Semiconductor designer Lattice Semiconductor (NASDAQ:LSCC) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 24.2% year on year to $145.8 million. On top of that, next quarter’s revenue guidance ($165 million at the midpoint) was surprisingly good and 11.6% above what analysts were expecting. Its non-GAAP profit of $0.32 per share was in line with analysts’ consensus estimates.
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Lattice Semiconductor (LSCC) Q4 CY2025 Highlights:
- Revenue: $145.8 million vs analyst estimates of $143.2 million (24.2% year-on-year growth, 1.8% beat)
- Adjusted EPS: $0.32 vs analyst estimates of $0.32 (in line)
- Adjusted EBITDA: $53.2 million vs analyst estimates of $50.81 million (36.5% margin, 4.7% beat)
- Revenue Guidance for Q1 CY2026 is $165 million at the midpoint, above analyst estimates of $147.8 million
- Adjusted EPS guidance for Q1 CY2026 is $0.36 at the midpoint, above analyst estimates of $0.33
- Operating Margin: 0.7%, up from -10.4% in the same quarter last year
- Inventory Days Outstanding: 177, down from 193 in the previous quarter
- Market Capitalization: $12.44 billion
StockStory’s Take
Lattice Semiconductor’s fourth quarter was marked by robust growth, reflecting strong demand in both data center artificial intelligence (AI) and physical AI applications. Management credited the quarter’s performance to expanded adoption of its low-power field-programmable gate arrays (FPGAs), which serve as companion chips in a wide array of systems. CEO Ford Tamer emphasized that Lattice’s solutions are now “being widely adopted at an accelerating rate,” noting that the company’s attach rates and average selling prices both increased. The business also benefited from successful normalization of channel inventory and record design wins across computing and communications sectors.
Looking forward, Lattice’s outlook is shaped by rising demand for AI-driven solutions, ongoing expansion in new product revenue, and broadening adoption across diverse markets. Management indicated that the company is entering the year with a strong backlog and improved visibility, particularly in data center and industrial end markets. CFO Lorenzo Flores noted, “We are highly confident in driving revenue growth while growing EPS at a faster rate,” while Tamer highlighted continued investments in R&D and partnerships with major industry players to support growth in both AI and industrial automation. The company’s strategy focuses on scaling its leadership in small and mid-range FPGAs, with management expecting new products to represent a growing share of revenue.
Key Insights from Management’s Remarks
Management attributed fourth quarter strength to accelerated adoption of Lattice’s companion FPGAs, higher attach rates in key end markets, and operational improvements that positioned the company for scalable growth.
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AI and data center demand: Lattice’s fastest-growing segment was data center servers, where its FPGAs are increasingly used for functions such as security, sensor fusion, and board management. Management highlighted a significant uptick in attach rates—now surpassing three FPGAs per server—and rising average selling prices due to broader applications and deeper content in each system.
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Physical AI traction: The company reported growing momentum in physical AI, referring to near-sensor AI applications in robotics, industrial automation, and automotive. Management pointed to design wins in industrial robotics, humanoid robots, and robotaxis, emphasizing the expanding opportunity as intelligence moves closer to the sensor edge.
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New product pipeline: Revenue from new products grew 70% in 2025, with management expecting this figure to reach the mid-20% range of total revenue in 2026. The Nexus and AVANT product families are seeing broader adoption, supporting growth across multiple verticals.
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Channel inventory normalization: Lattice successfully normalized channel inventory during the year, allowing revenue to track closer to end-customer demand and positioning the company to benefit from future growth across all markets.
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Operational leverage and investment: Improved operating margins and free cash flow were driven by disciplined cost controls, restructuring, and targeted investments in R&D and infrastructure. Management underscored the importance of maintaining operational efficiency while investing for long-term leadership in FPGAs.
Drivers of Future Performance
Lattice’s outlook for the upcoming year centers on continued AI-driven demand, new product growth, and disciplined investments to expand its FPGA leadership while navigating supply chain constraints.
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AI and data center growth: Management expects accelerating demand in data center and AI server applications to remain a primary driver, with strong customer bookings extending into the next year. Attach rates and average selling prices are both anticipated to climb as more advanced FPGAs are integrated into complex AI workloads.
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Industrial and physical AI expansion: The industrial, automotive, and robotics segments are forecast to return to growth as normalized inventory levels allow revenue to better reflect true consumption. Lattice is targeting market share gains in areas like industrial robotics and aerospace through new design wins and partnerships with leading microprocessor companies.
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Supply and execution risks: Management identified supply chain tightness—especially in substrates and assembly—as a critical risk, along with the need to execute on ambitious R&D and product launch plans. While no major component shortages were reported, the company is proactively securing supply and warned that operational missteps could impede growth objectives.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) whether data center and AI server attach rates continue to climb and sustain momentum, (2) the pace of new product adoption—especially Nexus and AVANT families—in industrial and robotics markets, and (3) Lattice’s ability to manage supply chain constraints while maintaining operating leverage. Progress in securing high-value design wins and expanding partnerships with industry leaders will also be important indicators of the company’s execution.
Lattice Semiconductor currently trades at $98.52, up from $96.99 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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