After many years of trading roughly sideways, Lattice Semiconductor (NASDAQ:LSCC) recently saw its shares surge to multiyear highs, which may have led some investors to pay closer attention to the company and its stock. 

For those of you unfamiliar with Lattice, it makes programmable logic devices, such as field-programmable gate arrays (FPGAs). Such chips can be reconfigured by customers to perform different functionalities on the fly. This is in contrast to application-specific integrated circuits (ASICs), which are designed with specific, immutable capabilities at the outset.

A stock chart showing a stock price that had risen sharply but is down a bit from the peak.

Image source: Getty Images.

Here, I'd like to go over three important growth opportunities for the small chipmaker.

1. 5G

FPGAs are commonly used in telecommunications infrastructure, and the imminent transition to 5G wireless technology by wireless carriers worldwide looks set to be a boon for FPGA makers, including Lattice Semiconductor. 

"In the communications market, we are starting to see early demand related to the 5G wireless infrastructure build out," said Lattice Semiconductor CEO Jim Anderson on the company's Feb. 12 earnings call. "We expect the 5G build out to be a growth driver for us since we are well-positioned across many OEM 5G platforms."

With that being said, this looks like more of a longer-term growth opportunity. Anderson said that "although we are seeing initial demand from 5G, it's still in the early stages of the ramp and we continue to expect 5G to be a material contributor to our revenue in the second half of 2019 and into 2020."

For some perspective, Lattice Semiconductor's communications and computing segment made up 31% of its revenue in 2019 -- up from 29% in the prior year. So the growth from the 5G ramp could have a significant impact on the company's overall business. 

2. The data center server market

As Anderson explained on the aforementioned earnings conference call, the company's chips are "used for manageability and security in servers." 

This opportunity, according to the executive, has been good to the company so far. 

"We have a strong position across a number of different server vendors," Anderson said. "And we saw good growth in 2018 as a current server platform generation began to ramp in data center and cloud applications."

As good as things have been so far, Anderson's subsequent comments indicate that the best is yet to come on this front.

"We are also seeing strong customer interest in our early-access program for our next-generation security solution," the executive said. "We believe our next-gen solution has a solid competitive advantage and that server and client security can be an important growth factor for us going forward."

Check out the latest earnings call transcript for
Lattice Semiconductor.

3. Industrial and automotive

Lattice Semiconductor's largest business is its industrial and automotive segment, which made up 39% of the company's revenue in 2018, up from 35% in 2017. This segment enjoyed 17% revenue growth in 2018, which Anderson attributed to "increased automation in factories and increased electronic content in autos." 

The future also looks pretty bright here, too. Anderson says that the company's CrossLink products, which are used for "video bridging for ADAS and infotainment systems," are "gaining traction." 

Per the executive, Lattice is also enjoying "strong design win momentum in a wide range of industrial automation applications such as autonomous robots and motor control."

It often takes time for design wins to translate into revenue, but it's encouraging that the company is having success filling up that design win pipeline today so that it can enjoy revenue growth in the years ahead.

Investor takeaway

Lattice Semiconductor seems to be undergoing a positive transformation under Jim Anderson and the rest of the new management that the company has brought in. The company appears to be quite focused on a number of compelling growth opportunities while at the same time scaling back its investments in areas that might not be as attractive (Anderson indicated that Lattice has "moved away from the more volatile and low-margin handset market" and will be "more selective" with respect to the opportunities it pursues in the consumer market).

While the stock is by no means cheap -- it's trading at nearly 30 times expected fiscal 2019 earnings per share (EPS) and about 22.4 times expected fiscal 2020 EPS -- the company is headed in the right direction, which should translate into long-term business success and, hopefully, value creation for its shareholders.