The Six Five team discusses Lattice Q1/24 earnings.
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Transcript:
Daniel Newman: Let’s talk about Lattice Semi. We’ve now seen the FPGA numbers from everybody or mostly everybody.
Patrick Moorhead: That’s right. Yeah, let’s dive in here. So first off, Lattice is in a very difficult market. A lot of it is IoT. So some puts and takes going on right now. Oh, thank you. We’re live. You’re actually live on the podcast. Welcome. So yeah, there was some puts.
Daniel Newman: Breakfast.
Patrick Moorhead: No, I know. Can you believe that? Isn’t that awesome?
Daniel Newman: Awesome.
Patrick Moorhead: So yeah, we had puts and takes. By the way, that’s my stepmom, Marcia. So thank you Marcia for joining the show. So yeah, puts and takes. I mean you have automotive that’s doing well for Lattice, but the market’s down. The whole industrial IoT thing, as we’ve seen from pretty much everybody is down. Computing is way up, right? You’ve got Lattice on pretty much every modern day server, general purpose server, but also AI server out there. And they got a 50% attach rate on pretty much everything that they do with software. So that’s pretty awesome.
So they don’t have to cut prices because they don’t have to. And they’re still hovering at 69% gross margins, which is pretty, pretty incredible. We haven’t yet seen the shoe drop on Avant, which is their mid-range play that goes right at the heart of Altera and Xilinx business. And Jim did throw something out there that I thought was provocative on the call. He said, “We have accelerated the roadmap on Nexus.” And that was definitely a stay tuned moment. If you’re looking competitively, Altera was down 58%, Xilinx was down I think 43%, and the Lattice was down 24%. So I think that’s a win.
Daniel Newman: Yeah, so this is definitely an instance where Lattice outperformed the market in its particular space, but has kind of … So just to be clear, we saw different gullies in the semiconductor space over a different periods of time. Data center bottomed at a different point, and then the memory bottoms at a different point, and then PCs and devices have bottomed to different points, and FPGAs. And FPGAs held up a lot longer, stronger for longer. Remember, I mean there was like 10, 11 quarters. This was a beat in terms of what was expected, but it’s just after so many really remarkable quarters, it’s just a little bit of a slowdown. But when it comes to that low to mid market, Lattice seems to really have its arms wrapped around it. And Pat, they’re still delivering close to a 70% margin, still delivering really strong earnings.
It’s a very well-run company. They’ve got good innovation coming out. They’re winning the right partners. They’re seeing some softness in areas like communications that have slowed down its recovery. Industrial broke later than other parts of the market. That’s stuck around. Now you got automotive, that should be making a comeback, I believe, in the near future. And of course data center is going to be really strong. And that’s where I see the growth. As they’ve gone up the market, they’ve been in a really good position. And as Intel tries to find its … Sorry, what’s the new company? It just totally slipped my mind.
Patrick Moorhead: Altera.
Daniel Newman: Is that what they’re calling it, the new-
Patrick Moorhead: Yeah, the old name is the new name.
Daniel Newman: Thank God. Why did that just disappear from my brain? Okay, I wanted to say it and then I’m like, “No, that’s not right. That’s the old name.” The old name is the new name. Okay, what’s old is new again. So Altera was really off its numbers. Xilinx showed up off its numbers. So I guess when you’re looking in a certain class, you want to say who’s performing best in the class? And right now Lattice is performing best in the class.
I know recently you sat down with Jim Anderson. He’s going to be joining us at The Six Five Summit this year. And so that’s very exciting. We look forward to hearing from Jim more. And of course, sometimes part of managing a company is doing really well when things aren’t going really well and doing better than what’s in the market. So in this case, credit to the company. I think we’re starting to see the bottom. My belief is there’s probably one more tough quarter and then you very likely might start to see the turn. And that’s really how it was guided as well.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
