Lattice Semiconductor Reports Second Quarter Results

HILLSBORO, Ore. - July 21, 2003 - - Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced financial results for the second quarter of 2003.

Revenue for the quarter was $58.2 million, flat with last quarter's revenue and an increase of three percent from the $56.5 million reported in the same quarter a year ago. Quarterly revenue from high density CPLD products was $40.3 million, down one percent from last quarter while quarterly revenue from FPGA products was $9.0 million, an increase of seven percent from last quarter.

On a GAAP basis, net loss for the quarter was $16.9 million ($0.15 per share). This loss includes an $18.7 million charge for amortization of intangible assets.

Non-GAAP income for the quarter was $1.8 million ($0.02 per share). Non-GAAP earnings exclude non-cash acquisition related amortization expenses and more closely approximates our cash earnings performance. A reconciliation of non-GAAP to GAAP earnings accompanies the financial tables in this earnings release.

"We remain pleased with the progress of our new product initiatives", stated Cyrus Y. Tsui, chairman and chief executive officer. "Since 2002, we have brought to market five major new product families: our advanced field programmable system chips (FPSC), our technologically differentiated ispXP^TM products, our innovative ispPAC POWR devices, our low power ispMACH 4000Z CPLDs and our third generation BFW III CPLDs. While the collective revenue of these new products is still relatively small, it grew very rapidly on a sequential basis. In addition, these new products accounted for well over a third of our customer design activity last quarter. We believe this positive customer reception will drive continued growth for these products."

"Last quarter, we introduced our sixth new product family, the XPIO^TM 110GXS", continued Tsui. "The XPIO is the industry's lowest power 10 gigabit per second CMOS transceiver and further solidifies our leadership position in the SERDES marketplace. We are committed to embedding this innovative technology into future generations of advanced FPSC and FPGA products", Tsui concluded.

Business Outlook - September 2003 Quarter

• We believe that, due to seasonality and general industry conditions, third quarter revenues will be between $52 million and $55 million.
• Gross margins are expected to remain at approximately 60% of revenue.
• Total operating expenses are expected to decrease by approximately $1 million to $2 million on a sequential basis.
• In conjunction with the previously announced retirement of our 4 percent convertible notes, we will incur a one-time charge of approximately $5.7 million for the call premium and accelerated write-off of remaining unamortized issuance costs related to these notes. Total Other Expense, including this non-recurring charge, is expected to be approximately $5.6 million.
• Finally, we anticipate reporting a tax credit of $3 million to $4 million.

On July 22, 2003, Lattice will hold a telephone conference call at 5:30 am (Pacific Time) with financial analysts and publish a "Business Outlook Statement" covering the September 2003 quarter. Investors may listen to our conference call via the web at www.on24.com. Both the conference call and our business outlook statement will be available on our website, www.lscc.com through July 28, 2003. On September 11, 2003, we plan to publish a "Business Update Statement" on our website for five calendar days. Our financial guidance will be limited to the comments on our public quarterly earnings call and these public business outlook statements. Additionally, during the September 2003 quarter, Lattice plans to participate in investor conferences sponsored by Soundview and Bank of America Securities. Specific presentation dates and times are posted on our website at www.lscc.com.

• Consolidated Financial Statements
• Supplemental Historical Financial Information

The foregoing paragraphs contain forward-looking statements within the meaning of the Federal Securities laws including statements about future quarterly financial results, revenues, customers, product offerings and our ability to compete. Investors are cautioned that actual events and results could differ materially from these statements as a result of a number of factors, including overall semiconductor market conditions, market acceptance and demand for our new products, risks related to our recent acquisitions and their integration with Lattice, our dependencies on our silicon wafer suppliers, the impact of competitive products and pricing, technological and product development risks.

Oregon-based Lattice Semiconductor Corporation designs, develops and markets the broadest range of Field Programmable Gate Arrays (FPGAs) and Field Programmable System Chips (FPSCs) and high-performance ISP^TMprogrammable logic devices (PLDs).

Lattice offers total solutions for today's system designs by delivering the most innovative programmable silicon products that embody leading-edge system expertise. Lattice products are sold worldwide through an extensive network of independent sales representatives and distributors, primarily to OEM customers in the communication, computing, industrial and military end markets. Company headquarters are located at 5555 N.E. Moore Court, Hillsboro, Oregon 97124, USA. For more information access our web site at www.latticesemi.com.

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Lattice Semiconductor Corporation, L (& design), Lattice (& design), in-system programmable, ISP and specific product designations are either registered trademarks or trademarks of Lattice Semiconductor Corporation or its subsidiaries in the United States and/or other countries.

For more information contact:

Roddy Sloss
Vice President, Finance
Lattice Semiconductor Corporation
(503) 268-8000