Lattice Semiconductor (NASDAQ:LSCC) executives highlighted accelerating momentum in data center and “physical AI” applications while reporting fourth-quarter and full-year 2025 results and issuing first-quarter 2026 guidance that calls for strong year-over-year growth. CEO Ford Tamer said the company spent 2025 stabilizing the business, normalizing channel inventory, and improving execution, positioning Lattice to benefit from expanding adoption of low-power FPGAs as “everywhere companion chips” across a broad range of systems.
Management frames FPGAs as “companion chips” for AI-era systems
Tamer described Lattice’s role in AI infrastructure as providing critical system functions alongside primary processors such as GPUs, CPUs, and custom accelerators. He cited use cases including boot, power sequencing, security, control, I/O expansion, board and rack management, leak detection, power and cooling, bridging, and sensor aggregation and preprocessing. He said this companion role becomes more foundational as AI workloads increase system complexity and as AI servers disaggregate into specialized modules.
Fourth-quarter results: revenue up 9% sequentially, 24% year over year
Lattice reported fourth-quarter 2025 revenue of $145.8 million, up 9.3% sequentially and 24.2% year over year. CFO Lorenzo Flores said growth was driven by a record quarter in communications and computing, with that segment up 25% sequentially and 60% year over year, which management attributed to strong data center demand.
On profitability, Flores said fourth-quarter non-GAAP gross margin was 69.4%, slightly down from the prior quarter. Non-GAAP operating expense was $56.4 million, up about 5% sequentially and 7% year over year, reflecting continued investment—primarily in R&D—aimed at expanding leadership in small and mid-range FPGAs and the company’s “companionship” strategy.
Fourth-quarter non-GAAP operating margin increased 170 basis points to 30.7%, while EBITDA margin rose 90 basis points to 36.5%. Non-GAAP EPS was $0.32, up 14% sequentially and in line with guidance. GAAP net cash flow from operating activities was $57.6 million, and free cash flow was $44 million, representing a 30.2% free cash flow margin.
Full-year 2025: modest revenue growth, margin expansion, higher cash flow
For full-year 2025, Lattice reported revenue of $523.3 million, up 2.7%. Flores said growth was driven by communications and computing, with revenue up 28%, partially offset by an 18% decline in industrial and automotive, which he said was expected as the company normalized channel inventory throughout the year.
Non-GAAP gross margin expanded 190 basis points to 69.3%. Non-GAAP operating expenses declined about 1% to $213.5 million, while non-GAAP operating margin expanded 340 basis points and EBITDA margin increased 320 basis points to 35%. Non-GAAP EPS grew 17% to $1.05, which management said reflected operating leverage and earnings growing faster than revenue.
Cash generation improved as well. GAAP operating cash flow rose to $175.1 million from $140.9 million in 2024, and free cash flow was $133 million, up from $120 million the prior year.
Q1 2026 guidance calls for sharp growth; company cites strong visibility
For the first quarter of 2026, Lattice guided revenue to $158 million to $172 million, with a midpoint of $165 million. At the midpoint, management said the outlook implies 37% year-over-year growth and 13% sequential growth. Non-GAAP gross margin is expected to be 69.5% ± 1%, with non-GAAP operating expense of $59 million to $61 million. The company expects a non-GAAP tax rate of 4% to 6% and non-GAAP EPS of $0.34 to $0.38.
Flores also reiterated the company’s fiscal 2026 framework, stating Lattice remained “highly confident” it will grow at least 20% year over year and that early-year trends have improved visibility to growth above that level, with more specific guidance expected later in the year. He said channel inventory has reached the company’s target level, which should allow revenue to more closely track consumption in 2026.
Earnings call Q&A: attach rates, supply tightness, new products, and M&A
During the question-and-answer session, Tamer discussed server-related growth drivers including higher attach rates, rising average selling prices, and an expanding number of applications for Lattice devices. He said the company’s FPGA attach rate per server has increased each generation, moving from “mid-ones” in 2024 to “mid-twos” in 2025, and that it expects to pass three FPGA units per server in 2026. He also said ASPs have been increasing from around $3 to above $4.
On AI servers, Tamer said Lattice’s attach rate in 2025 was about 12% of AI servers, and that AI servers represented a “roughly high teens, call it 20%” share of revenue. He added that the company has recently seen a pickup in traditional servers as well.
Management addressed supply-chain conditions, saying lead times have increased and that areas such as substrate and assembly are tight. Tamer said the company has been ordering additional materials since the summer and is working with suppliers, customers, and channel partners on allocations. He also said customers have indicated they have memory supply agreements in place consistent with their forecasts to Lattice.
On products, Tamer said new product revenue grew about 70% in 2025, and he later confirmed new products made up a “low-20s%” share of 2025 revenue. He said the company expects new products to rise to the mid- to high-20s% range of revenue in 2026 as Nexus and Avant adoption broadens.
Lattice also discussed capital allocation and inorganic strategy. Flores said the company remains debt-free and repurchased about 1.8 million shares, or $100 million, in 2025. He added the board authorized an additional $250 million share repurchase program. On M&A, Tamer said Lattice has completed four small “tuck-in” acquisitions focused on IP and software that have not been publicly discussed, and is working on more. He said the company remains interested in a larger acquisition but is not in a hurry, citing the need for strategic fit, accretion, and alignment across multiple factors.
The company said it will participate in upcoming investor events including the Susquehanna Technology Conference on Feb. 26 and the Morgan Stanley Technology, Media, and Telecom Conference on March 4.
About Lattice Semiconductor (NASDAQ:LSCC)
Lattice Semiconductor Corporation is a U.S.-based semiconductor company specializing in low-power, small-footprint programmable logic devices. The company’s product portfolio centers on field-programmable gate arrays (FPGAs), programmable logic devices (PLDs) and related intellectual property cores that enable customers to implement custom digital functions in applications where energy efficiency and compact size are critical. Lattice’s solutions are widely used to accelerate edge computing, support video and sensor interfaces, and provide flexible I/O connectivity across a variety of end markets.
The company offers a range of FPGA families, including the iCE40 series for ultra-low power mobile and consumer applications, the MachXO series for embedded control and security, and the ECP5 series for midrange performance in communications, industrial automation and automotive domains.
