Lattice Semiconductor Corporation (NASDAQ:LSCC) Q1 2023 Earnings Call Transcript

Jim Anderson: Thanks, David. So just as a reminder, the revenue breakdown by geography, that’s shipped to revenue, so that’s where Lattice products are shipped. And it doesn’t necessarily reflect where the end product is actually consumed. So I just want to say that from the outset. So you got to keep that in mind, a lot of times where the Lattice product is shipped, the system will be assembled there and shipped to a different geography. Now that said, yes, we’re pleased to see continued growth in North America and Europe. We’ve certainly seen strong growth with those customers over a number of quarters. We have seen some softness in the Asia geography. We attribute that to some of the softness that we talked about earlier in terms of server demand. Many servers are assembled in Asia, for instance. But when we look longer term, we see good growth expectations across our geographies over the long term.

David Williams: Great. And then maybe just from a fungibility standpoint of the products and customers, can you talk maybe about that fungibility, obviously, maybe not between specifics for the software stack? But just kind of think about the inventory levels and those are fairly flat, just modestly, but is there much fungibility that you have between those different products and customers?

Jim Anderson: Yes. There’s very high fungibility. One of the great things about FPGA is, one of the things I certainly like about FPGA products is because they’re programmable, the same product can get adopted across almost every market that we serve. So we often see, especially our popular products, we often see those being used across every single market that we serve. And so there’s great fungibility across our markets and I think that’s a real strength to the business.

Operator: Our next question is coming from Ruben Roy from Stifel. Your line is now live.

Ruben Roy: Jim, I guess most of my questions have been answered, but I did have a question on software. You started to talk a little bit about this. And I guess when you think about software attach rates and a little over the half the design wins having some sort of these soft IP cores involved. Is there an upper limit for software attach rate, i.e., are there some end markets or applications where we just wouldn’t see software that kind of limits growth? Or is it, if you build the stacks, your customers will come and use software and eventually, maybe not 100%, but that number keep going up?

Jim Anderson: Yes. Thanks, Ruben. I think there is an upper limit. There will always be a certain portion of customers that want to do a lot of the work themselves and won’t adopt the software stack. We don’t know exactly what that is. We don’t believe we’ve hit that yet. But yes, I would assume that some portion of our customers would not adopt and just use their own software or own specific programming modules. But yes, I can’t say that we know what that limit is. We don’t believe we’ve hit it yet.

Ruben Roy: Great. And the follow-up to that is a lot of us investors focus on new products, Nexus and, of course, Avant coming up. But in terms of software and sort of the way you’re looking at markets and addressing customers, is the software — are the software stacks sort of pulling through interest and adoption of pre-Nexus products, would you say?