Lattice Semiconductor Corporation

Greetings and welcome to the Lattice Semiconductor Fourth Quarter and Full Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Mouchet, Vice President of Investor Relations. Thank you, Rick. You may begin.

Thank you, Operator, and good afternoon, everyone. With me today are Ford Tamer, Lattice's CEO, and Lorenzo Flores, Lattice's CFO. We'll provide a financial and business review of the fourth quarter of 2025 and the business outlook for the first quarter of 2026. If you have not obtained a copy of our earnings press release, it can be found at our company website in the investor relations section at latticesemi.com. I would like to remind everyone that during our conference call today, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions based on information that is currently available, and that actual results may differ materially. We refer you to documents of the company files with the SEC, including our 10-Ks, 10-Qs, and 8-Ks. These documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements. This call includes and constitutes the company's official guidance for the first quarter of 2026. If at any time after this call we communicate any material changes to this guidance, we intend that such updates will be done using a public forum, such as a press release or publicly announced conference call. We will refer primarily to non-GAAP financial measures during this call. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. For historical periods, we've provided reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the investor relations section of our website at LatticeSemi.com. Let me now turn the call over to our CEO, Ford Tamer.

Thank you, Rick, and welcome everyone to our fourth quarter and full year 2025 earnings call. At the end of 2024, we told you what we're going to do. And over the last year, we did what we said. And we accomplished that by delivering on our commitments, stabilizing the business, normalizing channel inventory, improving execution, and positioning Lattice to capitalize on two of the most powerful secular trends, shaping our industry, data center AI and physical AI. As we begin 2026, I'm most excited to see that low-power FPGAs are being widely adopted at an accelerating rate, becoming the everywhere companion chips. With the Super Bowl still fresh on everyone's mind, I will use a sports analogy. The primary processors, GPUs, Custom AI accelerators, CPUs, and MPUs are the system's most valuable players, or MVPs. These MVPs are powerful, but cannot win a game, let alone a championship, without a team. And Lattice is that team. We provide the FPGAs, those everywhere companion chips, that perform many of the critical system functions. These include boot, power sequencing, security, control, IO expansion, board and rack management, leak detection, power and cooling, bridging, sensor aggregation, sensor fusion, pre-processing, and many other valuable system functions. We do this across both data center AI and physical AI. We do this across all major markets, communications, compute, industrial automotive aerospace and defense medical and consumer and we do this across some of the world's fastest growing applications security rack management communication quantum cryptography humanoids industrial automation logistics robotaxis space and ar vr wearables those powerful companion chips provide pervasive interoperability across all these vital functions, markets, applications, and diverse suppliers. You can consider Lattice as Switzerland for data center and physical AI applications. The other big benefit of our companion chip strategy is that it drives sustainable diversified growth across all markets and applications. which is helping us to deliver on our financial targets. And this companion role becomes foundational as AI workloads push system-level complexity higher and higher and drive to faster time to market. As AI servers disaggregate into processor boards, networking cards, security cards, power and cooling modules, storage, and other specialized blades, FPGAs show up everywhere in the data center. We are also seeing the same trend accelerating in physical AI. Intelligence is moving closer to the sensors where data is created. A single robot can have multiple vision sensors, including image, LIDAR, radar, and infrared, requiring fusion, aggregation, and pre-processing. In addition, humanoid robots could have dozens of motors requiring high precision and low latency control. Companion chip FPGAs sit beside those sensors and actuators to synchronize high bandwidth vision streams with real-time motion and deliver deterministic responses. And instead of software running on a microcontroller, lattice FPGAs do this in hardware, making it easier to guarantee the same cycle accurate responses every time. Finally, in some cases, FPGAs can also serve as the primary compute, such as signal processing, real-time networking, and what has become to be known as far-edge AI. We at Lattice define far-edge AI as near-sensor contextual AI with tiny or small self-contained models. and our momentum is building. For example, we recently won a design in a human-machine interface, or HMI, industrial robotics, and we are seeing the pull for applications under one TOPS and under one Watt. We came out of our recent global sales conferences with strong momentum, reinforcing our optimistic outlook for 2026. We are seeing accelerated design wind momentum, in both data center AI and physical AI. And we are excited about the future ahead with our tier one customer deployments.