Q1 2021 Lattice Semiconductor Corp Earnings Call
Welcome everyone to the that is semiconductor.
'twenty One conference call I would now turn the call over to Rick machine director of Investor Relations.
Thank you operator, and good afternoon, everyone with me today are Jim Anderson, <unk>, President and CEO and Sherri Luther <unk>. The CFO, we will provide.
The financial and business review for the first quarter of 2021, and the business outlook for the second quarter of 2021.
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 letter of semi Dot 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 for the future financial performance of the company.
We wish the caution you that such statements are predictions based on information that is currently available in the <unk>.
The results may differ materially.
We refer you to the documents of the company files with the SEC, including our 10, Ks 10, Qs and eight 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 second quarter of 2021, if at any time. After this call we communicate any material changes to this guidance, we intend that such updates will be done using the public forum such as the proceeds for public or publicly announced conference call.
Some financial information that we present during the call will be provided on both the GAAP and a non-GAAP basis 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.
Management uses non-GAAP measures to better assess operating performance and to establish the operational goals.
For historical periods, we provided reconciliations of these non-GAAP financial measures to GAAP financial measures that can be found on the Investor Relations section of our website, that's net of semi dot com.
Let me now turn the call over to Jim Anderson, our CEO.
Thank you Rick and thank you everyone for joining us on our call today I'm very pleased with our strong results in Q1, as we continue to execute to our strategy drive product leadership and deliver shareholder value.
Let me start by covering a few highlights from Q1 of 2021.
We grew revenue, 19% year over year with continued double digit year over year growth in our two largest segments of communications and computing and industrial and automotive which represent over 80% of our total revenue. We also grew revenue sequentially by 8% with sequential growth in each of our key market segments in <unk>.
Particular, we're pleased to see of second quarter of sequential growth in our consumer segment we.
We expanded non-GAAP gross margin by 190 basis points year over year as we continue to execute on our gross margin expansion strategy we.
We achieved record non-GAAP operating profit of 28%, while non-GAAP net income increased by 52 percentage year over year.
We delivered sequential growth from our lattice Nexus platform with our second device family shared of century and ex entering production in the quarter.
Let me now provide an overview of our business by end market.
In the communications and computing market revenue increased 7% sequentially and 28% on a year over year basis. Our key growth drivers remain data center servers client computing and <unk> infrastructure in servers growth was driven by expansion of both attach rates in the Asps as we continue to drive an increase in lattices dollar.
Content per server.
Client computing as we've discussed in prior earnings calls, we continue to ramp new client computing platforms that began production in 2020.
<unk> infrastructure, we're benefiting from ongoing deployments with higher revenue both sequentially and year over year, we continue to see communications and computing at the long term growth driver given its multiple growth factors.
Turning now to industrial and automotive market revenue increased 9% sequentially and was up 20% on a year over year basis Q1 growth in the industrial segment reflects consistently strong customer adoption in a broad range of applications, including industrial automation and robotics.
As the digital transformation in industrial and automotive applications continues to accelerate the lattice product portfolio is well positioned for sustained long term growth.
Turning now to consumer revenue increased 14% sequentially, our second consecutive quarter of sequential growth and was down 6% year over year. The revenue base in consumer has begun to reflect the results of our strategic shift into the applications with multiyear revenue streams and higher margins and where our solutions are enabling customer.
For us to differentiate their products.
I'll now provide some product roadmap highlights I continue to be very pleased with our team's execution since the launch of Nexus at the end of 2019, we launched three device families based on the platform.
Cross-link Nx, the first of ice family from Nexus platform of.
<unk> first revenue in Q4 of 2020 within 12 months after launch and grew sequentially. In Q1 also shirt of Santa ex the second device family from the Nexus platform began production in Q1, and our third Nexus device family <unk> ex which launched at the end of last year remains on track to generate revenue.
At the end of this year.
We continue to be pleased with the broad adoption of our Nexus platform across all our market segments, where the power efficiency and faster performance are helping our customers differentiate their applications and systems.
Software remains an integral part of our strategy as well and we continue to develop a portfolio of higher level of software solutions that make it easy for our customers to adopt lattice products and get to market quickly during the quarter, we expanded the capabilities and from the performance of two of our award winning software stacks envision focused on <unk>.
The vision applications and century for platform security applications.
In summary, we're very pleased with the strong revenue growth and profit expansion and continued execution of our product roadmap. We're excited to be entering of new growth phase for lattice and look forward to sharing more of our future plans at our Investor Day next week.
I'll now turn the call over to our CFO Sherri Luther.
Thank you Jim we are pleased with our strong Q1 financial results as we continue to execute to our financial model.
We drove sequential revenue growth gross margin expansion and record profitability, while continuing to invest in our leadership product roadmap.
Through strong cash generation and our focus on working capital we have a healthy balance sheet and continue to grow our net cash positive position.
Let me now provide a summary of our results.
First quarter revenue was $115 7 million of 8% sequentially from the fourth quarter and up 19% year over year.
Revenue grew double digits year over year, and our communications and computing and industrial and automotive market segments and was also strong sequentially.
Revenue from our consumer market segment grew for the second consecutive quarter and IP was down slightly sequentially.
Gross margin on a GAAP basis was up 50 basis points to 61% in Q1 compared to the prior quarter.
And was that 100 of 90 basis points compared to the year ago quarter.
Our non-GAAP gross margin increased 10 basis points to 61, 7% in Q1 compared to the prior quarter and was up 190 basis points compared to the year ago quarter.
Gross margin improvement continues to be driven by our margin expansion strategy, primarily in pricing optimization and product cost reductions.
Q1, GAAP operating expenses were $49 9 million compared to $47 5 million in the prior quarter and $47 8 million in the year ago quarter.
On a non-GAAP basis operating expenses were $38 9 million compared to $37 5 million in the prior quarter and $36 1 million in the year ago quarter.
Our R&D expenses increased sequentially as we continue to invest in the expansion of our product portfolio. While SG&A expenses were roughly flat sequentially as we continue to drive SG&A efficiencies.
Q1, GAAP earnings per basic share was <unk> 14 cents and 13 cents per diluted share compared to 12 cents and 11 in the prior quarter and six cents in the year ago quarter.
Q1, non-GAAP earnings per basic share was 23 cents and 22 cents per diluted share, which increased from 20 of 19 cents in the prior quarter and increased from 15 in the year ago quarter.
We remain focused on cash generation and generated $29 million in cash from operations in Q1.
We also repurchased approximately 300000 shares or $15 million in stock under our stock buyback program.
Our cash balance increased to 185 million growing our positive net cash position.
Let me now review our outlook for the second quarter.
Revenue for the second quarter of 2021 is expected to be between $116 million and $124 million.
Gross margin is expected to be 62% plus or minus 1% on a non-GAAP basis.
Total operating expenses for the second quarter are expected to be between $45 million and $41 5 million on a non-GAAP basis.
We are looking forward to our Investor Day next week, when we will share our plans of how we continue to build long term shareholder value.
Operator, we can now open the call for questions.
As a reminder to ask the question you will need to press star one on your telephone until withdraw your question press the pound or of hash key please standby, while we compile the Q&A roster.
Yeah.
Okay.
All of our first question in queue comes from the line of Alessandra Vecchi from William Blair.
Alessandra Your line is now open.
Thanks, everyone. Congratulations on the stellar results, especially in such a dynamic quarter wished with supply constraints.
Our non Ann can you can you maybe Jim update us on how we should be thinking about your exposure to the supply constraints you guys did a tremendous job starting in Q2 and in building up inventories, but those now appear to have come down a little bit.
If you could just give us a little bit of a framework on that front and then the final line.
Yeah. Thanks, Alex I appreciate it yeah. So in terms of the supply chain.
No. If you look at across the semiconductor industry certainly of the supply chain as tight as everyone knows.
I would say that from our perspective from a lattice perspective, I think the team is doing a really good job of managing the supply chain and making sure that we're delivering to our customers needs. In fact, I actually I would like to take an opportunity to just say thanks to my supply chain operations team for the great job that they're doing now.
Few things that we're doing to make sure that we manage the situation and meet our customer needs is one of which you already mentioned, which is actually about a year ago. This time, we started to build inventory.
Out of inventory and.
And we did that proactively and strategically to make sure that we were in a good inventory position because we were anticipating some supply chain tightness since we built inventory in Q2, and Q3 and Q4.
And we're really glad that we did that and even if you look at where we ended the inventory in Q1 of our most recent quarter. It's more inventory than we were carrying in say a year ago and so we're in a very good inventory position and then beyond that we've been working very carefully and closely with our customers, especially of our big.
The strategic customers make sure we fully understand their demand.
And that we've got a demand picture for the coming quarters, and then working very closely with our supply chain partners as well to make sure that we're matching that demand with the with the right capacity in the supply chain of working very closely with them to make sure of that we can continue to support our customers, but I think at this point you.
We're pleased with the level of inventory that we have and also the the ability to support our customers I think we've been doing a good job of that and then Alex I think you said you had a follow up question.
Yeah just.
I was looking for a little more color I mean, the upside to the quarter was quite strong you highlighted industrial but the the 20% sequential growth in industrial off of what we're already from very strong comps in the back half can you maybe tell us how how much of that upside or how much of the upside in Q1 in general was from the fall.
Quarter of Nexis Cross link not beginning to ramp and how we should think about the contribution there and potentially going forward.
Yeah definitely so.
Let me start with the first part of your question around just in general what kind of.
What is driving the upside for Q1, we saw strength across all of our market segments, which were quite pleased to see.
Communications and computing for example, which has been very strong growth driver for US last two years in a row, that's grown double digits, we saw 28% of year over year growth in comms <unk> compute.
As you mentioned industrial and auto grew 20% year over year.
And then consumer as well, which was a headwind for us the last couple of years, but really started to stabilize at the end of last year. We've seen now two quarters of sequential growth in consumer as well, which we're pleased to see so yeah I would say all three of those segments contributed to the into the upside in Q1.
And then as you are kind of the second part of your question around Nexus, Yeah, certainly Nexus was a contributor to that growth as well.
If you remember we just started shipping nexus in the production revenue at the end of last year, and so that Nexus revenue, which is on the first device that we launched the cross link and ex device that grew sequentially in Q Q1 versus Q4, we're really pleased with that growth that we saw and then the other a good piece of news.
Is that we we put our second Nexus device family into production in Q1, as well and that's the shirt US annex family that began production in Q1 as well and then our third device, which is mark an ax, which we launched at the end of last year, that's still tracking for our.
Our revenue before the end of this year should we still see.
You know that or expect that to ramp in the second half of this year. So yeah really good progress on Nexus as well and yeah. We're quite pleased with the Q1 result.
Great that was tremendously helpful with that I'll go back in the queue.
Thanks, Alex.
Yeah.
Your next question in queue comes from the line of Mark the passage from Jefferies.
Your line is now open Mark.
Hi, Thanks for taking my questions.
Maybe for Jim of the gross margins were the highest I think in 20 years.
And you're guiding them to be 62%, which I believe was the the.
The target you said at your analyst day. So now that you hit that target where do you go from here with the gross margins and maybe as part of that maybe you can remind us what has driven the the gross margins 500 basis points. Since you took the helm and.
Which of those drivers are still in play.
Thanks Mark.
Yeah. Thanks.
So on gross margin just kind of the progress let me start with some of the progress we've made over the last few years.
Yes, it's really the gross margin progress would you day as you mentioned is almost 500 basis points over I think since if you use 2018 as the baseline it's about 450 basis points to the most recent quarter and really what drove that gross margin expansion was to two things two main drivers number one was our pricing optimization strand.
<unk>, which we built out at the end of 2018, and we started putting that in place at the beginning of 2019.
And that had both short and long term drivers to it we continue to execute on that strategy and that's certainly been a big part of the gross margin improvement and we continue to execute on that strategy moving forward as well and then the other big contributor was our product cost reduction strategy and that was of multiyear roadmap that we worked with our key.
[noise] suppliers on right product cost reductions over a multiyear period and that's certainly been a contributor as well. The other factor is theres been a little bit of a mix benefit as well, but the two primary factors were that pricing optimization strategy and product.
Cost reduction strategy, and then yeah, you're exactly right. The target that we had put out a couple of years ago at our Investor day in May of 2019 was to get gross margins to 62% or higher very close to that target in the most recent quarter and our midpoint of our gross margin guidance at 62.
So in terms of the target moving forward you know we have an investor day next week. So we'll talk more about next week in terms of what might be the right business targets for the business moving forward, but we're certainly really pleased with the gross margin expansion over the last couple of years.
Excellent of follow up if I may can you talk about <unk>.
Produced in the.
A number of software stacks for your products can you can you talk about how.
How that how has that been bundled together with your products to what extent do you charge for the software separately versus you know as part of all of larger bundle or the or license fees can you separate out for us like with the software component of your of your revenue mix is versus the the chip side is it is there.
Our ability to do that and that's all I had thank you.
Thanks Mark.
So let me first start with the software again as we talked about back a couple of years ago at our Investor Day Shockers of very key part of our strategy and we talked about how we were going to invest more in software and we've certainly done that over the last couple of years and we've really built out our software portfolio the.
The one particular area that we wanted to invest in was application specific software solution stacks and so these are our softer solution stacks that are built for a purposeful application and what they do is they really make it very easy for our customers to to adopt our products our devices into there.
Our systems and it makes it really easy for them to get to market quickly as well and so the side benefit for US is it helps us get to revenue quicker and also helps us.
<unk> be much more sticky on the multi generational basis, we brought in built out three of those shoppers tax to date.
The sense AI shot for stack, which is around artificial intelligence embedded vision processing stack and of security software stack and as you might imagine there's kind of more to come.
The pie, but in terms of how we monetize that today, that's really bundled with our hardware sale with our device sale and it really is enabling the silicon or total solution sale and what I would say is in terms of existing customers. It has really helped us expand our share of wallet.
To add a number of existing large customers, but the other thing that it's done is it's really helped accelerate new customer acquisitions. We've had some of the highest rates of new customer additions over the last say six to 12 months that we've ever seen in the company's history and I attribute that a lot to the software solutions that we're providing.
I think maybe in the future sometime we may try to you know there may be some opportunity to monetize the software independent of the hardware, but for today, we're focused on a solution sale of the combination of the software and the hardware sold together.
Thanks, a lot very helpful.
Thanks Mark.
Your next question comes from the line of Christian Guerra from Baird.
Please go ahead.
Your line is now open.
Hi, good afternoon.
Could you and perhaps it's too early for that but I'll try anyway could you give us a sense of where you think <unk>.
Nexus could be as a percent of square the new exiting the year and when potentially you think youre going to be able to reach of cross over at the 28 nanometer of verses the prior nodes.
Yes, I think it's probably a little early to give.
The guidance view on that attrition, but what I will say is we do believe we've the company has started to move into a higher growth phase this year in 'twenty, one and certainly nexus as a contributor to that.
Nexus just started revenue at the very end of last year, and we're ramping that into full production. This year theres more nexus device and that will enter production at the end of this year and since Mark and ask and so Nexus is certainly a contributor to the top line growth. Both this year and in the years to come but the other thing that I would point out is.
We still are driving growth I'm pre nexus products as well. So there are products that preceded nexus that we continue to drive growth on as well. So it's not like the prior products are tailing off we want to continue to drive growth on both the the pre nexus products as well as Nexus moving forward.
Okay. That's great color and then on the consumer side, you know, it's not the second quarter of consumer of stabilizing.
Any color in terms of segments driving that growth is it small speakers you know do you still have some presence in China of small town.
And what's the level of confidence that the difficult comps for NAV behind in the in consumer.
Yeah. Good question Tristan Thank you shall.
So we are pleased to see two quarters in a row of of now of sequential growth in <unk> and consumer and whereas consumer has been a headwind for us in the past, we we don't anticipate of being a headwind for instance, this year in 2021.
One of the things that's really changed over the last couple of years in consumer and we had talked about this at our Investor Analyst day back in 2019 was that we were going to rebuild the revenue base of consumer and shift the revenue base of consumer towards a.
More multiyear revenue streams higher margin revenue streams application side of the tire less volatile and are more multi year and so we really don't have any handset business. That's within consumer that consumer segment now the revenue is really based on.
Longer term revenue streams things like.
Pro Schumer applications home automation applications applications that really live more than just 12 months, but it will of multiple years and so we feel like we've rebuilt that foundation such that it's much more stable and we don't expect consumer to be of a headwind for us moving forward and I think theres the potential to see some modest growth with the consumer as well.
Now we still expect.
The primary growth drivers for the company to be.
Munitions in computing and industrial and automotive those segments are our largest segments contribute over 80% of our revenue those of the segments that have been growing consistently for us over the last few years and we expect those segments to be the primary growth drivers for the company moving forward.
Great. Thanks for the color.
Thanks Kristen.
Your next question comes from the line of Christopher Rolland from Susquehanna.
Your line is now open.
Okay.
Thanks, guys.
Congrats on the volume quarter here.
I guess the first one of those.
He's probably for Sherry Buck the Jim if you want to find the.
<unk>.
I have in terms of typical seasonality I think there are some anomalies in here, but.
Right for you in for Q.
Traditionally typically.
You guys are.
Early on the strong growth project.
Projection of rate this year.
Maybe if you could just give us some broad strokes on on how we should feel about the third and fourth quarters of this year and are you know rmi seasonality numbers.
Right.
Oh down the traditionally in the back.
You guys really grown true that's true.
Yeah, Thanks, Chris I think on seasonality you know.
Historically in the or the part of our business that had the strongest seasonality was our consumer segment of trade and as consumers become a smaller percentage of our overall revenue our business has been less affected by seasonality.
As the other segments are you think of.
You know less seasonality patterns and so.
I think that's one thing to factor in I also thank the you know there are some lattice specific because sort of the seasonality. Aside there are some lattice specific growth drivers that have been kicking in that of kind of a superseding. The seasonality you know just as one example.
In communications and computing.
In client computing, we had a couple of new client computing platforms began production last year.
And are those.
Continue to ramp up you'll see a full year's benefit of those platforms. This year. So I think that's helping draw.
Drive above what is normal seasonality and I think you know in terms of.
You know you asked a little bit about the second half I think for first half we feel like we're off to a really good start for the year and we're certainly seeing a good strong demand, we don't provide annual guidance for the year, but.
But we do see good demand continuing through the remainder of the year to 12.
Okay fair enough. Thanks for the answer there.
Kim.
I'm going to get you back on this one.
For a second time.
So you know, we're we're obviously Yang from interesting times.
You know people can't build cars, because they can't get a dollar of microcontroller.
One of the great things about FPGA is their flexibility and.
I'm wondering you know if you're seeing anything today are you seeing because of any of the shortages.
The other areas of the market are you finding people that are coming over whether they are replacing an a S. S. P. As you mentioned.
Or you know even from Microcontrollers are small kind of Asics you name it are they finding that the.
They can use FPGA is to do that and if so or is some of the that.
Are you guys of near term beneficiary of of this change and if you're not of near term beneficiary of do you expect to be.
If this persists.
Yeah. It's a great question, Chris I would say, yes, definitely I think we're doing a good job supporting our customers and our customers see that and they appreciate the that a nice definitely factor that in to their decisions moving forward on what parts and what companies, they're going to rely on moving forward. So I think we will see some bench.
If it further out in time and then I also do think that there's advantages that our FPGA as have given their power efficiency of their flexibility of their ease of use all of the software of content that we have built that make it compelling for a customer that's used in a S. S P or of microcontroller in the past of switchover to our FPGA.
As we can usually offer them better power efficiency and better performance as well as well as as I mentioned, the complete software stack. So I think there's opportunities.
There as well she mentioned automotive in particular, we're happy to see any of our automotive customers switch from there to dollar microcontrollers over to you of Atlantis FPGA. We're happily we will happily facility that switch in and I would say yeah. We are having discussions with customers like that I think.
That's a that's not of near term benefit that we'll see because it does take time for customers to switch over from one device to another but that is something that we can see of benefit from in the in the future quarters and I definitely do think that customers take that into account and and I think we'll see some benefit moving forward.
Thanks, gentlemen, and congrats to you and your team again.
Yeah, Thanks again, Chris.
Okay.
Your next question comes from the line of Hans most of this man from Rosenblatt Securities.
Your line is now open.
Great. Thank you congrats guys are fantastic execution.
Sure.
In terms of the outlook.
Are you constrained is there the sales or the sales that you are leaving on the table.
So we think a hunch that we're doing a good job supporting our customers I think the supply chain team did a good job supporting them in Q1, and I am anticipating they do the same great job in Q2 as well.
It helped as I had mentioned earlier I think it helped a lot that we built inventory last year and we kind of got ahead of the curve in terms of supply chain tightness and we exited last year in a good inventory position and of the most recent Q1.
We have higher levels of inventory exiting Q1 than we did a year ago and I think that combined with the work that we're doing with our customers in terms of planning demand as well as with our suppliers, making sure that we of the right capacity I think we feel we feel good about supporting our customers moving forward.
Okay.
That means that your lead times of has not changed.
Yeah, our lead times.
Yes. Good question of our lead times have been relatively stable for the vast majority of our parts. There may be some particular parts of that happened to be of particular silicon package combination, where we're seeing a little bit longer lead time, the normal but vast majority of our parts are within the kind of normal lead times and.
I think again more importantly, we're working very clear carefully with our especially with our big strategic customers to make sure that we understand their demand needs going forward and we're matching that to the to the supply to make sure we've got capacity.
Okay, and then what's the one last one maybe for sure the.
Sure.
Fences are growing a bit faster than the top line in Q2.
Function of costs or maybe going up from some players have been talking about costs.
That had been going up for supplies of certain of certain.
Certain products for packaging.
Yeah. Thanks, <unk>, so from an Opex perspective, I'll kind of give you a perspective on that and then I'll come back to cost at the end of that the our Opex was up sequentially versus Q4, as we expected and it was towards the higher end of our guide.
And if you note there the areas, where it's higher it's in R&D, our R&D spend increased increased 7% sequentially as we continue to invest in our in our product portfolio.
And so youre going to continue to see more of that as you see our guide for Q2 weighted again.
At the midpoint versus our Q1 and again that increase is due to investment in R&D I've mentioned last quarter that we're in a growth mode. So that's really reflective of that as well as we continue to invest in the long term growth of the company.
And the other thing on Opex I'll, just point out is that our guide or rather our target that we put out at our 2019 Investor day was 35% and for Q1, we're still below that the while we're investing in the business we're still managing.
Our SG&A to our target of 15%, which is just a tad bit above that but we're managing to that target and then separately with respect to costs.
Who are our costs.
We are hearing a lot about that in the industry in general our costs are relatively stable.
The you know we might have seen a little bit of increase in areas like shipping cost for example in the supply chain, but where are we able to manage that is true our pricing optimization programs for example that Jim talked about earlier.
Where we've been able to really get the value for our product and as you've seen in Q1, we increased our gross margin by 10 basis points and year over year that was an increase of 190 basis points, though will continue to execute on our pricing optimization program and really utilize our key relationships with our suppliers to help make sure that we can continue to increase our gross.
The margin to the midpoint of our guide for Q2, which is 62%.
Fantastic. Thank you.
Thank you.
Your next question comes from the line of Matt Ramsay from Cowen.
Your line is now open.
Thank you very much good afternoon.
I think this question is probably for for both of you guys.
Different companies and the.
The semiconductor supply chain right now are obviously facing.
<unk> outstripping supply.
Some of chose to keep more inventory on our books versus the channel some of.
Jos I guess, it's the.
The port the channel versus sort of draining their own books of inventory. If you look across both of those metrics Sherry how are you.
Thinking about the inventory levels, both that you have and that you have in the channel versus target levels and what that might mean for visibility of revenue as you look forward into the back half. Thanks.
Yeah. Thanks, Matt I think let me take that one and net.
Can I ask Gerry to add if she has something to add but we.
We talked a little bit already about the Atlantis inventory and the fact that we had chosen to build.
The proactively build lattice inventory last year and we're in a good inventory position and of this most recent Q1 versus a year ago in terms of distributor inventory.
I would say in distributor inventory.
If you look at where we ended Q1 it was within the range of what we've seen over the last few years. So the normal range of what we've seen but on the lower end. So our distributor inventory of sitting on the lower end of our range right.
So I think that where we've chosen to make sure. We have the the inventory is more on the lattice side to give us the flexibility to allocate the supply and direct the supply where we where we see demand.
So hopefully that answers your question Matt.
Yeah, that's great. Thanks.
Obviously, there's a lot of questions that we'll get answered the next week at the analyst day.
I wanted to ask about.
Our recent partnership announcements that you guys announced with with Rambus for.
For the sharing of technology around <unk>.
Security and the number of end markets, Jim if you could give us a little bit of of detail into what that partnership entails what.
What IP you might be supplying and what you might be getting in and what what that partnership may do to enhance the security piece of features of the portfolio as you go forward. Thanks.
Yeah. Thanks, Matt Yeah, we were really happy with that announcement for her.
The to be partnered with Rambus, We view Rambus says an IP partner for us So both of an IP supplier to us, but also to our customers and so that partnership is specifically around IP related to security and we've been as you certainly know we've been investing.
In our own products and capability around security Bolton of hardware perspective by the software as well we've launched two devices to date.
That are the sort of security optimized our mark XO of three D product and our Mark and ex products of two generations of security optimized FPGA is and then we've also been developing software stack on top of that and there's some additional IP that rambus has that that we want to make sure that IP runs on late.
The devices as well so that if our customers choose to use.
Some of that Rambus security IP that that runs seamlessly on lattice devices as well so it's really about making sure that our customers have everything they need to build out of really secure system in and we'll probably talk a you know we can talk a little bit more about it next week during the Investor Analyst day as well.
Thanks, Tim I appreciate it and look forward to next week.
The man.
Your next question in queue comes from the line of Sam Theater of Man from Craig Hallum Capital. Your line is now open.
Hi, guys Sam on for Richard Here wanted to ask quick about your.
In the industrial auto and auto segment.
Of the quarter were industrial automation drove a lot of strength of.
You've seen that are you know over the last year as the pandemic accelerated.
The digital transformation of kind of across the board I'm curious now that we've lapped a year that strong growth in that area in particular, what's your read on demand in industrial automation going forward now is it still growing but maybe we should expect the rate of growth of slow to a more normalized rate.
Beyond this quarter or how should we think about that.
Yeah, we see industrial and automotive segment.
One of our key growth drivers for the long term as well if you look at.
For instance, last year for 2020 industrial automotive grew I think it was 11% year over year shows good growth contributor last year.
Most recent quarter Q1 grew 20% of year over year, what we're seeing within that segment and whats been in particular driving it for lattice is things like industrial automation and robotics.
You know of lattice devices and along with the software that go on top of our devices are just a really good natural fit for industrial automation and safety and robotics.
The combination of the power efficiency of the flexibility of the performance just make us a great fit and so we've got a number of good <unk>.
<unk> that were already designed into and a very healthy design win pipeline as well and I think the interesting thing is you know.
Pre pandemic, we were already seeing high levels of engagement and around industrial automation and robotics, but I think that the experience of COVID-19, and the pandemic has really accelerated our end customers plans in terms of driving faster automation of their industrial.
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More usage of of robotics et cetera, and that's.
That's great trade and we're really well positioned to benefit from what I think is of long term secular growth trend and so we do see industrial and automotive as a as a long term growth driver for the company as well.
Okay, that's great and one more quick one for me you said before you got a healthy design win pipeline in automotive I.
I haven't given a ton of color on that is there any way you characterize I guess what area of the car of those design wins are in and weren't auto might become.
For material portion of that industrial and auto segment.
Yeah. Thanks, Sam so.
We were pleased with our automotive segment in Q1, it did grow sequentially and year over year and that is still within that segment of relatively small portion of the industrial and automotive segment, but as you mentioned, we've said before we do have a very healthy design win pipeline. We will next week talk a little bit more in detail about what are the.
Some of the specific automotive applications that were both designed into today that are growing but also some of the ones that are in the pipeline as well so expect to hear more about that next week.
At our analyst day.
Okay. It sounds great that's it for me.
Thanks Sam.
Okay.
Once again, if you wish to ask a question. Please press star one on your telephone keypad.
Your next question comes from the line of Derek Soderberg from Colliers Securities. Your line is now open.
Hi, everyone. Congrats on the results just one question for me, Jim I'm curious sort of high level.
To what degree of some of the product enhancements, you're bringing to market, helping expand the unit opportunity out there in the industry.
Clearly there are opportunities with higher asps of bundling software now, but what.
All of sort of what the.
To what degree as you know should some of that growth start to come from just the unit volume just trying to get a sense for how the industry is growing.
Yeah. That's a good question I think we do see some significant unit volume opportunities. Let me, let me point out one or two one in particular that I would point out is client computing.
I am computing is that's a really large market. It's a you know roughly 300 million units a year when in client computing, we include laptops and tablets and desktop computers big market, a big unit opportunity and we had.
Couple of platforms in that segments start to ramp last year and ramped into good healthy volume and that'll help contribute to growth this year, but we see a lot more opportunity in that segment for lattice products.
We can bring some really interesting functionality to those devices, whether that's human presence detection gesture recognition signal aggregation and so we're we're pretty excited about that segment as an opportunity for unit volume moving forward and then I think Theres also.
Segments in parts of industrial that we see some good of unit opportunity growth with the for instance, robotics et cetera, but you know the.
The other the other thing that I would point out is beyond unit volume growth, which we're always happy to see we have been driving ESP growth as well our asps have had.
Steady growth over the last couple of years and so we're really focused on both driving higher asps.
As well as our unit growth.
Perfect. Thanks.
Thanks Derek.
There are no further questions in queue I will turn back the call to of that as CEO, Jim Anderson for closing remarks.
Yeah. Thank you operator, and thanks, everybody for joining us on today's call and as you can tell we're really excited about the progress that we've made but are even more excited about where we're headed from here and the future of lattice and some of the opportunities ahead of us. So we look forward to talking to all of you next week at the Investor day, and thanks <unk>.
For the time, operator that concludes today's call.
Thank you. So much. This concludes today's conference call. Thank you for participating you may now disconnect for sensors piece Tang.
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