Lattice Semiconductor Corporation (NASDAQ:LSCC) Q1 2026 Earnings Call Transcript

Lattice Semiconductor Corporation (NASDAQ:LSCC) Q1 2026 Earnings Call Transcript May 4, 2026

Lattice Semiconductor Corporation beats earnings expectations. Reported EPS is $0.41, expectations were $0.36.

Operator: Ladies and gentlemen, greetings and welcome to the Lattice Semiconductor Corporation First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please signal an operator by pressing star and 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Rick Muscha, Vice President of Investor Relations. Please go ahead.

Rick Muscha: Thank you, Operator, and good afternoon, everyone. With me today are Ford Tamer, Lattice Semiconductor Corporation’s CEO, Lorenzo A. Flores, Lattice Semiconductor Corporation’s CFO, and Sanjoy Maiti, AMI’s CEO, who will provide a financial and business review of 2026, an overview of the AMI acquisition, and the business outlook for 2026. Both a copy of our earnings press release and the press release announcing our planned acquisition of AMI 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 actual results may differ materially. We refer you to the documents that 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 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 provide 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. Lastly, we streamlined our financial reporting to better align with our strategic focus. Beginning this quarter, we will break out revenue across two primary end markets: compute and communications; and industrial and embedded. Our consumer business is now included within the industrial and embedded end market. For comparability, we have recast all prior period results so you can make a direct apples-to-apples comparison.

With that, I will turn the call over to our CEO, Ford Tamer.

Ford Tamer: Thank you, Rick, and welcome, everyone, to our first quarter earnings call. Lattice Semiconductor Corporation delivered an excellent start to 2026 with results that underscore both strong market tailwinds and our disciplined execution against a clear strategy. Our first quarter performance exceeded expectations, and our second quarter outlook reflects our expected continued momentum across the business. This is the seventh earnings call since I joined Lattice Semiconductor Corporation, and I hope we have now demonstrated that we consistently say what we will do and do what we say. These positive factors in aggregate provide the foundation for our proposed acquisition of AMI. This acquisition positions Lattice Semiconductor Corporation to create the industry’s most comprehensive secure management and control platform and enables us to deepen our customer relationships and expand our long-term growth opportunity.

Now turning to our results and outlook. Revenue for the first quarter was $170.9 million, representing 42% year-over-year growth, with strength across all end markets. Our compute and communications end market achieved record revenue, driven by continued momentum in data center AI applications. In Q1, 62% of our revenue came from compute and communications products, with expanding opportunities ahead. As Rick highlighted in the safe harbor, we have now merged our industrial and automotive end market with our consumer end market into what we now term industrial and embedded. The revenue from our industrial and embedded end market grew more than 20% sequentially, reflecting improving market conditions and expanding adoption of Lattice Semiconductor Corporation solutions.

As importantly, along with increased consumption, channel inventory reduced from three months last quarter to close to two months of inventory on hand, and we expect this trend to continue to under two months in Q2. As we anticipated, profitability grew faster than revenue, with EPS up 86% year over year. These results demonstrate the operating leverage in our model and our ability to scale efficiently as revenue accelerates. Demand trends continue to build across AI servers, networking, industrial automation, and emerging physical AI applications. We are seeing accelerated bookings which now support a strong backlog that extends well into 2027. We are also witnessing improved customer visibility and healthy design win momentum across our FPGA portfolio.

Taken together, we are confident that we are in the early innings of a multiyear growth cycle and our ability to deliver sustained above-market growth for the foreseeable future. Our results also highlight the progress we have made in evolving Lattice Semiconductor Corporation into a system-level solutions company. Customers increasingly value Lattice Semiconductor Corporation not just for low power programmable hardware, but for complete solutions spanning connectivity, security, management, and control. As system complexity increases, particularly in AI-driven and advanced computing architectures, our customers are giving their highest priority to platforms that reduce integration risk, shorten development cycles, and enable faster deployment at scale.

These trends continue to expand Lattice Semiconductor Corporation’s role within customer systems, increase attach rates, and drive higher value per design. We also continue to benefit from our everywhere companion chip strategy, positioning Lattice Semiconductor Corporation broadly across the ecosystem. Rather than competing with CPUs, GPUs, or other processors, our low power FPGAs enable and enhance them, providing secure boot, power sequencing, platform management, IO aggregation, sensor bridging, and control. This approach allows Lattice Semiconductor Corporation to participate across hyperscale data centers, communication infrastructure, industrial automation, aerospace and defense, automotive, medical, and emerging physical AI applications, while remaining silicon agnostic and ecosystem neutral.

Looking to the second quarter, our revenue guidance of $185 million at the midpoint represents nearly 50% year-over-year growth. This underscores our confidence in the accelerating momentum of the business. Our midpoint EPS outlook of $0.44 reflects roughly 80% year-over-year growth. It highlights the powerful operating leverage in our model and the differentiated products we bring to market. We maintain a disciplined capital strategy and believe we will be able to consistently drive earnings growth that significantly outpaces revenue growth, and we are committed to continue to do so. Turning now to the planned acquisition of AMI we announced earlier today. We are excited to have signed a definitive agreement to acquire AMI, a leader in firmware, orchestration, and system-level manageability.

The combination of Lattice Semiconductor Corporation’s low power programmable hardware with AMI’s industry-leading solutions, including BIOS, BMC, and platform security, creates the industry’s most complete secure management and control platform. Together, we will enable customers to accelerate development, simplify system integration, and bring increasingly complex platforms to market faster across AI servers, advanced compute, communication infrastructure, and industrial applications. Strategically, this acquisition represents a pivotal milestone in advancing Lattice Semiconductor Corporation’s long-term growth strategy. AMI’s firmware is expected to remain processor and silicon agnostic, preserving open ecosystems and customer choice, while Lattice Semiconductor Corporation’s FPGAs provide a complementary hardware foundation, reinforcing our everywhere companion chip strategy.

We expect this transaction to be accretive to gross margin, free cash flow, and EPS on a non-GAAP basis. It also supports our trajectory toward exceeding a $1 billion annual revenue run rate by 2026. We look forward to welcoming the talented AMI team to Lattice Semiconductor Corporation and expect this combination to strengthen our system-level roadmap and long-term growth profile significantly. Looking forward, we are encouraged by the continued durability of demand across our end markets, the depth of customer engagement, and the expanding role Lattice Semiconductor Corporation plays in next-generation systems. With a differentiated strategy, a scalable financial model, and an increasingly complete platform spanning hardware, firmware, security, manageability, and control, we are confident that Lattice Semiconductor Corporation is exceptionally well positioned for the future.

With that, I will turn over the call to Lorenzo for a comprehensive review of our first quarter results. Lorenzo?

Lorenzo A. Flores: Thank you, Ford, and good afternoon, everyone. We will begin with an overview of our first quarter 2026 financial performance and our second quarter outlook, followed by an overview of our planned AMI acquisition. With a quarter this good and guidance this strong, it is worth repeating some of what Ford said. Revenue reached $170.9 million, growing 42% year over year and 17% quarter over quarter. Earnings performance was even stronger, as Q1 non-GAAP EPS demonstrated the leverage in our model. EPS grew more than 80% year over year to $0.41, a 30% increase quarter over quarter and above the high end of our guidance. We expect Q2 to continue this growth trend and I will detail our guidance in a few moments. Back to Q1.

Revenue growth was driven by a record performance in compute and communications, up 86% year over year and 15% sequentially. We continue to benefit from strong data center growth as Ford noted. Additionally, our industrial and embedded end market grew 21% quarter over quarter, primarily driven by increased demand in factory automation, robotics, and medical applications. Q1 non-GAAP gross margin was a little better than expected at 70%, up 60 basis points quarter over quarter and 100 basis points year over year. Our gross margin continues to reflect the value and differentiation our products provide for our customers. Non-GAAP operating expense was $60.8 million, up roughly 8% sequentially and 18% year over year. Much of the sequential increase is from performance-based bonuses and commissions as our revenue and profitability are exceeding expectations.

We also continue to invest in order to capitalize on our near- and long-term opportunity. Our Q1 non-GAAP operating margin expanded 370 basis points to 34.4% and our EBITDA margin increased 310 basis points to 39.6%. Both were a little better than expected. Q1 cash flow was impacted by year’s annual bonus payout as well as revenue linearity in the quarter associated with our rapid growth. GAAP net cash flow from operating activities for Q1 2026 was $50.3 million compared to $57.6 million in Q4. Free cash flow trended with operating cash flow. In Q1, free cash flow was $39.7 million, down from $44 million in Q4. We expect a strong recovery of cash flow as we continue to grow. During Q1, we repurchased $15 million of stock. We ended the quarter with $140 million in cash and no debt.

Now for our guidance. We are targeting closing the AMI acquisition in Q3, so this guidance reflects expectations for Lattice Semiconductor Corporation standalone. In Q2 2026, we expect revenues to be in the range of $175 million to $195 million. At the midpoint of this range, this is almost 50% growth from Q2 2025 and 8% over Q1. We expect gross margin to be 70%, plus or minus 1%, on a non-GAAP basis. We expect non-GAAP operating expense to be between $64 million and $67 million. Most of the growth in OpEx will be in R&D and reflects disciplined investments to drive long-term sustained revenue growth. We expect the income tax rate for Q2 to be 4% to 6% on a non-GAAP basis. We anticipate non-GAAP EPS to be in the range of $0.42 to $0.46 per share.

At the midpoint of this guidance, we expect that we would again exceed 80% year-over-year earnings growth as we continue to demonstrate the leverage in our model. Turning now to the AMI transaction. I am just as excited as Ford, our Board of Directors, and our leadership team that we have entered into a definitive agreement to acquire AMI. AMI is a leader in platform firmware, secure boot, device management, and system control software. This acquisition represents a strategic expansion of Lattice Semiconductor Corporation’s capabilities to deliver system-level solutions, further accelerating our growth. The total consideration of the deal is expected to be $1.65 billion with $1 billion of cash and $650 million of equity. This is approximately 5.4 million shares based on the closing price on May 1.

We expect the acquisition to be equally compelling from a financial perspective. With AMI, we expect our revenue to exceed an annual run rate of $1 billion by the end of this year. We anticipate AMI’s software-centric, asset-light model to further enhance Lattice Semiconductor Corporation’s already strong business model. We expect that the transaction will be immediately accretive to gross margin, free cash flow, and EPS on a non-GAAP basis. We will cover our pro forma expectations in more detail after we close the transaction. In closing, we are truly excited about our organic growth and financial performance. We are all very enthusiastic about the opportunity to combine Lattice Semiconductor Corporation’s strengths with those of AMI.

Finally, the Lattice Semiconductor Corporation team remains focused on execution and taking advantage of the expanding growth opportunities ahead. We are well positioned to drive continued short- and long-term revenue growth, expand our operating margin, increase free cash flow, and grow earnings faster than revenue. Operator, that concludes our formal remarks. We will now open the call for questions.

Ford Tamer: Operator, before we jump into questions, can we introduce AMI CEO, Sanjoy Maiti, who has a few remarks? Sanjoy?

Sanjoy Maiti: Thank you. At AMI, our management team, our employees, board, investors, and I are equally excited to be joining with you and the Lattice Semiconductor Corporation team. The strategic combination with Lattice Semiconductor Corporation pairs the low power programmable leader with the leader in the platform firmware and infrastructure manageability for cloud and AI data centers. Lattice Semiconductor Corporation and AMI share a long history of collaboration and a common vision for a secure management and control platform. Now together, we can build on that foundation, extending the reach of Lattice Semiconductor Corporation’s low power FPGAs and AMI’s trusted platform, while we will maintain the open, silicon-agnostic, multivendor support our customers value.

We also share the same commitment to disciplined execution, strong margins, and a focus on building value for our investors. Thank you again. I am very excited and looking forward to building a great future together.

Ford Tamer: Sanjoy, great to have you here. Welcome to Lattice Semiconductor Corporation. Operator, we can now take questions.

Q&A Session

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. We will wait for a moment while we poll for questions. Our first question is from Ruben Roy with Stifel. Please state your question.

Ruben Roy: Yes. Thank you. Hey, guys, congratulations on the strong results and outlook and the deal announcement. I guess, Ford, to start, in the press release, you talk about doubling the SAM opportunity here. Can you talk about how we should think about that expansion? How much is incremental addressable opportunity from AMI and their existing firmware installed base versus combined solution categories that perhaps neither company could attack independently? And as part of that question, the core business is inflecting, particularly on the compute side. If you think about 2026, how are you thinking about mix of revenue from servers specifically and maybe AI overall? Thank you.

Ford Tamer: Thank you, Ruben. Good question. We expect our total serviceable available market to double from about $6 billion currently to about $12 billion jointly with AMI over the next three to four years. That main increase would come from the compute and communications subsegment. As you pointed out, the two major indicators in that segment are the percent server and the percent AI. On percent server, that has been growing steadily for us from the teens a couple of years ago to this year expected to be about 38% of our total revenue coming from server. On the percent of our revenue coming from AI, it grew from the mid-teens in 2024 to the high teens last year, to where we expect it to be about 25% of revenue in 2026. AMI plus Lattice Semiconductor Corporation is going to be uniquely positioned to provide solutions to customers in this compute and communications market.

Ruben Roy: Thank you, Ford. If I could ask a quick follow-up for Lorenzo. It is great to see that you are flagging the deal as immediately accretive on gross margin, free cash flow, and EPS. Can you give us a framework for the gross margin profile? I know it is early, but any thoughts on the software and firmware business relative to your 70% non-GAAP gross margin run rate at this point? How much of the accretion as you look ahead would be structural versus maybe dependent on synergies?

Lorenzo A. Flores: That is a great question, Ruben, and we will get into this in more detail once we close. The way to think about this acquisition, as Ford said, is that it is very strategic and in the midterm opens up really significant growth opportunities for us. The really nice thing about it immediately, thinking about this deal strategically and looking at the very complementary P&L structure and operating model that AMI has, is that we are not dependent upon synergies to make the deal accretive. In fact, AMI’s business is very high gross margin. It is higher than ours, and we will share more detail on that later. They have a different structure, but at the operating margin level, it is pretty close to ours. They generate a very significant EBITDA percent of revenue, close to ours or maybe slightly above ours right now.

So if you think about it that way, there is not a dependency on cost cutting. We will look at efficiencies through time, for sure, but on a go-forward basis, we are able to fund the debt and cover the interest and still show accretion immediately.

Ruben Roy: Appreciate all the detail. Congrats again.

Operator: Our next question comes from Christopher Rolland with Susquehanna International Group. Please state your question.

Christopher Rolland: Hi, guys. Thank you for the question. I wanted to dig in a little bit more on the strategic value of AMI. Looking over the website, it seems like they offer firmware but also infrastructure management software. Would love to know the cross synergies here between Lattice Semiconductor Corporation FPGAs and what you are going to do with this software. And perhaps if you could also talk about the growth rate for AMI. I know you talked about $200 million revenue in 2026, but that growth rate expectation moving forward would be helpful as well.

Ford Tamer: Yes. Thank you, Chris. Let me start by drawing on my background where I have done this twice already; this is the third time. At Broadcom, we were second in switch market share to Marvell, and by the time I left, our team had done a great job becoming number one. One of the key acquisitions we did along the way was a company called Level 7 that provided us with protocol software. We used that to come up with reference designs for the ODMs in Taiwan that made it much faster for customers to go to production with their switch systems. Think of this protocol software almost like hardware—very low-level stuff. Then at Inphi, when I joined, we were second to II-VI; by the time I left, we were the number one leader in optical interconnect.

Along that journey, we partnered with Microsoft to deliver a DCI module, 80-kilometer, then called Colors. That complementary addition of a system or subsystem, if you wish, with a module was very critical. We debated whether this was a departure from selling silicon and components, but it made sense. About 80% of the business ended up being components we were selling as a platform and 20% was the module, which started with Microsoft and eventually became standardized across the whole market. The addition of that module/system skill was very critical to help the silicon side go to market faster and do a better job. AMI has 40 years of developing test cases and very deep knowledge of the whole industry—from server to switch to NIC. They are the first ones to be brought up when a CPU gets brought up, the first when a GPU gets brought up, and with a lot of systems.

They are a very key complementary partner to the BMC, the board management controller, today, and we intend to continue to be a very strong partner to all of these BMC vendors—HPE, Nuvoton, NXP, and others in the market. It is an extremely strategic move that complements our low power FPGA business. The growth rates are going to be in the high teens, and we expect next year to be accelerating. We do expect to bring solutions to market together that will help grow our revenue faster. We are growing at 40% on revenue and 80% on EPS, and we should be able to grow faster on both revenue and EPS together in the 2028 timeframe as these solutions go to market. Solutions are being fitted today; we had many discussions with many customers about these solutions.

They are very excited. We have an investor deck on our website that details the AMI acquisition. On slide 5, it shows the challenges that data centers face today as you go from managing servers to racks to pods and the whole data center. Modularity becomes extremely important. AI is adding a lot of complexity, uptime is critical, and there is huge pressure on time to market and shift-left. Then if you jump to slide 11, it shows the solutions that we are providing together—rack boot, power and cooling, retrofit, and plug-and-play—along with our low power FPGAs and AMI’s platform firmware and manageability infrastructure. Very exciting future ahead.

Christopher Rolland: Thank you for that, Ford, and congrats on this deal. As a follow-up, I think you said inventory maybe was even under two months at this point in time. We should have an uplift here; I think we can see it in the guide. If you want to talk about it more broadly as you are no longer burning, could there potentially even be an opportunity to refill? How are you thinking about all this into the future and next quarter? Will we be balanced?

Ford Tamer: Good question. We are very excited about it. When I joined about a year and a half ago—this is my seventh quarterly call—I said we would bring this under control. When I joined, the numbers were closer to six months. We thought we would be at three months by the end of last year, and we were. By 2025, we got to three. I thought we were going to be in the twos; we are in the twos. I told you we would bring it under two, and we are on our way to under two. The last time the company was under two, we had 10 good quarters ahead in one-point-x. We may be entering a very strong period here. Our industrial and embedded business grew 22% sequentially, which is amazing, and hopefully more to come.

Lorenzo A. Flores: The way to think about channel inventory right now is that it is no longer a business imperative to bring it down. We are focused on keeping the right balance of inventory at distributors across the globe and the right type of inventory so they can service their customer needs. I would characterize this as a non-issue for Lattice Semiconductor Corporation going forward. We now have much greater, more direct visibility into end-customer demand, so our build is much more efficient.

Christopher Rolland: Appreciate it. Congrats.

Operator: Our next question comes from Melissa Weathers with Deutsche Bank. Please state your question.

Melissa Weathers: Hi there. Thank you so much for letting me ask a question. Congrats on nice results and an interesting deal, and to Sanjoy, looking forward to working with you in the future. For my first question, I wanted to touch on the data center side of things. In the past, you have given an FPGA attach rate per server, and it seems like the applications you can use an FPGA for in the data center are growing massively, and those conversations with engineers are happening live. We heard Jensen talk at GTC about using more FPGAs in those racks. Can you help us with an updated framework for FPGA attach in the data center? I am also curious on the wireline side in addition to the server side—any help on content in the data center would be helpful.

Ford Tamer: Thank you, Melissa. A couple of trends I will highlight. In recent customer visits, a server OEM showed me how the “unit of rack” has evolved from an all-in-one rack to now four racks together—a compute rack, networking rack, power rack, and cooling rack. That is a profound change and will allow us to increase our content in comms as well as power and cooling. Second, in data centers now, these cooling racks are attached by large pipes coming from the ceiling. It is going to be much harder to change the cooling racks, so this cooling rack may have longevity needs closer to our industrial embedded business, lasting for many years, as opposed to the faster cadence on the compute side. In the AMI presentation, we highlight Rack Boot on slide 11 where the cloud would like to power up not just a server at a time, but the whole rack at once.

We can have very interesting applications for our FPGAs in that new application. The third bullet on slide 11 shows retrofit—customers want to retrofit older systems for better uptime, security, and fault detection. That is another new opportunity. From a modeling point of view, we still have a forecast of a 16.5 million server market in 2026. We are roughly saying about three FPGAs per server overall. You can then calculate total FPGAs and revenue contribution. We gave you today a breakdown of that server business in Q1—about 38% of our revenue—so you can use our Q1 revenue to estimate ASPs and content.

Lorenzo A. Flores: Our ASP is continuing to increase on a per unit basis through this progression as we keep finding more value-added opportunities for our customers.

Ford Tamer: As we said in the past, what is helping us is number of servers increasing, AI increasing, and, even in the shorter term, big demand increases not only from AI but also traditional CPU and storage because of things like cloud and generative coding. That drives not just AI but also traditional CPU and storage. The attach rate continues to find new applications, new ASPs with new products. The ASP continues to increase, hence increasing that server dollar amount.

Melissa Weathers: Thank you for all the color. And then maybe just a quick follow-up. These growth rates seem to be a lot faster than what we were expecting coming into the year. From a supply perspective, can you talk about your ability to secure supply? It seems like your customer visibility is increasing, but what about your supplier visibility? Do you have the front end? Do you have the back end? Anything we should consider there?

Ford Tamer: We do. Our SVP of Operations, Divya Shah, has been in the industry for a long time. We have had many calls with our suppliers. This is definitely straining us, and we are working hard on it. We have been able to secure supply. It comes at a cost, but we are working with our customers and suppliers to deal with this, and we are in good shape.

Lorenzo A. Flores: Unlike some other industry players, our wafers are more legacy-node wafers, and our supply there is less challenged. The back end is where we see pressure, and we keep expanding our supply chain in that area to provide a diversity of suppliers and additional capacity. We are beginning to bring our lead times down as we expand supply.

Melissa Weathers: Perfect. Thank you.

Operator: Our next question comes from Tristan Gerra with Robert W. Baird. Please state your question.

Tristan Gerra: Hi. Good afternoon. As a follow-up to an earlier question, is there any step-function increase in the content for root of trust security with the upcoming cyber and payment platform? And also, is there any potential for Avant content in data center, or is that going to be in other end markets?

Ford Tamer: We are not commenting on specific platforms, but our security continues to be a major factor in allowing us to grow our business here.

Tristan Gerra: Regarding Avant and whether there is any data center potential opportunity for the higher-density FPGA that is coming up—what type of use cases do you see for Avant, and whether there are any data center applications, potentially datapath or anything else outside or even for a root of trust?

Ford Tamer: Thank you. You are asking whether our mid-range FPGA Avant platform has application in data center. So far, it has been mostly our Nexus and pre-Nexus products that are applicable for data center. Over time, Avant may find its way there, but Avant is really focused on our industrial embedded segment.

Tristan Gerra: And then just a quick follow-up. Your gross margin is starting to increase again, and your lead times have been expanding, which typically is good for ASP. I know you only guide a quarter at a time, but what is the potential for gross margin to go higher given the supply constraint and the state of demand versus supply?

Lorenzo A. Flores: We have talked about this a few times, especially leading into the year, where we thought we should be prudent about our outlook on gross margin because we saw the supply chain cost increases coming. We have been able to work with our customers on ways to offset the cost increases we are seeing. We do also expect that the cost pressure will continue and increase in the second half of this year versus the first half. We will provide more specific guidance as we get into the second half on how the cost increases are playing out. Our approximate range remains about 69.5% plus or minus 1%. This quarter we happened to be at 70%, a little higher than that, but that is the approximate range we see going forward.

Tristan Gerra: Thank you.

Operator: Our next question comes from Joshua Buchalter with TD Cowen. Please state your question.

Joshua Buchalter: Hi, guys. This is Manny on for Joshua. Congratulations on the quarter, and I will extend my congratulations for the deal as well. Focusing on the core business quickly, you have mentioned that Lattice Semiconductor Corporation is still on track for hitting that over $1 billion run rate in the fourth quarter of this year. Can you clarify if that is specifically for the core business, or is that inclusive of the AMI acquisition as well?

Ford Tamer: It is inclusive of the AMI acquisition.

Joshua Buchalter: As a follow-up, as it relates to AMI, what capabilities does this give Lattice Semiconductor Corporation that you did not have before? And can you talk about AMI’s current go-to-market monetization strategy and how that fits with Lattice Semiconductor Corporation’s business model currently and going forward?

Ford Tamer: Thank you. Together, we expect to exit the year at this $1 billion run rate with roughly 40% free cash flow, so you can see we would be able to delever pretty fast from there. The combination is going to be very strong financially. From a capability point of view, it gives us much stronger system skills jointly and allows us to bring these solutions to customers much faster. We will be able to discuss further at our next quarterly call when we discuss Q2 and guide to Q3, and give you a lot more details on AMI’s business and financials. Today, we wanted to focus on our business and introduce the acquisition. We expect to close in early Q3, and at that time, we will provide full details.

Joshua Buchalter: Alright. Thank you very much.

Operator: Our next question comes from Quinn Bolton with Needham and Company. Please state your question.

Quinn Bolton: Thanks for squeezing me in, guys. I will also add my congratulations, Ford. High-level question on the AMI acquisition. AMI talks about security and board management. You have historically talked about similar things for your FPGAs. Is there any place where the two businesses compete, or is it truly complementary? Does the Lattice Semiconductor Corporation FPGA root of trust protect the AMI firmware/BIOS as it resides in the servers? Any direct overlap?

Ford Tamer: Great question, Quinn. We have been working together since 2019, so it has been seven years of close collaboration. There is no place where we compete. This is totally complementary. It is very complementary to our customers and should really benefit our customers and partners. We are committed to remain agnostic. They support all the other silicon partners, and we are partnered with the same silicon partners. We see it as very complementary and beneficial to our customers and partners. It should be very strong—one plus one equals three. Sanjoy is sitting with me today; he wants four, five, and six, hopefully. He is laughing here.

Quinn Bolton: You had a great start to the year in terms of revenue growth. We came into the year thinking the server business could be up something like 20% to 40%, and industrial and now the embedded business up 5% to 15%. It looks like you are tracking well above that. Are you prepared to talk about growth rates for those businesses given the strong start?

Lorenzo A. Flores: For the year, it is still early. The trend that started late last year and has led to our results in the first quarter continues. Our business continues to book in very strong. Customers are continuing to increase their demand, and we are booking out even longer in time. At this point, we have high confidence that our growth this year will be strong—stronger than we originally thought at the beginning of the year. Compute and communications as an end market will be a key driver for the reasons we all know. Industrial and embedded is recovering, and we saw signs of that in the first quarter. The extremely high year-on-year growth rates might not hold for the rest of the year for compute and server, but they will be pretty strong.

The comms business will be aligned; it goes up and down relative to compute growth rate, but it is still going to be high. Industrial and embedded will continue to grow, but probably not at the Q1 versus Q4 rate. They did grow 10% year over year in Q1, and that is a pretty good range to think about for the year.

Ford Tamer: And, Quinn, right now, as Lorenzo said, demand is strong for the foreseeable future with bookings well into 2027.

Quinn Bolton: Got it. A quick clarification on the deal. Will THL Partners be locked up for any period post close on that $650 million of equity issued, or are they free to sell once the deal closes?

Lorenzo A. Flores: They have a lockup that extends for 12 months from close—25% per quarter.

Quinn Bolton: Perfect. Thank you.

Operator: Our next question comes from Bank of America. Please state your question.

Analyst: Hi. Thank you for taking the question. Congrats on the strong results as well. Following up on some of the earlier gross margin questions. You have been talking about bookings strong well into 2027, backlog is building up, lead times are expanding, and AMI margins are stronger. Is it possible that the margin structure is now more structurally higher than before? I think you have not really sustained 70%+ before. Should we think this is more achievable now?

Ford Tamer: This opens up opportunities for us that we may have shied away from before and across various markets. We do not intend to go much above that. We can, but right now there are opportunities we have not gone after that we could go after, so it could potentially open up a higher top line.

Analyst: Got it. One follow-up on broader competitiveness of the supply chain. Intel has now divested Altera and it is now a standalone company. They have a different supply chain with internal manufacturing. Does that give them more advantage in this supply-constrained environment? If not, why?

Ford Tamer: Our suppliers have been fantastic. We are with UMC, Samsung, and TSMC on the fab side—extremely supportive. We have strong assembly and test partners and are adding more because this is where the shortages are. We feel very good about our supply chain and our ability to supply. That is not an issue for us.

Operator: Ladies and gentlemen, that concludes the time we have for the Q&A session. I will now turn the call back to the company’s Rick Muscha for any closing comments.

Rick Muscha: Great. Thanks, everyone, for joining us on the call today. We will be attending the following investor events this quarter: the JPMorgan 2026 Global TMT Conference on May 19 in Boston, and the TD Cowen 54th Annual TMT Conference in New York City on May 28. This completes our call. Thank you very much for your participation, and have a good evening.

Analyst: Goodbye.

Operator: Ladies and gentlemen, the conference call of Lattice Semiconductor Corporation has concluded. Thank you for your participation. You may now disconnect your lines.