Lattice Semiconductor Corporation (LSCC)
UBS Global Technology and Services Conference Call
November 16, 2011 10:30 a.m. ET
Darin Billerbeck - President and Chief Executive Officer
Joe Bedewi - Corporate Vice President and Chief Financial Officer
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Okay. Thanks, Doug, and thanks for everybody for joining us here today. Good morning to everybody. So I am going to talk a little bit about Lattice, where we are. Spend a little bit of time talking really about what's different between us and the other two big guys. Because a lot of people are constantly asking us, okay, so you are Lattice, who are you and what makes you believe that you can be successful, especially in an environment where there is really only three players. So we will get into some of those as we talk about, we will talk about the financials and everything.
So let's jump into who we are. But before I do that, a lot of things that I say here today that could be considered as forward-looking, ignore them, right. So for the most part, there is our safe harbor. So as you all are aware Lattice plays in the programmable logic business. That’s a really a huge benefit I think in today's advanced technology, because as technologies become more and more expensive, it’s easier and cheaper actually to programmable logic in a lot of applications. There is always going to be ASIC replacement and things like that.
But we do allow our customers to rapidly implement a lot of their technologies, especially in an environment where cycle time is important. We lead with low power, low cost and what we call affordable innovation. So the innovation that we strive for is not the Intel, Joe Bedewi and myself -- our CFO and myself both came from Intel. We spent 20 odd years each there. We know about hi-tech innovation. The innovation we talk about at Lattice is all for low power. It’s for low cost. And there is a lot of innovative techniques that you use for a low cost in what we call that affordable innovation for application specific areas. And we are going to talk about a couple of those areas today.
We also want to focus our efforts on really growing our FPGA. We do sell a lot of CPLDs and PLDs that are great margin products. We will continue to sell those products through time. But we do want to focus all our effort moving forward on FPGAs. We have a healthy balance sheet with really zero debt. So we have a lot of cash in the bank and a lot of people have talked to us about what you are going to do with that cash. How are you going to use it? Are you going to give it back to the shareholders? We have heard everything. And we are not going to talk a lot about that today but I am sure in the break-out meetings we will.
And then in the last ten years we have shipped about a billion units. And a billion is lot in anything. And I think the first person that ever coined a billion was McDonald, when they did their hamburger and now they are probably in the trillions now. But billions are huge numbers. And we know a little bit of -- something about high cost and low numbers and high ASPs versus what we do which is really the low cost, high volume and the low ASPs. And we will talk more about that also.
We kind of everywhere just like everyone else is. Our primary sales are in Asia and Japan. Which is why you see a lot of our sales force overseas. We did recently open up a new facility in the Philippines. That facility was one which was an old Intel design facility, that we picked up the entire design team all at once. So they do a lot of our math layout and our silicon design. Our main development facilities are headquarters in Oregon and our headquarters -- not headquarters but our silicon development area in San Jose.
We do have core competencies and center of excellences in the United States with low cost geographies. So the center of excellence mirror image for San Jose is China. The mirror image from Oregon is the Philippines. And so for everybody in the room, the Philippines is much lower cost than China. So a lot of people think China is the lowest cost, it is not. The Philippines, Vietnam, are typically lower cost.
So let's talk about our product differentiation and then we will get into growth strategy and then our financial strength. So under the products you could see there is really four segments that people play in. The high end FPGA which is typically X&A, we do not play in. We don’t have million LUT devices, we don’t have 20 gig SERDES and we don’t have thousand dollar ASPs, right. So let's make that clear and we don’t strive for that, that’s not our focus.
What is our focus is what we call the mid-range FPGAs which are really data focused and they are moderate SERDES approaches. So we have a 3 gig SERDES that fits in nicely into 3G systems. We have a 2 gig SERDES, or 1 gig SERDES that fits nicely in the 2.5G. And soon we will have a 6 gig SERDES which will be LTE. So we pride ourselves on having the right performance SERDES for the right interface. And today our volume shipments are in 2G and 3G, not LTE.