Lattice Semiconductor Corporation · NASDAQ:LSCC
Lattice Semiconductor — Investor Day (May 2023)
67 slides from Lattice Semiconductor's investor day presentation, May 15, 2023
Slide 1: Analyst & Investor Day 2023
= baa sae LATTICE MOB SEMICONDUCTOR. The Low Power Programmable Leader Analyst & Investor Day 2023 May 15, 2023
Slide 2: Safe Harbor
Safe Harbor Forward Looking Statements This presentation contains forward-looking statements that involve estimates, assumptions, risks and uncertainties, including statements and graphs relating to our expectations about the growth of our addressable and end markets, and the factors driving such gr
Slide 3: Agenda
Agenda Jim Anderson Esam Elashmawi Sherri Luther President & Chief Executive Officer Chief Strategy & Marketing Officer Chief Financial Officer OVERVIEW & PRODUCTS & FINANCIALS STRATEGY MARKETS
Slide 4: Overview & Strategy
2023 LATTICE ANALYST & INVESTOR DAY OVERVIEW & STRATEGY Jim Anderson President & CEO
Slide 5: The Low Power Programmable Leader
Ee The Low Power Programmable Leader ALATOGE
Slide 6: Key Goals From Our 2021 Investor Day
Key Goals From Our 2021 Investor Day yoo mVigion” Sentra: Aulémate- Extend Our Nexus Expand Our Enhance Our Accelerate Growth ii Leadership | [aacteeeable Market | Software Solutions and Profitability |
Slide 7: Extended Our Nexus Leadership
EXTENDED OUR NEXUS LEADERSHIP THREE NEW DEVICE FAMILIES SINCE MAY 2021 Trearnce -— “Za —~Z CertusPro-NX MachXO5-NX — = | —_—_—_— — Enhanced Reinvented 2" Generation ‘Advanced Enhanced Monitor Advanced Embedded Vision General Purpose Security General Purpose and Control System Control FPGA FPGA FPGA
Slide 8: Doubled Our Addressable Market With Avant
DOUBLED OUR ADDRESSABLE MARKET WITH AVANT 2X SAM Lattice Avant Platform Launched in December 2022 Lattice Addressable Market HLATIUGE
Slide 9: Expanded Our Solution Portfolio
EXPANDED OUR SOLUTION PORTFOLIO j TWO NEW SOLUTION STACKS SINCE MAY 2021 = —= SénsAl | mVision: | | Aul8mate- ~ i) ) bk fe @ Enabling ORAN Edge Al Embedded Vision Root of Trust Deployment Low Power | Low Power | Cyber Resilient | ‘Accelerating Factory
Slide 10: Strong Growth in Our Core Markets
Strong Growth in Our Core Markets REVENUE bons $660 428% $515 Comms & Computing Industrial & Auto Consumer 2020 2021 2022 COMMUNICATIONS & COMPUTING Four consecutive years of double-digit growth Continued expansion in $ content per server Growth in 5G and datacenter networking INDUSTRIAL & AUTOMOTIV
Slide 11: Exceptional Financial Execution
Exceptional Financial Execution GROSS MARGIN OPERATING INCOME 69.1% 220k 2002 7020 70212022 +810 bps Expansion +1,350 bps Expansion EARNINGS PER SHARE 2020 matt 2022 2.5X EPS Growth LATIOSE
Slide 12: Driving Our Next Growth Phase
DRIVING OUR NEXT GROWTH PHASE Growing Expanding Market Leading Driving Addressable Market Product Portfolio Innovation Customer Momentum
Slide 13: Positioned in Secular Growth Markets
Positioned in Secular Growth Markets CORE STRATEGIC MARKETS e i STRATEGIC MARKET SHIFT COMMUNICATIONS COMPUTING 2018 2022 <a ® Non-core markets. ™ Core markets Shift to Durable Secular Growth Markets INDUSTRIAL AUTOMOTIVE
Slide 14: Expanded Market Opportunity
Expanded Market Opportunity $10B SAM IN 2028 TRENDS DRIVING FPGA ADOPTION INDUSTRIAL & gee Artificial Intelligence —EEE— AUTOMOTIVE CONSUMER "aoe Automation and Robotics = Re Automotive Electronics Le 4\ ‘<7, Hardware Platform Security COMMUNICATIONS & COMPUTING
Slide 15: Rapid Product Portfolio Expansion
RAPID PRODUCT PORTFOLIO EXPANSION sorrware ) eAZAL Vision Séntr® AuTgmate OARN: pee = SOLUTIONS ‘OVER PAST 2 YEARS 2025 TN DEVELOPMENT ‘MID-RANGE FPGAS. ‘SMALL FPGAs
Slide 16: Lower Power, Smaller Size
LOWER POWER Operating Power Consumption ‘COMPETITION LATTICE LATTICE SMALLER SIZE Package Size ‘COMPETITION Upto 6X Smaller LATIOGE
Slide 17: Software Strategy Expands Customer Value Creation
Software Strategy Expands Customer Value Creation re LATTICE LATTICE, SEAM mVision Senter INCREASING CUSTOMER ADOPTION >50% 2018 Over 50% of Design Wins Now Have Software Attach Current DELIVERING VALUE CREATION Higher ASPs on Design Wins with Software Attach Aulémate OR@N Drive ACCELERATING TIME-TO
Slide 18: Delivering Customer-Centric Innovation
DELIVERING CUSTOMER-CENTRIC INNOVATION ABB Acton AD\NTECH AIRSUS —agayonrboi’s Anritsu -APTIV: ARISTA OWS saesvstems (%) Geoewa 2 @ Bosch Canon ciena ‘{Hyil! Gutinentals Dawe onatatocic. detec A DELTA ¢ 2 ED Fujitsu Brceeatncare amet: © Google HSC Ene HITACHI QQ inventoc §—JUNIPEr KUKA —— @Lanarnis
Slide 19: Raising Our Long-Term Revenue Growth Target
Raising Our Long-Term Revenue Growth Target REVENUE BY END MARKET COMMUNICATIONS & COMPUTING = Continued expansion in server $ content * Datacenter networking and 5G infrastructure * Greenfield growth in client computing Target growth: 15-20% CAGR INDUSTRIAL & AUTOMOTIVE = New industrial robotics pr
Slide 20: Raising Our Long-Term Revenue Growth Target
Raising Our Long-Term Revenue Growth Target REVENUE BY MARKET SEGMENT MID-RANGE FPGA SEGMENT Revenue expected to begin end of 2023 * Additive to small FPGA revenue stream ~ Avant ASPs 10-20X higher than small FPGA Avant accelerates Lattice top line growth as it ramps Target growth: 15-20% CAGR SMALL
Slide 21: Raising the Bar Again on Our Financial Targets
Raising the Bar Again on Our Financial Targets GROSS MARGIN OPEX OPERATING EXPANSION DISCIPLINE INCOME Raising Target Lowering Target Raising Target to Low 70's to 30% to Low 40’s
Slide 22: Holding Ourselves to the Highest Standards
Holding Ourselves to the Highest Standards ENVIRONMENTALLY CONSCIOUS CULTURE OF INNOVATION on ea mane ol GSA MOST RESPECTED PUBLIC COMPANY THREE YEARS IN A ROW STRONG & GROWING RECOGNITION FOR CLEANTECH PRODUCT INNOVATION Fe ayy LATIOSE
Slide 23: Driving Our Next Growth Phase
DRIVING OUR NEXT GROWTH PHASE Growing Expanding Market Leading Driving Addressable Market Product Portfolio Innovation Customer Momentum
Slide 24: Products & Markets
2023 LATTICE ANALYST & INVESTOR DAY PRODUCTS & MARKETS Esam Elashmawi Chief Strategy & Marketing Officer
Slide 25: Lattice SAM Outlook
Lattice SAM Outlook EXPANDS TO $10B IN 2028 2028 SAM BREAKDOWN ————————— INDUSTRIAL & KEY EXPANSION DRIVERS CONSUMER AUTOMOTIVE Ap Artificial Intelligence New Datacenter Applications Cloud-connected Factories “COMMS & COMPUTE ‘Small FPGA Mid-range FPGA Previous | HELATTICE
Slide 26: FPGA Landscape
FPGA Landscape ASP Range Volume Typical Applications LARGE ; ’ Datacenter Acceleration & i $100's -$1000's Smallest canis Acee erat eres MID-RANGE ’ q Communications, Computing, a Se Neate Industrial, & Automotive ‘amie SMALL 7 eiesive Lames! Applications across many 4.40 mm x 1.45 mm end markets
Slide 27: FPGA Landscape
FPGA Landscape ASP Range Volume Typical Applications LARGE 4 55mm x 55mm i Datacenter Acceleration & $100's - $1000's Smallest Geant MID-RANGE Communications, Computing, Oo Bao sia Moderate Industrial, & Automotive 15mm x 15mm SMALL a 4.40 mm x 1.45 mm 2 | mason: see ob arg aap HELATIICE
Slide 28: Rapid Product Portfolio Expansion
RAPID PRODUCT PORTFOLIO EXPANSION rime |) SaREAL Vision SRE auTemste Oxf [Deel S SOLUTIONS 03.2023 TN DEVELOPMENT ‘OVER PAST 2 YEARS ‘MID-RANGE FPGAS. ‘SMALL FPGAs
Slide 29: Nexus FPGA Portfolio Expansion
Nexus FPGA Portfolio Expansion LAUNCHED APRIL 2023 LAUNCHING Q3 2023 Advanced System Control FPGA Best-in-class Embedded Vision FPGA
Slide 30: Avant FPGA Portfolio Expansion
Avant FPGA Portfolio Expansion LAUNCHED DEC. 2022 = LAUNCHING AT DEVELOPER CONFERENCE IN 2H 2023 Edge-optimized Cutting-edge Advanced Connectivity Low Power FPGAs General Purpose FPGAs FPGAs.
Slide 31: New Automotive Solution Stack
New Automotive Solution Stack LAUNCHING Q3 2023 CUSTOMER BENEFITS ss > ADAS sensor bridging and processing 7 hrs = Infotainment display bridging and processing = Low power driver / cabin / vehicle monitoring w ’ * Functional safety certified design software D DATtICe rlwe
Slide 32: Positioned in Growing Markets
Positioned in Growing Markets COMMUNICATIONS COMPUTING INDUSTRIAL AUTOMOTIVE 5G Wireless Servers Industrial loT ADAS Datacenter Network Client Factory Automation Infotainment Leading the Industry in Low Power Programmability
Slide 33: 5G Wireless Infrastructure and Datacenter Networking
5G WIRELESS INFRASTRUCTURE Lattice Avant Doubles Our Potential $ Content DATACENTER NETWORKING ‘Sample Datacenter Networking Board (8B) Expanding Into New Applications
Slide 34: Enabling Datacenter Networking
Enabling Datacenter Networking Datapath: Flexible fronthaul synchronization and low power acceleration Security: Authentication and real-time encryption/decryption of contro! data Control Functions: Board level management and control LATTICE ADVANCED CONNECTIVITY & POWER EFFICIENCY rial Bandwidth Op
Slide 35: Expanding Position in Server Platforms
Expanding Position in Server Platforms Mil DATACENTER SERVER OPPORTUNITY flat / nugPu neclrtr 7 Control & securty module (a Motherboard (tote, AMD, Arm, other) ac (Other speciay boards. = Pervasive heterogeneous computing Growth in Al acceleration driven by generative Al = Greater system modularity
Slide 36: Enabling Next Generation Datacenters
Enabling Next Generation Datacenters a Motherboard (tte, AMD, Arm, other) \i lal / AIGPU Accelerator (i) Control & security module (a Network interface card pict Storage system card ther speciaty boards. : Enabling alll architectures CPU Agnosti Connectivity: Industry standard for power management &
Slide 37: Lattice Solves Client Computing Challenges
Lattice Solves Client Computing Challenges LATTICE GROWTH POTENTIAL Comte vison Bl _* Large system unit TAM opportunity Image Quality Improvement Lattice ASPs per unit in low to mid-single digits Actively engaged with top OEMs Recent PI. Laun« Lenovo ASUS @ic | System Optimization i Enhanced Securit
Slide 38: Computing: Enabling Next Generation Client Devices
COMPUTING Enabling Next Generation Client Devices ~g—--* Attention Sensing: Intelligent collaboration - battery-life savings - wellness _* Enhanced Security: User ID & privacy - platform firmware resilience Adaptive Performance: Latest Al models - pre-processing - smart ISP LATTICE BATTERY LIFE SAVI
Slide 39: Lattice Solves Industrial Challenges
Lattice Solves Industrial Challenges ACCELERATING INDUSTRIAL INNOVATION Seegee dione - INDUSTRIAL LATTICE GROWTH POTENTIAL INDUSTRIAL TRENDS "= Increased factory and warehouse autonomy * More intelligent robots and industrial systems. Growing demand for cloud to edge networking LATTICE OPPORTUNITES
Slide 40: Enabling Next Generation Robotics
Enabling Next Generation Robotics Cloud to Edge Networking: Low power standards-based networking LATTICE PERFORMANCE ADVANTAGE Up to Up to 35X 2x Faster Motors LATTICE Aulémate Inference & Intelligence LATTICE Network
Slide 41: Lattice Solves Automotive Challenges
Lattice Solves Automotive Challenges \UTOMOTIVE ACCELERATING AUTOMOTIVE INNOVATION INFOTAINMENT Doon IN-CABIN Al Presence Detection 260" Suneund View LL Te Driver Monitoring ADAS | | \ | \\ ssc 508 Rater Sense Bong & Aozegaten || HYBRIDIELECTRIC| \. \ \Security eam eage Sour Bi 8 aon Seer Bala Mont
Slide 42: Enabling Next Generation Automotive Applications
Enabling Next Generation Automotive Applications : Display Connectivity: Multi resolution and display size compatibility 4 E-MIRROR, | E-MIRROR cos soa : " , o {| __ Sensor Aggregation: Abiity to interface with multiple sensors simultaneously Processing Data: Ability to process or co-process data to
Slide 43: Multiple Growth Drivers Across Core Markets
Multiple Growth Drivers Across Core Markets COMMUNICATIONS COMPUTING INDUSTRIAL. etal Expanding Into Increasing $ Content Automation Driving Electronics Driving New Datapath Applications Per Server Next Wave of Growth Opportunities Leading the Industry in Low Power Programmability
Slide 44: Financials
2023 LATTICE ANALYST & INVESTOR DAY FINANCIALS Sherri Luther Chief Financial Officer
Slide 45: Key Financial Priorities
KEY FINANCIAL PRIORITIES Strong Continued Substantial Disciplined Revenue Growth Margin Expansion Cash Generation Capital Allocation
Slide 46: Outstanding Financial Performance
Outstanding Financial Performance REVENUE ‘consumer sindutial & Auto Comms & Computing ‘secon som oon 2020 2021 2022 Growth in Core Strategic Markets OPERATING INCOME" 2020 2021 2022 +1,350 bps Expansion GROSS MARGIN" “ 2022 2020 0-810 bps Expansion [EARNINGS PER SHARE™ 2021 2.5X EPS Growth 2000 OPE
Slide 47: Raising Our Long-Term Revenue Growth Target
Raising Our Long-Term Revenue Growth Target REVENUE BY END MARKET COMMUNICATIONS & COMPUTING = Continued expansion in server $ content * Datacenter networking and 5G infrastructure * Greenfield growth in client computing Target growth: 15-20% CAGR INDUSTRIAL & AUTOMOTIVE = New industrial robotics pr
Slide 48: Gross Margin Expansion
Gross Margin Expansion GROSS MARGIN EXPANSION STRATEGIES PRICING OPTIMIZATION Leadership product portfolio = Maximize value with added functionality Higher software attach rate New Target: Low 70's * Prior Target: >659%, PRODUCT MIX = Higher capacity & greater capability PRODUCT COST REDUCTIONS = Op
Slide 49: Investments for Long Term Growth
Investments for Long Term Growth SGA R&D — Opex% OPERATING EXPENSES INVESTMENT STRATEGY R&D INVESTMENTS = Continuing to invest in portfolio expansion = Expanding both hardware and software portfolio v soe = Target 18-20% of revenue New Target: 30%: SG&A INVESTMENTS. = Investing in demand creation &
Slide 50: Record Profitability
Record Profitability OPERATING INCOME GROWTH STRONG EPS EXPANSION +2.5X 2020 2021 2022 2020 2021 2022
Slide 51: Substantial Cash Generation
Substantial Cash Generation FREE CASH FLOW FREE CASH FLOW PER SHARE 1% of Revenue /$ Milions +2.7X New Target: >30% 33% 31% 20% 2020 2021 2022 2020 2021 2022 Record cash generation from operations Significant expansion in Free Cash Flow per share 1 | masoaa usec AILATIGE
Slide 52: Strong Balance Sheet
Strong Balance Sheet LEVERAGE RATIO — bext aaance 1K 299 Ratio HIGHLIGHTS Record cash generation from operations Net Cash positive end of 2022 Debt rating upgraded 3 times over the past 3 years Increased liquidity with access to $350M revolver
Slide 53: Capital Allocation
Capital Allocation CAPITAL ALLOCATED STRATEGY (2020-2022) ORGANIC INVESTMENT = > Portfolio expansion & demand creation invent INORGANIC INVESTMENT nai > Mirametrix’ acquired Nov. 2021 > DEBT PAYDOWN ‘Derk Earionay Debt leverage ratio of 0.5X ‘Share > SHARE REPURCHASE Repurchase 3.6M shares repurchas
Slide 54: New Financial Target Model
New Financial Target Model Old Model New Target Model (2021) (Next 3 to 4 Years) Revenue Low i Growth (YoY) Double-digit 15-20% > Sustainable above-market growth Gross Margin 65% Low 70’s > Continued margin expansion opportunity OpEx 35% 30% > Investing in rapid portfolio expansion Operating , " inn
Slide 55: Key Financial Priorities
KEY FINANCIAL PRIORITIES Strong Continued Substantial Disciplined Revenue Growth Margin Expansion Cash Generation Capital Allocation
Slide 56: Wrap Up
2023 LATTICE ANALYST & INVESTOR DAY WRAP UP Jim Anderson President & CEO
Slide 57: Driving Our Next Growth Phase
DRIVING OUR NEXT GROWTH PHASE Growing Expanding Market Leading Driving Addressable Market Product Portfolio Innovation Customer Momentum
Slide 58: The Low Power Programmable Leader
sae LATTICE MBB SEMICONDUCTOR The Low Power Programmable Leader
Slide 59: The Low Power Programmable Leader
meLAT TICE M SEMICONDUCTOR The Low Power Programmable Leader
Slide 60: GAAP Metrics
GAAP Metrics |S GROSS oon GAAP OPEX EBITDA SGA © RAD_ mother = 2021 2022 Lone OPERATING INCOME GAAP EARNINGS PER SHARE =| | nasoaa:Ls0e HELATTICE
Slide 61: Gross Margin Reconciliation
Gross Margin Reconciliation (Thousands except percentages) 2022 2021 2020 GAAP Gross Margin $ 452,050 $ 321,675 $ 245,306 GAAP Gross Margin % 68.5% 62.4% 60.1% Stock-based compensation expense 4,310 4,105 3,818 Non-GAAP Gross Margin $ 456,360 $ 325,780 $249,124 Non-GAAP Gross Margin % 69.1% 63.2% 61
Slide 62: Operating Expenses Reconciliation
Operating Expenses Reconciliation (Thousands except percentages) 2022 2021 2020 GAAP Operating expenses $ 264,683 $ 220,859 $192,940 % of Revenue 40.1% 42.9% 47.3% Amortization of acquired intangible assets (3,778) (2,613) (4,449) Restructuring and other charges (3,062) (2,111) (3,937) Stock-based c
Slide 63: R&D % and SG&A % Reconciliation
R&D % and SG&A % Reconciliation 2022 2021 2020 GAAP R&D Expense % 20.6% 21.4% 21.9% Stock-based compensation (3.2%) (3.0%) (2.7%) Non-GAAP R&D Expense % 17.4% 18.4% 19.2% 2022 2021 2020 GAAP SG8A Expense % 18.5% 20.5% 23.4% Stock-based compensation (6.1%) (6.9%) (6.8%) Litigation expense (0.4%) = ,
Slide 64: Operating Income Reconciliation
Operating Income Reconci' (Thousands except percentages) 2022 2021 2020 GAAP Income from Operations $ 187,367 $ 100,816 $52,366 GAAP Income from Operations % 28.4% 19.6% 12.8% ‘Stock-based compensation ~ gross margin 4,310 4,105 3,818 Amortization of acquired intangible assets 3.778 2,613 4449 Restr
Slide 65: Earnings Per Share Reconciliation
Earnings Per Share Reconciliation 2022 2021 2020 GAAP net income per share — diluted $127 $0.67 $0.34 Amortization of acquired intangible assets 0.03 0.02 0.03 Restructuring and other charges 0.02 0.02 0.02 Stock-based compensation expense 0.41 0.35 0.30 Loss on refinancing of long-term debt 0.01 :
Slide 66: GAAP EBITDA
GAAP EBITDA (Thousands except percentages) 2022 2021 2020 GAAP Net Income $ 178,882 $95,922 $ 47,392 Interest Expense 4,146 2,738 3,702 Income Taxes 3,230 1,704 1,064 Depreciation & Amortization 29,323 24,429 25,140 GAAP EBITDA $ 215,581 $ 124,793 $77,298
Slide 67: GAAP FCF
GAAP FCF (Thousands except percentages) 2022 2021 2020 GAAP net cash provided by operating activities $238,806 $167,722 $91,687 Operating cash flow margin 36.2% 32.5% 22.5% Capital expenditures (23,338) (9,835) (12,121) Free cash flow $215,468 $157,887 $79,566 Free cash flow margin 32.6% 30.6% 19.5%