Lattice Semiconductor posted a standout performance in its second quarter of 2026, achieving revenue of $201 million. This figure represents a 62% increase compared to the same period in 2025. The company’s success is largely due to growing demand in AI data centers and industrial sectors.
Non-GAAP earnings per share climbed to $0.53 for the quarter, which surpassed the top end of the company's guidance. Ford Tamer, President and CEO, credited these results to the company's successful execution and a favorable market environment.
Compute and Communications Growth
In the compute and communications business, Lattice achieved record revenue, with a year-over-year increase of 83%. This growth stemmed from demand for AI applications in data centers, as well as for servers, networking, and cloud infrastructure. Meanwhile, the industrial and embedded segment posted a 17% growth in revenue compared to the previous quarter, with notable demand in automation, aerospace, defense, and medical areas.
Tamer highlighted that the company’s performance in these key areas is being driven by rising capital spending, higher AI content per server, increasing FPGA attach rates, and more complex and secure system architectures. He also noted that the company is seeing rising attach rates and average selling prices for certain newer products, particularly those that support more complex security needs.
Strategic Acquisition of AMI
Lattice completed the acquisition of AMI at the end of July 2026. This strategic decision is expected to double the company’s addressable market and provide a meaningful boost to its earnings per share during the fourth quarter of 2026.
The AMI acquisition adds firmware and infrastructure management tools to Lattice’s offerings, enhancing its ability to serve the AI data center market. After the acquisition, Lattice has already engaged with over 100 hyperscalers and OEMs, who have expressed strong interest in the combined solutions.
AMI’s revenue comes from firmware licensing, ongoing maintenance, and subscription-based models. Lattice anticipates that the acquired company will achieve a revenue run rate above $200 million by the end of 2026, adding significant value to the overall business.
This synergy has been well received by Lattice’s ecosystem partners, who have shown strong support for the time-to-market and value potential of joint solutions.
Financial Performance Highlights
Lattice reported a non-GAAP gross margin of 71.7% for the second quarter, a 170 basis point increase from the previous quarter. According to CFO Lorenzo Flores, this improvement is due to a better product mix and an advantageous customer base.
The company's non-GAAP operating margin increased by 390 basis points to 38.3%, while the EBITDA margin reached 43%. Operating expenses rose by 10% compared to the previous quarter, driven by continued investment in research and development, as well as performance-based bonuses and commissions.
GAAP operating cash flow for the second quarter was $88.3 million, a significant jump from $50.3 million in the first quarter. This reflects Lattice’s strong financial performance and the impact of the 2025 annual bonus, which was paid in the first quarter.
Free cash flow margin hit 40.4% in the second quarter, compared to 23.2% in the first quarter. Flores attributed this growth to improved financial results and the payment of the 2025 annual bonus. Lattice expects that by September 2026, supply and demand will reach a balanced state, with management confident in the company’s position for the remainder of 2027.
The company’s guidance for the upcoming quarter is even more optimistic. Q3 revenue is projected to be between $245 million and $265 million, with $33 million to $37 million of that attributed to the AMI acquisition. Management is aiming to reach an annualized revenue run rate of $1.2 billion by the end of 2026 and is targeting $3 billion in revenue by 2030, reflecting a strong forward-looking strategy and confidence in the company's long-term growth potential.