Lattice Semi Outpaces Expectations for the Fourth Consecutive Quarter

The News: Lattice Semiconductor (LSCC) came out with quarterly earnings of $0.22 per share, beating the Zacks Consensus Estimate of $0.19 per share. This compares to earnings of $0.15 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 15.79%. A quarter ago, it was expected that this chipmaker would post earnings of $0.17 per share when it actually produced earnings of $0.19, delivering a surprise of 11.76%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times. Read the full earnings news item on Nasdaq.

Analyst Take: Over the past few quarters, we have been watching Lattice continue to outpace market expectations on the strength of the semiconductor market paired with its strategic focus on low-power FPGA’s addressing several key markets. The company is scaling its business through the continued development and diversification of its Nexus Platform, which launched in 2019, and now houses three device families to address its market segments. The focal point of its products includes low-power and faster performance. Additionally, the company focuses on software development that simplifies the adoption of Lattice products and solutions while speeding go-to-market execution.

Growth in its Key Areas

Lattice breaks its revenue down into two key segments. The first is communications and computing, and the second is industrial and automotive. Both areas are rapidly growing, and both segments have been impacted by the global supply chain issues (more below).

The communications and computing segment saw 28% YoY and 7% sequential growth. The company pointed to the growth in data center servers, client computing, and 5G infrastructure as the strength in this segment. While Lattice isn’t supplying the well known general-purpose computing or complete systems that the likes of Intel or AMD or Qualcomm may be recognized, their FPGA’s are found in endless designs and are used frequently as sidecars or as low-cost chips that are found in computers, mobile devices, and servers. This result for the quarter was once again robust.

In the Automotive space, the company also saw 20% YoY with 9% sequential growth. The automotive market and its need for vast semiconductors continue to grow. We see more significant investment in everything from more intelligence in rising ADAS levels, infotainment, and traditional sensing equipment in the automotive space.

Supply Chain Well Managed

With Semiconductors facing shortages in the supply chain, it would be reasonable to think Lattice could run into a slowdown, but the company’s earnings call indicated that the operations team has this well managed and seems to be in an excellent position to manage demand through the shortage. This resiliency includes inventory levels that exceeded the same period a year before. Meaning, this is an area to watch for Lattice, but not an area that should worry investors at this juncture.

Overall Impressions of Lattice Semiconductor Earnings

Lattice has carved out an important niche in the low-power FPGA space, and this focus is enabling growth and differentiation. The YoY increase coincides with the growing demand in its key areas, including 5G, Computing, Automotive, and IoT. I expect this trajectory to be sustainable and will provide more commentary on Lattice following the company’s upcoming investor day.

Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.

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Image: Lattice Semiconductor