Lattice Semiconductor Corporation (NASDAQ:LSCC) Q3 2021 Earnings Conference Call November 2, 2021 5:00 PM ET Company Participants Rick Muscha - Senior Director of Investor Relations Jim Anderson - President, Chief Executive Officer & Director Sherri Luther - Chief Financial Officer & Corporate Vice President Conference Call Participants Alessandra Vecchi - William Blair Tristan Gerra - Robert W. Baird Hans Mosesmann - Rosenblatt Securities Matthew Ramsay - Cowen & Company David Williams - The Benchmark Comp ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 2, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ Commission file number 000-18032 LATTICE SEMICONDUCTOR CORPORATION (Exact name of Registrant as specified in its c ...

Lattice Semiconductor Corporation (NASDAQ:LSCC) Q2 2021 Earnings Conference Call August 3, 2021 5:00 PM ET Company Participants Rick Muscha - Director, Investor Relations Jim Anderson - President and CEO Sherri Luther - Chief Financial Officer Conference Call Participants Matt Ramsay - Cowen Alessandra Vecchi - William Blair Tristan Gerra - Baird Chris Rolland - Susquehanna Hans Mosesmann - Rosenblatt Sam Peterman - Craig-Hallum Capital Derek Soderberg - Collier Securities Operator Welcome everyone to the L ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 3, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ Commission file number 000-18032 LATTICE SEMICONDUCTOR CORPORATION (Exact name of Registrant as specified in its char ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 3, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________ Commission file number 000-18032 LATTICE SEMICONDUCTOR CORPORATION (Exact name of Registrant as specified in its cha ...

Lattice Semiconductor Corporation (NASDAQ:LSCC) Q1 2021 Earnings Conference Call May 4, 2021 5:00 PM ET Company Participants Rick Muscha - Director, Investor Relations Jim Anderson - President and CEO Sherri Luther - Chief Financial Officer Conference Call Participants Alessandra Vecchi - William Blair. Mark Lipacis - Jefferies Hans Mosesmann - Rosenblatt Securities Matt Ramsay - Cowen Tristan Gerra - Baird Christopher Rolland - Susquehanna Sam Peterman - Craig-Hallum Capital Derek Soderberg - Colliers Secu ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) Lattice Semiconductor specializes in low-power FPGAs, operating a fabless model and generating significant revenue through distributors across key end markets - Lattice positions itself as the leader in low-power programmable logic, focusing on FPGAs to solve customer problems in growing markets like 5G, cloud computing, industrial IoT, and automotive electronics[13](index=13&type=chunk) - The company operates a fabless model, partnering with established foundries like Samsung, UMC, TSMC, and Epson for wafer fabrication, and OSATs like ASE and Amkor for assembly and testing. This strategy allows Lattice to focus on product development and avoid the high costs of owning manufacturing facilities[34](index=34&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk) Revenue by End Market (Fiscal Year 2020) | End Market | Revenue ($ millions) | % of Total | | :--- | :--- | :--- | | Communications and Computing | $174.7 | 42.8% | | Industrial and Automotive | $168.3 | 41.2% | | Consumer | $45.5 | 11.2% | | Licensing and Services | $19.6 | 4.8% | | **Total Revenue** | **$408.1** | **100.0%** | Sales Channel Breakdown (Fiscal Year 2020) | Channel | % of Total Revenue | | :--- | :--- | | All Distributors | 83.1% | | Direct Customers | 12.1% | | Licensing and Services | 4.8% | - As of January 2, 2021, the company had **746 employees** worldwide[50](index=50&type=chunk) [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, supply chain concentration, distributor reliance, geopolitical tensions, and industry competition - The COVID-19 pandemic is highlighted as a significant risk that could disrupt manufacturing, supply chains, and customer demand, potentially impacting revenue, margins, and overall operating results[59](index=59&type=chunk)[60](index=60&type=chunk) - The company relies on a concentrated number of independent foundries and OSATs in Asia. Any disruption, financial difficulty, or inability of these partners to meet demand could lead to significant costs and delays[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - A substantial portion of revenue comes from a concentrated group of distributors. In fiscal 2020, **two distributors accounted for 60% of total revenue**. Adverse changes in these relationships could significantly harm sales[114](index=114&type=chunk) - Tariffs, trade sanctions, and U.S. export restrictions, particularly concerning customers in China, pose a significant risk. Regulatory actions have previously limited business with a major Chinese customer and could affect others in the future[68](index=68&type=chunk)[69](index=69&type=chunk) - As of January 2, 2021, the company had approximately **$171.9 million in outstanding debt**. The credit agreement contains covenants that could limit strategic flexibility and require significant cash flow for debt service[98](index=98&type=chunk)[99](index=99&type=chunk) [Unresolved Staff Comments](index=15&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[122](index=122&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) Lattice leases all major facilities, including its corporate headquarters and key R&D centers, which are deemed adequate for current needs - Key leased properties include a **47,800 sq ft corporate headquarters** in Hillsboro, OR; a **98,874 sq ft facility** in San Jose, CA (of which about half is intended for sublease); a **48,565 sq ft facility** in the Philippines; and a **68,027 sq ft facility** in Shanghai, China[123](index=123&type=chunk)[124](index=124&type=chunk) [Legal Proceedings](index=15&type=section&id=Item%203.%20Legal%20Proceedings) The company is defending a lawsuit seeking $138 million in damages related to export-controlled product sales, believing the claims are without merit - The company is defending a lawsuit where plaintiffs seek **$138 million in damages** related to the sale of export-controlled products in 2008. The company believes the claims are meritless[335](index=335&type=chunk) [Mine Safety Disclosures](index=15&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[127](index=127&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=15&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Lattice's common stock trades on NASDAQ, has never paid dividends, repurchased $15.0 million in Q4 2020, and significantly outperformed market indices - The company's common stock is traded on the **NASDAQ Global Select Market** under the symbol **"LSCC"**[128](index=128&type=chunk) - Lattice has never paid cash dividends and intends to retain earnings to finance its business[130](index=130&type=chunk) Q4 2020 Stock Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Nov 1 - Nov 30, 2020 | 384,538 | $38.98 | | **Total** | **384,538** | **$38.98** | - The company's stock performance from December 2015 to December 2020 showed a cumulative return of **708.19%**, substantially outperforming the S&P 500 (**203.04%**) and the PHLX Semiconductor Index (**461.53%**)[137](index=137&type=chunk) [Selected Financial Data](index=17&type=section&id=Item%206.%20Selected%20Financial%20Data) Five-year selected financial data shows stable revenue, return to profitability in 2019, and reductions in total assets and liabilities Five-Year Selected Financial Data | Fiscal Year Ended | Jan 2, 2021 | Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue ($ millions)** | **$408.1** | **$404.1** | **$398.8** | **$386.0** | **$427.1** | | Gross Margin ($ millions) | $245.3 | $238.4 | $219.4 | $216.6 | $246.4 | | Income (loss) from operations ($ millions) | $52.4 | $59.0 | $(3.1) | $(47.6) | $(26.7) | | **Net income (loss) ($ millions)** | **$47.4** | **$43.5** | **$(26.3)** | **$(70.6)** | **$(54.1)** | | Diluted EPS | $0.34 | $0.32 | $(0.21) | $(0.58) | $(0.45) | | Total assets ($ millions) | $680.1 | $612.0 | $623.7 | $636.0 | $766.9 | | Total liabilities ($ millions) | $295.6 | $284.4 | $365.2 | $418.3 | $496.5 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2020 saw 1.0% revenue growth to $408.1 million, improved gross margin, increased operating expenses, and strong liquidity with $182.3 million cash Fiscal 2020 vs. 2019 Revenue Performance | Metric | FY 2020 ($ millions) | FY 2019 ($ millions) | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $408.1 | $404.1 | 1.0% | Revenue by End Market (YoY Change) | End Market | % Change (2020 vs 2019) | | :--- | :--- | | Communications and Computing | 12.1% | | Industrial and Automotive | 11.0% | | Consumer | (39.4)% | | Licensing and Services | (8.9)% | - Gross margin percentage increased by **110 basis points to 60.1%** in fiscal 2020, attributed to pricing optimization programs, product cost reductions, and favorable product mix[165](index=165&type=chunk) - Operating expenses increased in fiscal 2020. R&D expense rose **13.5%** due to increased stock compensation and headcount to support product portfolio expansion. SG&A expense increased **15.5%**, also driven by higher stock compensation and salaries[168](index=168&type=chunk)[172](index=172&type=chunk) - Cash and cash equivalents increased by **$64.3 million** to **$182.3 million** at year-end. The company generated **$91.7 million** in cash from operating activities during fiscal 2020[190](index=190&type=chunk)[193](index=193&type=chunk) - Inventories increased by **17.5%** to **$64.6 million** to meet increased customer demand[197](index=197&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks primarily involve interest rates on its $171.9 million variable-rate debt, with foreign currency risk historically immaterial - Foreign currency exchange rate risk has not had a material impact on the company's results from operations[212](index=212&type=chunk) - The company is exposed to interest rate risk on its **$171.9 million of outstanding debt**. A hypothetical **100 basis point (1%) increase** in the one-month LIBOR would increase future interest expense by about **$0.4 million per quarter**[213](index=213&type=chunk) [Financial Statements and Supplementary Data](index=26&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for fiscal years 2020-2018, including statements of operations, balance sheets, cash flows, and detailed notes Consolidated Statement of Operations Highlights | Line Item | FY 2020 ($ millions) | FY 2019 ($ millions) | FY 2018 ($ millions) | | :--- | :--- | :--- | :--- | | Revenue | $408.1 | $404.1 | $398.8 | | Gross Margin | $245.3 | $238.4 | $219.4 | | Income (loss) from operations | $52.4 | $59.0 | $(3.1) | | Net income (loss) | $47.4 | $43.5 | $(26.3) | Consolidated Balance Sheet Highlights | Line Item | Jan 2, 2021 ($ millions) | Dec 28, 2019 ($ millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $182.3 | $118.1 | | Total Assets | $680.1 | $612.0 | | Long-term debt, net | $157.9 | $125.1 | | Total Liabilities | $295.6 | $284.4 | | Total Stockholders' Equity | $384.4 | $327.7 | - The company relies on a limited number of distributors, with **Weikeng Group and Arrow Electronics accounting for 35% and 25% of total revenue** in fiscal 2020, respectively[229](index=229&type=chunk) - Total stock-based compensation expense was **$40.4 million** in fiscal 2020, a significant increase from **$18.9 million** in 2019, primarily driven by market-based and performance-based awards[300](index=300&type=chunk)[311](index=311&type=chunk) - The company maintains a full valuation allowance against its net federal and state deferred tax assets in the U.S., as it has not concluded that realization is more-likely-than-not[318](index=318&type=chunk) [Changes in and Disagreements with Accountants On Accounting and Financial Disclosure](index=52&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20On%20Accounting%20and%20Financial%20Disclosure) The company reports no changes or disagreements with its accountants on financial disclosure - None[362](index=362&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of January 2, 2021, with no material changes - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the fiscal year[363](index=363&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of January 2, 2021, based on the COSO framework[366](index=366&type=chunk) [Other Information](index=52&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[370](index=370&type=chunk) PART III [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=53&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for Items 10-14 is incorporated by reference from the forthcoming definitive proxy statement for the 2020 Annual Meeting - Information regarding directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and accountant fees is incorporated by reference from the forthcoming Proxy Statement[371](index=371&type=chunk) PART IV [Exhibits](index=53&type=section&id=Item%2015.%20Exhibits) This section lists all financial statements and exhibits filed as part of the Form 10-K report - This item contains a list of all financial statements and exhibits filed with the Form 10-K[381](index=381&type=chunk)

NEWS RELEASE CONTACTS MEDIA: INVESTORS: Bob Nelson Rick Muscha Lattice Semiconductor Corporation Lattice Semiconductor Corporation 408-826-6339 408-826-6000 Bob.Nelson@latticesemi.com Rick.Muscha@latticesemi.com LATTICE SEMICONDUCTOR REPORTS FOURTH QUARTER AND FULL YEAR 2020 RESULTS • Revenue Growth of 6.9% in 4Q 2020 Compared to 4Q 2019 • Gross Margin Expands to 60.5% / 61.6% in 4Q 2020 on a GAAP / Non-GAAP Basis, Compared to 59.2% / 59.6%, respectively, in 4Q 2019 • Net Income Increases to $0.11 / $0.19 P ...

Financial Data and Key Metrics Changes - Fourth quarter revenue was $107.2 million, up 4% sequentially and up 6.9% year-over-year [26] - Full year 2020 revenue was $408.1 million, up 1% from 2019 [27] - Non-GAAP gross margin for Q4 was 61.6%, up 200 basis points year-over-year [27] - Non-GAAP net income increased 20% year-over-year [13] - GAAP operating expenses for Q4 were $47.5 million, down from $49.5 million in the prior quarter [29] - Full year 2020 GAAP EPS was $0.35 per basic share, up from $0.33 in 2019 [33] Business Line Data and Key Metrics Changes - Communications and computing market revenue increased 12% year-over-year, driven by growth in servers, client computing, and 5G infrastructure [15] - Industrial and automotive market revenue increased 11% year-over-year, with growth in industrial automation and robotics [17] - Consumer market revenue declined 40% year-over-year due to weaker demand from the pandemic [18] Market Data and Key Metrics Changes - Communications and computing accounted for approximately 85% of total revenue in Q4 [45] - Industrial automation and robotics saw increased adoption due to the pandemic, driving growth in the industrial segment [117] Company Strategy and Development Direction - The company is focused on accelerating revenue growth and expanding profitability while investing in product portfolio expansion [36] - The launch of new products based on the Nexus platform is a key part of the strategy, with expectations for continued growth in communications and computing as well as industrial and automotive markets [20][23] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain challenges, having built inventory strategically in previous quarters [40][42] - The company anticipates strong customer engagement across all markets as it enters 2021 [23] - Management expects continued growth in communications and computing and industrial and automotive segments, despite challenges in the consumer segment [50][70] Other Important Information - The company ended 2020 with a net cash position for the first time in six years [25] - A virtual Investor Day is scheduled for May, where further details on strategy and product roadmap will be shared [10] Q&A Session Summary Question: Impact of supply constraints on business - Management indicated that the supply chain team has effectively supported customer demand despite overall industry tightness [40][42] Question: Growth in FPGA market despite consumer segment decline - Management noted strong performance in communications and computing, with specific growth drivers in servers and 5G infrastructure [45][50] Question: Initial revenue contribution from Nexus products - Management confirmed initial production shipments of Nexus products and expects them to contribute to growth in 2021 [55][57] Question: Future gross margin expectations with Nexus products - Management expects gross margin improvements primarily from pricing optimization and product cost reductions, with Nexus products contributing in the following years [83] Question: Visibility in the consumer segment moving forward - Management indicated that consumer revenue has stabilized and is expected to be more reliable moving forward, with a focus on higher value applications [70] Question: Sequential demand expectations for Q1 - Management expects growth in communications and computing and industrial and automotive segments, while consumer revenue is expected to stabilize [121]

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