title & date: page: 1 globalpress summit 2010 april 26, 2010
TRANSCRIPT
Global Press Presentation Lattice Semiconductor ConfidentialPage: 2
SAFE HARBOR NOTICESAFE HARBOR NOTICE
This presentation contains forward-looking statements that involve estimates, assumptions, risks and uncertainties, including statements relating to our 2Q10 business outlook, the potential growth of various served markets, strong and consistent new product growth, continuing cost structure and reduction opportunities, and the potential growth of the programmable logic market. Lattice believes the factors identified below could cause actual results to differ materially from the forward-looking statements.
Estimates of future revenue are inherently uncertain due to the high percentage of quarterly "turns" business. In addition, revenue is affected by such factors as global economic conditions which may affect customer demand, pricing pressures, competitive actions, the demand for our Mature, Mainstream and New products, the ability to supply products to customers in a timely manner and our actions to restructure our distribution channel. Actual gross margin percentage, operating expenses and operating income could vary from the estimates contained herein on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly, test and other costs, variations in manufacturing yields, the failure to sustain operational improvements, the effects of transitioning certain distributors from the sell-to to the sell-through business model, and compensation charges due to stock price changes. Any unanticipated declines in revenue or gross margin, any unanticipated increases in our operating expenses or unanticipated charges, including without limitation, restructuring charges or any impairment charges related to an other-than-temporary decline in the fair value of auction rate securities held in Long-term marketable securities, could adversely affect our profitability during the quarter.
In addition to the foregoing, other factors that may cause actual results to differ materially from the forward-looking statements herein include overall semiconductor market conditions, market acceptance and demand for our new and existing products, the Company's dependencies on its silicon wafer suppliers, the impact of competitive products and pricing, technological and product development risks, the compromised liquidity of the Company's auction rate securities, our ability to improve customer service by moving our warehouse to Singapore, our ability to improve our operational efficiencies by establishment of our Asia Operations Center, and the other risks that are described herein and that are otherwise described from time to time in our filings with the Securities and Exchange Commission. The Company does not intend to update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Global Press Presentation Lattice Semiconductor ConfidentialPage: 3
AGENDA
Where Lattice Is Today• Chris Fanning, CVP & General Manager,
Low Density & Mixed Signal Solutions
Lattice’s Roadmap To The Future• Sean Riley, CVP & General Manager,
High Density Solutions
Lattice’s Financial Achievements• Bruno Guilmart, President & CEO
Question Time
Global Press Presentation Lattice Semiconductor ConfidentialPage: 4
ABOUT LATTICE SEMICONDUCTOR
• Founded (1983); IPO 1989 (NASDAQ: LSCC)
• Design and develop programmable semiconductor products, which allow the end customer to determine functionality
– FPGA, PLD, Mixed Signal
• Customers are primarily OEMs in the communications, computing, consumer, and industrial end markets
• Product development, manufacturing, and sales offices worldwide
• $194.4M revenue in 2009
Global Press Presentation Lattice Semiconductor ConfidentialPage: 5
Camera Wireless
WHERE LATTICE COMPETESLinking People Together
LCD TV Smartphone
Lattice continuing to differentiate in its traditional Communications, Computing, and Industrial markets
• Low cost• Low power• High convenience
Consumer is emerging as a good fit for PLD strengths• Reducing time to market• Mitigating ASIC development risk and cost• Integrating discrete components
Server
Global Press Presentation Lattice Semiconductor ConfidentialPage: 6
Source: iSuppli, “Core Silicon Market Tracker & Component AMFT – Q4 2009,” January 5, 2010
DIGITAL CAMERASPicture A New PLD Market
Lattice Product: MachXO 4000ZEFunction: Image Rotation Discrete Component IntegrationWhy We Won: Cost Reduction, Technical Support, Supply Chain
Year
2009
2013E
Volume
110Mu
130Mu
Global Press Presentation Lattice Semiconductor ConfidentialPage: 7
LCD TV Shipments (Mu)
0
50
100
150
200
250
2009E 2010E 2011E 2012E 2013E
Source: iSuppli, “Digital TV Semiconductor Q4 2009 Market Tracker,” January 13, 2010
CAGR’09 – ’13
15%
LCD TVHigh Growth In High Definition
Lattice Product: MachXOFunction: LED backlight controlWhy We Won: Price, High IO Count, Non-Volatility
Global Press Presentation Lattice Semiconductor ConfidentialPage: 8
SERVERSBig Iron Opportunities
Lattice Product: MachXOFunction: Clock Generation, Bus / Memory Processor InterfaceWhy We Won: Memory, PLLs, Price, Technical Support
Source: iSuppli, “Core Silicon Market Tracker & Component AMFT – Q4 2009,” January 5, 2010
Year
2009
2013E
Volume
7Mu
10Mu
Global Press Presentation Lattice Semiconductor ConfidentialPage: 9
Source: Unwired Insight, iSuppli, San Jose Business Journal – Cisco Systems, February 12, 2010
“20x increase in 3G traffic in the next 5 years”
– Unwired Insight
“Wireless data to double yearly through 2014”
– Cisco
“Wireless Comm to grow 10% annually through 2013”
– iSuppli
WIRELESSThe Appetite Is Still Growing
Key Lattice Product: LatticeECP3Functions: Baseband and Radio InterfacesWhy We Win: Low Power, High Value, Relevant IP
Global Press Presentation Lattice Semiconductor ConfidentialPage: 10
0
100
200
300
400
500
2009E 2010E 2011E 2012E
Source: Goldman Sachs, Frost & Sullivan
CAGR’09 – ’12
34%
Smartphone Shipments (Mu)
“Virtually all phones sold in the U.S. will be smart phones within 5 years”
– Frost & Sullivan
SMART PHONEWhere The World Is Going
Lattice Product: 4000ZEFunctions: Discrete Integration, Level Shifting, Data Bus ControlWhy We Won: Lower Power, Small Form Factor, Halogen Free Packaging
Global Press Presentation Lattice Semiconductor ConfidentialPage: 11
Wireless Smartphone
4000ZE ✓ ✓ ✓ ✓
MachXO ✓ ✓ ✓ ✓
Power Manager ✓ ✓ ✓
LatticeECP3 ✓ ✓
LatticeXP2 ✓ ✓
LATTICE HAS SOLUTIONS ACROSS THE SPECTRUM
15% 10M 10% 34%Units CAGR CAGR CAGR
Camera LCD TV
130M
Units
Server
Global Press Presentation Lattice Semiconductor ConfidentialPage: 12
THREE PROGRAMMABLE DIGITAL SEGMENTS
R&
D I
nv
es
tme
nt
/ S
up
po
rt
Ultra-High
Low
Ultra-High
Low
Pe
rfo
rma
nc
e /
De
ns
ity
Low DensityCustomer needs: cost & convenience
Examples: handhelds, LCD displays, control & glue logic
Mid-RangeCustomer needs: optimized blend of power and performance
Examples: wireless interfaces, security & surveillance
Ultra-HighCustomer needs: ultimate performance & density
Example: ASIC emulation, 100G optical switches
Global Press Presentation Lattice Semiconductor ConfidentialPage: 13
LATTICE DIGITAL ROADMAP
R&
D I
nv
es
tme
nt
/ S
up
po
rt
Ultra-High
Low
Mid-Range• Low Power• High Value
2007 2008 2009
ECP2/M90nm
Low Density• Low Cost• High Convenience• Channel Partnerships
Pe
rfo
rma
nc
e /
De
ns
ity
Non-VolatileNext Gen
Mid-RangeNext GenSCSC
90nm90nm
ECP365nm
Ultra-High
Low
Ultra-High
XO130nm
XP290nm
4KZE180nm
2010
Global Press Presentation Lattice Semiconductor ConfidentialPage: 14
Ultra-HighFPGA
Market w/outMid-Range
FPGAs
High Gross Margins
MID-RANGE PRESENTS SIGNIFICANT OPPORTUNITY
High
Low
Pe
rfo
rma
nc
e /
De
ns
ity
Medium Gross Margins
Low DensityFPGA
Fast SerDesHigh Speed I/O
DSP/MACsBig Memory
High Performance
No SerDesLower Speed I/O
Minimal DSPMinimal Memory
Low Performance
Global Press Presentation Lattice Semiconductor ConfidentialPage: 15
Ultra-HighFPGA
Market w/outMid-Range
FPGAs
High Gross Margins
MID-RANGE PRESENTS SIGNIFICANT OPPORTUNITY
High
Low
Pe
rfo
rma
nc
e /
De
ns
ity
Medium Gross Margins
Low DensityFPGA
Fast SerDesHigh Speed I/O
DSP/MACsBig Memory
High Performance
No SerDesLower Speed I/O
Minimal DSPMinimal Memory
Low Performance
Market withMid-Range
FPGAs
Low DensityFPGA
Mid-RangeFPGA
Ultra-HighFPGA
SerDesHigh Speed I/O
DSP/MACsBig Memory
Mid-Range Performance
Lower PriceLower Power
Global Press Presentation Lattice Semiconductor ConfidentialPage: 16
LATTICE MIXED SIGNAL ROADMAPExtending The Benefits Of Programmability
• Sequencing• Monitoring
• Sequencing• Monitoring• Hot-swap• Voltage Measurement • Trimming/ Margining
Power Manager I
2003 2006
Power Manager II
• Sequencing• Monitoring• Hot-swap• Voltage
Measurement • Trimming/
Margining• Reset Tree• NV Error Logging• System Interface
2010
Platform Manager
• Sequencing• Monitoring• Hot-swap• Voltage
Measurement • Trimming/
Margining• Reset Tree• NV Error Logging• System Interface• Fan Control• User Logic• Temperature
Monitoring• Current
Measurement
Next Gen
Platform Manager II
Global Press Presentation Lattice Semiconductor ConfidentialPage: 17
QUARTERLY REVENUE
Revenue ($M)
$0
$20
$40
$60
$80
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10F
~6-10%
+28%
Global Press Presentation Lattice Semiconductor ConfidentialPage: 18
$0
$4
$8
$12
$16
$20
$24
$28
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
CONSISTENT NEW PRODUCT REVENUE GROWTH
New products: LatticeECP2/M/3, LatticeXP2, MachXO, Power Manager II, ispClock A/D/S, ispMACH 4000ZE
Revenue ($M)
34% Quarterly Growth
Global Press Presentation Lattice Semiconductor ConfidentialPage: 19
LATTICE FPGA GAINING TRACTION
-15%
-10%
-5%
0%
5%
10%
15%
Actel Altera Lattice Xilinx
2009 / 08 FPGA Revenue Growth
Source: Company financials, Lattice estimates
FPGA Up 41% In 1Q10
Global Press Presentation Lattice Semiconductor ConfidentialPage: 20
PROFITABILITY ACCELERATINGStrong Balance Sheet
4Q09 1Q10 2Q10FRevenue $55.1 $70.4 6-10%COGS $24.6 $29.3GM 55.3% 58.5% 57-59%R&D $12.6 $14.7SG&A $13.3 $15.4Operating Income $4.5 $11.0Net Income $5.6 $11.1
Cash $164.5 $183.5Debt - -
$31M
Global Press Presentation Lattice Semiconductor ConfidentialPage: 21
• Focused on programmable logic opportunities where we have sustainable and differentiated market positions– Good product position in
large and growing markets– Differentiating with high-
value, low power solutions
• Strong and consistent new product growth
• Accelerating profitability– Strong balance sheet
SUMMARY
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$1
$2
$3
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Stock Price
Jan. ‘09 Apr. ‘10