Lattice Semiconductor Corporation (NASDAQ:LSCC) Q4 2022 Earnings Call Transcript

Matt Ramsay: Thank you very much. Good afternoon. And I mean 70% gross margin, Sherri, that’s really, really impressive, so congrats for the whole team. I guess my first question, Jim, is related to the guidance to guide, I think well ahead of consensus for the March quarter definitely sticks out among the semiconductor market right now? In particular, I guess no secret that the notebook market in the very short-term the server market in terms of units are feeling a bit of correction and also we’ve seen some weakness from the wireless infrastructure space as well. And in some of the box makers and in CapEx from some of the carrier folks. So I just wondered if you could walk through some of those end market trends and maybe juxtaposed that against the guidance, I assume most of it’s driven by industrial and automotive on the upside and maybe comps and computing a little bit weaker. But if you could clarify that, that’d be great. Thank you.

Jim Anderson: Thanks, Matt, for the question. Yes, so If you take the midpoint of our guidance for Q1, clearly, at a total company level, we’ve guided up sequentially. But if you look underneath the covers at the different segments, yes, we expect industrial and automotive to be up sequentially from Q4 to Q1 continuing to see design wins ramp within that market segment. Communications and computing, we do expect that to be down sequentially from Q4 to Q1 with primarily what’s driving that is what you mentioned some of the softness that the industry has seen in overall server consumption and deployment. So we do expect that segment to be sequentially down. And then consumer, we also expect to be down sequentially from Q4 to Q1. More tracking normal seasonality within consumer. So that’s kind of a little bit of color by the overall end markets.

Matt Ramsay: Thanks, Jim. Appreciate it. Just as my follow-up, Sherri, we — and digging into the balance sheet a little bit, days of inventory up quite a bit over the last couple of quarters and maybe you could just walk us through that? And what it might mean from a sell in perspective? Or is it — and maybe there’s some pieces that haven’t sold in as much as you thought or conversely, is it sort of a forecast of what future sales might be looking like as you’re building inventory in preparation for that growth? Just I don’t know the puts and takes there on the inventory would be helpful. Thank you.

Sherri Luther: Sure. Thanks, Matt. So if you recall, we’ve actually been pretty consistent over the past two years or so and saying that we may choose to increase inventory to support the growth of our business. And that’s exactly what we did. We increased inventory to support growth in terms of design wins with customers, in terms of new product ramps, Jim mentioned in his prepared remarks that we have four Nexus devices that are in production and ramping and we have one that is going to be in production or ramping rather in the first half of this year. So new products certainly driving growth and demand for inventory. And we may continue to increase inventory going forward, anything to do, to support the business, to support our customers and that future growth.