Lattice Semiconductor to Make Advance Payment to Support Fujitsu's New 300mm Fab

Agreement to Extend Technology Development Partnership to 65nm Also Announced

HILLSBORO, OR - September 10, 2004 - Lattice Semiconductor Corporation (NASDAQ: LSCC) today announced an agreement under which Lattice will advance US$125 million in support of the new 300mm silicon wafer fab being constructed by Fujitsu Limited in Mie, Japan. The advance payment will be made by Lattice in four stages, based upon the successful completion of specific milestones, with a US$25 million payment scheduled for October, 2004, and the balance currently anticipated to be paid by the second quarter of 2006. All advances will be repaid in the form of future delivery of production wafers to Lattice

Fujitsu's new 300mm fab, which is scheduled for completion in the second quarter of 2005, will initially provide Lattice with cost-effective, leading-edge 90-nanometer (nm) technology for its next-generation FPGA (field programmable gate array) products. Lattice expects to produce its first programmable products in the new facility on 300mm wafers in late 2005. With accelerating technology and product evolution in mind, Fujitsu has architected and developed its 90nm technology to be easily scaleable to 65nm. To take mutual advantage of this capability, Lattice today also announced the extension of its agreement with Fujitsu under which Fujitsu will provide Lattice with 300mm / 65nm wafers and technology from the new fab.

Cooperation, Agreement Extended

This foundry agreement between the two companies extends the initial announcement of Lattice and Fujitsu's cooperation made in March of this year. Lattice selected Fujitsu to manufacture its next-generation, high-performance products based on Fujitsu's extensive expertise in the development and manufacturing of state-of-the-art process technologies. At that time, it was announced that Fujitsu would supply Lattice with leading-edge 130nm and 90nm CMOS process technologies, as well as a 130nm technology with embedded Flash memory being jointly developed by Fujitsu and Lattice. The initial announcement covered 200mm wafer production for all three technologies.

Fujitsu's semiconductor technology is built on high-performance and high-reliability expertise gained through the development of its own products. In particular, Fujitsu is a pioneer in the use of cutting-edge technologies such as copper wiring and Low-k dielectric for its high-end servers. Fujitsu already manufactures products using 90nm CMOS technology on 200mm wafers at its Akiruno Technology Center, located in western Tokyo, including initial silicon for Lattice's next-generation, high-end FPGAs, the LatticeSCTM (System Chip) products. In addition, 130nm technology from the Mie facility is currently supplying initial production quantities of Lattice's low-cost FPGA products, the LatticeECP-DSPTM (EConomy Plus - DSP) and LatticeECTM (EConomy) devices, as well as development wafers for the LatticeXPTM non-volatile, infinitely reconfigurable Flash-based FPGAs.

A Synergistic Partnership

"The FPGA market continues to be an attractive one with high growth potential. Fujitsu is happy to partner with Lattice to drive our mutual success in this segment," said Toshihiko Ono, Corporate Executive Vice President and Group President of Fujitsu's Electronic Devices Business Group. "Lattice's innovation in the programmable device marketplace is well-established. Fujitsu's technology will be the means to turn Lattice's creativity into a major success in the FPGA market."

Lattice CEO and Chairman Cyrus Tsui said, "This extension of our agreement with Fujitsu demonstrates that our synergistic partnership is working extremely well. Fujitsu has proven to be an exceptional, results-oriented partner and we are happy to have the opportunity to invest in a state-of-the-art 300mm fab that will give us the best technology available. Fujitsu has expended considerable effort to make their technology both scaleable and manufacturable. The combination of our exciting new FPGA products and Fujitsu's advanced technologies will give Lattice a powerful platform to compete in the FPGA market over the coming years."

Lattice's New FPGA Families Coming to Market

The initial partnership agreement between Fujitsu and Lattice is already beginning to show dramatic results. In June of this year, Lattice introduced its first LatticeECP-DSP and LatticeEC low-cost FPGAs to the market. These devices have been well received in the market based on their best-in-class memory interface and DSP performance, as well as their overall cost-effectiveness. The first family members are moving smoothly into production at Fujitsu's Mie facility on 200mm wafers. Remaining members of the LatticeECP-DSP and LatticeEC families are currently being fabricated in that facility. In addition, Lattice has recently received the first 130nm Flash-based products and the first 90nm products fabricated by Fujitsu, which are currently in the early stages of evaluation. The LatticeXP family will support "instant on" applications by combining a cost-effective FPGA fabric with efficient Flash technology, dramatically expanding the FPGA market. The LatticeSC family will incorporate an efficient programmable fabric supporting devices with over 10 million system gates and 10 million bits of embedded RAM, as well as optimized, embedded system functions using the 90nm technology.

"These new product families anticipate customer requirements for FPGAs over the next three to five years," added Mr. Tsui, "and are targeted to the FPGA market segments that we believe will grow most rapidly. Our 300mm wafer capacity agreement with Fujitsu will ensure we can meet the significant market demand we foresee."

About Lattice Semiconductor

Lattice Semiconductor Corporation designs, develops and markets the broadest range of Field Programmable Gate Arrays (FPGA), Field Programmable System Chips (FPSC) and high-performance ISP™ Programmable Logic Devices (PLD), including Complex Programmable Logic Devices (CPLD), Programmable Analog Chips (PAC™), and Programmable Digital Interconnect (GDX™). Lattice also offers industry leading SERDES products. Lattice is “Bringing the Best Together” with comprehensive solutions for today's system designs, delivering 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 fields of communications, computing, computer peripherals, instrumentation, industrial controls and military systems. Company headquarters are located at 5555 NE Moore Court, Hillsboro, Oregon 97124-6421, USA; telephone 503-268-8000, fax 503-268-8037. For more information about Lattice Semiconductor Corporation, visit http://www.latticesemi.com

Statements in this news release looking forward in time are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements involve risks and uncertainties including market acceptance and demand for our new products, our dependencies on our silicon wafer suppliers, the impact of competitive products and pricing, technological and product development risks and other risk factors detailed in the Company's Securities and Exchange Commission filings. Actual results may differ materially from forward-looking statements.

Lattice Semiconductor Corporation, Lattice (& design), L (& design), in-system programmable, ISP, LatticeEC, LatticeECP, LatticeECP-DSP, LatticeSC, LatticeXP, PAC, GDX 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.