial and Embedded — Continued revenue recovery in Q2 2026. Includes factory automation, robotics, smart factories, and automotive applications such as ADAS and electrification.
• Intellectual Property (IP) licensing and services — Provides recurring revenue streams across end markets, though not separately quantified. IP and services are part of the company's monetization strategy.

Recent performance

Q2 2026 (ended July 4, 2026) revenue was $201.1 million, up 62.2% year-over-year and 17.7% sequentially. GAAP gross margin was 70.3%, and GAAP diluted EPS was $0.14. Non-GAAP diluted EPS was $0.53, up over 120% year-over-year. GAAP operating cash flow was $88.3 million (43.9% margin), and non-GAAP free cash flow was $81.3 million. For the first half of 2026, revenue was $372.0 million and GAAP operating income was $48.4 million.

Strategy

The company is focused on small- and mid-range FPGAs and a companion chip strategy to AI processors. It completed the acquisition of AMI on July 27, 2026 to build a secure management and control platform. Management is investing in R&D and sales to expand customer reach and drive market share gains. The stated goal is to become a leader in the far-edge AI segment.

Risks

• Geopolitical supply chain exposure — The company relies on subcontractors for wafers, packaging, and testing, which exposes it to geopolitical risks and potential supply disruptions.
• Tariffs and trade restrictions — Tariffs, export controls, sanctions, or similar actions could impact Lattice's global business and results.
• Inventory valuation risk — Changes in customer demand, technology, or market conditions could require additional inventory write-downs, negatively impacting gross margin.
• Intellectual property licensing volatility — Revenue and margins can fluctuate due to intermittent sales of patents and significant licensing transactions.

Outlook

Management expects Q3 2026 revenue of $255 million at the midpoint, including two months of AMI revenue, implying about 65% year-over-year growth in the FPGA business. Non-GAAP EPS growth is expected to outpace revenue growth. The company projects a $1 billion annual revenue run rate ahead of expectations.