Good afternoon ladies and gentlemen. My name is Gerald and I will be your conference operator. At this time I would like to welcome everyone to the Lattice Semiconductor second quarter 2010 earnings call. (Operator Instructions). I would now like to turn over the conference over to Mr. David Pasquale. Sir you may begin.

Thank you operator. Welcome everyone to Lattice Semiconductor second quarter 2010 results conference call. Joining us from the company today are Mr. Bruno Guilmart, the company’s president and CEO and Mr. Michael D. Potter, Lattice’s Corporate Vice President and chief financial officer. Both executives will be available for Q&A after the prepared comments. If you have not yet received a copy of toady’s results release, please email Global IR Partners using lscc@globalirpartners.com or you can get a copy of the release off of the investor relations section of Lattice Semiconductor’s website. Before we begin the formal remarks, I’ll review the Safe Harbor statement. It is our intention that this call will comply with the requirements of SEC regulation FD. This call includes and constitutes the company’s official guidance for the third quarter of fiscal 2010. If at any time after this call we communicate any material changes to this guidance, we intend that such updates will be done using a public forum such as press release or a publicly announced conference call. The matters that we discuss today other than historical information include forward looking statements relating to our future financial and other performance metrics and expectations. Investors are cautioned that forward looking statements are neither promises nor guarantees. They involve risks and uncertainties that may cause actual result to differ materially from those projected in the forward looking statements. Some of those risks and uncertainties are detailed in our filings with securities and exchange commissions including our fiscal year 2009 Form 10-K filed on March 10th and our quarterly reports on Form 10Q. The company disclaims any obligations to publicly update or revise any such forward looking statements to reflect event or circumstances that occur after this call. Our prepared remarks will also presented within the requirements of the SEC Regulation G regarding Generally Accepted Accounting Principles or GAAP. I now turn the call over to Mr. Bruno Guilmart. Please go ahead sir.

Thank you David and thank you everyone for joining our call today. This was another strong quarter for us with gross across all geographies and markets and product categories. Asia and Europe showed particularly solid growth where the a computing industry and consumer markets were all strong. Our new mainstream and mature product categories all delivered sequential growth. Of note, the seventh quarter was the strongest quarter ever for our new SPGA business and our new MachXO product family. Lattice ECP3 revenue more than doubled from the prior quarter and it continues to be the best launch of an SPGA product in the company’s history. We remain very confident in our business given existing customer demand, growth from our new product families and the successful transition to our improved distributor network over the last year. We are focused on expanding our business with existing customers and broadening our customer base by moving into new areas. Our strategic focus on high value and low power solutions continues to get attractions as customers seek to optimize cost and power consumptions of their design. We expect to see a further acceleration of opportunities related to zero expansion of wireless dynamics requirements as companies try to meet the increased pressure on the networks due to the data intensive smart phones, clock computing and zero intensive applications. Based on market forecast these are likely to be multi year prolonged global opportunities. Importantly we are not seeing any significant supply constraints, any time issues or investor issues that would impact our pursuit of this gross opportunity. Our midrange is from FPGA continues their (inaudible) and low power leadership and remain particularly attractive in the wireless communication markets. Our non-volatile FPGA’s continued with their design wind momentum in the consumer and industrial markets. We are well positioned…

Thank you Bruno. As noted earlier, revenue for the second quarter was 77.1 million, up 10% from the prior quarter and up 64% from the year ago period. Gross margin for Q2 improved further to 61.2%. This was above our guidance and higher than the gross margin posted in prior and year ago period. We continue to see the benefits of favorable volume and mix combined with continued with strict cost controls. Similar to Q1 we benefited from good overhead absorption as our revenue in production ramped up over the last quarter. Our strength in mature products contributed to a more favorable margin mix. Gross margin in Q2 also benefited from the strength in revenue from the industrial and other end markets. We will continue to work to control the cost side in an effort to maintain the higher margin levels we achieved in the first half of this year. As noted in our press release, in Q2 we enjoyed a one time benefit of some sales of order fully reserved products. Total operating expenses for the second quarter came in at 31.4 million compared to 30.2 million in the first quarter. Reflected in the total OpEx number is approximately $600,000 of one time non-executive level incentive compensation. Although we have added some additional R&D and marketing head count, we continue to closely monitor our spending. Q2 net income was 16.7 million of $0.14 per share as compared to 11.1 million or $0.10 per share in the first quarter, and compared to a net loss of 2.7 or $0.02 per share in the year ago period. All per share amount (inaudible) fully diluted basis. At the current share price, we expect diluted share count to be approximately 120 to 121 million shares. Moving on, our balance sheet was further strengthened…

Thank you Michael, in summary we continue to fell very positive about our business moving forward. We believe we had the right combination of product families to be customers’ needs as reflected in our design win momentum. We’re confident we can sustain our profitability in the in the second half of 2010 as we continue to drive revenue growth while keeping strict control over all operating expenses. While maintaining a lean infrastructure and adding our count very selectively where at the same time continuing to watch and adjust as needed to global economic changes. On the R&D side we are excited about the progress we have made executing our new product road map. We believe that these products will further improve our current offering and provide different shaded and defendable market positions. Let me turn now to our expectations. In terms of specific guidance, we expect revenue to be flat to up 5% compared to Q2. Q3 gross margin are expected to be in the range of 59 to 61%. Operating expenses are expected to be approximately 31million as we continue to tightly control cost. As noted in our earning release, we expect continued profitability in the third quarter. In closing, our business continues to gain momentum; we expect further progress and look forward to updating you as we move through the remainder of 2010. This concludes our prepared remarks, operator we will now be happy to take any questions. Operator, please?

(Operator instructions). Your first question comes from Tristan Gerra with Robert Baird

Hi, good afternoon. Looks like your 90 nanometer SPGA revenue potentially declined sequentially. Is this an indication that we may be -- have a peak for 90 nanometer or is it a one quarter trend and any -- coming up round it would be useful?

Hi Tristan, this is Bruno. I’m not sure how you have been able to make that assumption. I would say the (inaudible) ECP2 and ECP2M and these are still are growing products

And our XP2 is also a 90 nanometer

…flash but its also 90 nanometers so as we’ve mentioned, we’ve seen also pretty significant growth year-over-year and quarter on quarter on these products so I am not sure where you get the impression that our 90 nanometer product lines have picked.

And still on the SPGS side, I am looking at about 1.2 million incremental quarter-over-quarter, and given your comment about 65 nanometer trend, that’s how I got the assumption that (inaudible).

The mature SPGA products which are much larger than 90 nanometers; those are the missing part of your formula system

Okay, and what is your expectation then in terms of slowdown or peak in 90 nanometers in terms of timeline?

They continue to be classified as new products. Our XP2 in particular has been winning a lot of video surveillance and other related video type wins and it continues to do quite well in growth [gross] and I don’t think it was peaked out than our other 90 nanometer of FPGA products so it continues to grow, maybe not as fast as our ECP3 family is growing in terms of percentage, but they’ll certainly be growing for a little while to come

Okay and then wishing in the PAD space -- historical high in gross margin and then -- just trying to see what could be a common denominator. I know that you’ve provided some color on what was the reason for the gross margin’s trends; is pricing also a factor?

We did selectively raise a few prices on some older products at the beginning of the year, I would say that there has not been maybe as much pressure on pricing because the more robust demand right now. But certainly we don’t model or expect price increases in this phase. I think most of our gross margin increases has been relative to volume and our continued executions on our cost and infrastructure developments we’ve made and I also think our distribution channel has been helping us there

And next quick one in terms of phase 4, what types of timing are you seeing in terms of ramp and also how does that compare in terms of spending verses phase 3 in China?

You mean the 3G spending?

Oh yes (inaudible).

I think there is a published number of about 98, 000 base stations or something like that that are supposed to roll out. We certainly expect to participate in the roll out of that. We never modeled the full number that people talk about to be on the conservative side for internal planning. But if we look at our customer positioning we believe we are well positioned to benefit from it when the service providers start buying the equipment

Thank you

Your next question comes from Richard Shannon with Northland securities

Hi guys, a couple of questions on communications. First of all let me take a quick look at the second quarter. You had reasonable amount of growth here by my calculations, a few percentage points. Obviously communication has been a very nice driver for you but didn’t look that great in the second quarter. Can you kind split out your performance between wireless and wire line and could you have some maybe follow up in some older products in that area, you can help us understand the trends there?

Most of our business is now in the wireless business, okay and that’s what has been growing the fastest for us given that the products that we have in our (inaudible) FPGA ’s which are really well suited for application in the wireless base. As we’ve said in our remarks we’ve seen a slow down I would say especially in China, due again to no further I would say no more deployment or employment in China at least until the later part of this year and also delayed in the announced deployments in India. That was somehow offset by more business in Europe and US. So I would say pause a little bit, sort of a pause in Q2 but we do expect that as new deployments will resume in large numbers in China and also in India or will start in India, we expect that to resume in the second half of this year.

Maybe kind of looking at the forward business in wireless specifically do you think the next twelve months of your business in the wireless will be better than the last 12 months or kind of flattish or how do you view that kind of generally speaking Bruno?

Difficult to forecast over the next twelve months, I mean we usually put our guidance for the next quarter but I would say, generally speaking -- I mean as I’ve said, we expect that in Q3 to see an improvement of our communication business especially as we gain more and more traction. The ECP3 I would say is a good proxy for you to track the progress we are making there. We’d say we’ve doubled the revenue from Q2 to Q1 and that has been the fastest growing product we’ve ever had in the company and that’s, I would say probably 95% of the ECP3 design wins on the wireless area.

And Bruno in your prepared comments did you mention what the percentage of sales for the two large telecom OEMs you’ve put out in the past?

No we did not.

It's just below 10%

It's just below -- there are not 10% customers yet but they are large customers.

Okay, another topic on CPLDs; you’re not to split out to those and the growth you’re seeing is very nice, obviously you’re getting some benefits from chain of distribution, also seems like you’re appropriating some reference designs and things like that. But obviously this growth rate can't continue, some of these dynamics that are helping improve in the near term, how far away are we through seeing the benefits of that or are we kind of going to start to see those (inaudible) become more difficult; can you give us a sense of how long where we can see this outside growth in CPLDs?

So I think that inside the CPLD category are two very important products for us, the first is the XO, the XO continues to grow and do well for us; it's gaining greater and wider market acceptance and it's being used in a lot of different devices that people hadn’t thought about using in before. And we are excited about our road map in the low density are which really does help us win business because we have a robust road map compared to our competition. The other area is near mix signals particularly power management which is growing very well for us. And we see quite good opportunities for growth there as well into the future. So I would say that that’s an area of particular strength for Lattice and we expect it to continue in the time the Carmen will continue to vote a lot of effort to drive our revenue and our growth in that space.

And one thing I’d like to add is if you look at our product roadmap, we do have in the low density area a product roadmap that is actually very attractive to customers. And then also as I’ve mentioned in the opening remarks we are actively looking at new consumer applications such as smart phones, digital cameras and other products; mobile type applications. And these are new customers coming to the PLD space; these are areas of application that have not been served traditionally by the programmable logic suppliers. And that market is not recaptured in the overall Programmable Logic markets so it's kind of unknown; I would say, how much you can capture outside of the traditional programmable logic market probably to the detriment of ASSP and [agex]. So that’s really what we are putting a lot of effort into actually.

Sorry, I didn’t mean to interrupt

No, go ahead. I was done.

That’s a very good, save way for my last question. I’ll jump on the line Bruno but can you talk a little bit more about what you’ve seen there in smart phones and digital cameras and other sorts of mobile consumer devices in terms of like number of design wins you have and also when we might start to see revenues start to become material?

Okay, so we were just in the early stage of getting designs in this mobile-type application and we are testing, I would say, the market. If you look at our products roadmap today, we do not have products that are really targeted except for the 4KZE which is a low power kind of almost commodity like CPLD designs. We do not have a more complex CPLD product yet to address this market specifically in terms of -- especially in terms of performance and power consumption which is very important for all battery applications. But it is on our roadmap, okay so what we do -- I would say I was thinking a lot of -- we are seeing a lot of encouraging signs that customers that never used Programmable Logic in the past are now open and actually very interested in using that because they can have some -- they can [endeavor] the number of functions in one device, they can reduce their both sides, they discuss selling opportunities and so this is just the tip of the iceberg, okay? So I would say probably a few quarters down the road or you should ask these questions every quarter as we go along as we have new products coming into the market that will be really targeted at these specific applications.

Great. I appreciate the detail and congratulations on those numbers, guys, thank you.

Thank you.

(Operator Instructions) Your next question comes from (inaudible) with Morgan Stanley. Unknown Analyst – Morgan \Stanley: Hi thanks for taking my question. Nice quarter. Can you just remind us where you are in your ECP3 revenue ranks? It seems like it's been about a year and a half since it was introduced. In what timeframe do you expect it to reach some type peak revenue run rate? And then if you could just compare that with your previous generation product ECP2 and just point out any major differences there?

So the ECP3 was the first product in family was launched in February of 2009. I believe that we did disclose last quarter that we had about $1 million of revenue in the first quarter so less than a year after the launch and then with the cash flow again that we doubled that revenue so it's not a complicated multiplication to make to find out the revenue for Q2. And we are seeing actually, continued momentum in terms of growth. Typically, the product will ramp after three to five years after launch, okay? So we are -- compared to the ECP2M which is a comparable product a generation behind, we’ve seen a much faster ramp from stocks to volume. And -- I was not around at the time of ECP2 and somehow I have the data in my head but I know based on some analysis that we have done in the past this is by far the fastest launch in terms of the initial product launch to revenue ramp we’ve ever had in the company. Unknown Analyst – Morgan \Stanley: Okay. Just to follow up on that, so roughly what portion of your communications revenue growth do you think is coming from high density devices versus low density devices that would be sort of your ECP particularly ECP3 versus MachXO versus going into base stations?

So the -- so we have three really main -- besides the Power Management I would say if you look at the Power Management and the XO products, these are very broad based products that go in a number of applications. Okay so they go in communication, they go in computing, they go to some extent in some consumer applications when there is no power or strict power consumption requirements. So that’s really how you look at it. In the high density, what we classify as [meter hydro] high density we do as two products: the XP2 and the ECP family of products. The ECP family of products mostly go into the communication business while the XP2 family goes into some industrial applications, [video] application and I would say to some extent also consumer type application but again non-portable type or non-battery operated only battery operated type applications. So I’m not sure if I’ve answered your question properly but that’s how I can -- the (inaudible) I can give you. Unknown Analyst – Morgan Stanley: That’s fine, I appreciate. I guess just to clarify the question a little bit more, so when you think about a wireless base station, you may have multiple sockets within the base station in some you could have sockets with your MachXO with competitive devices or you may have sockets with your ECP3 and MachXO. I guess I’m trying to get a sense for how much of your growth in that market is roughly coming from MachXO versus ECP3?

We don’t really track it this way, but yes in a wide expectation we may have an ECP3, we may have multiple XO, we may have some power management products and we basically don’t really track from an ASP perspective or open perspective what’s happening.

I can tell you just to give you a little additional information, traditionally we’ve had a lot of our communication revenue come from our lower density products, the ECP2M allowed our mid-range product to move very strongly into the market place, our penetration with the ECP2M was very focused; there were several customers that we had very deep and big relationships, with the ECP3 ramp is actually very broad so in terms of customers that have not used our mid-range products before, we’ve added quite a few new customers, they are in the designing and getting ready for launch dates for most of those products. So we feel quite confident about the growth prospects of the ECP3 coming forward and we think its’ going to greatly contribute to our growth in communication. Unknown Analyst – Morgan Stanley: Okay, thanks so much and just one last question if I may. I notice your announcement with (inaudible) and I was very interested to understand how that type of collaboration helps your market position especially when you compare it with comparative offerings.

So (inaudible) is really – it’s an IP provider for us and we basically, they offer -- help us to compete the offering and have a low power solution for RH, so they are just one of our partner and we are doing actually some pretty good work especially in China with them. So it’s re-focused that RH-IP for wireless and low power applications. Unknown Analyst – Morgan Stanley: Okay, thanks very much.

Your next question comes from Apurva Patel with Ticonderoga Securities Apurva Patel – Ticonderoga Securities: Hey guys, in terms of the guidance, can you elaborate as to where the growth is going to come from in terms of the end market and relative to that, is industrial and other market has been going for the last three quarters, do you expect that to continue and can you elaborate and design wise in that market?

I think in terms of Q3 growth, we expect communications to start coming back and contribute more to our growth in Q3, industrial on other is, it’s the ‘N’ others kind of the catch phrase in that, it’s a very broad category and it tends to be a little bit more tied to the general economy. For us the economy has been recovering over the last year, our revenues there has certainly have been growing. It’s a very global product category as well, we have winds all over the place in that category and it’s a broad range of products anywhere from just about our oldest products under the first products we ever made or still selling for some applications in that market. Apurva Patel – Ticonderoga Securities: In terms of your gross margin Michael, you mentioned about on going improvement in cost out, is that going to continue I mean, you can help us in that (inaudible) that too.

Yeah, so I think if you look over to the press releases for the last year have sort of been moving up the range of gross margin every quarter and this quarter our buyers from 59 to 61%. So I would say that we are certainly going to maintain the gains we’ve made and we are working as hard as we can to continue to grow our gross margins. Some of the key things for us there are the controller – our operations is not all packed with SPNA and such but the operating group’s expenses. As our volume goes up, our purchasing power for both wafers and assembling and test services improved and we are able to get better pricing there. And finally some of our newer products like the ECP3 are early enough in the ramp that are yields and such or not where they are going to be once the process is better understood. So we certainly expect to get some progress there as well. Apurva Patel – Ticonderoga Securities: Thank you, and the last question for me Michael, in terms of your -- you mentioned earlier about the (inaudible) business coming up and you talked about it in second half, you may have your two top customers come back into the market again, you are going to see growth especially the China’s 4G build out, can you elaborate on that? Is that starting to re-queue or is that still going to need more back half in terms of 4Q10?

I think it’s going to be deployment in the back half of this year and into next year and it’s going to be dependent on the willingness of the actual telecom carriers to invest in the equipment and how quickly they want to take it in. In terms of positioning when that demand comes, we believe that our low power-low cost solutions are very well suited to that type of market. Apurva Patel – Ticonderoga Securities: Thank you

(Operator instructions). Your next question comes from Bill Dezellem with Titan Capital Management

Thank you, relative to the success that you’re having with Nu Horizon, would you describe number one the ramp and number two to what degree that you feel Zylink [ph] is dropping in as a distributor has contributed to your strength and you’ve been able to capture some of those potential business winds?

This is really a question that you should ask Nu Horizon. Obviously we saw a window of opportunity, Nu Horizon was already our partner in Asia for quite some time, and we had a window of opportunity after Zylink [ph] made the decision not to use Nu Horizon any more that we’ve captured on; I think it’s too early to say what the benefits will be to us because we’ve just started working with them in Q2. There are all these benefits obviously, we have already a partner that we knew well that has a well trained work force that understands our business and we have compared to I would say some of the larger distributors we’ve used and we continue to use now, a dedicated team of both sales people and SAE’s are working with us, we knew customers that we didn’t know. I would say it’s too early to say what are the benefits, but there are some images that we say we saw that as a window of opportunity and we wanted to capture that.

And we certainly are excited about the opportunity, but when the opportunity were turned into actual assignments [ph] and revenue, it takes between 6 and 18 months from when the winner designs would actually turns into revenue for us. In the area of Asia we are certainly getting some of that from them already, they’ve been our distributor for a year now and we are quite pleased with our progress there. In the US and Europe really relationship is brand new, so it will be another quarter or two before we start seeing some of the initial design revenue that they win when they bring us the design. In terms of ramping up as a distributor to take over the fulfillment and the general duties, they’ve done quite well and we are very pleased with our partnership; but I would say in general we are pleased with all of our main distributor partners, they’ve all done extremely well for us and we certainly have seen increased effort from all of them in terms of focusing on getting us designs. They see the improvement in our results as well as anybody else does, and they hear directly from our customers which are also their customers about the growing acceptance of (inaudible) products, and that’s far as even more effort from them to capture business.

And then specifically relative to the US and Europe, after Zylink [ph] dropped them, did they layoff some of their employees or did they retain all of those employees that now are potentially working on Lattice’s behalf?

Again that’s a rare question that you should address directly to Nu Horizon during their recording call.

They had a commitment to us with how many FAEs and direct sales people would be assigned to us and they have more than met that commitment to us and continue to execute on. It in terms of their total headcount in such that’s something that would be better addressed to them.

Thank you both.

Your next question comes from David Duley with Steelhead Securities David Duley – Steelhead Securities: Congratulations on a nice quarter, just a couple of questions on gross margins, I think the drop rate to the margin lines this quarter on the incremental revenues was about 90%, in the past quarter it was between 65 and 70, I was just wondering the key reason for that was the inventory that was sold but was already reserved or?

That contributed to it but I lost the range still sort of around where was this quarter. So I would say it is a combination of mix and as we’ve stepped up in volume and maintain that volume we are getting a bigger growth through rate. So those would be the main items I think have helped us David Duley – Steelhead Securities: So going forward the drop rate is going to look more like 90% or more like 70%?

I don’t really look at it that way; it’s really dependent on the specific mix of the products and what customers are seeing (inaudible) during the quarter. So I gave a range in my release and that’s kind of what my expectations are based on different mixed scenarios and volume scenarios we have in our guidance.

Okay and the gross margins going from what the mid-point of the guidance range is 60%, it’s going to go down to 1.2 percentage points and the key reason for this sequential decline in gross margin is what again?

So if it at 60, that’s just a point in the range….

That’s the mid-point, alright?

That would be at the mix and volume that would give you the 60%, that’s the number that would fall out for us. So it’s complicated to calculate the exact mix that’s why we give the range when we give the margin.

Okay, so basically you’re saying because gross margin is going to be down sequentially as a percentage and revenue is going to probably be up, it’s going to be mixed revenue.

So I gave a range of gross margins, I didn’t say gross margins is going to be down and I said it’s an approximate range. So I’m not sure how I can answer your question.

Okay, in the press release you talked about the size of the new attractive market and the consumer space. I was wondering if you might have a total available market there for some of these new portable mobile applications that you’re talking about, (inaudible) for that and (inaudible) your goal as far as the share goes.

David as I’ve mentioned in I guess in previous question asked, I mean we’re just looking at the tip of the iceberg right now. The new opportunities we’re seeing are not part of the traditional programmable logic term, okay? This is a fairly new concept for real consumer type companies and again when I refer to consumer I’m talking about mobile, high end mobile consumer type application that have not used traditionally programmable logic devices in their products, okay? So they’re just looking at it and it is very difficult to size that market. All I can tell you, it is not in the current programmable logic term because it is currently served by AASP’s and (inaudible) and so the size of the AASP’s and (inaudible) is pretty large. Obviously you can make your own calculation but we do hope that with the products that we have on the roadmap for our low density offering is going to be able to capture a portion of that. But it’s very hard to put a number on it at this stage.

Yeah, it seems like a really attractive opportunity. One final thing from me, you generated I think $80 million in cash year over year, I know some of that is probably from the return of Fujitsu but you’re generating significant amounts of cash. Any thoughts on what you might want to do with that?

I mean we continue to look to see if there is merchant acquisition opportunity that would make sense that would be a good strategic fit for us. So that remains our primary plan is strategic use of cash. Obviously we haven’t done anything there yet and that’s mainly a function of our caution and desire to make sure we don’t overpay for something is that if we do do something of that nature it’s a good fit.

Thank you.

(Operator instructions) and your next question is a follow up from Apurva Patel with Ticonderoga Securities. Apurva Patel – Ticonderoga Securities: Thank you. If I can just ask a question about high level, there’s a whole debate around the [Pulding] market about [Pulding] displacing [Asix] and [Asix] fees. Granted you are one or two notes behind your competitors, but are you seeing that trend in your market and if you are can you elaborate which specific market you’re seeing that trend?

Well, yes again we are seeing some of that and that’s the reason why we’ve targeted consumer as an attractive potential new market for us because this is not again a market that has been served by (inaudible) logic our supplier in the past. But why we authorized our strategy is very different from the two larger players, we do not compete at the high-end, very complex [Asix] replacements type of products. We are more in the mid-range and the low density space but we do see the same thing happening in these markets as well, in communication sensing, ECP3 the project we had can be a replacement because it’s at the right price points, it’s a low-powered product with the right amount of specifications or performance that can replace in some cases or at least make us ask questions to engineers about really using an [Asix] for particular application because of again the price point is becoming quite attractive to use an SPGA. Apurva Patel – Ticonderoga Securities: Great, just want to get that clarification. Thanks for now.

I would now like to turn the conference back to management for any closing comments. So that will conclude our call for today, thank you everyone for joining and we look forward to updating you at our next call in third quarter.