Lattice Semiconductor Sees AI Server Demand Fueling FPGA Growth

Key Points

• AI server demand is driving Lattice’s FPGA growth, with higher server shipments, increasing FPGA attach rates, greater server complexity and rising average selling prices. AI-related products now represent the high-20% range of the company’s overall business.
• The AMI acquisition expands Lattice into server-management solutions covering uptime, security, power and cooling, leak detection and heterogeneous infrastructure. The company expects integrated hardware-and-firmware offerings to create new data-center opportunities.
• Lattice reported recovering industrial demand and improving visibility, with bookings extending through the fourth quarter of next year. Supply constraints remain concentrated in assembly, testing and packaging, while the company expands capacity to support continued growth.

Lattice Semiconductor NASDAQ: LSCC CFO Lorenzo Flores said the company is seeing rising demand from both AI-focused and general-purpose server deployments, supported by increasing FPGA content per server and higher average selling prices.

Speaking at a KeyBanc Capital Markets event, Flores said industry estimates for total server shipments have increased during the year, from roughly 15 million units with an approximately 20% AI mix at the start of the year to a recent estimate of about 20 million units with a higher AI mix. He said both AI servers and the conventional CPU-based infrastructure supporting broader agentic workloads are contributing to demand.

“We saw a really strong unit volume growth in our products going to servers,” Flores said. He attributed that growth to rising attach rates, growing server complexity and expanding average selling prices for Lattice devices.

Server Content and AI Exposure

Flores said Lattice’s historical server footprint was centered on bridging and I/O expansion, with security capabilities including root of trust subsequently added. The company is now seeing opportunities in manageability functions, including power and cooling management.

He said Lattice’s attach rate in server applications has risen from roughly 1.x several years ago to 2.x and then 3.x, and is now higher still. The company has also moved toward supplying higher-value FPGA products, including devices from its MachXO and Nexus families.

AI-related exposure, including products used on the data path and in the server domain, has grown to the high-20% range of Lattice’s overall business, according to Flores. He said the company does not have significant direct exposure to AI compute itself and does not always have complete visibility into how customers deploy every device after shipment.

For the FPGA business, Flores said unit-volume growth should remain the primary driver over the next several years, with continued increases in attach points providing additional upside. He cited leak detection as an example of a data-center application that has become increasingly important. He also expects ASPs to continue progressing.

AMI Acquisition and Data-Center Management

Flores said Lattice’s acquisition of AMI is intended to expand the company’s capabilities in server management and create opportunities for integrated hardware and firmware solutions. He described the combined offering as a “greenfield” opportunity that could deliver more value than an FPGA or management firmware product on a standalone basis.

According to Flores, customer discussions around the combined Lattice-AMI offering have focused on several key data-center issues:

• Increasing system uptime and accelerating rack startup.
• Improving security through hardware- and firmware-based capabilities.
• Optimizing power consumption and cooling.
• Responding quickly to events such as liquid leaks to avoid catastrophic failures.
• Managing infrastructure sourced from multiple original design manufacturers and combining older and newer equipment.

Flores said AMI’s firmware-layer management capabilities are particularly relevant as hyperscalers seek to use more heterogeneous sources of supply.

He also said Lattice’s approach of providing companion functions rather than competing in core data-center processing helps reduce the risk that FPGA functions could be replaced by customer-designed ASICs. Lattice devices can handle functions such as I/O expansion using older process nodes, he said, while preserving more advanced silicon for core processing. Faster rack design cycles, low-power characteristics and programmable updates also support the sustainability of FPGA content, Flores added.

Physical AI, Industrial Demand and Supply

In physical AI and robotics, Flores said Lattice sees opportunities in sensor fusion, vision processing and the aggregation and preprocessing of data from multiple sensors before information is sent to a core processor. He said the company participates in NVIDIA’s Holoscan platform and believes it has a footprint across nearly all robotics companies.

Flores said some robotics companies are less advanced than traditional industrial automation companies in using FPGAs, and Lattice is working to provide a more software-like programming environment. He said meaningful physical-AI volume could begin to emerge toward the end of next year, though he added that timing remains uncertain. The company expects multiple sockets per deployment.

Separately, Flores said Lattice’s traditional industrial business has begun to recover and is showing roughly 20% year-over-year growth. He said the company expects that business to grow again next year on a comparable-period basis.

On supply and visibility, Flores said Lattice’s order book has expanded both in dollar value and duration, while tighter channel inventory has improved visibility into end-customer demand. Lead times rose above one year in some cases earlier this year, but the company has worked to bring them down into the 40-week range. Assembly, test and packaging remain the principal supply-chain constraint, while fab capacity is more comfortable, he said.

Flores said Lattice has bookings extending through the fourth quarter of next year, while emphasizing that the company can still support additional demand. He said the company is expanding its supply chain and test capacity in anticipation of continued growth.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source