Lattice Semiconductor (NASDAQ: LSCC)
Technology; Specialized Semiconductors; 25%-30% Upside
FPGAs and ASSPs are expected to lead growth for Lattice
Semiconductor. The Silicon Image acquisition exposes the company to MHL
prospects in emerging markets. Several valuation approaches reveal an
upside of ~30%. Acquisition potential makes LSCC even more attractive.
Recent design wins
indicate growth ahead for LSCC. The company recently revealed its design
wins with Huawei and ZTE Corp. Huawei is using Lattice’s iCE40 FGPA in its P8 flagship for smart
antenna switching functionality. ZTE is
also using this family of FGPAs in its Star 2 flagship for sensor hub function.
As iCE40 is the world’s smallest
FGPA, more flagship design wins are expected going forward. Now, Huawei and ZTE
win is an indicator of growth because both the companies are rising in the smartphone
arena. Huawei is currently the fourth largest smartphone maker by market share,
which is growing at a faster pace as compared to other makers. Huawei increased
its share from 3.4% in Q1 2012 to 5.2% in Q1 2015. Big players like Apple and Samsung have shed market share since 2012. This is
indicative of Huawei’s success in emerging markets, which, in fact, will
benefit Lattice going forward. ZTE is also aiming
to double its smartphone market share during the next few years. As far as
topline growth is concerned, recent design wins with ZTE and Huawei bodes well
for Lattice. Note that Lattice customers also include Apple, Samsung, Lenovo and
HTC etc.
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