LATTICE SEMICONDUCTOR CORP Annual Report Summary

Business Overview Lattice Semiconductor delivers cutting-edge, low-power programmable solutions, primarily focusing on Field-Programmable Gate Arrays (FPGAs). These essential technologies power applications across communications, computing, industrial, automotive, and consumer markets, enabling faster, more efficient data processing right where it's needed – at the network's edge.

Financial Performance Lattice Semiconductor delivered a strong financial performance for the fiscal year ending January 3, 2026. The company generated $650 million in total revenue, marking a 7% increase from the prior year. This growth stemmed primarily from robust demand for its new Avant™ platform and increased adoption in the industrial and automotive sectors. Net income surged to $120 million, climbing 15% year-over-year, as the company achieved improved gross margins and managed expenses effectively.

The company continued to diversify its sales geographically and by channel:

• Geographic Distribution: Americas (35%), Europe (25%), China (20%), Japan (15%), with other regions comprising the remainder.
• Channel Distribution: Direct sales accounted for 40% of revenue, while distributor partners contributed 60%. Distributor A remained a key partner, generating approximately 18% of total sales.

During the year, Lattice incurred $15 million in restructuring charges. These charges primarily supported operational streamlining, including $10 million in termination fees from canceling legacy contracts and consolidating R&D initiatives to sharpen focus on core strategic areas. While these actions temporarily impacted short-term profitability, management expects them to boost long-term efficiency and strategic alignment.

Risk Factors Investors should consider several key risks associated with Lattice Semiconductor:

• Customer Concentration: Distributor A represents a significant customer, accounting for approximately 18% of total sales. A substantial drop in orders from this partner could negatively impact revenue.
• Supply Chain Volatility: Global semiconductor manufacturing complexities and geopolitical tensions could disrupt the supply chain, affecting production and delivery schedules.
• Intense Competition: The company faces fierce competition from larger semiconductor firms and emerging players. The rapid pace of technological change in the industry demands continuous innovation to stay competitive.
• Geopolitical Factors: Trade relations with China, which contributes 20% of revenue, present potential regulatory or market access challenges due to evolving geopolitical dynamics.

Management Discussion (MD&A highlights) Lattice Semiconductor navigated a dynamic market environment, delivering solid financial performance through strategic product introductions and operational efficiencies. A significant achievement for the year was the successful launch and rapid adoption of its next-generation FPGA products, which received positive customer feedback and broadened market reach. The company also advanced its supply chain optimization efforts, leading to improved delivery times and greater cost efficiency.

To strengthen financial oversight and market strategy, Lattice made key leadership appointments:

• Tonya Stevens became Corporate Vice President and Chief Accounting Officer on November 19, 2025, enhancing financial reporting and compliance.
• Esam Elashmawi was appointed Senior Vice President and Chief Strategy and Marketing Officer on December 3, 2025, signaling a renewed focus on market expansion, product roadmap development, and strategic partnerships to fuel future growth. These appointments highlight the company's dedication to operational excellence and strategic market penetration.

Lattice actively manages its capital structure through share repurchase programs. The board authorized up to $100 million in share repurchases under its 2025 and 2026 programs. During the fiscal year, Lattice repurchased 2 million shares for $50 million, aiming to return value to shareholders and mitigate dilution from equity compensation. This demonstrates management's confidence in the company's valuation.

As a "Large accelerated filer" with the SEC, Lattice Semiconductor meets specific market capitalization and public float requirements, adhering to robust reporting and internal control standards. Global semiconductor market trends, including rising demand for specialized chips and evolving geopolitical trade policies, will continue to influence the company's operating environment.

Financial Health Lattice Semiconductor ended the fiscal year on January 3, 2026, with a strong financial position, holding $320 million in cash and cash equivalents. The company also maintains a $200 million revolving credit facility, a flexible line of credit. At year-end, Lattice had drawn $50 million from this facility, leaving $150 million available for future operational needs or strategic investments. Total long-term debt amounted to $75 million.

As of February 9, 2026, the company reported 136,786,203 shares of common stock outstanding. The market value of voting stock held by non-affiliate investors totaled approximately $3.43 billion as of June 27, 2025, underscoring strong investor confidence.

Future Outlook Lattice Semiconductor expects continued growth in the upcoming fiscal year, fueled by rising demand for AI at the edge, IoT devices, and advanced industrial automation. The company plans significant investments in research and development, focusing on next-generation programmable logic and software tools to sustain its competitive advantage. Management projects mid-to-high single-digit revenue growth for the next fiscal year, assuming stable macroeconomic conditions and supply chain stability.

Competitive Position Lattice Semiconductor distinguishes itself by concentrating on low-power, small-form-factor, and cost-optimized programmable solutions, especially for edge computing and embedded applications. The company's competitive edge comes from offering easy-to-use development tools and a robust ecosystem for its FPGAs, which helps customers achieve faster time-to-market. Major competitors include larger FPGA manufacturers like Xilinx (now AMD) and Intel (Altera), alongside ASIC and ASSP providers in specific market segments. Lattice seeks to expand its market share by targeting specialized niches where power efficiency and flexibility are critical.