LATTICE SEMICONDUCTOR REPORTS FOURTH QUARTER AND YEAR END FINANCIAL RESULTS

Records non-cash charge of $223.6 million to write off goodwill

HILLSBORO, OR - January 24, 2008 - Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced financial results for the fourth quarter and year ended December 29, 2007.

For the fourth quarter, revenue was $53.1 million, a decrease of nine percent from the $58.3 million reported in the prior quarter, and a decrease of 14% from the $61.8 million reported in the same quarter a year ago.

FPGA revenue for the fourth quarter was $13.0 million, a decrease of four percent from the $13.6 million reported in the prior quarter, and an increase of 10% from the $11.8 million reported in the same quarter a year ago. PLD revenue for the quarter was $40.1 million, a 10% decrease from the $44.7 million reported in the prior quarter, and a decrease of 20% from the $50.0 million reported in the same quarter a year ago.

For the year 2007, revenue was $228.7 million, a decrease of seven percent from the $245.5 million reported in 2006. Revenue from FPGA products was $52.0 million and increased six percent over 2006. Revenue from PLD products was $176.7 million, a 10% decrease from 2006.

New product revenue for the fourth quarter was $9.3 million, up 12% from the $8.3 million reported in the prior quarter, and an increase of 127% from the $4.1 million reported in the same quarter a year ago. For the year, New product revenue was $28.9 million, up 99% compared to 2006.

Net loss for the fourth quarter was $229.5 million ($1.99 per share), as compared to a net loss of $4.4 million ($0.04 per share) reported in the prior quarter, and net income of $0.9 million ($0.01 per share) in the same quarter a year ago. At December 29, 2007, the estimated fair value of the company was below book value. Therefore, the company performed an impairment analysis and remeasurement of goodwill in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.” As a result, the company concluded all of the goodwill on the balance sheet was impaired and recorded a non-cash charge of $223.6 million to the consolidated statement of operations. Also included in the net loss for the fourth quarter of 2007 and 2006 are non-cash intangible asset amortization charges, stock-based compensation expense and restructuring charges, which total $4.2 million and $3.8 million, respectively, and $5.5 million for the third quarter of 2007. Excluding these charges, net loss for the fourth quarter was $1.7 million as compared to net income of $1.1 million for the prior quarter, and net income of $4.8 million for the fourth quarter of 2006. The Company believes exclusion of these charges more closely approximates its ongoing operational performance.

Net loss for 2007 was $239.8 million ($2.09 per share) as compared to net income of $3.1 million ($0.03 per share) reported in 2006. These results include a goodwill impairment charge of $223.6 million in 2007, and non-cash intangible asset amortization charges, stock-based compensation expense and restructuring charges which total $17.7 million and $14.7 million for the years ended 2007 and 2006, respectively. Excluding these charges, net income for 2007 was $1.4 million ($0.01 per share) as compared to net income of $17.8 million ($0.16 per share) for 2006.

“Despite a difficult fourth quarter, I remain optimistic about the future revenue growth of our New products,” said Steve Skaggs, Lattice’s President and Chief Executive Officer. “Entering the new year, we are seeing increased levels of business activity and thus expect to sequentially grow revenue in the first quarter.”

Fourth Quarter Business Highlights:

• EDN magazine selected the 90-nanometer LatticeXP2™ non-volatile FPGA family as a 2007 “Hot 100” product. Recognition as a “Hot 100” product is particularly coveted because there is no nomination process. Instead, EDN’s editors select those products that in their judgment are particularly noteworthy.
• Lattice announced a reference design supporting an interface to Texas Instruments’ ADS6000 family of analog-to-digital converters (ADCs). LatticeECP2/M FPGAs provide a high-speed integrated interface capable of acquiring 14-bit ADC data at rates up to 120 Megasamples per second (MSPS) from the two to four serial channels found in the ADS6000 ADC device family. Previously, only expensive, high-end FPGAs could satisfy this requirement. Now, the LatticeECP2/M FPGA family is able to offer these important bridge functions in an optimally sized FPGA at a significantly lower cost.
• Lattice announced availability of Industrial Ethernet Intellectual Property (IP) from the newest member of Lattice's ispLeverCORE™ Connections program, Oregano Systems Design and Consulting. Oregano has ported their IEEE 1588 IP core for clock synchronization over Ethernet to the LatticeXP™ and LatticeXP2™ FPGA families. This IP core implements a popular IEEE standard that is used for many Industrial Ethernet applications to ensure that the various nodes in a network have synchronized real time clocks. The combination of Oregano Systems’ Industrial Ethernet solutions experience, and Lattice’s non-volatile, instant-on FPGA devices, offers our mutual customers a secure, small footprint solution for Industrial Ethernet control.
  
• Synplicity, Inc. expanded support of Lattice FPGA products with a highly optimized, non-proprietary synthesis flow for Digital Signal Processing (DSP) design. Synplicity's Synplify® DSP software now supports the advanced DSP capability in the LatticeECP2/M™ and LatticeXP2™ FPGA families, creating a powerful solution for DSP algorithm implementation commonly used in aerospace, wireless, telecom and digital multimedia applications.
  
• Lattice and Dune Networks, a provider of networking devices for Data Center, Enterprise and Carrier Ethernet scalable switching platforms, also announced they will collaborate on the development and marketing of SPAUI-based networking solutions. The LatticeSCM™ FPGA family provides an optimized programmable platform to bridge to switch fabrics and traffic managers by utilizing hardened on-chip Ethernet and SPI4.2 blocks implemented via Lattice's proprietary Masked Array for Cost Optimization (MACO™) technology. Dune Networks’ traffic managers provide ingress and egress programmable traffic management solutions. SPAUI is a serial interface standard based on the 10 Gigabit Ethernet (GbE) XAUI and SPI4.2 standards that enables system designers to take advantage of the ubiquity of XAUI at the physical layer as well as the multi-channel QoS and flow control mechanisms of SPI4.2.

Business Outlook – March 2008 Quarter

• Revenue is expected to grow 1 percent to 5 percent on a sequential basis;
• Gross margin percentage is expected to be approximately flat as a percentage of revenue on a sequential basis;
• Total operating expenses are expected to be approximately $32.5 million;
• Restructuring charge is expected to be approximately $1.3 million;
• Intangible asset amortization is expected to be approximately $1.5 million; and
• Other income is expected to be approximately $1.5 million.

Discussion of Non-GAAP Financial Measures

Discussion of Non-GAAP Financial Measures: Management evaluates and makes operating decisions using various performance measures. In addition to our GAAP results, we also consider adjusted net income, which we refer to as non-GAAP net (loss) income. This measure is generally based on the revenue of our products and the costs of those operations, such as cost of products sold, research and development, sales and marketing and general and administrative expenses, that management considers in evaluating our ongoing core operating performance. Non-GAAP net (loss) income excludes goodwill impairment charge, amortization of intangible assets, stock-based compensation and restructuring charges. Intangible assets relate to assets acquired through acquisitions and consist of technology purchased in connection with the acquisitions. Stock-based compensation charges are related to the adoption of SFAS No. 123(R) effective January 1, 2006, and include expense for items such as stock options and restricted stock units granted to employees, purchases under the employee stock purchase plan and deferred stock compensation issued in connection with acquisitions. Restructuring charges consist of expenses and subsequent adjustments incurred under corporate restructuring plans that were initiated in the fourth quarter of 2005 and in the third quarter of 2007, and include items such as separation packages, costs to vacate space under long-term lease arrangements, and other related expenses.

Non-GAAP net (loss) income is a supplemental measure of our performance that is not required by and not presented in accordance with GAAP. Moreover, it should not be considered as an alternative to net (loss) income, operating loss or any other performance measure derived in accordance with GAAP, or as an alternative to cash flow from operating activities or as a measure of our liquidity. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our net (loss) income, which is our most directly comparable GAAP financial result. For more information, see the consolidated statement of operations contained in this earnings release.

Conference Call and Business Update

On January 24, 2008, Lattice will hold a telephone conference call at 2:00 p.m. (Pacific Time) with financial analysts. Investors may listen to our conference call live via the web at www.lscc.com. Replays of the call will also be available at www.lscc.com. On March 13, 2008, we plan to publish a “Business Update Statement” on our website. Our financial guidance will be limited to the comments on our public quarterly earnings call and these public business outlook statements.

• Conference Call Link
• Consolidated Financial Statements
• Supplemental Historical Financial Information

Forward Looking Statements Notice

The foregoing paragraphs contain forward-looking statements that involve estimates, assumptions, risks and uncertainties. With respect to particular forward-looking statements in the “Business Outlook - March 2008 Quarter” section of this release, Lattice believes the factors identified below in connection with each such statement could cause actual results to differ materially from the forward-looking statements. Estimates of future revenue are inherently uncertain due to the high percentage of quarterly “turns” business. In addition, revenue is affected by such factors as pricing pressures, competitive actions, the demand for our Mature, Mainstream, and New products, and the ability to supply products to customers in a timely manner. Actual gross margin percentage and operating expenses could vary from the estimates contained herein on the basis of, among other things, changes in revenue levels, changes in product pricing and mix, changes in wafer, assembly and test costs, variations in manufacturing yields, and changes in stock-based compensation charges due to stock price changes. In addition to the foregoing, other factors that may cause actual results to differ materially from the forward-looking statements herein include the Company’s dependencies on its silicon wafer suppliers, technological and product development risks, and the other risks that are described from time to time in our filings with the Securities and Exchange Commission. The Company does not intend to update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

About Lattice Semiconductor

Lattice Semiconductor Corporation provides the industry’s broadest range of Programmable Logic Devices (PLD), including Field Programmable Gate Arrays (FPGA), Complex Programmable Logic Devices (CPLD), Mixed-Signal Power Management and Clock Generation Devices, and industry-leading SERDES products.

Lattice continues to deliver “More of the Best” to its customers with comprehensive solutions for system design, including an unequaled portfolio of high performance, non-volatile and low cost FPGAs.

Lattice products are sold worldwide through an extensive network of independent sales representatives and distributors, primarily to OEM customers in communications, computing, industrial, consumer, automotive, medical and military end markets. For more information, visit http://www.latticesemi.com

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Lattice Semiconductor Corporation, Lattice (& design), L (& design), ispLeverCORE, LatticeECP2/M, LatticeSCM, LatticeXP, LatticeXP2, MACO 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.

GENERAL NOTICE: Other product names used in this publication are for identification purposes only and may be trademarks of their respective holders.

For more information contact:
Jan Johannessen
Chief Financial Officer
Lattice Semiconductor Corporation
(503) 268-8000