Q4 2024 Lattice Semiconductor Corp Earnings Call
Speaker Change: Greetings and welcome to the Lattice Semiconductor fourth quarter fiscal year 2024 earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad.
Speaker Change: As a reminder this conference is being recorded. It is now my pleasure to introduce Rick Muscha, Senior Vice President of IR. Please go ahead.
Speaker Change: Thank you operator and good afternoon everyone. With me today are Fouad Tamer, Lattice's CEO, Tonya Stevens, Lattice's Chief Accounting Officer and former interim CFO, and Lorenzo Flores, Lattice's CFO. We will provide a financial and business review of the fourth quarter of 2024 and the business outlook for the first quarter of 2025.
Speaker Change: If you have not obtained a copy of our earnings press release, it can be found at our company website in the Investor Relations section at latticesemi.com.
Speaker Change: I would like to remind everyone that during our conference call today, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions based on information that is currently available and that actual results may differ materially.
Speaker Change: We refer you to the documents that the company files with the FCC, 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.
Speaker Change: This call includes and constitutes the company's official guidance for the first quarter of 2025. 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.
Speaker Change: 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.
Speaker Change: Let me now turn the call over to our CEO, Fouad Tamer.
Speaker Change: Thank you, Rick, and thank you, everyone, for joining us on our call today.
Speaker Change: I've just returned from customer and partner meetings and sales conferences in North America, Asia Pacific, and Europe.
Speaker Change: We capped off the European sales conference with a very productive and promising executive summit with our top European customers from the industrial, automotive, communications, and aerospace and defense sectors.
Speaker Change: We also visited Pune, India, where we inaugurated our new state-of-the-art R&D site.
Speaker Change: All of this came on the heels of our latest Developers Conference in December 2024.
Speaker Change: This was a highly successful event with 6,000 registrants and over 90 show floor demos.
Speaker Change: Many of you were able to hear directly from some of our leading customers and see firsthand how they're deploying the impressive innovations from Lattice in their systems.
Thank you. Thank you. Thank you.
Speaker Change: As a result of these events, I'm even more energized and confident in the long-term outlook for Lattice.
Speaker Change: Today, we're pleased to announce a further strengthening of our executive leadership team with three new additions.
Speaker Change: Lorenzo Flores is joining Gladys as chief financial officer from Intet where he was CFO for the foundry business.
Speaker Change: Prior to that, Lorenzo was Vice Chairman at Keoxia and CFO at Xynyx.
Speaker Change: Nicole Singer is coming on board as our Chief People Officer from PSY-5, where she was CHRO.
Speaker Change: Prior to that, she was CHRO at Synaptics and Vice President of Human Resources at Xynyx.
Speaker Change: And we're promoting Erhan Sheikh to Senior Vice President of Worldwide Sales.
and many more. Thank you. Thank you.
Speaker Change: Erhan has been at Lattice for over four years and prior to that he spent over 20 years in executive sales and field engineering roles at Altera, Xilinx and Fungible.
Speaker Change: I am confident that this new team will make significant contributions to Lattice's next phase of growth.
Speaker Change: I'm also pleased to announce the appointment of Tonya Stevens to the role of Chief Accounting Officer.
Thank you. Thank you. Thank you.
Speaker Change: In her nearly six years at Lattice, Tonya has been a tremendous asset.
most recently serving as our interim CFO.
Speaker Change: We are thrilled she will stay on this new role and look forward to continue working closely with her.
Speaker Change: Tonya's expanded scope, along with Erhan's promotion, demonstrate Lattice's bench strength.
Speaker Change: And when you combine Tonya's and Erhan's deep company backgrounds with the experienced industry veterans choosing to join Lattice.
Speaker Change: It is clear that we're building one of the semiconductor industry's strongest management teams which will enable us to build near-term and future shareholder value.
Speaker Change: At a high level, the overall FPGA market is continuing to grow in importance, driven by five secular trends acting as tailwinds, and Lattice is uniquely positioned to leverage those trends.
and others. Thank you. Thank you.
Speaker Change: First, AI is driving shorter system design cycles, which provide less time to integrate auxiliary functions.
and FPGAs are best positioned to enable those functions.
Second, as ASIC and ASSP development costs continue to increase,
Speaker Change: The bar rises for which functions could justify that ROI and that pushes more designs towards FPGAs.
Speaker Change: Third, as the cost of advanced nodes skyrockets, mature process FPGAs are much more economical to perform certain functions.
Fourth, emerging applications, like security, have fast-changing requirements.
A perfect example is post-quantum cryptography or PQC.
Thank you. Thank you. Thank you.
Speaker Change: Programmability is a much more effective solution than a fixed function ASIC that cannot easily be respawned.
Thank you. Thank you. Thank you.
Lastly, Edge AI is requiring contextual intelligence near the sensor.
Lattice is already in the sockets today, performing other functions.
which gives us a critical advantage with customers.
And it is far better to implement tiny AI model.
Speaker Change: in our far-edge devices which save processing power of the near-edge inference chips for other tasks.
furthermore
Speaker Change: The small and mid-range FPGA segments are growing faster than the rest of the market led by new applications.
Speaker Change: Amongst them, data centers in cloud, robotics, industrial automation, self-driving cars, electrification, IOT, telematics, medical devices, as well as artificial intelligence across all these segments.
Speaker Change: These applications have driven an explosion of sensors everywhere, which require massive amounts of data to be bridged, aggregated, and fused to upstream processing units.
Speaker Change: Lattice has done a good job in these markets and our goal is to lead in this growing far-edge AI market segment.
Speaker Change: This is an example of just one of the catalysts that gives us added confidence in Lattice's long-term growth opportunities as we continue to execute.
and many more. Thank you. Thank you.
Over the near term, we're seeing improvement in customer consumption.
Speaker Change: We continue to ship below estimated true demand and are working closely with our customers to ensure we're effectively supporting their product roadmaps.
and many more. Thank you. Thank you.
Speaker Change: We also continue to be encouraged with our stronger backlog, and for the first time in six quarters, our book-to-bill ratio has been over one for the past few weeks.
Speaker Change: Taken together, this bodes well for our business in the coming quarters.
Now moving on to our Q4 results.
Speaker Change: From a high level, fourth quarter 2024 revenue was in line with our guidance at $117.4 million and developed as expected.
Thank you. Thank you. Thank you.
Speaker Change: On an end market basis, communications and computing was down 5% sequentially, and industrial automotive was down 9%, primarily due to continued inventory normalization.
Speaker Change: Thank you for watching. Please subscribe to my channel. See you in the next video.
Speaker Change: We continue to make significant progress in the realignment of our resources to best support customer demand and ensure the long-term success of our company.
Thank you. Thank you. Thank you.
Speaker Change: In Q4, this included taking the opportunity to clean up a material liability we discovered after a comprehensive internal review.
Tonya will provide more details in her prepared remarks.
Speaker Change: We do not expect any additional wind time charges and are confident that this is another example of the specific actions we are vigorously implementing to position Lattice for sustained long-term success.
Speaker Change: Revenue for the full year 2024 was $509.4 million with a strong EBITDA margin of 31.8%.
Speaker Change: A bright spot to highlight is that our computing subsegment grew in 2024.
Speaker Change: DesignWin momentum continues to be robust as we achieved record DesignWins in 2024.
Speaker Change: Additionally, our new product momentum continues to be a highlight as revenue from our new products, including Nexus and Avant, grew double digits in 2024 compared to 2023.
Earlier you heard about our successful Developers Conference in December.
For more information, visit www.FEMA.gov
Speaker Change: There was the launch of the Nexus 2 platform and two new Avant devices.
Speaker Change: We expanded our leadership in the small to mid-range FPGA segments.
and a lot more. Thank you. Thank you. Thank you.
Speaker Change: This further builds on Lattice's differentiation in low power, small size, cost-effective solution, and ease of use.
and many more. Thank you. Thank you.
Speaker Change: These new offerings add connectivity advancements, performance optimizations, and leading security and reliability capabilities to meet the increasing demand for edge applications.
We had multiple customer keynotes at our Developers Conference.
Speaker Change: that demonstrated significant benefits of using Lattice solutions in their systems.
Speaker Change: Furthermore, because of our focus on ease of use, we also introduced new tools and solutions.
to speed up our customers' deployments and time to market.
Speaker Change: If you're not able to attend in person, our website has multiple videos showcasing applications like Gladys Sensei for Edge AI.
Lyris and Vision for Embedded Vision.
Speaker Change: Lattice Automate for factory automation and Lattice Drive for automotive designs.
Speaker Change: We also introduced new versions of our award-winning Lattice Radiant and Lattice Propel softer tools.
Speaker Change: This continued innovation in our software tools and solutions will enable customer differentiation and make our solutions stickier and multi-generational.
Speaker Change: Looking ahead, as you heard during last quarter's earnings call, we expect more of a U-shaped recovery in 2025.
Speaker Change: We are very pleased to be guiding our Q1 EPS above the current consensus estimates.
Speaker Change: in a quarter when other companies in our industry are expecting a guide down.
and many more. Thank you. Thank you.
Speaker Change: For the full year 2025, we continue to anticipate low single-digit revenue growth compared to the full year 2024.
Speaker Change: We expect that channel inventory will begin moving back to the midpoint of our target range and enable Lattice to execute to our long-term revenue growth target of 15-20% in 2026 and beyond.
Speaker Change: In summary, over the past five months since I joined Lattice, we've taken significant actions to drive the next phase of our growth.
Speaker Change: As you heard earlier, some of these actions included our holding three recent successful sales conferences across North America, Asia-Pacific, and Europe.
inaugurating our new state-of-the-art R&D design center in Pune, India.
holding another highly successful Developers Conference.
Speaker Change: and expanding our product portfolio with Nexus 2, Avant and associated IP tools and solutions.
Speaker Change: We are also continuing to focus on financial discipline, including a strategic and comprehensive 14% workforce transformation we implemented in Q3.
Speaker Change: a material liability charge that was taken in Q4 after a thorough year-end review and the further strengthening of our executive team with key additions.
Speaker Change: All these actions, combined with an improvement in customer consumption, a stronger backlog, and book-to-bill ratio reaching over one for the past few weeks, provide us increased confidence.
Speaker Change: Overall, Lattice remains committed to our long-term strategy and we're very optimistic about 2025 and beyond.
and many others. Thank you. Thank you. Thank you.
Speaker Change: Let me now turn the call over to Tonya for a detailed review of our results. Tonya?
Tonya Stevens: Thank you, Fouad. Working closely with you as the interim CFO has been both a rewarding personal and professional experience.
Speaker Change: I'm excited to continue my growth in my new role alongside Lorenzo, one of the most respected and accomplished CFOs in our industry. I also want to welcome Nicole and congratulate Erhan, with whom I've worked closely.
Speaker Change: With the strengthening of Lattice's executive team, we have a tremendous opportunity to build on Lattice's strong track record and expanded leadership product portfolio to drive Lattice's next phase of growth.
Speaker Change: In 2024, we continued to generate solid operating, adjusted EBITDA, and free cash flow margins and returned cash to shareholders through share buybacks, while experiencing continued customer inventory normalization and shipping under true demand.
Speaker Change: Additionally, as we mentioned on the Q3-24 earnings call, we implemented a workforce reduction of 14% which better aligns our resources to support the current business level.
Speaker Change: We are confident that this action will be a key driver for Double-Digit Earnings Expansion in 2025.
Let me now provide a summary of our results.
Speaker Change: Fourth quarter revenue was $117.4 million, down 8% sequentially from the third quarter and down 31% year over year, which reflects a combination of continued inventory normalization and macroeconomic softness.
Speaker Change: Full year 2024 revenue was $509.4 million, down 31% from 2023.
Speaker Change: While computing was up for the year, both segments of Communications and Computing and Industrial and Automotive declined double digits for the year.
Speaker Change: We started to see signs of improvement in communications and computing in the second half of 2024 and expect to build on that in 2025.
Our Q4 non-GAAP gross margin was 62.1%.
Speaker Change: This included a $7 million one-time charge related to materials purchased by our assembly and test partners during the supply constraint that due to the current business environment are no longer expected to be used before expiration.
Speaker Change: Absent that charge, our non-GAAP gross margin would have been 68.1%.
Speaker Change: Our non-GAAP gross margin for the full year 2024 was 67.4%. Adjusting for the one-time charge, our full year non-GAAP gross margin would have been 68.7%.
Speaker Change: Q4 non-GAAP operating expenses were $52.8 million, down 2% sequentially, and down 5% year-over-year.
Speaker Change: We are making significant progress on the realignment of our resources to best support the current business environment.
These efforts are already driving results of reduced operating expenses.
Speaker Change: Non-GAAP operating expenses for the full year 2024 decreased 4% to $215.6 million.
Speaker Change: This was primarily driven by diligent operating expense management and the partial impact of the workforce transformation implemented in Q4, which we will start to see more benefit from in Q1.
Speaker Change: Our Q4 non-GAAP operating margin was 17.1% and included the $7 million one-time charge mentioned earlier.
Speaker Change: Q4 adjusted EBITDA margin was 24.9%. Our non-GAAP operating margin for the full year 2024 was 25.1% and adjusted EBITDA margin was 31.8%.
Speaker Change: Excluding the one-time charge, we delivered non-GAAP operating margin of 26.4% and adjusted EBITDA margin of 33.2%.
Speaker Change: We continue to have a disciplined approach to investing in the long-term growth of the company.
Speaker Change: In Q4, non-GAAP EPS was $0.15 per share, with 138.3 million diluted shares outstanding.
Speaker Change: Without the impact of the $7 million one-time charge, Q4 non-GAAP EPS would have been $0.20 per share.
Speaker Change: Non-GAAP diluted earnings per share for the full year 2024 was $0.90.
Speaker Change: Without the impact of the $7 million one-time charge in Q4 2024 full-year non-GAAP EPS would have been $0.95 per share.
and the rest of us. Thank you. Thank you.
Speaker Change: Now let me provide you with an update related to our taxes.
Speaker Change: Gap income taxes for the fourth quarter of 2024 included tax benefits of $27.7 million related to the release of certain long outstanding tax matters which were previously reserved as uncertain tax positions.
Speaker Change: This tax benefit was adjusted out for non-GAAP reporting, resulting in a non-GAAP effective tax rate of 5.3% for the full year 2024.
Speaker Change: Moving to our cash flow and balance sheet, cash flow from operations in the fourth quarter was approximately $45.4 million, up slightly from Q3.
Speaker Change: Pre-cash flow margin increased to 34% up from 31% in the third quarter.
Speaker Change: Our inventory at the end of the fourth quarter was $103.4 million, which is a decrease of approximately $1 million from the prior quarter.
Speaker Change: In Q4, we repurchased approximately 367,000 shares, or $20 million of stock, making Q4 our 17th consecutive quarter of executing share buybacks.
Speaker Change: Over that period, we have repurchased approximately 6 million shares, thereby reducing dilution by 4.3%.
Speaker Change: Additionally, our board recently approved a $100 million share buyback for 2025.
Speaker Change: We will continue to prioritize investing in the organic growth of our business, but intend to continue returning capital to our shareholders through share repurchases. Let me now review our outlook for the first quarter.
Speaker Change: Revenue for the first quarter of 2025 is expected to be between 115 million and $125 million.
Speaker Change: Gross margin is expected to be 69%, plus or minus 1% on a non-GAAP basis.
Speaker Change: Total operating expenses for the first quarter are expected to be between $50 million and $52 million on a non-GAAP basis.
Speaker Change: Our non-GAAP tax rate in the first quarter is expected to be in the 5-6% range.
Speaker Change: Based on the above inputs, our non-GAAP EPS is expected to be in the range of $0.20 to $0.24 per share.
Speaker Change: Operator, that concludes my formal comments. We can now open the call for questions.
Thank you. We'll now be conducting a
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start keys.
One moment, please, while we poll for questions.
and many more. Thank you. Thank you.
and many more. Thank you. Thank you.
Speaker Change: Thank you. Our first question is from Melissa Weathers with Deutsche Bank.
Melissa Weathers: Hi there. Thank you for letting me ask a question. Congrats on the new role, Tonya, and welcome to the call, Lorenzo.
Speaker Change: I guess my first question is, cyclically it seems like you're starting to see some improvements. You talked about the backlog improvement and the improved B2B, so any particular end markets?
Speaker Change: that are performing better than others that you're seeing and how much of this is lattice specific versus kind of the disties you're making progress on getting under the channel inventory.
Speaker Change: Thank you, Melissa. I think there are three factors. As you said, number one, the channel inventory, we're making progress as expected.
Speaker Change: We do expect to continue to glide down inventory as we previously discussed.
Speaker Change: to get to regular inventory level by mid-year 2025. So that's probably factor number one.
Speaker Change: Factor number two, if you compare this against the backdrop of other companies in our sector
Speaker Change: that are guiding down, we do believe we're taking share in our markets. So we are encouraged.
Speaker Change: by the continued design wins on our Nexus, Avant, and new product lines and continue to take share. And number three, we have seen...
Speaker Change: improvements across our industrial automotive as well as the communication sectors. Computing has always been strong, continues to be strong, but we're seeing recovery in the other segments as well. So three factors, Melissa.
Got it. On that comms and computing side,
Speaker Change: I know computing did grow in 2024. I don't think you've given us a mix of how big the com side is versus the computing side, but can you just at a high level talk about what are the different trends you're seeing in those two sub-segments and what should we be expecting in the coming years between those two businesses? I think we've heard from
Speaker Change: your peers at the comm side is a little bit weaker, so help us think about those two different sub-segments.
So I think the percent of comms and compute
Speaker Change: is roughly the same as last quarter between Q3 and Q4. We see a slight increase in that segment but not very meaningful.
Speaker Change: And the percent industrial, auto, and consumer, again, are pretty much the same, a slight decrease in those segments. Within industrial and automotive, we have seen a nice recovery in automotive.
Speaker Change: this past quarter. So that's a positive. And we do expect O-1 segments to grow into Q-1.
Thank you.
Speaker Change: Communications in particular is slightly stronger in Q4 compared to Q3 and expected to be steady going to Q1.
Speaker Change: Thank you. Our next question is from David Williams with The Benchmark Company. Please proceed with your question.
David Williams: Hey, good afternoon, and thanks for letting me ask the question, and congrats on the solid progress here. So I guess maybe first, Fouad, if you kind of think about where you're seeing demand across that automotive segment, where are you seeing that picking up in terms of the market? Is it on the electrification side or more on just the general ADAS side? And should we think about maybe the traditional versus EV or hybrid platform where you have greater exposure or potential strength?
Speaker Change: Thank you, David. We're designed in across all the various applications, and we're in production today in infotainment, in display, in ADAS, in charging applications, as well as...
Speaker Change: and the other electrification factors. So we continue to see a newer application and do see automotive as a long-term growth driver for us.
We're also getting increasingly more...
Speaker Change: a image sensor, could be a LiDAR, could be a radar, could be other sensor. The FPGA, the small and mid-range FPGA, are the perfect first hop from that sensor before it goes to a near-edge, if you wish.
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Speaker Change: AI engine and so we're the perfect place to tag to do all kinds of function to make that near-edge device more productive.
Speaker Change: And I do believe that having these far-edge applications in our FPGAs are going to be a great place for us to...
to provide value and automotive moving forward.
Speaker Change: If you think of a car, you've got literally tens of these sensors in the car and they all need to be aggregated, fused, and processed before they go to this Near Edge device. And again, RFPGA are the perfect place to do that.
Speaker Change: Great, fantastic color there, thanks so much. And then maybe secondly, just as you kind of think about the R&D Center in India, is that a market that you think is an opportunity for you all or is this more about maybe just the cost structure and does this give you an opportunity do you think in that geo to maybe drive sales and really add to your portfolio there? Thank you.
Speaker Change: I know, great question David. I think again maybe three factors. Number one, we are excited about the opening of this R&D center.
Speaker Change: We, you know, are finding great skill sets over there, including AI.
Speaker Change: Some of the new graduates are all steeped into these AI-type of technologies in Pune, and we should be able to...
Speaker Change: double down not just on chips but also on software and AI type of skills in that market.
Speaker Change: And then number two and three, I would say, from a customer and sales point of view...
Speaker Change: There are two types of opportunities, if you wish. One is the direct customers there, and obviously we're engaged with some of the industrial automotives in that geography.
Speaker Change: But even more importantly, a lot of the OEMs and Tier 1 that we are doing business with are actually increasing.
Speaker Change: they're sort of manufacturing and system bids in that geography so it could become a global OEM in tier one bidding in the geography and and again being
Speaker Change: our support center there could support them directly. So R&D, local customer as well as global customer setting up a shop in India.
Thank you. Thank you. Thank you.
Thank you.
Speaker Change: Thank you. Our next question is from Christopher Rowland with Susquehanna. Please proceed with your question.
Thank you. Thank you. Thank you.
Speaker Change: Hi, this is Aaron Nackville in for Chris. Thanks for taking the question. In doing an acquisition, would you be interested in just the low to mid range of the FPGA portfolio or would you have a preference towards moving higher up in capabilities?
and Tonya Stevens. Thank you.
Speaker Change: Thank you Aaron, good question. As we look at the market, we do believe that the small and mid-range FPGA segments are the most interesting ones. They're the ones growing faster. If you look at the large FPGA, the RI in that category has not been stellar over the past, I don't know,
Speaker Change: If you look at the usage of these larger PGA and cloud or wireless infrastructure type
Speaker Change: They've been challenging, and so we do believe that the investments that we've made in the small and mid-range, our focus on the small and mid-range, is where the money is and where the growth is. So we're going to continue to focus on those segments.
Speaker Change: are low power programs and offerings can address, but we'll do it in a differentiated way, not try to follow incumbents that have been there for many years.
Thank you.
Speaker Change: Thanks. Thank you for that. And given your history in networking and AI, can you talk about new products that you can develop using FPGAs in these areas?
Yes, again, we are very mindful of our
Speaker Change: you know, place in the hierarchy and the food chain. So we are a partner to the NVIDIA, the Amazon, the many training and accelerator companies in the space. We work with them on reference design.
Speaker Change: as well as the partners that they have on the switch and the NIC and storage so we work obviously with the Broadcom, the Marvell and other companies that are developing switches and networking equipment.
very closely on reference design and partnership opportunities, so...
We see these companies as partners.
Speaker Change: These are multi-hundred-million-dollar type of ASICs that are not well-suited for FPGAs.
Speaker Change: On the other hand, if you go, so that's all the way on the cloud and high-end. Then if you look at the edge devices, there's been talk about the far edge and the near edge. The far edge is those devices where we are near the sensor and the near edge.
Speaker Change: are sort of these main brains inside some of these systems. We do believe they were better suited for the far edge.
Speaker Change: And the far edge is near the sensor. And so what you need there is you need a low-power device, which we provide, you need a low-latency device, which we provide, you need fast boot time. And we've shown at our latest developer conference.
Speaker Change: a 10 times faster boot time compared to competition. We just, you know, totally smoked the competition in those spaces.
Speaker Change: Actually we spoke to them on small size and low power as well, I mean the chip was small enough I had to drop it at the developer conference.
Speaker Change: You know, the power is, we're talking milliwatts of power, you know. FPGAs are great at parallel processing, and that's what we do. And we are focused on these tiny AI models, like IOTA or MobileNet. We've got our own version of these models for vision and speech and text.
Speaker Change: They are very well suited for these far-edge, near-sensor type applications. If you look at the
Speaker Change: Dell customer presentation from our developer conference is on our website. You'll see Dell referred to the contextual intelligence and so we're in these laptops sitting next to the camera and inside.
Speaker Change: that laptop, looking at the glare, at the glance from the user and powering down the laptop as an example if there's no user there to save battery power. We're being looked at today in many applications in industrial and automotive.
Speaker Change: for Far Edge. So we're very excited about our place in the ecosystem and being able to provide additional value to make our partners shine in their near-edge and bigger inference and training engines.
Thank you.
Thank you.
Thank you. Bye.
Speaker Change: Thank you. Our next question is from Reuben Roy with Stiefel. Please proceed with your question.
Speaker Change: Thank you. Fouad, I wanted to start by asking about one of the trends that you mentioned. I think trends two through five we thought a little bit about over, I don't know, the last several years. But, you know, the first trend that you mentioned, that AI is driving shorter system design cycles.
Speaker Change: It's sort of new to me. I think it's starting to, you know, show up here and there, but I'm wondering if you could drill into that a little bit and how you're thinking about that. And I ask that because, you know, when I think about Avant and, you know, moving into the mid-range and getting into, you know, slightly more complicated
Speaker Change: FPGA structures and designs, it would seem like those types of system designs would take longer to design and put out into the market. So I guess the question is...
Speaker Change: Do you think this might accelerate the pace at which, you know, we would see Avant, you know, start to gain some traction in the marketplace?
and many more. Thank you.
Speaker Change: Thank you, Ruben. Good question. What I was referring to there is, you know, the cadence of accelerators and switches and other...
releases of these trips.
Speaker Change: There could be some auxiliary functions that could not be comprehended and so we could be a good place.
Speaker Change: to put these functions, especially they were still on older technologies, you know.
Thank you.
Speaker Change: Avant is on 16 nanometer. Nexus is on 28 nanometers. So some of these functions...
Speaker Change: could be much better done in our older processes as opposed to put it in a bleeding-edge two nanometer expensive dye, right? And so that's what I'm referring to. We've got some evidence that point to that to that to that trend.
Speaker Change: All right, got it. Thank you, Fouad. And then as a follow-up,
Speaker Change: Can you kind of give us an idea of where inventories are today and sort of what you're targeting? I think you said by mid-year you're expecting to hit the target, and here too, I'm asking
Speaker Change: It's great to see that the book-to-bill, you know, creeped over one over the last several weeks and it sounds like things are getting better in some of these markets that have been weak for a while. And so I'm just trying to figure out...
Speaker Change: You know your inventory commentary relative to bookings and then you know sort of maintaining the low single-digit growth for the year You know just how you're thinking about those, you know the puts and takes of you know how to get to You know how you're thinking about the year would be helpful. Thank you
Tonya Stevens: Yeah, let me get started and turn it over to Tonya for additional color. As I said, we're encouraged by the early sign of recovery in industrial automotives. That book has been on a steady climb for the past, you know,
For two years, we, you know, it was...
Tonya Stevens: I don't know, call it seven quarters ago, and then steadily climbing back to where we are right now. So we're excited about this.
Tonya Stevens: The second one, as you mentioned, is the consumption demand is another very important metric that we track and that's
answer that.
Tonya Stevens: again is, you know, positive and working with our channel partners to continue to glide to this healthy range of inventory and they've been very supportive so we expect this more vibrant demand to come back in the second half of 2025. Now let me turn over to Tonya to give you a bit more color.
Tonya Stevens: Yes, as we said last quarter, DITSI inventory can fluctuate on a quarterly basis, and it was at the high end of our normal range, but we're in the process of actively bringing that down from the high end to the midpoint of our target range, which is three months of inventory, and we're seeing good progress on that. As Fouad mentioned last quarter, we expect to see that back to the midpoint of our target range in 2025.
Thank you. Thank you. Thank you.
Very helpful. Thank you, Tonya. Thank you, Fouad.
and many more. Thank you. Thank you.
Speaker Change: You can quit.
Chris craft: Hey, sorry, I jumped on late get the names Chris craft.
Chris craft: I just wanted to come back to your comments about the revenue contribution for Vaughn and Nexis. You said it was sort of mid teens up from single digits last year was that our accumulative that it's in.
Chris craft: Mid teens across both Nexus and a bond is it both or at that level and I guess the related question is if it's cumulative it sounded like then bringing extra there's still roughly 85% of revenue.
Chris craft: And we are if you remember last quarter, when we had broken that up at 13%.
Chris craft: And we said, we're not going to break it out moving forward. All I can tell you in Q4 is that number is higher than that 13%. So you know so but we're not we're going to try not to break it up. So we've made good improvements from last quarter and yes last year was single digits. So you can see we're making good improvement on mixes of moving forward.
Speaker Change: Got it okay. Thank you.
Chris craft: Yeah.
Chris craft: Yeah.
Speaker Change: Thank you there are no further questions at this time I'd like to hand, the floor back over to lattice Semiconductor's CEO, Mr. Ford Tamer for any closing comments.
Chris craft: Yeah.
Ford Tamer: Thank you operator.
Speaker Change: Thank you everyone for joining us on today's call and for your continued support.
Speaker Change: Our focus is to continue to drive innovation create value for our customers.
Speaker Change: And stakeholders and proactively adapt to market conditions to maintain the stability.
Speaker Change: Integrity of our leadership product roadmap.
Speaker Change: My support and demand creation infrastructure.
Speaker Change: I look forward to sharing the company's progress with you in the coming quarters.
Speaker Change: Operator that concludes today's call.
Yeah.
Thank you you may disconnect your lines at this time, thank you for your partner.