Analyst(s): Ray Wang, Daniel Newman
Publication Date: August 5, 2025
Lattice’s Q2 FY 2025 earnings report highlights strong momentum in communications and compute, driven by increased attach rates and rising demand in AI server deployments. While industrial and automotive remained soft, inventory levels are improving, and design win traction continues to build across end markets.
What is Covered in this Article:
- Lattice’s Q2 FY 2025 financial results
- Record server growth and rising AI attach rates
- Edge AI traction through companion FPGA strategy
- Product mix shift toward Nexus and Avant platforms
- Industrial recovery outlook and inventory progress
- Q3 FY 2025 revenue and EPS guidance
The News: Lattice Semiconductor Corporation (NASDAQ: LSCC) reported its Q2 FY 2025 financial results, with revenue of $124.0 million (in line with consensus estimates), flat year-on-year (YoY) and up 3.2% sequentially. Revenue in the Communications and Computing segment grew 26% YoY and 20% sequentially, marking the segment’s strongest sequential growth in five years. The Industrial and Automotive (I&A) segment declined sequentially, with inventory normalization expected by year-end. Non-GAAP gross margin expanded 30 basis points YoY to 69.3%. Non-GAAP operating income rose 8.1% YoY to $34.1 million (at par with consensus), with an operating margin of 27.5% (Q2 FY 2024: 25.4%). Non-GAAP net income was $32.6 million (-1.4% below consensus), up 3.7% YoY.
“We delivered another strong quarter, with broad-based growth across key financial metrics and record design wins. Communications and computing markets remain solid, with normalized channel inventory and continued strength expected into 2026. Industrial and automotive markets are recovering as anticipated, with channel inventory levels showing signs of further improvement,” said Ford Tamer, CEO of Lattice Semiconductor. “Looking ahead, we’re excited about growth driven by major design wins alongside AI accelerators in Cloud datacenter, wired communications, industrial robotics, ADAS, and other far-edge AI applications.”
Lattice Q2 FY 2025 Results Show Strong Comms and Compute Growth
Analyst Take: Lattice had a solid Q2 for FY 2025, with a noticeable rebound in its Communications and Computing segment and continued progress in getting inventory levels back on track in the Industrial and Automotive space. While results were mostly in line with what was expected, the business showed signs of picking up, especially with stronger server attach rates and fresh design wins. Even with some ongoing challenges from the macro environment and inventory issues, Lattice is in a good spot to take advantage of the growing demand for AI infrastructure and edge computing in the months ahead.
AI Server Momentum Drives Record Growth in Communications and Compute
The Communications and Computing segment saw its best sequential growth in five years, climbing 20% from the previous quarter and 26% YoY. Server revenue stood out, jumping 85% YoY in Q2 FY 2025 and more than doubling in the H1 FY 2025 compared to last year. This surge came from higher capital expenditure (CapEx) spending by hyperscalers, rising attach rates in servers, better average selling prices, and more traction in AI-focused server setups. CEO Ford Tamer shared that attach rates now range from 70 to 130 FPGAs per hyperscaler rack, driven by needs like security, system complexity, and post-quantum encryption. Lattice’s FPGAs, which are known for being power-efficient, compact, and cost-effective, are getting more attention in server builds, with the company staying processor-neutral. These wins highlight Lattice’s growing role in the AI server space.
Far Edge AI and Companionship Strategy Reinforce Differentiation
Lattice is leaning into its role as a support chip provider for AI accelerators, NICs, switches, and control processors across compute and industrial tasks. In edge setups where power use needs to stay under 1 watt, Lattice FPGAs help with bridging, sensor fusion, and board control – essential features for far edge AI. Around 55% of AI-related revenue comes from these kinds of companion uses, with the rest from places where the FPGAs are either directly handling data or running AI models on the chip. Lattice is on track to pull in a high-teens percentage of FY 2025 revenue from AI, with that likely growing to the mid-20s in FY 2026. Their clear strategy – focusing on edge AI without competing with customers’ ASICs or larger FPGA designs – sets them up as a solid partner across AI, industrial, and communications applications.
New Product Portfolio Expansion Enhances Mix and Margins
In Q2 FY 2025, Lattice added to its small FPGA offerings with high I/O density parts in the Certus-NX and MachXO5-NX lines, built for low-power needs in AI, auto, and industrial use. These chips meet growing demands for connectivity, next-gen encryption, and better security. The product mix is shifting more toward high-value platforms like Nexus and, eventually, Avant – helping lift ASPs. The new lines are on pace to grow over 70% YoY this fiscal year and are expected to make up a mid-20s percent of revenue in FY 2026. For now, Nexus is the main driver, but Avant should start making a bigger impact by late FY 2026. This product roadmap shows Lattice’s ability to grow both in volume and in value through platform upgrades.
Inventory Normalization Continues, but I&A Recovery Remains Gradual
The Industrial and Automotive segment slipped slightly from last quarter, as Lattice continues shipping below actual demand to reduce excess inventory in the channel. The company expects to get back to normal inventory levels by the end of the year. The industrial recovery is likely to be led by smart factory, aerospace, defense, and robotics – areas where Lattice is gaining ground. Automotive is still the smallest part of this segment (under 5% of total sales), but solid demand in China and parts of Europe has supported a gradual recovery. Bookings and backlog going into Q3 and Q4 look strong, with industrial expected to return as a key growth engine in FY 2026. Until the inventory situation clears up, though, overall revenue growth will still face some pressure.
Guidance and Closing Thoughts
For Q3 FY 2025, Lattice is guiding revenue between $128 million and $138 million, which would mean up to 7.2% sequential growth at the midpoint – the best in three years. Gross margin is expected to stay steady around 69.5% ±1%. These targets reflect the growing lift from AI and newer products, though the industrial rebound is still taking time. With a solid pipeline, rising AI attach rates, and steady execution, Lattice is setting up for stronger momentum heading into late FY 2025 and beyond.
See the full press release on Lattice Semiconductor’s Q2 FY 2025 financial results on the Lattice Semiconductor website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Other insights from Futurum:
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Author Information
Ray Wang is the Research Director for Semiconductors, Supply Chain, and Emerging Technology at Futurum. His coverage focuses on the global semiconductor industry and frontier technologies. He also advises clients on global compute distribution, deployment, and supply chain. In addition to his main coverage and expertise, Wang also specializes in global technology policy, supply chain dynamics, and U.S.-China relations.
He has been quoted or interviewed regularly by leading media outlets across the globe, including CNBC, CNN, MarketWatch, Nikkei Asia, South China Morning Post, Business Insider, Science, Al Jazeera, Fast Company, and TaiwanPlus.
Prior to joining Futurum, Wang worked as an independent semiconductor and technology analyst, advising technology firms and institutional investors on industry development, regulations, and geopolitics. He also held positions at leading consulting firms and think tanks in Washington, D.C., including DGA–Albright Stonebridge Group, the Center for Strategic and International Studies (CSIS), and the Carnegie Endowment for International Peace.
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.
