Lattice leads global shipments of low-power FPGAs, competing in a differentiated segment against market leaders AMD Xilinx and Intel Altera.
Lattice Q1 Results:
Revenue reached $171M, up 42% year over year and 17% sequentially, marking a third consecutive quarter of year-over-year growth.
GAAP gross margin was 68.8%, up 0.8 percentage points year over year and 0.3 points sequentially. Operating income reached $26.1M, up 274% year over year.
Non-GAAP operating income reached $58.7M, up 86% year over year and 31% sequentially, for a fourth consecutive quarter of year-over-year growth. Non-GAAP operating margin expanded 8.2 percentage points year over year and 3.7 points sequentially to 34.4%.
Non-GAAP net income reached $57M, up 85% year over year and 30% sequentially, also marking a fourth consecutive quarter of year-over-year growth. Non-GAAP net margin rose 7.7 percentage points year over year and 3.3 points sequentially to 33.3%.
Lattice repurchased $15M of stock, extending its buyback streak to 22 consecutive quarters. The company ended the quarter with $140M in cash and no debt.
Channel inventory declined from three months last quarter to nearly two months. Management expects the improvement to continue in Q2, taking inventory below two months.
I have consistently viewed Lattice's industry-leading gross and net margins as one of its main strengths and a key reason to follow the company. FPGA is clearly a highly profitable segment: maintaining gross margin at this level even through the recent industry downturn was exceptional.
Since 2024, repeated weakness in automotive semiconductors and soft FPGA demand at Intel Altera and AMD Xilinx have weighed on the entire FPGA market, and Lattice was not immune. The sector finally moved past its trough in 2025Q2. AMD's Embedded segment, which consists largely of Xilinx, generated $870M of Q1 revenue, up 6% year over year for a second consecutive quarter of growth. Operating margin recovered to 39%, still the highest among AMD's businesses.
AMD's Q1 Embedded growth was driven by test, measurement and simulation, aerospace and defense, communications, and increased adoption of embedded x86 products. Design-win momentum grew at a double-digit rate year over year, with several billion dollars of new wins across multiple markets.
Q1 Segment Results: Beginning this quarter, Lattice reports two segments: Communications and Computing, and Industrial and Embedded.
Communications and Computing revenue reached $107M, up 86% year over year for a fifth consecutive quarter of growth and up 15% sequentially. The segment represented 62% of total revenue and continued to benefit from strong data center demand.
Industrial and Embedded revenue reached $64.3M, up 2% year over year and more than 20% sequentially, representing 38% of total revenue. The result reflected improving market conditions and broader adoption of Lattice solutions, led by stronger demand in factory automation, robotics, and medical applications.
Products:
Lattice currently has three product lines: two FPGA hardware platforms and one software-development platform. Management previously said the software platform generated several million dollars of quarterly revenue but has not updated that figure. This quarter, Lattice announced the acquisition of AMI, a leading global BIOS provider. Management said combining Lattice's low-power programmable hardware with AMI's BIOS, BMC, and platform-security solutions will create the industry's most comprehensive secure management and control platform.
In FPGAs, Lattice's small-device portfolio includes eight Nexus products and one Nexus 2 product. The Avant line introduced last year expanded the company into mid-range FPGAs with three families: E for edge, G for general purpose, and X for connectivity. Lattice expects to add another five or six Nexus SKUs in 2026.
Management has described 2026 as the year of the data center and expects 2027 to bring a substantial recovery in industrial and automotive markets.
AI Exposure:
Current AI applications include server control and security chips, monitoring chips for AI PCs, and ADAS chips. About 16.5 million servers are expected to ship in 2026. Lattice estimates that servers represent roughly 38% of its revenue exposure and AI servers about 25%. Average Lattice content per server rose from slightly more than one device in 2024 to more than two in 2025 and should exceed three in 2026, while ASP increases from roughly $3 to more than $4.
Management previously said Lattice devices are seeing faster adoption as companion chips for data center AI accelerators, networking silicon, and edge-computing processors. Server attach-rate growth should continue to outpace industry capital spending. Large FPGAs are less suitable for this role because of their power consumption and cost. In one hyperscaler's rack architecture, a rack typically contains 40-60 servers and, depending on configuration, more than 70-130 small and mid-sized FPGAs.
Data center applications currently rely primarily on pre-Nexus and Nexus products. Avant could enter the segment over time, although it is now focused mainly on Industrial and Embedded platforms.
Outlook:
The high end of Q2 revenue guidance is $195M, implying 57% year-over-year growth and a third consecutive quarter of double-digit growth. Non-GAAP gross margin is expected to be about 70%. The high end of non-GAAP net income guidance is $64.1M, up 97% year over year, with net margin holding near 33%.
Lattice expects its Q4 annualized revenue run rate to exceed $1B, excluding AMI, with full-year gross margin of 69% and a 40% free-cash-flow margin.
Lattice products are manufactured primarily on mature process nodes, giving the company a more efficient capital-spending profile than competitors that rely on leading-edge nodes. This should allow EPS to grow materially faster than revenue.
Lattice announced a $1.65B acquisition of AMI, funded with $1B in cash, including $950M of debt financing and $50M of cash on hand, plus $650M in stock. The transaction is expected to close in Q3. AMI is projected to generate more than $200M of revenue in 2026, growing in the high teens, with growth accelerating next year. The companies expect their combined addressable market to double from $6B to $12B over the next three to four years.
The current order book supports a strong backlog extending into 2027. The last time channel inventory fell below two months, to the mid-one-month range, Lattice went on to deliver ten strong quarters. The company may be entering another exceptionally strong period.
The AMI acquisition could become a major strategic turning point in Lattice's history, deepening the semiconductor industry's shift toward software. On the earnings call, CEO Ford Tamer pointed to the pivotal acquisitions he helped execute at Broadcom and Marvell as evidence of his strategic track record.
Based on management's current guidance, a Q4 annualized revenue run rate of $1B should support a non-GAAP net income run rate above $300M. Adding roughly $200M of annualized AMI revenue could lift the combined non-GAAP net income run rate above $400M. The current market capitalization values that earnings run rate at about 41 times.