What changed in this filing

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Item 1. Business

2023-02-17 compared with 2022-02-23 · 49 added, 54 removed, 180 unchanged (36% of the section changed)

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solutions are ideal for control and connect functions in enterprise and datacenter server applications.

With the expected continued Communications infrastructure build-out from 5G deployment and beyond, Lattice solutions are being adopted to control and connect a variety of functions in critical systems.

With the expected continued Communications infrastructure build-out from 5G deployment and beyond, as well as continued datacenter network expansion, Lattice solutions are being adopted to control and connect a variety of functions in critical systems.

With the increase in electrification and the proliferation of sensors in smart factories, smart homes, and automobiles, our low power, small form factor solutions are ideal for everything from battery powered systems and sensor applications to embedded vision.

With the increase in artificial intelligence ("AI"), machine learning, and a multitude of applications at the network edge, Lattice devices support applications that often act independently and need to make instantaneous decisions.

Our solutions provide the computing and machine learning capabilities to perform functions like face detection, image recognition, and video analytics.

With the demand for more hardware security in the Communications, Computing, Industrial, Automotive, and Consumer markets, our hardware root of trust devices provide platform firmware resilience.

This provides a secure boot for systems that are dependent on processors.

With the increase in artificial intelligence ("AI") and a multitude of applications at the network edge, Lattice devices support applications like face detection, image recognition, and video analytics.

With the demand for more hardware security in the Communications, Computing, Industrial, Automotive, and Consumer markets, our devices provide enhanced platform security.

To serve these emerging needs, customer solutions require power efficiency, memory bandwidth, processing power, and the ability to integrate complex functionality into a highly compact footprint.

These requirements align to the capabilities of our FPGA devices.

Our flexible, low power, small form factor, easy to use FPGAs put us in a unique position to meet these growing market needs.

These requirements align with the capabilities of our FPGA devices.

Our flexible, low power, small form factor, performance optimized FPGAs put us in a unique position to meet these growing market needs.

Our Markets and Customers

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As server architectures become increasingly complex, customers need simplified control logic, enhanced hardware platform security, system status monitoring, and rigorous power and thermal management.

Networks typically require progressively higher bandwidth and increased reliability as more data is demanded by consumer and other connected devices.

Bandwidth demands are also driven by the rapid transition to cloud-based infrastructure.

As wireless cellular sites become more compact without fans, there is a growing requirement for smaller form factors optimized for low power consumption.

Networks typically require progressively higher bandwidth and increased reliability as more data is demanded by connected devices.

As wireless cellular sites become more compact, there is a growing requirement for smaller form factors optimized for low power consumption and thermal management.

Lattice FPGAs solve these customer problems.

Our FPGAs are optimized for input/output ("I/O") expansion, hardware acceleration, and hardware management.

Our FPGAs consume power at very low rates, which reduces operating costs and supports the continued miniaturization of consumer devices.

Our FPGAs consume power at very low rates, which reduces operating costs.

Their small form factor enables higher functional density in less space.

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As factories automate to improve efficiency and employee safety, sensors, machine vision, and robotics are proliferating, in turn requiring increasing amounts of data to be gathered, connected, and processed.

Cars, trucks, and trains are also becoming smarter and more connected.

Automobiles and other forms of transportation are also becoming smarter and more connected.

Drivers and passengers are demanding better in-cabin experiences including entertainment, diagnostics, and enhanced safety —

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Our small-sized, low-power FPGAs not only provide the I/O expansion, bridging, connectivity, and processing inherent in FPGAs, but they also form the backbone of several integrated solutions, including motor control, complete High Definition ("HD") camera and DVR solutions on a single FPGA device, and Human-Machine Interfaces ("HMI") on a chip.

In the Consumer Market , you can find our solutions making products smarter and thinner, including smart home devices, prosumer devices, sound bars, high end projectors, Augmented Reality ("AR") / Virtual Reality ("VR"), and wearables.

In the Consumer Market , you can find our solutions making products smarter and smaller, including smart home devices, prosumer devices, sound bars, high end projectors, Augmented Reality ("AR") / Virtual Reality ("VR"), and wearables.

Our Consumer customers are driven by the need to deliver richer and more responsive experiences.

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Our FPGAs are among the most power efficient in the industry, enabling the application processor and other high-power components to remain dormant longer, resulting in longer battery life.

Finally, with some of the industry’s smallest packages, we enable thinner end products.

Our proprietary solutions help our customers get their products to market faster than typical development cycles.

Finally, with some of the industry’s smallest packages, we enable thinner and more compact end products.

Our proprietary solutions help our customers get their products to market faster than typical development cycles of custom ASICs.

With re-programmability and flexibility, our FPGAs inherently allow our customers to have quicker product development.

The time-to-market advantages of Lattice's solutions are critical given the shorter product life cycles and higher competition in our customers’

The time-to-market advantages of Lattice's solutions are critical given the shorter product life cycles in our customers’

Our Products, Services, and Competition

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This programmability allows our customers flexibility and reduced time to market while allowing us to offer the chips to many different customers in many different markets.

Four product families anchor our FPGA offerings:

The Certus™

and ECP™

Lattice FPGA product families include:

The Lattice Avant™, Certus™

and LatticeECP™

device families are our “General Purpose FPGAs”

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ECP devices are optimized for the Communications and Computing market but also find significant use in the Industrial, Automotive, and Consumer markets.

The latest introduction in our general purpose family, CertusPro™, is the CertusPro-NX™

FPGA, which offers the highest logic density of any Lattice Nexus™

platform device and delivers advanced system bandwidth and memory capabilities to Edge applications.

The Mach™

The latest introduction in our general purpose family, Lattice Avant-E™

FPGAs, are designed to solve key customer challenges at the Edge by combining class-leading power efficiency, size and performance with an optimized feature set tailored to the needs of mid-range FPGA Edge applications like data processing and AI.

The Lattice Mach™

device family are our “Control & Security FPGAs”

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They are control-oriented and offer optimized cost per I/O and cost per look-up table.

Mach FPGAs are widely used across our three end market groups:

FPGAs are widely used across our three end market groups:

Communications and Computing, Industrial and Automotive, and Consumer.

Our latest generation MachXO3D™

and Mach-NX™

FPGAs come with pre-verified cryptographic functions to enable Hardware Root-of-Trust functionality, which is needed for systems to have platform firmware resiliency, i.e.

the ability to protect, detect, and recover from unauthorized firmware attacks.

The iCE™

Lattice MachXO5™-NX family, the fifth device built on the award-winning Lattice Nexus™

platform are our latest addition to the Mach™

FPGA family, enabling the latest generation of secure control through increased logic and memory resources, robust 3.3 V I/O support, and a differentiated security feature set.

The Lattice iCE™

device family are our “Ultra Low Power FPGAs.”

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Lattice CrossLink-NX™

FPGAs, built on the new Lattice Nexus platform, provides the lowest power in the smallest packages in its class, higher performance, and high reliability.

FPGAs, built on the Lattice Nexus platform, provide the lowest power in the smallest packages in its class, higher performance, and high reliability.

These products are designed for Computing, Industrial, Automotive, and Consumer markets, but also find use in Communications.

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for unparalleled ease in creating embedded processor-based designs.

We have developed integrated system-level solution stacks, such as Lattice sensAI™

for Edge AI applications, as well as Lattice mVision™

We have developed integrated system-level solution stacks, such as Lattice ORAN™

for robust control data security, flexible fronthaul synchronization, and low power hardware acceleration for secure, adaptable, Open Radio Access Network (ORAN) deployment, as well as Lattice sensAI™

for Edge AI applications, Lattice mVision™

for low power embedded vision, Lattice Sentry™

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Further, we have application software such as Glance by Mirametrix™

that allows users to control the AI experience of their end systems.

that allows users to control the AI and computer vision experience of their end systems.

Depending on the application, we may compete with other FPGA vendors, as well as producers of ASICs, ASSPs, and microcontrollers.

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In contrast to the use of consortia, these licensing activities are generally performed internally.

Patent Monetization - we sell certain patents from our portfolio generally for technology that we are no longer actively developing.

Patent Monetization - we consider sales of certain patents from our portfolio generally for technology that we are no longer actively developing.

The revenue from these sales generally consists of upfront payments and potential future royalties.

IP Services - projects and design services for customers who wish to develop specific solutions that harness our proven technology and expertise.

IP Services - we undergo projects and design services for customers who wish to develop specific solutions that harness our proven technology and expertise.

Research and Development

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Shanghai, China;

and Muntinlupa City, Philippines.

Muntinlupa City, Philippines;

and Penang, Malaysia.

We believe that a continued commitment to research and development is essential to maintaining product leadership and providing a strong cadence of innovative new product offerings and, therefore, we expect to continue to make significant future investments in research and development.

We operate as a fabless semiconductor provider and, therefore, we do not manufacture our own silicon products.

We maintain strategic relationships with large, established semiconductor foundries to source our finished silicon wafers.

We operate primarily as a fabless semiconductor provider and, therefore, we maintain strategic relationships with large, established semiconductor foundries to source our finished silicon wafers and manufacture our silicon products.

This strategy allows us to focus our internal resources on product and market development and eliminate the fixed cost of owning and operating manufacturing facilities.

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Wafer Fabrication

Lattice partners with Samsung Semiconductor ("Samsung") to develop and manufacture the first low-power FPGA on 28nm fully depleted silicon-on-insulator ("FD-SOI") technology, which is used in our Nexus platform of FPGA products.

Lattice partners with Taiwan Semiconductor Manufacturing Company ("TSMC") to develop and manufacture on 16nm technology, which is used in our Avant platform of FPGA products, and to manufacture our 350nm, 130nm, 55nm and 40nm products.

We partner with Samsung Semiconductor ("Samsung") to develop and manufacture the first low-power FPGA on 28nm fully depleted silicon-on-insulator ("FD-SOI") technology, which is used in our Nexus platform of FPGA products.

We partner with United Microelectronics Corporation ("UMC") and its subsidiary United Semiconductor Japan Corporation ("USJC") to manufacture our products on its 130nm, 90nm, 65nm, and 40nm CMOS process technologies, as well as embedded flash memory in these process nodes.

Taiwan Semiconductor Manufacturing Company Ltd.

(“TSMC”) manufactures our 350nm, 130nm, 55nm and 40nm products.

Seiko Epson ("Epson") manufactures our 500nm, 350nm, 250nm and 180nm products.

We source silicon wafers from our foundry partners, Samsung, UMC, USJC, TSMC, and Epson, pursuant to agreements with each company and their respective affiliates.

We partner with Seiko Epson ("Epson") to manufacture our 500nm, 350nm, 250nm and 180nm products.

We source silicon wafers from our foundry partners, TSMC, Samsung, UMC, USJC, and Epson, pursuant to agreements with each company and their respective affiliates.

We negotiate wafer volumes, prices, and other terms with our foundry partners and their respective affiliates on a periodic basis.

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Our distributors also provide technical support and other value-added services to our end customers.

We have two global distributors.

We also have regional distribution in Asia, Japan, and Israel, and we sell through three major on-line distributors.

We have multiple global distributors.

We also have regional distribution in Asia, Japan, Europe, and Israel, and we sell through three major on-line distributors.

Revenue from foreign sales as a percentage of total revenue was 86%, 88%, and 89% for fiscal 2022, 2021, and 2020, respectively.

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Purchase orders, consistent with common industry practices, generally can be revised or canceled up to 60 days before the scheduled delivery date without significant penalty.

A sizable portion of our revenue comes from our "turns business," where the product is ordered and delivered within the same quarter.

A portion of our revenue comes from our "turns business," where the product is ordered and delivered within the same quarter.

We periodically experience variability in our sales volumes and financial results due to seasonal trends in the end markets we serve, the cyclical nature of the semiconductor industry, and general economic conditions.

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In addition to protecting innovations designed into our products, our ownership and maintenance of patents is an important factor in the determination of our share of the royalties from the implementation of the HDMI standard.

Our current patents will expire at various times between 2022 and 2040 , subject to our payment of periodic maintenance fees.

Our current patents will expire at various times over the next 20 years, subject to our payment of periodic maintenance fees.

We believe that our patents have value, and we expect to file future patent applications in both the United States and abroad on significant inventions, as we deem appropriate.

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Human Capital Management

We provide a safe and positive work environment for our employees that emphasizes respect for individuals and ethical conduct, learning and development, facilitated by a direct employee engagement model. The health and safety of our employees is of utmost important to us.

During the COVID-19 pandemic, we have taken actions to safeguard the health and well-being of our employees and our business.

We implemented social distancing policies at our locations around the world as appropriate, including working from home and eliminating substantially all travel.

We provide a safe and positive work environment that emphasizes respect for individuals, ethical conduct, and learning and development that is facilitated by a direct employee engagement model. The health and safety of our employees is of utmost importance to us.

We have aligned to local COVID-19 guidance to return to normal operations while maintaining actions to safeguard the health and well-being of our employees and our business.

Recognizing and respecting our global presence, we strive to maintain a diverse and inclusive workforce everywhere we operate.

As of January 1, 2022, we had 856 employees worldwide.

We believe our employees are the foundation of our success and that our future growth depends, in part, on our ability to continue to attract and retain key technical, sales, and management personnel, particularly highly-skilled engineers involved in the design, development, and support of new and existing products and processes.

As of December 31, 2022, we had 949 employees worldwide.

We believe our employees are the foundation of our success and that our future growth depends, in part, on our ability to continue to attract and retain key executive, technical, sales, and management personnel.

Due to our growth and cadence of new product introductions we are particularly focused on highly skilled engineers involved in the design, development, and support of new and existing products and processes.

In order for us to attract the best talent, we provide a collaborative, diverse, inclusive, and innovative work environment, competitive compensation, and recognition to give our employees the opportunity to grow.

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We strive to attract and retain talented employees by offering competitive compensation and benefits that support their health, financial, and emotional well-being.

Our compensation philosophy is based on rewarding each employee’s individual contributions and striving to achieve equal pay for equal work.

Our compensation philosophy is based on rewarding each employee’s individual and team contributions and striving to achieve equal pay for equal work.

We use a combination of fixed and variable pay including base salary, bonuses, performance awards, and stock-based compensation.

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Our SEC filings are also available at the SEC's website at www.sec.gov .

Our Investor Relations website also provides notifications of news or announcements regarding our financial performance and other items that may be material or of interest to our investors, including SEC filings, press releases, earnings releases, and webcasts of our earnings calls.

Our Investor Relations website also provides notifications of news or announcements regarding our financial performance and other items that may be material or of interest to our investors and for complying with our disclosure obligations under Regulation FD, including SEC filings, press releases, earnings releases, and webcasts of our earnings calls.

Further, corporate governance information, including our corporate governance policies, director code of ethics, code of conduct, board committee charters, conflict minerals report and conflict minerals policy, is also available on the investor relations section of our website.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business