The News: Lattice Semiconductor’s revenue for the third quarter (Q3) of 2023 rose to $192.17 million, up 11% from $172.5 million year-over-year (YoY) and marking the fourteenth consecutive quarter of record revenue gains for the low-power, field-programmable gate array (FPGA) maker. Lattice reported its latest earnings figures on October 30 for the period ending September 30. Read the full press release on the Lattice Semiconductor investor website.
Lattice Semiconductor Q3 2023 Revenue Hits $192 Million, Up 11% YoY
Analyst Take: Lattice Semiconductor is keeping its impressive earnings progress going, now achieving 14 consecutive quarters of revenue gains with its latest Q3 results as the company is seeing ongoing strength in its industrial and automotive market segments.
We continue to maintain that Lattice has been one of the most rock-solid performers throughout the past year, and while the company did see some slowing this quarter, demand has remained robust and margin has been exceptional.
Here are Lattice Semiconductor’s fiscal Q3 2023 earnings results by the numbers:
- Q3 2023 revenue of $192.17 million, up 11% from $172.5 million YoY. The Q3 revenue figure topped analyst consensus estimates of $192.08 million from Investing.com.
- Q3 2023 non-generally accepted accounting principles (non-GAAP) net income of $73.6 million, up 10.7% from $66.5 million YoY.
- Q3 2023 non-GAAP diluted earnings per share (EPS) of $0.53 per share, up from $0.48 per share YoY. The EPS beat analyst consensus estimates of $0.52 per diluted share from Investing.com.
- Q3 2023 non-GAAP gross margin of $135.6 million, up 13% from $119.9 million YoY.
- Q3 2023 non-GAAP gross margin percentage of 70.6%, up from 69.5% YoY.
It was another good quarter for Lattice overall, powered by its broad and expanding product line of FPGAs for every need and by its ability to meet the demands of its customers. We continue to see progress being made by this innovative semiconductor vendor in the global marketplace and are bullish on its promising future.
What Are FPGAs?
FPGAs are versatile, specialized semiconductor chips that can be used in devices across a wide range of market segments, including IoT, edge computing, AI, home security, robotics, consumer robots, toys, vehicle infotainment and advanced driving systems, and more.
One of the biggest advantages of FPGAs is that they can be reprogrammed again and again in devices whenever a manufacturer’s design needs change, instead having to swap out a new static chip assembly. This reprogramming capability gives broad flexibility to easily update and extend the lives of products for manufacturers and device users, which is an important part of why this market is growing.
And as we have said in the past, fortunately for Lattice, the FPGA market has been growing big time in the past few years.
So just how hot is the FPGA market? Well, in October Intel announced that it is separating its Intel FPGA division out of what is now its Programmable Solutions Group (PSG) and turning it into a standalone company to allow the unit to nimbly chase the increasing opportunities in the expanding FPGA marketplace.
That is how big the market is – Intel is now paying closer attention. We believe that this Intel FPGA spinoff announcement should be seen as further evidence that the FPGA market has real legs in the marketplace.
Lattice’s first FPGAs were focused on the low- to mid-tier FPGA business segment, but it continues to branch out to more powerful FPGAs. In September, the company unveiled its latest Lattice CrossLinkU-NX embedded vision FPGAs that include integrated USB for ease of use by device makers. Earlier in 2023, it unveiled its Lattice MachXO5T-NX Advanced System Control FPGAs for IoT devices and factory automation tasks, which require deeper levels of direct system controls. In December 2022, the company launched its Lattice Avant FPGA products, which aim to double the vendor’s sales opportunities and give it products that can be used in markets where it does not have a major sales presence.
Lattice Semiconductor Revenue by Markets
By segment, Lattice saw its industrial and automotive unit bring in $109.9 million in Q3, up 28% from $85.7 million YoY, continuing its growth in the category. Lattice revenue dropped 6% in its communications and computing unit, which brought in sales of $68.4 million in Q3 compared with $73 million YoY, while its consumer unit brought in $13.9 million in revenue, up 1% from $13.8 million YoY.
In Q3, 61% of Lattice’s business was in Asia, down from 72% YoY. Seventeen percent of the company’s business was in the Americas, up from 13% YoY, while 22% of its business was in Europe and Africa, up from 15% YoY.
Lattice Semiconductor Revenue Guidance for Q4 2023
As part of its Q3 earnings report, Lattice Semiconductor also provided earnings guidance for the fourth quarter (Q4) of 2023. Lattice said it expects Q4 2023 revenue to be between $166 million to $186 million, with a non-GAAP gross margin percentage of 70.5%, plus or minus 1%. The company said it also expects Q4 2023 non-GAAP total operating expenses between $57 million and $59 million.
We believe that this guidance is a bit concerning as this is the first guidance for the company in a long time that trends downward. However, without a lot of competition, this guidance might reflect more of a macro slowing for the market rather than slowing due to Lattice Semiconductor’s sales or operations.
We did have the chance to talk to Lattice’s Chief Strategy Officer, Esam Elashmawi, and he reiterated his confidence in the company’s ongoing performance but noted some approaching softness in parts of the business.
At the same time, we believe that some of the company’s newest products, especially the Avant FPGAs in the mid-range should be a growth-enabler for Lattice.
Lattice Semiconductor Revenue Overview
Lattice Semiconductor continues to do well even as other semiconductor companies have been down in a global market that remains challenging. The company’s executive team, led by Jim Anderson, Lattice’s president and CEO, continues to provide prudent leadership by assembling a successful mix of products, people, and engineering prowess.
We have been saying for quite some time that the continuing growth in the FPGA market could be just beginning as more FPGAs are being integrated into the newest cars and trucks – both gasoline-powered and electric vehicles – as the segment continues to grow in importance and market share for Lattice.
In Q3, Lattice announced more such growth as Mazda Motor Corporation unveiled that its new crossover SUV models CX-60 and CX-90 will incorporate an interface bridging product that uses multiple Lattice FPGAs to enable safety-critical Advanced Driver Assistance System (ADAS) features. These kinds of wins keep coming for Lattice and its FPGAs as they see expanding in-vehicle markets for systems including autonomous driving components, infotainment, telematics, and sensing equipment in the automotive space.
As 2024 approaches, we maintain a positive view on the FPGA space and on Lattice’s long-term future strategy and performance. And with the coming moves by Intel and other competitors to get more deeply into this category, the FPGA market will continue to be an intriguing place to watch.
Disclosure: The Futurum Group 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 The Futurum Group as a whole.
Other Insights from The Futurum Group:
Lattice Unveils CrossLinkU-NX FPGAs With Integrated USB
Lattice Semiconductor Unveils Advanced System Control FPGAs
Lattice Semiconductor Q3 2023 Revenue Hits $190.08 Million, Up 18% YoY
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