1. How do you see the present outlook for the semiconductor industry?

The global semiconductor industry clearly is hurting right now.  However, the rate of decline has been slowed by the aggressive build out of 3G networks in China.  Now the question becomes whether other regions will recover before the Chinese network build out slows.  As for Lattice, we are focused on improving our cost structure and maintaining our financial strength (for example, we generated $7.5M of cash from operations last quarter).   We are also actively delivering the benefits of our low-cost, low-power programmable logic devices to our customers, who we know are feeling the effect of the economic slowdown as much as we are.

2. In the past seven months senior management has been overhauled. What are the attributes the new recruits bring to Lattice?

Lattice's management team has been strengthened both by bringing people in from external positions as well as promoting Lattice managers with key skills.  Some of these managers and their skills include:

Michael Potter, CFO - cost control, Asian operations; Clay Miller, CIO & CVP Shared Services - systems and supply chain management; Stacy Fender, CVP Worldwide Sales - Asia has grown to 60% of our sales today. Stacy has deep experience selling programmable logic products in Asia; Sean Riley,Corporate Vice President and General Manager, High Density Solutions - deep experience from Intel in the advanced technologies and markets of high density products; and Chris Fanning, Corporate Vice President and General Manager, Low Density Solutions - experience in strategic planning and enterprise solutions qualify Chris to maximise our low density business.

3. Lattice recently announced it would not pursue the high-end FPGA market. Why?

Most of the market does not need, and will not benefit from, ultra-high density FPGAs built on the most advanced process node and running the fastest SerDes.  Given Lattice's scale, it does not make sense for us to invest in such a comparatively limited market.  We believe that devices such as our mid-range LatticeECP2M FPGA, and its successor, the LatticeECP3, offer the majority of customers the advanced features they need (deep memories, fast SerDes, powerful DSP capabilities) without the cost and power burden of the un-needed high-end features that they were formerly forced to pay for.

4. You recently stated it was your aim for Lattice to capitalise on the downturn. How does it plan to do this?

In a downturn customers are looking to reduce costs.  Let me give you several examples of how Lattice products can help customers achieve that goal:

The ECP3 FPGA: product cost is the sum of the device cost and the power required to operate it. Our ECP3 is up to half the price and half the power of competitive solutions.

The 4000ZE CPLD: reduces cost with low power, as well as ultra-small packaging that results in a small board footprint

The XO PLD: a low cost, versatile programmable logic device, with a newly released inexpensive development kit and free downloadable reference designs that accelerate a customer's time to market.

5. Investment in R&D is essential even in a downturn. How is this holding up at Lattice? Is there a specific focus for the company's R&D spend?

Lattice continues to invest in R&D.  We are focused on identifying and developing solutions for applications and markets where we believe we have a clear and sustainable advantage.

To that end we have settled on a product roadmap which we believe will reduce our R&D costs while preserving our competitiveness. Going forward our low-density business will focus on an embedded flash architecture, while our high-density business will focus on a mid-range FPGA architecture with low-cost SerDes which we believe can address the great bulk of the market, including most higher performance telecom applications.

6. Your recently launched the ECP3 third generation FPGA family. What new features does it bring to this family of products and what are the target applications?

Our ECP2M has had tremendous acceptance worldwide, and we believe the LatticeECP3 will build on that success.  Though many of the ECP3's features, such as PCI Express functionality, are broadly applicable, the ECP3 is particularly well suited for applications in the communications and video markets.  Let me give you a few highlights:

For communications the ECP3 supports a wide range of packet-based standards and has special features, such as a Physical Coding Sub-layer (PCS), that offers a low latency option which enables a smaller, cleaner CPRI implementation, and cascadable DSP blocks for implementing wide math functions such as the adder trees in FIR filters.

Video engineers will appreciate the built-in enhanced SMPTE support, including, SD, HD, and the 1080p 3GHD, as well as the large (up to 7Mbits) memory.

All of these features and benefits, and more, are delivered to the customer in a device that is half the power of competing programmable solutions and is in production today.

7. What percentage of Lattice's sales go through the distribution channel? In Europe, Arrow and Avnet dominate your network, do you think a smaller, specialist distributor would another dimension?

A large portion of Lattice's European sales does go through distributors.  While Arrow and Avnet are the Lattice distributors with the highest name recognition, we do have six other smaller distributors who also carry our line in Europe. 

8. Lattice competes in a market dominated by two companies. How can you counter these two competitors and grow market share against companies with bigger financial and commercial resources?

The key here is not to compete head to head, but rather where we have clear and differentiated advantages.  Here are some examples:

The LatticeECP3 mid-range FPGA is the lowest power SerDes-enabled FPGA in production today. It is the lowest power programmable design solution for applications such as wireless base station interfaces and PCI Express.

Our LatticeXP2 is the only non-volatile FPGA in the industry that is based on Flash memory embedded in a SRAM fabric. The embedded Flash gives customers faster boot up times and higher security, and the SRAM fabric reduces the cost of the part. The XP2 is ideal for security / surveillance and display applications.

Our MachXO PLD is the only low density programmable solution that offers embedded memory, PLLs and LVDS I/O. It is the most versatile programmable logic solution for those who need a low-density non-volatile device for general purpose I/O expansion, interface bridging and power-up management functions. Designed for a broad range of applications, the MachXO is used in a variety of end markets including consumer, automotive, communications, computing, industrial and medical.