A maker of low-power programmable logic chips called FPGAs, Lattice Semiconductor designs reconfigurable semiconductors found in everything from industrial machines and cars to consumer gadgets, along with licensing and design services. Founded in 1983 in Oregon by a former Intel engineer and two co-founders, this fabless company got its name from the grid-like "lattice" architecture of programmable logic cells at the heart of its chips.
Q2 FY2026 revenue rose 62% to $201.1M as data center and AI demand lifted Compute and Communications 83%
The recovery accelerated to its fastest pace in two years. Revenue rose 62.2% to $201.1M and widened 1.9 points to 70.3% as Compute and Communications grew 83% on data center and AI demand, while Industrial and Embedded rose 36%. The company returned to broad-based growth but now carries $925M of new debt from the AMI Acquisition.
Key takeaways
rose 62.2% to $201.1M, with Compute and Communications up 83% on data center and wireline demand and Industrial and Embedded up 36% on recovering industrial and aerospace demand, after both segments had declined through FY2025.
expanded 1.9 points to 70.3%, driven by favorable product mix and higher volume partially offset by increased .
R&D expense rose 48% and SG&A rose 44% primarily from higher stock-based and cash compensation; management expects both to decline as a percentage of .
Section summaries
Management's Discussion and Analysis
Revenue surged 62% YoY to $201M in Q2 FY2026, driven by data center and AI demand, with gross margin expanding 190 bps to 70.3%.
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Total Q2 grew 62% to $201.1M, with Compute and Communications up 83% on strong data center and wireline demand, and Industrial and Embedded up 36% on recovering industrial and aerospace demand.
improved 190 to 70.3%, driven by favorable product mix and volume, partially offset by higher .
was $19.4M (9.6% margin) and rose to $86.4M (43.0% margin), reflecting higher and .
was $88.3M in the quarter, up 129.2% , and cash and equivalents ended at $173.3M, up 61.7% from a year earlier, with no on the balance sheet at period end.
A new $925M delayed draw was borrowed for the AMI Acquisition, introducing and compliance risks not present in the prior annual report.
What changed
Q2 FY2025 flagged SG&A to see if the 74% increase normalizes after the prior-year forfeiture base effect; this quarter SG&A rose 44% on higher stock-based and cash compensation, still elevated rather than normalized.
Q1 FY2026 flagged Q2 Compute and Communications to confirm the 86% increase holds; it rose 83%, confirming the data center-led expansion continued.
Q1 FY2026 flagged Q2 Industrial and Embedded to see if the 2% rise builds; it rose 36%, a sharp acceleration from the prior quarter's modest gain.
FY2025 flagged trajectory at $115.6M; Q2 R&D and SG&A both rose sharply on compensation, with management expecting the ratio to decline rather than the absolute level stated.
FY2025 flagged two-distributor concentration at 69% of and Greater China at 52% of sales; the 10-Q did not update these figures this quarter.
The prior annual report showed no ; this filing discloses a $925M for the AMI Acquisition as the dominant new risk factor.
What to watch
Q3 FY2026 Compute and Communications to confirm the 83% increase holds as data center demand continues
Q3 FY2026 Industrial and Embedded to see if the 36% rise sustains beyond the current recovery
R&D and SG&A as a percentage of next quarter to see if compensation-driven increases decline as management expects
Drawdown and headroom on the $925M and any disclosed AI-related from the design-win pipeline
Operating expenses rose, with R&D up 48% and SG&A up 44%, primarily due to higher stock-based and cash compensation; both are expected to decline as a percentage of .
Q2 was $19.4M (9.6% margin), and rose to $86.4M (43.0% margin), reflecting higher and .
was $138.6M for the first half of FY2026, up from $70.4M, supporting a cash balance of $173.3M; the company believes resources are sufficient for at least 12 months.
Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We assess these risks…
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Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. We assess these risks on a regular basis and have established policies that are designed to protect against the adverse effects of these and other potential exposures. There have been no material changes to either the foreign currency exchange rate risk or interest rate risk previously disclosed in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," of our 2025 10-K.
The information set forth above under "Note 12 – Contingencies – Legal Proceedings" contained in the Notes to Consolidated Financial Statements is incorporated herein by reference.
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The information set forth above under "Note 12 – Contingencies – Legal Proceedings" contained in the Notes to Consolidated Financial Statements is incorporated herein by reference.
Risks center on integrating the AMI Acquisition and servicing $925M in new term loan debt.
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Integrating AMI may be more difficult, costly, or time-consuming than expected, potentially delaying or preventing anticipated synergies and cost savings.
The $925M borrowed for the AMI Acquisition increases , reduces strategic flexibility, and requires compliance with financial covenants including a .
Failure to service debt could force asset sales, restructuring, or refinancing on unfavorable terms, and a breach could trigger acceleration or bankruptcy proceedings.
Pursuing or completing acquisitions, divestitures, or partnerships demands significant management attention and may result in unexpected costs, liabilities, or .
Adverse macroeconomic conditions—including tariffs, trade disruptions, rising inflation, and labor shortages—may reduce demand or increase costs, pressuring revenues and gross margins.