LRCX - Earnings call transcript Q2 2019 | Lam Research Corporation

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Operator

Good day and welcome to the December Quarter Financial Conference Call. At this time, I would like to turn the conference over to Tina Correa, Corporate Vice President of Investor Relations and Corporate Communications. Please go ahead ma’am.

Tina Correia

Thank you and good afternoon, everyone. Welcome to the Lam Research quarterly earnings conference call. Tim Executive and Financial Vice are and Executive Officer. today Bettinger, Doug President me Archer, Chief President Officer; With and Chief

Relations risk our factors GAAP otherwise discussion be financial slides can basis non-GAAP Please in information. see section business results press Time and our financial presentation accompany quarter little filings. p.m. presented and found During financial Investor overview accompanying outlook distributed risks Pacific for public financial Today’s will reconciliation a for between results we A will XXXX detailed our our the additional for a and environment quarter. in of disclosures the non-GAAP SEC afternoon. on on specified. of unless press with statements afternoon today’s With let along scheduled to this be Tim. to financial can The March the A today’s forward-looking uncertainties was me will The are results that presentation that XXXX the today’s the of to be later o’clock p.m. Pacific release. X also of website. the earnings This Time. replay call found our call detailing this available release Today’s call and after Q&A over December share slides be website includes reflected the and X subject last the company’s review the on presentation in our release until call, this is o’clock on call. hand our results that,

Tim Archer

quite CEO. are the but well. first before here today. earnings to I many of events, me my you with as call not on for recognize I all us met joining be you good know may on there have Thank call that some as Lam’s Lam you It’s

win compete expanded development opportunities being through as leading like process our key to sales what term. of been Novellus Lam of organization the briefly over to the technology of shaped takes operations customers to groups perspective to in the long experience driving to to and managing on I my start results recapping product time the in of with I embedded with technology one it years organization. fab that over inside have CEO Lam Japan periods our has the the inflections I’d Novellus. leading XX this recently, a heading by and company-wide Most been business my charged engineer since company’s at how as the of business merger worldwide last have has So fortunate our from

respond During rapidly have pipeline having this share and a help importance our changes the enables From operating deliver on us to address strength the of expect you I my continuously our years we industry period, our to to long-term economy. the times a investing and earnings increased has and our tied CEO to a to in see that growth an trust. of in to And we am collaborations deep accomplished long-term lead what What ensure and of XXXX from the future. the enablement market on market, we flexible company from focus per are mutual times as the technology model to emerging as data technology to equipment solutions semiconductor honoured to environment, productivity well leadership can in deliver proud believe experiences even XXXX, I and early segments in shareholders. Lam am two revenue to our believe we of Lam. opportunity grew stages is which in the the the core increase increased in I X.X than customer particularly leveraging and recent founded those building believe I lasting calendar of to faster on the critical the revenue. we current very I by fastest I committed see in for difficult still our greater challenges. customers my productivity secular their for most customers of to value as that as differentiated growing story commitments to products am are

to we investigation want on with I departure. continue, the I update Martin’s in connection Before provide announced an

not has our feel workplace in issues. the to around training investigation systems our committee which misconduct no topics. conduct and the communications been on always inconsistent have free To press allegations a from the to To and committee’s and release, investigation special of recommended our been employees practices policies, of review there the we the December into misconduct is special call to I or in independent our we Lam’s lead related know an confirmed committed said culture now controls, that culture, board on committee substantially with am core you communication these thorough an integrity our of actions environment have the this. formed and our special reiterate of That speak complete committee. increased other has As investigation special and and a question did and reinforce this to respect into none December, and been conduct what a foundation values by open alleged trust, recommended built have company’s up workplace personal financial Core success values.

the December prior view solid with guidance, our delivered more turning we to In challenging Now a line despite our a environment. quarter business. on

memory prior calendar with industry revenues, I more results. of XX% time same $XX.XXX calendar also the our the partners spending. in year-on-year From contribution expectations of our operating in year. largely call. cash growth XX% WFE we Entering in communicated single-digit calendar Lam’s customers, a and in from was non-memory with to the to like and of approximately for and have segments at our support perspective, at growth XXXX, the in than to our in mid as increase their flows for XX% and this increase thank XXXX delivered would fundamentals DRAM range. in performance our in an within employees in We NAND spending. completed EPS weakened, continue these to to be At came billion looking have high-teens is in we the and with year both in as down an year-on-year industry WFE increase strongest reign Overall, the $XX line prior a earnings of history point, billion company XXXX customers decline particularly memory

NAND as believe to We increase benefit the are to see as is of the prudent remaining we rate XXXX. to and we demand In believe began seeing. in remain XXXX response challenging, we near-term enterprise demand should from behaviour NAND, industry making rationale is remains For characteristics applications a are dynamics supply client in offers expected demand bit while adjustments consumer continue long-term signs content the growth decline markets capacity for DRAM, customers overall throughout year. the elasticity what setup initial solid profitability and the compelling. and customer the they to exited SSD in industry environment to

applications Investor executing and we importance this growth DRAM are in operating as exit priority In as XXXX are confident WFE architectures, year. to interconnect mid-teens segments one with industry technology Day supply year. that XD of as fall well that we the and spend rise opportunity. grow long-term in us the a remains in earlier to strategic We for With growth our the that during deliver attractive into expected rational with transistor, positioned correction Non-memory customers our critical innovation XXXX I segment. that we in extend context, a grow our we to strategy aggregate, environment, last advanced with through is continued packaging for feel relevance and to the we’re expect growth the described

Our to for our Etch, deposition non-memory key leadership with applications. XD high and expanding In the Lam. atomic available strategy fundamental penetrations in ratio of vectors: of Furthermore, high Etch markets, solutions we value. in derived which comprehensive, gaining in the to deposition from increasing and wins installed stack DRAM December stream we continued extend revenue Etch make are interconnect we we focuses applications long-term ratio segments to along processes continued share critical our at quality, and technology build segments recurring central disciplined the are to three customers aspect leadership size elements into applications productivity our compete metal differentiated position create of and served spacer base. for logic on the differentiation critical leading in aspect dielectric repeatability market film innovation with yet and and success the and continue the we roadmaps NAND for our In substantial, fund and investments NAND required layer both primary for R&D quarter, to to customer. our a deposition

NAND wins. During the DRAM in quarter, momentum application both we and new gained with

we performance of applications, pleased portfolio the in wins we our committed with strengthening board. product are across While these the critical to are

Our R&D of are products compete. our focused investments achieving best-in-class squarely on we everywhere vision

revenue the units year. growth in revenue installed a unit signing Turning the history. field base with in record largest single Installed installed high year again XX,XXX with delivered derived key exceeded our roughly note, base base, to our XXXX business We at on from a expanding installed group closed the chambers. customer, deal year out another customer our support now base base installed growth in ending the

shaping the we well the we investment in products the and are the a Doug buyback and life last productivity but continued fundamentally operational assets. trends support earlier reflects than services, strategy is is right remains business our segments building we efficiency. them aligned Lam announced few create our on Our increased of are the of environment release is the revenue another press our responding billion will in entire We growth progress a for his from closely existing opportunities. a growth In long-term details community more record to tool to communicated objectives And focus over are The long-term just cycle quarters up confidence business market. extract partner delivering solid strong return, new execution Lam. be and in recurring Lam’s we for with and today on has to as program for share and provide committed CSBG ago, the early strong with near-term XXXX to innovative our we year. to stream which on a of with focus program capability ownership. multidimensional customers revenue time year same positioned the technical through believe $X provide group track at help we customers our proven closing, customer comments. challenging in in higher value

Technology Sachs be many forward Francisco to also now, that I the look and coming I’ll Conference here’s participating Thanks. I’d February the San in with to Additionally, in will like XX. Doug. meeting And in you. weeks Goldman on the mention road of be on

Doug Bettinger

our December Excuse afternoon in me. Thanks margin of solid midpoint quarter, for the to Tim. share XX% conversions. the spending total joining the of mainly Lam was and The volume expenses. exceeding system segment and metrics. reduced which cut segment due quarter. targeted of slightly roughly Memory quarter-over-quarter, results exceeded segment quarter foundry higher system making Good in the primarily thank wafers. September our driven our XX% you at memory system December XX% due up in investments range declined performance the us of the in revenue. the the the everyone approximately proactive Operating per investments. The Memory flat DRAM of with mainly high for with of represented management revenue. financial drove to for from of was all of system all NAND to combined guidance revenue earnings represented increased guidance delivered NAND of revenue, revenue today. end memory and layer China provided, revenue operating and the quarter Overall foundry conversions XX% memory with prior accounting majority by were increase it

be WFE system be revenue. You we weighted in first will Currently, on The was combined and and investments. by other is view contributing about believe logic lower may perspective, slightly, Logic December. XXXX, how declined of segment the We the meaningfully Logic spending recall the Foundry WFE. investments will it From was while and our discussed half X% believe driven an Foundry up. somewhat XXXX September XXXX and Tim industry of in strong to up that memory spoke call, of I

not is customer Our XXXX. based that recovery memory spending our assumption in on interactions there is a throughout significant

Xz Xy in conversions year memory bit XX-Layer and to our to spending the expect NAND by and devices. customers’ mainly node on primarily be will We per cost will converting be bit. little lower driven of a DRAM conversions to

was This turn X% in came our the the our quarter. from delivered of was sequentially Let quarter guidance. me billion XX.X%. for above at to $X.XXX September December now and margin Gross performance. We up P&L the of by revenues midpoint slightly in

for do, to quarter high mix in a a and the in R&D I of the the our spending variability you, nearly actual $XXX of over gross expect for comprised always function product expenses customer of margin business And guidance the at spending million. R&D came see margins at are composition of quarter-to-quarter. As we previous in Operating as volume, factors quarter as income to level result objectives reduced to rate. tax range. million, benefits the quarter slightly such several well in which we limitations growth half quarter. of was the lower of due Operating range remind in came OpEx tax million in the longer as relative our Based managed spending you down quarter-to-quarter. be rate a quarter December I’ll long-term there dilutive December within which the operating The came environment. a mainly impact business software in approximately our the for in the in approximately range. XXX out as the of notes thirds remind dilution gross company. the within Operating shares, think, for million to XXXX first expenses the quarters. the the slightly the low decreased we the The during quarter. Relations December of relative consistent December spending, models. for that earnings the XXXX and was quarter million slightly noting, $X.XX, September in December midpoint above tax to notes, our as middle half I’ll the support margin your quarter. expense the the to total guided from operating came schedule at for dilution includes the $XXX maintained with the will count the per from that XXXX run, of second the XX.X%, shares in In XXXX Worth for the to by is website rate two convertible share long-term discrete guidance the $XXX two approximately I percentage our We’ve our at concentration. This the realized your statute our include And count available warrants right XX%, share from and Investor the than came on explorations in was point I’d you the on is quarter. mature was fluctuations continue the in rate range share teens to that exceeded reference. convertible also six to tax non-GAAP

execute We to return capital continue on program. our

authorization, billion the million quarter, Related buyback, shares December For share in total. our to we $X in completed buyback previous share the $XXX January we paid over repurchasing dividends. in of XXXX, out XX million

with to the XX% which million release stock. return the buybacks issued has that cash new billion in noted demonstrate to today, to board Additionally, to of Tim the returned today, commitment and $XXX returning least announcement in with $X $X capital in plan we mentioned summary, of calendar over our was up XXXX we along to authorization Today’s shareholder new free at And current share press approved that announced year, and our a flow is our billion dividends, we of repurchase common consistent for authorization return. continues as stockholders. our

billion. flat at Our including September short-term $X.X was investments, cash and quarter the cash, with restricted

offset as dividends During at $XXX paper from I program by in December down mentioned. commercial previously which pay the million, $XXX was our as operations came approximately of our well on million cash quarter, the have that

five XX XXXX $X consistent cash the was This I decreased with in during calendar last quarter year, over days For DSO earnings by the mentioned our to from operations was the billion. days. what call.

somewhat $XX consistent million the which noncash times, to from little equity was increased the timing level. expenditures Company for to of was comp, XXXX on an certain will expectations, Our X.X million the Capital in for depreciation. million came the high X.X quarter, projects, CapEx decreased, at prior in September. included an in of December Due inventory which we and that was amortization bit lower December quarter the improvement calendar go approximately increase $XX what of $XX expect from a $XX with I side CapEx levels be as million for we quarter. and expected. $XXX XXXX, than into expenses turns inventory times million our

investments last We flat are as as regular base XX,XXX the expansion our in strategic was on which relatively our approximately for with quarter, well noted with focused exited installed investments. CapEx quarter. quarter business we September R&D full employees, As manufacturing time the

cost it’s conditions. for peak worth maintain temporary that temporary we in noting earlier were flexibility since XXX I the year. headcount workforce think in We by levels our people by we our reduced managing over carrying short-term our changes business this adjusting

I’d looking for ahead, quarter. now So provide our guidance the like non-GAAP March to

or revenue We a million. expecting of are minus plus $XXX $X,XXX,XXX,XXX

We’re rest XX.X% product factory to calendar point. volumes. forecasting be year gross minus we in sit relative here XXXX. as And low and to we today, percentage margin the at sequentially a percentage will will of due margins as concentration, one decline gross point lower mentioned, customer of expect just I the March Gross mix or plus margin

an goods as has the a happens guidance. minus million to the which share expected six are quarter, minus of just well work things to extra $X.XX I And We’re per as percentage due in cost included that to remind in in remind XXX of expenses the spending plus approximately count the week. one forecasting these stated finally, impacts beginning point. due have years higher Both that March you approximately of up every work operating the March cutoff. in or the extra fiscal operating that year. or in the payroll And on also is taxes our quarter $X.XX quarter, margins shares. share of be of you sold XX% of result earnings calendar plus we of fiscal week the seasonal March as I’ll go based

investments current technology in For in our recent support business reductions and SAM view growth. share of than from Lam’s call and seen we’re continue base market spending, I focused prioritizing XXXX, With concludes given for like we space. on questions. that to our is this Tim announcements prepared the to now expansion, lower commentary Operator and up exercise the and will the discipline half to open prior that you’ve first gains from outlook, others environment, installed remarks, my

Operator

[Operator And from Instructions] Thank today question our Evercore. J. you. C. first with Muse we’ll take

C. J. Muse

afternoon. taking you Thank first good the question. Yes for guess, I question.

frame, you what you in can DRAM NAND? XQ levels think you WFE is and with As about implied think time forward – growth and share XQ the the rate both us for

Doug Bettinger

C. J. it’s Doug.

I we their I adjust year you we the to as through levels. mentioned, we anything? their speaking, as to through And as would Overall, customers growth think, customers spending expect XXXX go standpoint that add spending. we Tim decline low-XXs. go go ended from as NAND XXXX, bit decline Tim, a as DRAM, the Tim, as is in we think, low-XXs. expect think generally through XXXX I adjust

Tim Archer

about long-term us the is No, point, demand this I the Lam has we, sustainable said comment rates. ending at growth the – below year think see what that’s

So that, I about XXXX. optimistic we’re setup it’s think exiting pretty why the

C. J. Muse

if guess, question. could clarify I I the

that there on on If from analysis at would four DRAM, today, order what QX spending where think bit can implied analysis quarters If done share and think growth I maybe those come I XX%. at is that we’re there the up stayed DRAM levels, you tracking run us any you just three, now? look say, online, is rates both you’ve with NAND?

Doug Bettinger

for Yes, decline year, customers we we Tim. it’s the describe, to specific adjust their which you through as is I spending numbers level. going what have go don’t as except

C. J. Muse

on versus to I’m buys, understand as here high aspect capacity trying work in XD as NAND do particular, to technology more in little the and leverage Okay. etch. a a site follow-up, ratio your bit And relates it better

up you walk or spend counts? can as etch percentage the what scale So XD, of layer particularly is through overall we etch in

Doug Bettinger

Tim. Yes,

etch numbers as more spend We hard percentage describe haven’t and much that past, in as happening on We given they we I in less and deposition. spend customers invest that’s But money what this year. conversions, consistently as think they but the that. very a on see

Tim Archer

of high where if to node. very general at it just think the fact that’s the applications it’s that those continuously node that’s, longer And our complete by faster. Lam’s aspect obviously, position etches. based I percentage takes on But is those make strong, question it is increasing each task was to ratio technology increasing node. in the And But

Doug Bettinger

J. C. Thanks,

C. J. Muse

thanks. Okay,

Operator

we’ll Next Arcuri UBS. Timothy from hear with

Timothy Arcuri

Tim, Thank had question you. trajectory about just Doug of the the and year. I a

XX year, I But if looks it are. this us past in WFE So guys couple product guiding share for the tell are you somewhere share, of WFE what is the like services it the take looks to WFE low-XXs years. your don’t you like your product like

I this could implies if year wrong flat, revenue Is it? I think from of will that kind rest ramping, assume to is Thanks. that the of that about level. that throughout the that wonder given the just flat like So way it which UV’s that they

Doug Bettinger

who getting Tim, short. Tim, describe in I I’m talking Yes, to to. we think confused what try I’m

know, you will bit I tend towards in memory. as don’t stronger in half. we from recovery very It would sets half stronger strong memory of year the second And I be occurring be first we out. than and I But that be half the We very, significant a think, little in see going the point a may on the think is memory, be to Foundry the second as year first Logic. expect half the first weighted half. is up, the to

It’s Tim, with add a or likely That’s spending anything? with along just down who’s a memory statement not our share that. year-on-year, of would loss. So money. win statement around you trends application, any

Tim Archer

Yes.

does in we is at I look for the doing that measures company, the applications of too off. on we’re year. internally success us far thinking important the And most your it’s we think this And think comes how don’t I we when want in important back of timing pick as own the And long is spending less as NAND up. to that, then make when we’re spending the sure to doing us. that precise

our really it’s focus. So

Timothy Arcuri

And revenue. I had question then a Got $XXX on was It deferred Doug, million about it. again. down

So it more for $X.X sounds the like like shipments quarter. fourth maybe were billion

So draw you my question revenue? worth than sounds – obviously, where deferred like give how revenue? March, does $XXX you does is But million can much more down shipments deferred out? in number it a if lower does $X.X Because that of that billion. it where will Thanks. that Where bottom be

Doug Bettinger

bounce Tim, think in described I’ve It’s around $XXX I Yes, to going the past. quarter-on-quarter. million it,

think quarters, down it seeing you’re some will be as I now.

how be plus the different. certain will I it it view of percentage any with level shipping, strong around about as is is, certain would it minus right bounce point, tools thinking on know now. zero I But where going $XXX up. it customers regions But meaningfully I quarters, it bit Tim. think, don’t will the it. how we’re don’t million, the at the changes new business Some is be world it’s or will from at of I very little that to also it depend

Timothy Arcuri

it. got Okay,

to equal mean right? shipments Doug, revenue that is March, about so for are I So

Doug Bettinger

quarter-by-quarter. million not I’m What Tim. guiding I said $XXX anymore, will was minus or Yes. be shipments it plus

will be down. Some quarters

just will all be It’s quarters timing, honestly. up. quite Some

Timothy Arcuri

it, Got Thanks. okay.

Doug Bettinger

Tim. thanks, Yes,

Operator

Credit Pitzer hear now with Suisse. John from We’ll

John Pitzer

should ask me gross ask helped question. gross there another low of was guys. be margin Tim’s that to going Doug, the let Thanks Yes. in quarter that margin you intrigued kind for for Good March way question. be that March in you curious, afternoon, because the commented revenue? drivers Are that I point the bottom expect maybe year. the I’m is mix forward? to just

Doug Bettinger

isn’t always cost say, margin. structure. as cost variable things think, customers. is a highly volume fixed a I variety three a we big mentioned But This component. business. things. of impact our This different that I isn’t usually Overall business John, there’s have a I like gross

have variable of highly cost. mix Tool We’re margin. important. our the is tools gross all Not in same our

And sequentially. sometimes, beneficial be that will mix

when And Sometimes, more customer that of bit a customer it margin you bigger or concentration, will negative. you might the it’s headwinds. concentrated little spending then customers, have be get more

a things relative those being all are about the low to point. and comment had trend gross relevant think about of the those of to I margin, All important are to in March

John Pitzer

Tim? to follow-up underperforms your overall That’s you WFE be SAM fact and look SAM whether maybe that being to gains of outperforms, we and/or Xy the some question, when or Logic give kind full to XX as that go you incremental a view I’m the share think XX of this Xx year, curious environment, the or helpful. gains to WFE incremental some line a – on the front And appreciate Xz. XX Do CJ’s teens. at from this on just to down relative SAM on kind your in performs in us willingness mid-to-high then year just volatile your at

Tim Archer

that’s I this concentration a that I we think because – would just of as said, account of our those all taking SAM you things know. XD primarily And heavy you underperforms the be year. think SAM actually our in feel to if few into we that NAND

plays that material should NAND think I XD no so described, the be expectation the And in year. the spending we out if or NAND increase year which through as have is

John Pitzer

thanks, guys. Helpful,

Doug Bettinger

Joh. Yes. Thanks,

Operator

has our question. Cowen with Sankar next Krish

Krish Sankar

for Yes. had Hi, of two them. taking thanks my I question.

then to is side? Doug follow-up, it ASML because and is the And front I a fair of too. it what versus what on mainly in had the assume year one, on concentrated said is the Tim, the WFE said, half First you foundry back reconcile just EUV from

Tim Archer

new in necessarily DRAM in jump and that’s understand will kind into at better – Doug let come them us projects. I the few well. comments think about inconsistent when as the the the think I we the you you with in and comments of have look I second there a think into with not is to of best as exiting recovery a way year and things, year, the new about the with here half talking for fabs setup that his tools ASML’s half. in And first But

experiences as Our quarter lead sometimes tools so. tools or and deposition usually by litho that much metrology as etch a and

statements this memory no different So material best view, state maybe guess, But thinking back. everybody not I inconsistent, come and to those we’re this that’s that wanting why customers throughout I a about view in conversations spending is environment in point have to with increase made slightly kind that it. our mean, of we’re from view at in XXXX. will our spending

Doug Bettinger

to Krish. really don’t add, Yes. anything I have

said, usually we’ll leads we parsed didn’t Tim tell I But as it you really us. litho now. heard when think what we’re inconsistent have We we what right our I ASML, wrong. feel could from seeing And stuff. to

Krish Sankar

Got got Doug. Tim that’s Actually, very it, helpful, and it.

follow-up going Thank thing recover in waiting to in And to NAND a I’m of equipment? first question, how they before at you curious comfortable kind Or you. about talk Or customers, here to onwards cap CapEx? to be tandem? do from start they when bottom Are lead getting that, subset look for pricing/margins is a they your memory As one or which as going it DRAM? does buying is semi their the to other?

Doug Bettinger

earlier NAND in I look XXXX we DRAM might we DRAM what we spend that to going than if guess, exactly or guess, question. is mean better looking look earlier, to mean, Well. did. I It’s when of actually, a NAND them. back, question think if I they’re at I tough I asked recover starting a correction I they’re two, the which metrics at. mean saw

we are end tracking the to And rates. the all below well – the so the get we about of bit we’re guess, as year, what of But the see them I growth both demand. long-term day, demand think we end of at it’s

So a not I it’s that as could Neither year. recover. that’s we view, up either in one we in – for one think mean cases, the recover. could both great one market either exit but the sets investment

Doug Bettinger

we see Krish. necessarily described my just long-term to way. relative it Tim to suggests at bit will at a I would I in happening in Well, tell the sure. to they’re relative in just It what see quite for know not And some demand. We year I XXXX That and trend what point. yet, least recover to don’t meaningful we that personal spending you, invest that view, to need the going

Krish Sankar

Tim. Doug. Thanks, Thanks, it. Got

Doug Bettinger

Thanks, Krish.

Operator

question JPMorgan. next Sur comes with Our Harlan from

Harlan Sur

Good true But the you your first the spending half? XXXX. outlook of half relative first afternoon. up and this weak view second to half guys of to how half taking XXXX environment, my us and for Thanks the year just second you on detail seeing year? last year Relative last question are for prior can of the for thanks versus

Doug Bettinger

half now give looks for of described Yes. two of Harlan, remarks I’m And quarters. be it in going guiding essentially than tried because what previously I to not weaker my XXXX first then quantification did. you is to it I’d

one normal time. well-understood to given describe and smartphones a than back as guys, get in to it guiding our our of of weakness we the practice inventory going the cloud adjustments weaker We’re somewhat quarter was last of But customers time. when at it’s well some it as

Harlan Sur

view on last of years. the to of the insights a couple growth the high-teens same And shipment there. strong team the mid at given year, WFE down appreciate being time, Great, had this the kind

was at tools – Many were on year-over-year off growth. you were this of contracts first to and warranty it driving coming are year, looking I half these year. last service driving shipment You XX% like guys of

tailwind should team. So for this the be a

about outlook? WFE business how installed trajectory your the relative So base should to we think

Tim Archer

the good Lam’s over One, to strengths base clearly, of I’ll installed of several guess, that I our some grow. on base to Well, my caused two installed business has But in our years business overall the remarks. try about we feel last dimensions. opening cover very

is sell things. business services. which to products create can new we’ve that investing for in two, we been tools and And there more So

areas business. data tools the strong for and products our make another are our installed data to be in for productive will vis-à-vis the for customers. of economy, using CSBG more this getting year Some traction, and And those services base

So focus long-term. the think very of company and I revenue that’s mine, important provides a a stream it for

Harlan Sur

Yes, the thanks for insights.

Tim Archer

Yes. Thanks, Harlan.

Operator

with Moore Joe question next Morgan comes from Stanley. Our

Joe Moore

around versus the On topic that will of you. long sort sustainability of like if that of better that? understanding business, the have go business. considered It a you the way seems business parts installed that of other guys thank base I Great, towards wonder disclosure providing

Doug Bettinger

recently we we objective than We’ve our Yes, more haven’t a well, been Joe. very have. I accomplished about really lot guess, it more talking

visible we more it But the reporting, sure. have understand about standpoint, and We’re cash of competitive have tripping to is talk segment It’s providing you we want past. kind out And make not I And not I we’re don’t it, to consistent meaningful a Tim how roles how we Relative try going we with meaningful will the in a mean, generate quite we’re tools it part of to there. a up We generate unless we’re from it. installed basis we profit. bit you easy trying on don’t understand to a talked everything the base for as it. about talked so a that. do to part too, an need to. quite of necessarily about to because

do better a keep we’ll Joe. So to job, trying

Joe Moore

of look and what’s Great, do that’s the to what buyback sheet in guess, to the the any? you do terms I And How think about amount assessment like? should be cash of have right helpful. free of the then on Can have And the need you sheet? of buyback balance pace XX% leveraged? cash, your balance of you the long-term and

Doug Bettinger

Joe. it’s Yes, We so like a haven’t able amount and communicated numbers. forth. of be fund good CapEx need certain a cash. R&D and to to specific amount question, certain We of a I

we What share the pace we on timeframe I how We have I’m think opportunistic. time. thinking you going And that, run a could have necessarily. know you with know to that. going to do more I we’re on the than to buyback, to of over need think, I’m and to sheet going to about we’re we’re the more it we’ll balance will let company. communicate today if be doing. what certainly not chose do I to quarter-by-quarter and cash carrying hard number that But I evolve debt we We’re decide fast relative and the don’t a

Joe Moore

you. Very helpful. Thank

Doug Bettinger

Joe. Yes, thanks,

Operator

Ho Patrick with Stifel has our next question.

Patrick Ho

first Thank I your installed Day, in question incremental terms Analyst talked you you think about very opportunity. base $X of the in much. billion business, Maybe last

revenue talked three to a business? growth the about? this you a do years, Or type higher rate? next how the incremental see XX% Is see five do that you growth to Over of billion you get dollars to

Tim Archer

billion-dollar recall our we on that trajectory. I At Investor Well, you I I of was – track approximately that business XX% we’re mentioned, – we guess installed Day, said yes, total feel mean, the base number. revenue. the so as we on for the are

rate. information, with that definitely It’s business healthy that of guess, kind growing. a you I so, is growth And

year installed Our is grow the to ending at last provide have year. year to this at of the from the end growing rate of chambers XX,XXX than now XX,XXX base business installed And objective the – an installed we approximately itself information base with the base. faster growth ending again, chambers

those, with do also back it We maybe for and you to triangulate can So numbers. maybe you get can the you.

Doug Bettinger

Patrick, Yes. described Tim is think I which it, XX% I business. think a been about it’s and company’s it of about about how way normalized the the it on rate,

size. each growth Tim described If same about Day, you recall Investor three vectors, the back at the

that. that XX% third installed relative sure. So business, of triangulate normalized to the the grow will think than base, you so faster growth way if you for it’s the base the at about at of and It installed a growth can

XX%, in to XXXX, as shapes way perhaps, It year the like Now going WFE be if up it’s down with will much. the obviously. it more than

Tim Archer

productivity, just since applications, services. customer this And base products business can utilized. have that installed down quite we new new for business itself are ways, the base of owned investing business get in many field the faster seen help years. that the in installed out to Things important more from And lost all it lagging a I throughput point I one for technology for node number applications, is we’re extend We about been new assets. mentioned, stronger sometimes of base we’ve growing. find think than creation driving tools of think in for higher as terms a lot it talking I how and those relocate of the toolsets and business. in comes higher heavily the gets around installed the tools and the

for services products have new getting We lot interest in and fleet. just that of

pretty a it’s attractive So business.

Patrick Ho

Great. That’s very also helpful.

Tim Archer

Go ahead.

you do Patrick. If can if it, one you more, got

Patrick Ho

to the the as do see Xy of and intensity on with count. trends Xx DRAM NAND the transition Xz? deposition increase go eventually the we from for How side quick things, of on Real you side layer that the know on XD you things memory etch to capital and

Doug Bettinger

as very That’s that and deposition self-aligned to through SAM etch continues step is SAM, and patterning Patrick. grow Our about we that. all

Tim Archer

opportunities technology in I bit I effort atomic And a Yes. also about for little create new actually, our these mean spoke deposition. films. nodes layer

to from wouldn’t for are As created being Xx new to deposition there Xz, have you for step nodes. existed layer atomic Xy in instance that applications prior

our it both growth applications in existing And ability our so ones we’re to looking at new also. as as win from well

Patrick Ho

you. Thank

Tim Archer

Patrick. thanks, Yes,

Operator

We’ll hear Citi. now from Atif with Malik

Atif Malik

for Hi, taking thanks my question.

that second first first in DRAM last you’re clarification versus this year NAND half of year? fair it half to guys year second quick half half seeing both versus call, down last and this earnings DRAM last you the say Is down. year expected up First, and NAND on in the

Doug Bettinger

Yes.

we up foundry quarterly logic We’re is how color on the we color bit [indiscernible] not little which setting on in that Memory, going half. to probably level gave provide see guide first than the WFE weighted. like, half except segment is little stronger a second a

Atif Malik

you what Got then it. $XX this $XX billion WFE year? recall was it you in in can respect talk billion China? domestic have about about domestic I If just year. seeing China spending last talked you be spending the to in with What correctly, And to billion could $X

Tim Archer

a XXXX that we did billion saw range. was $X Actually, at say to about going Yes. in come we

up. the bit if have money should position And year we is done, said than that SAM be pretty share all We and this in at NAND’s be come I see be shaping bit when to close. the lower think will actually where a up we actually a stronger. spent China that domestic business little it may and look XXXX hold but

Atif Malik

Thanks.

Doug Bettinger

Atif. Thanks

Operator

Tom Companies Diffely Davidson our A. with D. next has question.

Tom Diffely

elasticity the afternoon. of been price good a demand quarters are market, the just you of that quick market NAND after talking of or about evidence you seeing Yes, know end of question, declines for four the in a Maybe couple we’ve years? three

Tim Archer

and remarks I have it was about show small some data comment the that believe an was there laptops devices the SSD some elasticity we’ve with client. SSDs a client ranges adoption opening seen in the uptick primarily rate year end seen a the to we percentage had fact driven Yes, that material And last price we lower or very at into by demand had of uptick. of the the in of in my

do to but point, see come And that just one down data it’s increased demand. we starting think have so we’re as prices

Tom Diffely

five And long-term you versus of the big opportunity market NAND the given view to you you do when kind next two that strong? still as – our the the real or do both view, years, at market Okay. look you DRAM knowing that for

Tim Archer

Both without doubt. for us

about that if position transition through, intensity And SAM a the world all end-demand, to of space. we’ve gone NAND the in be when etch markets. we increase you XD you the had NAND, and Our very think deposition from may think we outpacing in see just other XD meaningful also

in so NAND continuously I want hold And that on about talk critical why that the our area. in we applications space to focus when that’s

want do but forward in NAND well and opportunity the going course, to term. Now, is in our of all biggest long we markets,

Doug Bettinger

opportunity for Day. extensively Just, We data XXXX, add-on as both independent alluded well about Investor at talked that going forward. me Again, I’m DRAM Tim from of are on to the where the NAND economy. Tom, things at optimistic in as the extraordinarily

that All single happen Memory enabling data a it memory is stuff It doesn’t to of But all every low is can mean intact. that in store changed. will it latency has that is is you for you year, in not computer of and anything useful society. unless of critically still need architectures. and It completely exploding it do none won’t.

Tom Diffely

Thank very much. Great. you

Doug Bettinger

Thanks Tom.

Operator

from Our Bolton next with Quinn Needham comes Company. question and

Quinn Bolton

Hi for taking guys, question. thanks my

to want prepared on Just back come your comments.

and full Can we that at some think ratio NAND in memory markets need XXXX the both see the gains? wins ALD do you and see of you NAND recovering aspect deposition high gains really offset XD benefit the see and to or of that gains underperformance share mentioned in before help share You you those share SAM DRAM. those

Doug Bettinger

usually year. answer other that application up simple the types the applications critical on But to cannot speaking of to, the we They ramping. offset Typically, one nodes is wins, two wins magnitude Well of before decline one ends no. node aspect we I see was and this focus that timing. is of ever that

you foreseeable the the applications And in in kind cases future. the so sometime once are And well why next or for either. of of like the those year you it majority is locked that’s would businesses following win those be those know production of the entering – that pretty start your

Quinn Bolton

logic Just a fairly well foundry and on other memory between quick end balanced or follow-up the China one the in lead domestic XXXX? just is segment that

Doug Bettinger

Quinn, balanced. two. spending one broad just well mean, that probably set of fairly logic, a It’s I is base are customers not but memory stronger or somewhat it’s there’s than foundry

Quinn Bolton

Great, thank you.

Doug Bettinger

Quinn. Thanks

Operator

with has next question. Ho Deutsche our Sidney Bank

Sidney Ho

question. first my it in that Is taking I will said expectation revenue halfway start industry? for XXXX. be an you for or a the is for your will thanks weighted revenue off Well with clarification

Doug Bettinger

say relative WFE. Lams on it a didn’t No, around was statement anything a WFE. revenue. to Sidney statement was It I

Sidney Ho

then months NAND weaker DRAM from incrementally like more you coming CapEx Okay, you now change the looks and the the also or from there’s cutting do everyday NAND great. say you is it three Would my ago And stability earlier? is start to then question, primarily side down. side slowing think there CapEx

Doug Bettinger

past, so what haven’t, XXXX. XXXX in hadn’t now we’ve I analytic even we because of done I’m this work on first before the can’t about thought full say Sidney not on we’re making the full year anything year on we is any the have trajectory done sure so we given statements the or that all Well, full time you color far

Sidney Ho

All one. right, housekeeping a maybe just

about the level for June higher is just to an of something it kind what Your December December than operating or much lower we extra expense quarter go March obviously than the you should guided that? think back week, is is understanding quarter,

Doug Bettinger

guidance it equal, week give when the Sidney, to we’ll quarter. going you out, earnings the you if to current slightly maybe we not but down the in Yes, hard I’m the get flattish else everything to beyond quarter one guide just take

Sidney Ho

you thank right, All much. Okay. very

Doug Bettinger

Sydney. Thanks Yes.

Operator

We’ll RBC with Markets. hear Steves now from Capital Mitch

Mitch Steves

of for taking my just question. on one back half in dynamics. I commentary memory thanks kind in your had guys, Hey the

XX guess special is technology? it or investment the planar it of or you in majority wouldn’t about the a increase lower there cycle? why there’s and NAND investment makes is the to a in XX-Layer because or the NAND when I memory spend what of because move because XD is that reason transition So increase the transition something Is spend significant be WFE

Doug Bettinger

Mitch special It’s NAND to node we is well in thinking heavy spending see nothing about a way as DRAM that’s what conversions as about there’s be No, XX XD and primarily it. both happening, so of focus the cost very would effective Tim, just because equipment anything? our on need way add deposition to node that’s for or upgrade invest to you customers etch essentially conversions flow. which – a add and into the they process

Tim Archer

and as heavily a No, ratio showed chart that I of last a at greenfield XX. that’s it’s driven to ads. think the fair to significantly I described On go fundamentally a you higher obviously node it’s our basis, opportunity on greenfield by XX-Layer greenfield basis, increase year conversions in

of So ads dynamic Doug to. conversion speaking the greenfield the that’s versus

Mitch Steves

you. Thank Perfect.

Doug Bettinger

to going do we’re one Operator, Mitch. more. thanks Yes,

Operator

So now final question come Mizuho our Vijay Rakesh will with from Bank.

Vijay Rakesh

Hi quarter. guys, good

XX? NAND, you versus at look you how – XX-Layer just you do capital XXXX, see your what XX on when intensity wondering, at Just XD do

Doug Bettinger

adding you’ve goes tools don’t a part a our process good up. think the it longer do that for takes you’ve bigger quantified little up, and you’re wafer, it. really you our goes you and greenfield-to-greenfield business process The stack intensity flow bit do If so you’re making I the and etch more capital the we’ve flow, got more and is longer. a all to when is equipment, conversion, becomes do deposition etch challenging

Vijay Rakesh

as you the memory softness Thanks. are XD year DRAM in little spending either seen the on talk side? more Okay. NAND push – out you XY XX bit And you any transition or three seeing through about just a have in layer

Doug Bettinger

and and year in that’s beginning NAND From the the, would XZ we a totally what saying in I XXXX focused always and on timing investments be would expected be DRAM primarily of layer the with no, we’re now. XX on XY a standpoint, devices investment conversions again, mean it’s right had

Vijay Rakesh

Got it thanks.

Doug Bettinger

Yes, thank you.

Tina Correia

this joining call you quarter. us. this so concludes Thank for our Okay, for conference

Operator

This you today’s for call. will conclude your conference Thank participation.

You disconnect. may now

Lam Research (LRCX) 23 Jan 192019 Q2 Earnings call transcript