Almost ten years ago to the day (Dec. 10, 2001), Lattice Semiconductor Corp. became a major FPGA player by acquiring the Orca product line from Agere (the former AT&T and Lucent Microelectronics) for $250 million.  Lattice celebrated this birthday Dec. 9 by announcing an intended acquisition of SiliconBlue Technologies for $62 million in an all-cash deal (http://www.marketwatch.com/story/lattice-semiconductor-to-acquire-siliconblue-2011-12-09).

SiliconBlue has only been on the scene for five years, but has grown to more than 70 employees, and has garnered more solid design wins than most FPGA startups by offering unique low-power operation that makes its products the only FPGA solution for some handheld applications.  In fact, Clive Maxfield of embedded.com reported a few days ago the use of a SiliconBlue FPGA in a wristwatch developed by Citizen (http://www.embedded.com/electronics-blogs/other/4231148/Cool-Beans--First-FPGA-in-a-watch-).

Lattice vice president of marketing Doug Hunter said one thing that made SiliconBlue so attractive was its reliance on a nonvolatile, one-time programmable memory process that could scale easily using standard CMOS.  Lattice had years of experience in both EEPROM and flash, but realized that its XO2 mid-range programmable logic was running out of gas.  With the SiliconBlue products, “we can go into a customer and offer absolute lowest power and somewhat limited functionality with the new ice40 family, or offer our own XO2 and ECP products for more functions.”

Nothing in the Silicon Blue portfolio, Hunter said, fundamentally changes the company’s focus on mid-density, highly-optimized solutions.  SiliconBlue’s ice40 Los Angeles FPGAs are fabricated in a 40-nm CMOS process, using special design techniques in OTP structures to achieve low power (http://www.siliconbluetech.com/LA1/). The FPGAs are offered in a low-power version for smartphones, watches, and similar applications; and a higher-speed version for tablets and laptops.  These two spins of the ice40 have virtually replaced SiliconBlue’s original ice65 FPGA, though Hunter said “we still have people who ask for Lattice’s GAL and PAL devices, so I’m sure there will be customers for the 65-nm SiliconBlue products.”

The focus on mobile applications for ice65 was made clear by Lattice, when it announced that SiliconBlue CEO Kapil Shankar will become vice president of a new Mobility Business Unit at Lattice.  Few, if any, layoffs are anticipated as the deal closes by the end of this calendar year, as the SiliconBlue products will form a new center of gravity in the Lattice portfolio.  Lattice already had established a new consumer product business, in order to help alleviate the company’s dependence on communication infrastructure and server-farm businesses.

There is an unsettling side to the acquisition, however, even as Lattice broadens its portfolio to become a major player.  The company simultaneously cut its guidance for the fourth calendar quarter of this year to predict a sequential decline in business from the previous quarter of from 14 to 17 percent, up significantly from a previous guidance that business might be down by 4 to 9 percent.  Eric Savitz provided a revealing analysis on Forbes.com, pointing out that Altera and Texas Instruments have offered similar warnings of softness as the year ends (http://www.forbes.com/sites/ericsavitz/2011/12/09/lattice-semi-cuts-guidance-to-buy-silicon-blue-for-62m/).

In short, Lattice is not facing unique problems, nor is the FPGA sector the only soft semiconductor realm.  Hunter said some of the slowness is seasonal, some is dependent on external factors like the continued Euro debt crisis, but part of it indicates that all semiconductor players, particularly in FPGAs, must divert from large-system infrastructure to more low-power consumer end products.  The chip business may see slight declines throughout digital logic, processor, analog, and FPGA realms for the next few quarters.  In this kind of environment, the remaining FPGA players may want to hunker down and focus on advanced designs and growth of a new customer base.