Lattice Semiconductor Corporation · NASDAQ:LSCC
Lattice Semiconductor — Investor Day (May 2021)
76 slides from Lattice Semiconductor's investor day presentation, May 11, 2021
Slide 1: Slide 1
Slide 2: Safe Harbor
Safe Harbor Forward Looking Statements ‘Ts presertation contains forardooking statements that involve estimates, assumption, risks and uncetites, including statements and graphs relating to ou ‘expecations that we are erering a new phase of accelerated growth and wil expand our Nexis leadership, ou
Slide 3: Agenda
Agenda AN a President & Chief Execulve Officer Corporate Vice President, RED Chi Strategy & Marketing Orficer Chit Financial Officer OVERVIEW PRODUCTS MARKETS FINANCIALS
Slide 4: Lattice Investor Day 2021: Overview
2021 LATTICE INVESTOR DAY OVERVIEW JIM ANDERSON PRESIDENT & CEO
Slide 5: Our Mission
Our Mission The Low Power Programmable Leader
Slide 6: Positioned in Growing Markets
Positioned in Growing Markets Ey Sst LS Ca Dee 5G Wireless Servers Industrial oT ADAS. ‘Smart Home ‘Switches/Routers Client Factory Automation Infotainment Wearables Leading the Industry in Low Power Programmability
Slide 7: Executing to Our Strategy
Executing to Our Strategy Drive Product Leadership Faster Product Cadence Rebuild Competitiveness Expand Software Solutions Improve Execution Fidelity Enable Faster Customer TTM Double-Digit Growth Starting 2021/2022 Gross Margin Expansion Operating Expense Discipline Profit Growth Strengthen the Ba
Slide 8: Faster Product Introduction Cadence
Faster Product Introduction Cadence PRODUCT INTRODUCTIONS 2016 TO 2018 PRODUCT INTRODUCTIONS 2019 TO 2020 LATTICE NEXUS Hardware Devices — Trernce Machx0o" ail Rebuilt Product Portfolio
Slide 9: Lattice Market Focus
LATTICE MARKET FOCUS OTHERFPGACOMPANES = gL AT TICE TOOTTUUUTU IT B q B q ~W cB q can 8B q Hardware Platform Security E ‘ hl onnnannoanan ne) See | Control & Management ~200 With Heat Sink CompetitorsfocusedonLarge _Laticeisfocusedon Low ; : "High PONE Dasa ea er erier Fore Pecirs | Industrial Autom
Slide 10: Lattice Application Examples and Market Leadership
LATTICE APPLICATION EXAMPLES LATTICE MARKET LEADERSHIP J: Control & Management [oveuisittene| | “adem |[ “ett | ey. Ad Al Inference at the Edge Embedded Vision LATTICE|NEXUS™ I T T T ] Weare) TBtarmce| (Btarnee tree) tare Hardware Platform Security row, Cera acne cory sense a a | | 4
Slide 11: Building a Stronger Revenue Profile
Growth in Ou LATTICE REVENUE ACTUALS BUILDING A STRONGER REVENUE PROFILE $386M —$399M = $404M $408 ° 1 = Shift to higher quality revenue streams come * Growth of 12% CAGR over past 3 years in our strategic markets (Comms/Compute & Industrial/Auto) o = Consumer headwind stabilized in late 2020; Rebui
Slide 12: Execution to Our May 2019 Financial Goals
Execution to Our May 2019 Financial Goals oross uaren semicon [orexosceune! | orerarwo neous crown | SCRA RAD May 2019 Target: 62% = May 2019 Target 25% 1 20% May 2019 Target: 35% 11% 192% gay, ar er ee eT] a Er a Pricing Optimization and, Driving SG&A Efficiency While Record Annual Operating Profit
Slide 13: Strategic Focus on Revenue Growth
Strategic Focus on Revenue Growth Extend Our Nexus Enhance Our Expand Our Raise the Bar on Our Leadership Software Solutions Addressable Market Financial Targets [oe] 3 | Jy J Entering a New Phase of Accelerated Growth
Slide 14: Extend Our Nexus Leadership
Extend Our Nexus Leadership LAUNCHED COMING SOON once Bo rrce ence E E E BREATIICE | PRBLATTIICE | URBLATTICE —_| _| ail -_ _ —_ — ll — 4 - al ae eas = fare, cial, irs | pe FPGA FPGA FPGA FPGA FPGA FPGA LATTICE NEXUS LATTICE
Slide 15: Enhance Our Software Solutions Portfolio
Enhance Our Software Solutions Portfolio LAUNCHED COMING SOON SIN nagpiss : LarTice SG ORAN F SensAl = mVision- = Senter | AuT@mate™ sotuion stack solution Stack Low Power Low Power Cyber Resilient ‘Acceleraing Factory Enabling ORAN ur Edge Al Embedded Vision Rootof Trust, ‘Automaton Deployment Deve
Slide 16: Growing Customer Momentum
Growing Customer Momentum Ss Accton amazon @ Canon‘!!! Da 2 FUITSU ERICSSON ae HE Microsoft aNoKia Panasonic Raytheon SAMSUNG SIEMENS SONY ZTE EXPANDING SHARE MULTI-GENERATIONAL CUSTOMERS ASKING FOR OF WALLET ROADMAP ENGAGEMENTS PORTFOLIO EXPANSION Google H3C @ Feaeareias HITACHI JUNIPES Lenovo « En
Slide 17: Lattice Addressable Market (SAM)
LATTICE ADDRESSABLE MARKET (SAM) et Target Launch in H2 of Next Year NEXT GENERATION FPGA PLATFORM = New FPGA platform based on our low power architecture = Expands capability by 5X compared to Nexus = Avant platform development began in late 2019 * Lead strategic customers engaged since the beginni
Slide 18: Double-Digit Growth Target
306M $390M_ —S404M_—_ S408 20172018 «2019-2020 ConmsiComputesindstaAsto Consumer 81° DOUBLE-DIGIT GROWTH TARGET LATTICE AVANT = Adtional Avant revenue ramp begins LATTICE AVANT line acceleration when CONSUMER DRIVERS More stability; modest growth potential INDUSTRIAL & AUTOMOTIVE DRIVERS New industr
Slide 19: Gross Margin, OpEx, Operating Profit Targets
“ae GROSS MARGIN OPEX OPERATING EXPANSION DISCIPLINE PROFIT —— —o Raising Target to Maintain Target at Raising Target to 65% | | 35% | | 30%+ Net Prete asedennen GMP ages See append econctuteta mestconcuab GAAP measure
Slide 20: Delivering Shareholder Value with Sustainable Business Practices
Delivering Shareholder Value with Sustainable Business Practices =
Slide 21: Building Shareholder Value
Building Shareholder Value LEADING IN GROWTH REBUILT PRODUCT DOUBLING OUR RAISING FINANCIAL. MARKETS PORTFOLIO ADDRESSABLE MARKET TARGETS Entering a New Growth Phase
Slide 22: Lattice Investor Day 2021: Products
———— | 2021 LATTICE INVESTOR DAY PRODUCTS STEVE DOUGLASS CORPORATE VICE PRESIDENT, RESEARCH & DEVELOPMENT
Slide 23: Product Roadmap
Product Roadmap Sei Faster Roadmap ; Market Leading "© (Cadence Fi Innovations L" a | bear
Slide 24: Platform Based Design
Platform Based Design r ls 7 - =) Product2 | PRIOR METHOD = Pre-Nexus products: = Lack of reuse and scale = Longer development time NEW METHOD. = Nexus and future products = Lower development cost « Faster time to market
Slide 25: Faster Product Introduction Cadence
Faster Product Introduction Cadence PRODUCT INTRODUCTIONS 2016 TO 2018 PRODUCT INTRODUCTIONS 2019 TO 2020 LATTICE NEXUS Hardware Devices — Trernce Machxoo" al Rebuilt Product Portfolio
Slide 26: Market Leading Innovation
Market Leading Innovation SOLUTIONS LATTICE|NEX' pee all =m =I ©. )e.) [| =a |] = 4 J a | optimized for Power efficiency | ciRcUIT GS Low Power Design
Slide 27: CrossLink-NX: Optimized for Embedded Vision
ized for Embedded Vision CrossLink’-NX: Opti COMPETITIVE COMPARISON Display Connectivity Speed LATTICE IUNK INTEL Launched @42019 Production Started @4 2020 Solving the Challenges of Display and Sensor Up to 2X Faster Display Connectivity Deployments in Embedded Vision with Up to 90% Smaller Form Fa
Slide 28: Certus-NX: Reinventing General Purpose FPGA
Certus*-NX: Reinventing General Purpose FPGA CERTUS-NX HIGHLIGHTS, . COMPETITIVE COMPARISON ] > Power Consumption (mW) upto4X Lower Power Launched @22020 ProductionStarted @1 2024 amee, mame cet cx : Up to 4X Lower Power with More Processing and Intelligence at the Edge Double the I/O Density
Slide 29: Mach-NX: Second Generation Hardware Security
Mach -NX: Second Generation Hardware Security COMPETITIVE COMPARISON MACH-NX HIGHLIGHTS . Mach-NX | OtherFPGAs | Microcontroller 1. DETECT Femware 1% Upto6XStower Up to 4X Siower ‘therticaton* PROTECT ReeaLime SPI Supported Supported Not Supported Montorng RECOVER Firmware Microseconds Upto Minutes
Slide 30: Software Investment Strategy
Software Investment Strategy FPGA SOFTWARE SPEND. EXPANDING OUR SOFTWARE Se] BEFORE TODAY Esa — SS = Ee New Application Solution Stacks and Accelerating Investment in Software Embedded Development Tools
Slide 31: Application Solution Stacks
os plication Solutonaay a 2 LATTICE mVISI@On” Low Power Embedded Vision LAUNCHED @1 2020 LATTICE, Sentra” Resilient Root of Trust LAUNCHED @3 2020 Low Power Edge Al LAUNCHED @2 2018
Slide 32: Innovation Focus Going Forward
Innovation Focus Going Forward New Application New Lattice Nexus New Lattice Avant Solution Stacks | | Products Platform
Slide 33: Lattice Automate Solution Stack
ke Auié LATTICE mate Launching Today CUSTOMER BENEFITS = Low power Al based predictive maintenance = Deterministic performance for multi-axis motors Real-time networking for factory automation Functional safety certified design software
Slide 34: New 5G ORAN Solution Stack
New 5G ORAN Solution Stack FIFTH SOLUTION STACK CUSTOMER BENEFITS = Enabling customer trend towards ORAN* Leadership security & control for ORAN architecture Designed into early systems Growth opportunity as adoption increases ‘Open Radio Access Network Target Launch H1 H1 2022 Server Based o] Distn
Slide 35: Fourth Nexus Product Family
FOURTH NEXUS PRODUCT FAMILY : = BEE ereF re 7 INCREASE IN SYSTEM BANDWIDTH CUSTOMER BENEFITS Industry leadership in power efficiency “Best in class system bandwidth "+ New protocols for wide range of applications = Advanced memory interface standards = More to be announcedat launch. Launchi g June 2
Slide 36: Lattice Avant Customer Benefits
CUSTOMER BENEFITS “= Market leading power efficiency = Advanced FPGA architecture = Scalable to 5X the capacity of Nexus = Higher system bandwidth = Breakthrough system features = Leverages existing software portfolio = More to be announced at launch. Target Launch H2 of Next Year
Slide 37: Expanding Our Leadership Portfolio
Expanding Our Leadership Portfolio aiid P| | aad — aa = an = 4 ai
Slide 38: Innovating to Accelerate Growth
Innovating to Accelerate Growth “LEADERSHIP PRODUCT FASTER REALE” STRONGEST PORTFOLIO te hi ep
Slide 39: Lattice Investor Day 2021: Markets
2021 LATTICE INVESTOR DAY MARKETS ESAM ELASHMAWI STRATEGY & MARKETING
Slide 40: FPGA TAM Summary
FPGA TAM Summary FPGA 2024 TAM $7.7B° eee "200 Ta estimated based on 1 an Late toma anise LARGE FPGA Datacenter Acceleration ‘and Communications MID-RANGE FPGA Applications in Communications, Industrial and Automotive SMALL FPGA Applications Across Many End Markets
Slide 41: FPGA TAM Summary
FPGA TAM Summary i LARGE FPGA FPGA 2024 TAM $7.78" os Gamminesio LATTICE AVANT | | LATTICE NEXUS "2004 TaM estimated based on 1 an Late toma anise
Slide 42: Lattice Nexus and Avant
LATTICE NEXUS With Nexus LATTICE AVANT * Based on Lattice low power architecture Bringing differentiation to mid-range FPGA = Enabling new applications LATTICE NEXUS * Industry leadership with small FPGA = Addressing traditional FPGA applications * Driving growth from new applications With Avant Dat
Slide 43: Lattice Avant Customer Engagement
Lattice Avant Customer Engagement WIDE CUSTOMER PARTICIPATION IN DEFINITION LATTICE AVANT pe” Lh ill CUSTOMER FEEDBACK = Industry lacks a compelling mid-range FPGA = Asking Lattice to extend low power architecture to mid-range = Avant applications align with Lattice expertise Target Launch H2 of Nex
Slide 44: Lattice End Market Opportunity
=a, , Lattice End Market Opportunity ~ $6B SAM ‘CONSUMER INDUSTRIAL! AUTOMOTIVE COMMS / COMPUTE ‘COMMS & COMPUTE | SERVER 5G INDUSTRIAL & AUTOMOTWE 4 Ry { é a4 ( | & FACTORY AUTOMOTIVE automation ROBOTICS eLectRonics ‘CONSUMER SMARTHOME — PROSUMER
Slide 45: Client Computing Next Generation Smart PC Trends
Client Computing Next Generation Smart PC Trends AlCapable *= = ~—__.* Small Form Factor * PW Sinale wire agoregation Client Computing is a Greenfield Opportunity for Lattice
Slide 46: In Development
IN DEVELOPMENT User Presence Detection = Power saving until user detected = Leverage low power Al performance ZL 2 Shoulder Surfing = = + Provides waming to user Mea oS = Offload CPU to enhance performance Image Processing | Attention Tracking = Multi-screen tracking & power savings * Started rampin
Slide 47: Driving Higher $ Content with Each New Generation
Driving Higher $ Content with Each New Generation
Slide 48: Driving Higher $ Content with Each New Generation
Driving Higher $ Content with Each New Generation
Slide 49: Content Increasing in 5G
Content Increasing in 5G Ce | 5G - NEXTWAVE (az) (az) [ae [a] LATTICE Power Mamt Bridging a! (zi) (a) (| a Macro BBURRU sstennas Baseband Unt (BU) ‘Asteroas Baseband Unt (@8U) srtereas ‘Baseband Unt (88U) $ Content Per Base Station 1x >1.3X >1.5X
Slide 50: / Ml
/ Ml
Slide 51: Why Customers Are Choosing Lattice
‘Motor Control: Abilty to control multi axis motors with high precision & low power ‘Signal Aggregation: Flexible, configurable interfaces allow forinteroperabilty Predictive Maintenance: Al and processing efficiency WHY CUSTOMERS ARE CHOOSING LATTICE Power Motor Control Ga srs ol mw cane MCU LATTIC
Slide 52: Content Increasing in Automotive
Content Increasing in Automotive ‘anemone INFOTAINMENT - IN CABIN Al De-Fog — 7 Human Presence Detection =e} , 7 = 360° Surround View} . 7 = * Driver Monitoring Display Bridging IsP SECURITY ‘Secure Battery Mgt. ADAS i | Secure Boot Radar Sensor Bridging & Aggregation SR a Image Sensor Bridging & Ag
Slide 53: Example: Automotive Display
Example: Automotive Display sauromonve .» Automotive Grade: Qualfiedto meet automotive standards ‘+ Display Connectivity: Muti resoluionand display size compatbilty «J '* Sensor Aggregation: Abilty to interface with multiple sensors simultaneously MO c \\_sProcessingData: Abiity to processor co-proc
Slide 54: Slide 54
Slide 55: Driving Accelerated Growth
Driving Accelerated Growth
Slide 56: Lattice Investor Day 2021: Financials
————— | 2021 LATTICE INVESTOR DAY FINANCIALS SHERRI LUTHER CHIEF FINANCIAL OFFICER
Slide 57: Entering a New Growth Phase
Entering a New Growth Phase Accelerated Top Line Continued Gross Investment in Profit Growth & Growth Margin Improvement| PortfolioExpansion Strong Balance Sheet ee ee
Slide 58: Strong Financial Execution
Strong Financial Exec ution REVENUE ‘scommelcomputeminaistraiAuto Consumer a Growth in Core Strategic Markets GROSS MARGIN * Gross Margin Expansion (OpEx Discipline OPERATING INCOME * a a a) Record Operating Income EARNINGS PER SHARE* a a er} EPS Expansion NET CASH ‘Stans 2 10 Positive Net Cash Posi
Slide 59: Double-Digit Growth Target
306M $390M_ —S404M_—_ S408 20172018 «2019-2020 ConmsiComputesindstaAsto Consumer 81° DOUBLE-DIGIT GROWTH TARGET LATTICE AVANT = Adtional Avant revenue ramp begins LATTICE AVANT line acceleration when CONSUMER DRIVERS More stability; modest growth potential INDUSTRIAL & AUTOMOTIVE DRIVERS New industr
Slide 60: Gross Margin Improvement
Gross Margin Improvement GROSS MARGIN EXPANSION STRATEGIES New Target: 65% * PRICING OPTIMIZATION May 2019 Target:>62% * Strategic analytics to maximize value * New initiatives to continue value expansion * New products provide opportunity for added value PRODUCT COST REDUCTIONS * Operational improv
Slide 61: OpEx Investment Discipline
OpEx Investment Discipli OPERATING EXPENSES __ INVESTMENT STRATEGY =| RED Target20% = Increased investment for portfolio expansion = Continue to support software expansion | | = Focused on investing in our product roadmap forlong term growth (e.g. Avant Platform) SS —— E> SG&A Target 15% = Driving e
Slide 62: Profit Growth
Profit Growth OPERATING INCOME STRONG EPS EXPANSION New Target 30%» May 2019 Target: 25% 10 90% 2017 201820192020 = att 2017 2018 2019 2020 Raising Profitability Target to 30%+
Slide 63: Strong Balance Sheet
Strong Balance Sheet NET CASH LEVERAGE RATIO $ Millions es 2017 2018 2019 2020 rat ‘2017 2018 208 200 ara Net Cash positive for the first time in 6 years = Lowest interest rate tier at leverage ratio of 1.5X Continued strong cash generation from operations = Debt rating upgraded twice within the las
Slide 64: Capital Allocation Strategy
Capital Allocation Strategy INVEST IN ORGANIC GROWTH Portfolio expansion for future revenue growth (Avant) of MAINTAIN HEALTHY BALANCE SHEET Manage leverage ratio and interest expense (C2) return caprmat To SHAREHOLDERS ‘$60M authorization in place; $15M executed in Q1 2021 = oF STRATEGIC MBA Ajacen
Slide 65: New Financial Target Model
New Financial Target Model New Target Model (Next 3 to 4 Years) Low Double-Digit Growth, with Additional Revenue Growth (YoY) Double-Digit Growth Acceleration When Avant Ramps Pricing and Product Cost Optimization; 4 y Cessuea C36 New Product Ramps Focused on Investing in Our Roadmap for y OEE: 35%
Slide 66: Building Shareholder Value
Building Shareholder Value LEADING IN GROWTH REBUILT PRODUCT DOUBLING OUR RAISING FINANCIAL. MARKETS PORTFOLIO ADDRESSABLE MARKET TARGETS Entering a New Growth Phase
Slide 67: Live Q&A Starting Soon
faLAT TICE Live Q&A Stay Tuned — Starting Soon
Slide 68: Live Q&A
Live Q&A AN a President & Chief Execulve Officer Corporate Vice President, RED Chi Strategy & Marketing Orficer Chit Financial Officer OVERVIEW PRODUCTS MARKETS FINANCIALS
Slide 69: Lattice Investor Day 2021: Appendix
————— | 2021 LATTICE INVESTOR DAY APPENDIX
Slide 70: GAAP Metrics
GAAP Metrics GAAP GROSS MARGIN GAAP OPEX SCHA «RED "O%er PPPEE GAAP OPERATING INCOME GAAP EARNINGS PER SHARE 2010 EBITDA 201 2m art HELATIICE
Slide 71: Gross Margin Reconciliation
Gross Margin Reconciliation (Thousands except percentages) Q1 2021 2020 GAAP Gross Margin $70,585 $245,306 GAAP Gross Margin % 61.0% 60.1% Inventory adjustment related to restructured operations. Stock-based compensation expense 773 3,818 Non-GAAP Gross Margin $71,358 $249,124 Non-GAAP Gross Margin
Slide 72: Operating Expenses Reconciliation
(Thousands except percentages) 2019 2018 2017 "$179,380 44.4% (13,558) ct (3,937) (4,664) Acquisition related charges - 5 E Impairment of acquired intangible . 7 He assets ‘Stock-based compensation expense (10,218) (38,324) (17,477) Gain on sale of building - - . Non-GAAP Operating expenses $38,940
Slide 73: R&D % and SG&A % Reconciliation
R&D % and SG&A % Reconciliation (Thousands except percentages) 12021 2020 2019 2018 2017 GAAP R&D Expense % 20.8% 21.9% 19.5% 20.7% 26.8% ‘Stock-based compensation (2.5%) (2.7%) (1.4%) (1.1%) (1.4%) Non-GAAP R&D Expense % 183% 19.2% 18.1% 19.6% 25.4% (Thousands except percentages) 12021-2020 2019 20
Slide 74: Operating Income Recon
Operating Income Recon (Thousands except percentages) 2020 2019 2018 2017 "GAAP (Lossi/income from Operations. $52,966 $59,041 $13,120) _$(47,620) GAAP (Lossyincome from Operations % 128% 148% (0.8)% (12.39% Inventory adustmentrelated to restructuring operations =~ : (338) 7,829 = ‘Stock-based compe
Slide 75: Non-GAAP Earnings Per Share Reconciliation
Acquisition related charges Impairment of acquired intangible assets Stock-based compensation expense Gain on sale of building Loss on sale of assets and business units Non-GAAP earings per share — diluted $0.69 $0.59 0.33
Slide 76: GAAP EBITDA
GAAP EBITDA (Thousands except percentages) 12021 2020 2019 2018 2017 GAAP (Loss)/income from Operations $20648~«S6a368~=«S BG OAT—«S (3,120) (47,620) GAAP (Loss}/income from Operations % 17.8% 128% 146% (08% —(123)% Depreciation & Amortization 5.227 20691 19.498 21871 26621 ‘Amortization of acquired