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    LSCC
    Earnings call· Mar 2026(Q1 FY26)

    LATTICE SEMICONDUCTOR Q1 FY26 earnings call LSCC

    May 4, 2026 Source

    Executive summary

    Lattice Semiconductor Q1 FY26 — Strong Growth and Strategic AMI Acquisition

    Lattice Semiconductor delivered a strong Q1 FY26, exceeding expectations with significant revenue and EPS growth driven by market tailwinds in AI servers and industrial automation. The company announced the strategic acquisition of AMI, aiming to create a comprehensive secure management and control platform and accelerate growth. Management is confident in a multi-year growth cycle, with bookings extending into 2027 and channel inventory normalizing, positioning Lattice for sustained above-market growth.

    Highlights

    6

    • Q1 revenue was $170.9 million, representing 42% year-over-year growth.

    • Non-GAAP EPS grew more than 80% year-over-year to $0.41, a 30% increase quarter-over-quarter.

    • Compute and Communications end market achieved record revenue, up 86% year-over-year and 15% sequentially.

    • Industrial and Embedded end market grew more than 20% sequentially, reflecting improving market conditions.

    • Channel inventory reduced from 3 months last quarter to close to 2 months of inventory on hand.

    • Acquisition of AMI is expected to be immediately accretive to gross margin, free cash flow, and EPS on a non-GAAP basis.

    Concerns

    2

    • Q1 GAAP net cash flow from operating activities was $50.3 million, down from $57.6 million in Q4, impacted by annual bonus payout and revenue linearity.

    • Cost pressure is expected to continue and increase relatively in the second half of this year versus the first half.

    Guidance & targets

    8
    CategoryTargetConfidence
    Revenue
    $175 million to $195 million
    high materiality
    High
    Non-GAAP Gross Margin
    70% plus or minus 1%
    medium materiality
    High
    Non-GAAP Operating Expense
    $64 million and $67 million
    medium materiality
    High
    Non-GAAP Income Tax Rate
    4% and 6%
    low materiality
    High
    Non-GAAP EPS
    $0.42 per share and $0.46 per share
    high materiality
    High
    AMI Acquisition Closing
    Q3 2026
    high materiality
    High
    Annual Revenue Run Rate
    exceed $1 billion
    high materiality
    High
    AMI Acquisition Accretion
    immediately accretive
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Compute and Communications
    Driven by continued momentum in data center AI applications.
    Record revenue
    		62% of total revenue86%15%—
    Industrial and Embedded
    Primarily driven by increased demand in factory automation, robotics, and medical applications. Consumer business is now included within this segment.
    		38% of total revenue10%21%—

    Operational metrics

    14
    Non-GAAP EPS
    $0.41up 86% YoY, 30% QoQ
    Q1 FY26

    Above the high end of guidance.

    Non-GAAP Operating Expense
    $60.8 millionup ~8% QoQ, 18% YoY
    Q1 FY26

    Much of the sequential increase is from performance-based bonuses and commissions; continued investment in R&D.

    Non-GAAP Operating Margin
    34.4%expanded 370 bps
    Q1 FY26

    A little better than expected.

    EBITDA Margin
    39.6%increased 310 bps
    Q1 FY26

    A little better than expected.

    Cash and investments balance
    $140 million
    Q1 FY26

    Ended the quarter with no debt.

    Stock repurchases
    $15 million
    Q1 FY26

    Executed during Q1.

    Server revenue mix
    38%up from teens a couple of years ago
    FY26

    Expected percentage of total revenue coming from servers.

    AI revenue mix
    25%grew from mid-teens in '24 to high teens last year
    2026

    Expected percentage of total revenue coming from AI.

    AMI acquisition value
    $1.65 billion
    Q1 FY26

    Total consideration for the acquisition of AMI.

    AMI equity shares
    5.4 million
    Q1 FY26

    Based on the closing price on May 1.

    AMI growth rate
    high teens
    future

    Expected growth rate for AMI, with acceleration next year.

    FPGA per server
    3
    overall

    Roughly estimated number of FPGAs per server.

    Server forecast
    16.5 million
    2026

    Total server forecast for the year.

    Served Available Market (SAM) expansion
    $12 billiondoubled from $6 billion
    next 3-4 years

    Expected SAM for the combined Lattice and AMI, primarily from the Compute and Communications subsegment.

    Industry KPIs

    7
    MetricValueDetails
    Lead timescoming down
    Backlog order bookstrong
    Ai data center revenue25%%
    Bookings net order intakeaccelerated
    Design wins socket pipelinehealthy
    Inventory channel inventoryclose to 2 monthsmonths
    End market segment revenue mixCompute and Communications: 62%, Industrial and Embedded: 38%%

    Orderbook & backlog

    2
    BacklogstrongQ1 FY26

    extends well into 2027

    BookingsacceleratedQ1 FY26

    Deals & partnerships

    1
    AMI (American Megatrends International)Acquisition of a leader in firmware, orchestration, and system-level manageability to create the industry's most comprehensive secure management and control platform.$1.65 billion ($1 billion cash, $650 million equity)

    The acquisition combines Lattice's low-power programmable hardware with AMI's industry-leading solutions (BIOS, BMC, platform security). AMI firmware will remain processor and silicon agnostic. THL Partners (AMI's owner) has a 12-month lockup on the equity issued, with 25% per quarter.

    Risks & headwinds

    3
    Supply chain straining due to rapid growthcurrent

    definitely is straining us

    Mitigation: Working hard with suppliers, expanding back-end supply chain, adding more partners, securing supply.

    Increased cost pressureH2 FY26

    cost pressure will continue and increase relatively in the second half of this year versus the first half

    Mitigation: Working with customers to offset cost increases.

    Cash flow impact from bonus payout and revenue linearityQ1 FY26

    Q1 GAAP net cash flow from operating activities was $50.3 million compared to $57.6 million in Q4. Free cash flow was $39.7 million, down from $44 million in Q4.

    Mitigation: Expect a strong recovery of cash flow as we continue to grow.

    What to watch in Q2 FY26

    5

    Channel inventory levels

    Q2 FY26
    Currentclose to 2 months
    Targetunder 2 months

    Why it matters

    Further reduction in channel inventory indicates strong end-market demand and improved visibility, signaling a potential multi-year growth period.

    As importantly, along with increased consumption, channel inventory reduced from 3 months last quarter to close to 2 months of inventory on hand, and we expect this trend to continue to under 2 months in Q2.

    Q&A highlights

    7

    How will AMI double Lattice's SAM, particularly in Compute and Communications? What is the expected mix of revenue from servers and AI in 2026 for the core business?

    AMI is expected to double Lattice's SAM from $6 billion to $12 billion over 3-4 years, primarily in the Compute and Communications subsegment. Server revenue is projected to be about 38% of total revenue in 2026, and AI-related revenue is expected to be about 25% of total revenue in 2026.

    “we expect it to be about 25% of revenue in 2026. And AMI plus that is going to be uniquely positioned to be able to provide solutions to customers in this Compute and Comms market.”

    asked by Ruben Roy · answered by Fouad Tamer

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance and Operating Leverage

    Lattice Semiconductor reported a strong Q1 FY26, with revenue reaching $170.9 million, a 42% year-over-year increase and 17% quarter-over-quarter. Non-GAAP EPS grew over 80% year-over-year to $0.41, demonstrating significant operating leverage. Non-GAAP gross margin was 70%, up 60 basis points QoQ and 100 basis points YoY, reflecting product value. Non-GAAP operating margin expanded 370 basis points to 34.4%, and EBITDA margin increased 310 basis points to 39.6%.

    02

    Strategic AMI Acquisition

    The company announced the definitive agreement to acquire AMI for $1.65 billion ($1 billion cash, $650 million equity), expected to close in Q3 2026. This acquisition is a pivotal milestone, combining Lattice's low-power programmable hardware with AMI's leadership in firmware, orchestration, and system-level manageability. The combined entity aims to create the industry's most comprehensive secure management and control platform, expanding Lattice's served available market (SAM) from $6 billion to $12 billion over the next 3-4 years.

    03

    Market Tailwinds and Multi-Year Growth Cycle

    Lattice is experiencing accelerated bookings and a strong backlog extending into 2027, driven by robust trends in AI servers, networking, industrial automation, and emerging physical AI applications. The company sees itself in the early innings of a multi-year growth cycle, with high confidence in sustained above-market growth. Server revenue is expected to be about 38% of total revenue in FY26, and AI-related revenue is projected to reach 25% of total revenue in 2026.

    04

    Channel Inventory Normalization

    Channel inventory reduced from 3 months in the prior quarter to close to 2 months in Q1 FY26, with expectations to go under 2 months in Q2. This improvement, coupled with increased customer visibility, allows for more efficient build processes and is seen as a positive indicator for future demand, particularly in the Industrial and Embedded segment which grew 21% sequentially.

    05

    Evolving to System-Level Solutions

    Lattice is evolving into a system-level solutions company, with customers valuing complete solutions spanning connectivity, security, management, and control, beyond just low-power hardware. This approach increases attach rates and drives higher value per design, particularly in complex AI-driven and advanced computing architectures. The AMI acquisition further strengthens this strategy by integrating firmware and manageability infrastructure.

    06

    Supply Chain Management and Lead Times

    Despite the rapid growth straining the supply chain, Lattice has been able to secure necessary supply, working closely with fab partners (UMC, Samsung, TSMC) and expanding back-end supply chain. The company is actively bringing lead times down, with the supply of legacy node wafers being less challenged. Cost pressures are expected to continue and potentially increase in the second half of the year.

    AI-generated summary of the company’s earnings call. Not investment advice.