LRCX - Earnings call transcript Q1 2020 | Lam Research Corporation

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Operator

Good day, and welcome to the September 2019 Quarter Financial Call for Lam Research. At this time, I'd like to turn the conference over to Ms. Tina Correia, Corporate Vice President of Investor Relations. Please go ahead ma'am.

Tina Correia

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

P.M. our our call, today's the and financial the outlook and the we our XXXX Pacific also share for XXXX results financial Relations Time During afternoon. call. was press after distributed overview Company's can on the release a for results detailing The December the will that the business be of on X:XX found with environment presentation Investor little section quarter release our September along review quarter. accompany this The website slides today's

otherwise reflected in Risk of and filings. see financial SEC Today's disclosures Q&A Please on until reconciliation earnings press unless A A on the available public forward-looking today's be call our our of scheduled is non-GAAP later presentation will basis information. detailed This slides results call for are additional P.M. website. in this and last Pacific includes will this to presentation uncertainties presented between non-GAAP can our replay in Time. subject discussion the accompanying found release. specified. that be financial Factors X:XX results be Today's and of afternoon GAAP statements to risks a

With call that, the let hand to Tim. over me

Tim Archer

the Lam solid delivered In quarter, results. September everyone. welcome and Tina, Thanks,

the the the of the earnings strong share results power our calendar Doug December December higher. especially fabrication Our continued of more position the our despite in I’m current pleased spending be wafer increases demonstrated execution year but with as industry in combined cover financial to cycle. XXXX outperform equipment quarter commitments, will the for Company. highest that guidance detail will history earnings to Lam At our midpoint conviction our shortly, with is diluted second in a inflects per guide, the

XXXX partners From these this for of opportunity employees we customers world to to perspective, and their industry low $XX our our the have on a year mid-to-high which like view thank spending. year, billion and throughout implied results. down of support Lam prior revised on level teens an our upward contributions to range to I our take $XX billion percentage would continued their the estimate versus WFE of for mid

by to beginning demand are dynamics in quarter. We conditions improvement improving move December the continue memory NAND. we and are first the to abate led market, see should as oversupply through NAND’s

below approximately long-term as expected exit the NAND a in supply is which We well view calendar of XXXX levels XX%, NAND XXXX. expect with our demand; bit on normalized decline to of inventories to rate half and to are growth for first result, a

the that to timing predict, supply in we This demand equipment NAND even continue increased good is indicators. a memory for as starting are hard of growth While are customers spending of is XXXX. the always industry and spending to encouraged setup a see healthy we a recovery to manage end-market sign favorable

until levels remain inventories them normalized On of elevated, the not and do to second the front, expect have we reach half DRAM XXXX.

the ahead see we server in positive demand markets. both catalyst smartphone However, and

Our platforms server generation from new leading expected to cycle year with adoption increased begin CPU upgrade next is manufacturers. of

XG major market smartphone models expected content vendors XXXX. overall planning launch in smartphones, to are drive growth the additional For for which to is

device are and chip changes these challenges in accelerating moreover, functional spending, block die in logic architectures logic and SRAM based to levels segment Diverse looks are end of such customer this and to Turning in increases to on in XXXX commentary, scaling remain strong as next foundry higher devices and manufacturing leading has logic, turn and market driving and so year. foundry heading into recent are been applications throughout technologies. spending in sizes

share to foundry us throughout Lam's December guidance, these The benefit are of They now and over and are we significantly our on growing position of from positioned are multiple gains and technology set the customer years executing product midpoint result sustained in at outgrow segment Lam's the seeing cycles. in to of revenues incrementally investment customers logic has foundry Based high collaboration secular strong with the the a of key foundry many level. and plans. Competitively, close XXXX CapEx and evidence are we execution transitions. customer announced trends. logic R&D logic are benefit industry

been performance, in XD performance net key and enable penetration application best continued becoming decisions year. focus market defense whole the including are revenue architectures, memory, and made at on penetration that scaling measured deliver and increasingly defense as track we to ever three-year a to by forward-looking, A this logic, has performance to foundry, our technologies Looking as on and device strong across important which contributor calendar all XXXX are segments. our for market in cost opportunity

these enablers aggressively in as early are scaling, productivity and innovation technology and seeing market expansion satisfy the invested SAM to XD both deposition transitions deliver and are for roadmaps. are are and XD inflections; processes we we to critical XD Etch in required We and our to customer occurring, share. investing

believe we As this Lam's extending in wins by penetration year, our and are evidenced this defense leadership space. we

the successfully dielectric XD to NAND all be at defended we're supplier etch this NAND, our XXX% whole application of positions memory and for manufacturers. continue XD In

dielectric are productivity uniformity for sensitive our win where production has differentiation. winning an application. etch first to we Lam is profile deliver hardware used the primary We etch our to of In Notably, slit tilt this solutions tunable also system important and productivity edge-yield been applications quarter, XD Corvus proven etch. on improve NAND point flex the edge

layer new is won for as stress which deposits vertical increase. we to the deposition, XD counts NAND application In for reduces size front, architecture solution a cost. an etch for conductor a XD bit the lowering films we NAND technical On important VECTOR and recorded that die win backside control a DT,

liners aspect ratios Striker as deposition ALD Another was get to high for quality gapfill higher. deposit significant win our and used tool

We packaging markets advanced and extend XD outside in expertise continue integration. XD to also and as including rapidly the such heterogeneous space, of our position NAND growing

three last years, sensor, base than logic leading image the grown for are XD by electroplating our the electroplating we for system SABRE for XX%, supplier has DRAM, Over CMOS and devices. more and installed TSV, the

Our long-term markets, SABRE grow, our equipment electroplating an successive to solutions of by XD customer each Lam experience. embed backed installed of high-volume support opportunity best-in-class production served business. technology base in for continues across resulting expanding revenue With our years win the

from actively assets. our These we over To targeted as and result, their a customers extending increasing total installed offerings advanced create customers upgrades cost; at demand. services capability and existing the reduce base entire to help see value growing of for are we productivity tool developing ownership, continue lifecycle and technical

business customer grew the row. third quarter in quarter in the our our a from a record basis on and September sequential Reliant business Revenues support for revenue quarterly achieved

growth We support be another year our expect will for business. overall XXXX customer

our and made our our Looking performance, expanding market building tremendous installed SAM, objectives our base have at year-to-date our business. share, we increasing progress against of

foundry been its where has XXXX Importantly, logic the a strengthened year and Lam position segment. has in

up DRAM, back as the and NAND calendar indications the year is to year our Also, moves Lam setting positive favor. be for spending for horizon improving on of outperformance are optimistic a of we mix catalyst in demand increasingly with XXXX early

Thanks again Doug. for joining today and now here's

Doug Bettinger

earnings today good is for joining with Lam's We're busy the everyone, in on what September quarter. you Tim, and and Okay, great. afternoon know I a you, us pleased season. performance Thank thank

range quarter. our again midpoint at guidance came share once the guidance results prudent income managing all of in Operating for exceeded Our diluted high-end metrics. the remain our in and as throughout the of financial earnings spending per we

begin from XX%, XX% in revenue. do June in had memory of segment Let total systems memory as the from We September in quarter. while revenue. DRAM a by talking me moving at XX% decrease I was about our from increased The revenue XX% segment, always September the of quarter XX% quarter combined the with the nonvolatile assistant to flat segmentation

Spending the layer in ramp and nodes focused of segment first multiple structures. NAND beginning XXX the see was to we're on

initial from Xz. and nodes, the DRAM apart seeing On side, we're at Xx the investments Xy

remainder quarter last logic expect from foundry earnings and was strong call, the As and segment the year. on this I to of spending noted strength continue to our we calendar

quarter. represented and segment at related was X level to systems coming down X on the system another Logic prior XX% from slightly in this nodes. XX% foundry the in nanometer segment revenue. of spending our is The revenue quarter in segment of Strength the

We to a strong demonstrate foundry us logic depressed levels profitability segments, enabling continue progress and solid in to spending. memory period of the during maintain

spending be again Revenues logic of December. quarter stronger came will even the probably which believe was $X,XXX at in guidance. million midpoint foundry in for above I the

the mix slightly the in September Our a quarter. revenue had June geographic quarter, compared to broader

be to Our Taiwan. Korea China, top and continue reasons

revenue. of quarter region last Chinese came historic majority than quarter, from what remains And talked to this higher concentration performance about I the across customers China similar average multiple segments. of our indigenous The

XX.X% XX mix and quarters, should variability as was customer several at basis quarter. in in midpoint, above volumes, factors as came expect which prior quarter margin points mix. due and margins function customer of such stated see gross mainly be we to you to we And a to business Gross product the expect concentration, to

to September Company on spending quarter and we the previous programs, which quarter. the of as in XX% million operating investing the $XXX $XXX remain research percentage laser expenses was operating down R&D in in from of levels focused quarter-over-quarter increased as declined spending manager We to continued We and in development million expenses. saw

the December increase The quarterly level, the based due compensation spending, increasing to level compensation to on A primarily total fluctuates the in an reflects of variable guidance quarter profitability. variable back June expense.

the we spending the I'm the things you will to increases taxes. as look payroll going XXXX also quarter, remind to to related that comes like from you calendar normal March ahead seasonal see year,

million and our the guidance margin September quarter range. of XX.X%, Operating was income top in was the $XXX at operating

and There fluctuations the was now our quarter to long was rate approximately which non-GAAP to be term be September than tax Our term low from quarter rate. slightly expect will rate rate our XX% in teens the we quarter long level. lower in

approximately quarter. income balances was debt to components our from the outstanding tranches we right the Other quarter. The income now our $XX $XX related The September hold, of expense a offset by and is our other expense and main expense all and per of and expense income interest in interest in investment million expense cash total total million about of debt.

based quarter-to-quarter, as; and such You fluctuate on income deferred investments capital several will expense should that venture foreign our exchange. items related expect compensation and market assets, other

return on continue $XXX September the share program capital repurchases during $XXX in to with million to allocated market and quarter. $XX million our We We return to open execute in related the quarter capital dividends. million

capital repurchase return. is will approximately This quarter. committed remain expected in count. share continue I that to to structured remaining you program would our like have the We our We repurchase to we continue December track Board an reduce in to share have remind that billion currently authorized with ongoing on $X mature our program.

ended earnings where that share the our which schedules your in of range per for convertible the high seventh includes for And $X.XX, diluted The reference. notes. approximately We share X which on quarter September earnings approximately from count at website came convertible quarter of available we you has million shares, I'll XXX remaining count XXXX XXXX impact consecutive with the provided Relations shares at for was is dilutive dilution diluted at a million declined. remind share Investor September. notes the Diluted our share the for shares per the is the end guidance

switch balance the sheet. now me to Let

Year-to-date $X.X quarter level have investments, Cash million, from were short-term with from strong June we're history. in offset and and the repurchase year including performance operations to $XXX in slightly track cash the September dividends. had cash highest which cash, the $X.X we of in quarter. billion XXXX, and share by on calendar to flows Our increased free flows year cash in end operations was billion restricted second the this from Company's

XX in December is of The DSO our occurring the the at the increase DSO fiscal payments September to customer the versus quarter. month, which increased falls timing to within prior XX quarter. related end days of calendar

was than were turns turns declined June inventory less million, the which is by turns, where sequentially which a fifth X.X balance quarter we little quarter. bit just saw balance inventory decline. Our the X.X that Inventory in $XX the consecutive

and depreciation expenditures expenses $XX a amortization. from which $XX million million quarter in in September included capital Non-cash decrease million quarter. $XX equity for June the was million, million for approximately for compensation, $XX came at $XX

flat was at approximately full-time quarter headcount the quarter-end September prior regular Our XX,XXX employees. with

our provide December non-GAAP looking So now to ahead like the I'd XXXX for guidance quarter.

X $X,XXX revenue plus million, We percentage are XX% $XXX X expecting plus point, point. million. of or operating or minus Gross or minus of plus XX% margins minus of percentage margin

minus or you million has share share delivered finally, with pleased XXXX a and the based per what of of I'm we've plus year results And count XXX earnings $X.XX industry challenging approximately on throughout environment. $X.XX calendar to been a share shares.

the noted and logic progress we've foundry the segments our demand environment Tim for As memory and is good improving supply positioning. made in

on base deliver heading positioned installed continues optimistic well a forward. We're to performance and Our business growth are XXXX. track about our to future be into in year going XXXX

March Day Finally, City. I'd like New to time to plans forthcoming. precise in host Xrd, the on announce York on Details an our venue Investor XXXX will be and

Operator, that the and remarks. Tim my I call like to concludes up for now prepared questions. would open

Operator

Instructions] take Atif from Citi. question Malik [Operator we'll first Thank our And you. with

Atif Malik

outlook? foundry/logic to revised in low if Question going to the WFE the WFE, mid has of from segment billion. increase the on understand $XX majority from of the billion terms $XX wanted Tim, the I you mentioned come

Tim Archer

continued mean, and see a few I modifications, said, as in strengthening we've foundry Maybe we've to clearly, logic.

a -- December now in indications NAND some increased strengthening as finally, The we of throughout And WFE of, early year. for is very seen guided spending the that strength it. of we've, continuing increase as portion the quarter. So kind China have

lead those things, our revision WFE. a of upward to combination So all in

Atif Malik

foundry/logic out reuse a your then prepared year the given and we And of business remarks, this and next CapEx some year. share should growing in of gains there’s above foundry/logic foundry/logic you How steps? like into the mentioned outperformance Okay. think EUV elements your follow-up about

Tim Archer

see occasions, continuing a -- intensity at and a have every etch we basically that's we number increase great Well, deposition of node. said we to question, of as on technology the

etch. there to for number the for EUV, steps even that; SAM be a SAM to of five whether on increases XX additional of complexity into of three increase the of introduction it'd face patterning Our so seven to EUV increased deposition to the future. regardless And grows, continues and in and reasons there's are usage.

talked new etching that Lam past the of EUV also, be for the And new EUV quality productivity hardmask, introduces EUV and opportunities to we to like and which about for requirements layer itself participate help processes pattern from gives have introduces perspective. deposition atomic opportunity a like steps can increase itself. in used

space think technology is the gaining is in expanding, forward some as think we're about SAM foundry and I our you should way new feel it at our competitively of the and share we both we're layers, So, these setup -- logic going well transitions.

Operator

next with our take question now We'll Muse you. Thank from C.J. Evercore.

C.J. Muse

guess roughly afternoon it wallet you first like taking for NAND for look WFE back Good to thank question. if question, I Yes. through the we is looks XXXX, XX%. of your share with

call XXX about curious So etch, we you high to how above the think ratio on aspect a to announced the your the and deposition as rising about just we as of layer count share into go in think and tonight, wallet layer should wins and XXXX? leadership moving your

Tim Archer

and count, that new the case of and the the building etching counts. of fact percentage mean a fact mentioned with with as created two I associated taller such stack, layer as but I one, in also reasons; increase obviously layer SAM there the continues and Our VECTOR that's customer simple steps spend with to for for that, get as; DT issues stress opportunities dealing new are the those higher

I our count So, is think increases. grows that as SAM view layer

C.J. Muse

but should I if model XXXX? in guess the what did Doug, of Or of we it And revenues, And installed sequentially to sure into September? base up, spoke the should I'm Tim. not about as entirety we you follow Thanks, trend? to grow a kind how they think

Doug Bettinger

to every the this have to what depressed the next can of too grow chamber bit prepared count a continue it I'm service we mentioned growing I remarks and us saying hope year we doesn't be comfortable to should actually Tim, in because offerings Reliant they it more enable to a third yet, OpEx that the think, the market spending in when year, quarter installed that customer's did business. it's spend. quantify of even the sequentially said a component hard envisioning year consecutive little is, continue not memory business time today year single more grows new and soon. I bring a for we that I was But achieve advanced in environment, C.J., going base his every past and record to grow grow, year, Yes. very and

you be So that's that how should thinking C.J. about

Operator

Thank you.

We will our with take Harlan now next JPMorgan. Sur question from

Harlan Sur

December given anticipate this This their is to last and a to your you China their the just effort with trade my Do to accelerate heavier more question semiconductor and memory the having the or guys China continue second capabilities, the China with Is customers your this row view move to next into quarter in confidence in time? manufacturing and year mix. a of focused foundry domestic by more into early the quarter bias tensions similar programs? U.S. forward

Doug Bettinger

Yes, and will to project. in and to Harlan, local that tried rate came be probably do But will year, grow flow, remarks strengthening last look want big fab And what -- but we projects I up any billion down think fact, Tim, these WFE and the will into depending it on China, out did add into I’ve normal ebb Chinese equipment from ships it run his go next again spend. next Tim it tried absolutely in as earnings we will local it will $X lumpy of it about anything? this year, at customers is to of describe when above go you times, that and WFE. can one point foreshadow now somewhat in it nominally some in in quarter

Tim Archer

in through we've the of clearly is most China a important that that commented, new I is our see year, the as us. obviously seen think of anticipate incremental and spend continuing is for China portion big in in an part and I the good, the that our -- from so story perspective that Lam strengthening as memory SAM, Yes, And strength the maybe toward memory spending China we that share domestic space for of market. targeted quite area

Doug Bettinger

they utilize they because from part forgot sense concerned reason inability in, pulled about of one can don't and we very the sooner being actually would pulling can't in? Harlan, tools things your Yes, our asked, really really think I if they be I Actually the well. you question that spares us, pulled and it make don't, do to then they anything you're get in think ship would service the

So that. pull-ons like do I don't believe that was anything there really

Harlan Sur

Great, thank team you. technology And design strong continues win node. non-critical and/or Thank the there. you for the insights legacy momentum its on

pointed part is As to as systems out the continue well. products of you Reliant it, do

some hear laser the costs. We revenue business is -- that throughput, you continue all of relative things total position they're guys your to size business sense on Are productivity on in this overall from at how give to systems of And the to focused growing? us base? your business non-critical/refurbished the that impact least wafer customers fast footprint uptime, now a roughly

Tim Archer

Investor -- plan do in do to will we areas have we -- just, to have more detail now provide those we we're wait that. you some Day Maybe you No, and do for that. till we promised time for

up productivity? mean, efforts customers products couple takes it's being comment of in talking wins. one time maybe to really points, it, about for show some think for our we it I about those been to reasons new have a why I focused of the start laser your on

help tools on starting implement. you relatively know intelligent troubleshooting for reduce, us time reduced Doug things see systems, are already database some and services, advanced of hard these downs to because in starting talked we're in that instance are it's place the to customers productivity that where those this about really for are to on in are that But tools easy the again unscheduled systems for and the pulling area

So of as we whole. prioritizing the productivity, are because industry interest best and in it's a customer the the

Operator

John We'll Pitzer Credit Thank you. with from Suisse. now hear

John Pitzer

ask want just in Tim, for Thanks, me guys. to market you. I question. strong go good the logic/foundry the the Yes, back Congratulations let afternoon to on results. opportunity

we and North XX% that a have XX to I'm trying a think in year-to-date calendar maybe as Taiwan at go of go on your just was product see to five about some visibility look steps? we about nodes? etch business to these you can bit sense of go these your kind XX tool opportunity share you of down how migrate for little as critical guess, and XX% up of go you position, I how think to somewhere we to see in might we seven combined year-over-year? talk we much maybe as market on America seven deposition three, get record to how you And between If about

Tim Archer

Taiwan without notes. I quite specific North Sure, on America, do that getting as can as those

and is many I to couple foundry then was So first a point of maybe logic of record. it the record. establish buys space, as there -- development I production know, bit, tool embellish I'll into years you just within it comments, of And a said rollout you made volume that tool takes and the the the then little ultimately see as yourself

when I bit look And we -- gave little penetration this defense. gave so a a and talk of about into new we

decisions opportunity definitely time of and revenue is following revenue selection statement, space. one some in takes three-year you'll it those foundry give opportunity from to how that those three place the over we will the that's logic see years, indication as to and win designed true long Forward-looking that take

you in that decision can course you then think revenue the opportunities now five, we about know, of next over I look is and of so XX a And seven we're several out roll talk like if the and years. and then you're X-nanometer at when kind say, that improving opportunity

it basically our space. but be will we things next quite winning So you of that says may plus actually in not for revenue are level specificity years that the be now the that wanted, three

John Pitzer

Any a remind capital understandable, color left in And the you pace That's should uncertainty. kind comments, we buybacks give mentioned prepared of you to this I just billion trying us bit, level want little allocation is down still which policy return to on forward? can recent buybacks how you then, about us hit? quarter, apologize $X the the the in just buyback, I most dipped of, call, guess around going helpful. you're might again at which try to your the execute have And you given cash about, think Doug, and but

Doug Bettinger

I mean, to Yes, one the repurchase out look because seen John, if point down deployed the we programs one have actually where you before and last would you thing I That in you place. will somewhat. over quarters quarter years, share these several in the of was cash two moved put that we accelerated

You quarter. have same the on phenomenon this going

So back, deployed in quarter, the significant ASR cash in even market that's that executing repurchases ASR will terms that complete was though the stock we quarter. that currently still there December that wasn't of out open all and buying this

as thinking going we're So we'll be do we go what incrementally about to forward.

flow least just I've talked look have XX% what now. to free timing we've And last to on in Analyst far, remain last of at as and had about we'll as six than you done I'm shareholders, whole complete you Day the if been cash at So kind and we're we our that. of and remind years, over right that said and opportunistic quite a be now the that went past, lot going authorization I a I the the to more current to the much that's five, way. committed obviously it's returned while history,

Operator

take Thank our with Timothy next from question UBS. you, we'll Arcuri

Timothy Arcuri

I'm a you bit I us foundry more question, with revenue little guess mix is NAND to on can Thanks side? side the in if my the Doug Thanks. more curious, first help on and a be the the uptick in going December. is lot.

Doug Bettinger

continue remarks, strong was and to Tim said, in expect I quarter. with foundry I pretty logic what December Yes, be will my

So that's going what's on. of key a piece

Timothy Arcuri

then down And China I piece. I awesome. little bit -- the Okay, to a into just just drill to wanted wanted

is revenues trailing your XX% on the now XX-month China about So of basis.

you XXXX and curious how said at think I of said billion much billion $X is be China. guess, just this China billion going about WFE, the of into that time, multinationals. that versus you $X this were I year. was China indigenous think about talking So of being thought I $X I $X is to And domestic you over that I'm going projects Because

you year? like us be can year will much much can domestic $X Thanks. set on that of how So, sort domestic how of this multi-versus next and even level maybe grow

Doug Bettinger

back Tim, last little because a at know Yes, some moved happened When I billion bit. a have things year, walk let around of WFE being ended little, $X.X China me what I local it for look don't you roughly. up

next We'll But tell give I year. much next China call. next as it it's So whatnot, year. that little for strongly believe up have to it you the for ready I'm yet. But to sure do I way the clarity local that what look about being on on we a more grow our ended and will you next bit grow our more is earnings to $X, we not in talking coming been and than it maybe year for view next pretty don't that in see today, I are somewhat $X. know look like. above we projects year it's continue at going see above will think analytics the fab WFE how

Timothy Arcuri

just clarify are to And, those right? Doug China numbers local numbers

Doug Bettinger

Yes. right, That's Tim.

Operator

Thank you. We'll take the next Toshiya from Hari Goldman Sachs. question with

Toshiya Hari

perspective? implicitly, of Thanks least results. Tim, Doug, think early recovery collectively that quarter a in and rev a in expect in growth NAND And of should we're most that you logic? mentioned the I rec we So question remarks. should taking the that about prepared should congrats growth on Yes. projects or from about most and hit hearing foundry the from of just for the some at signs the talked you commented coming be March you strong NAND December all of quarter the your

Tim Archer

you -- there ever are we Yes, talked is said. supply weak not of in about, year, just we a relatively the XX% those spending know, we but prudently some but that bit with throughout it's We now this know, we're little it since bit to early the a occurring healthy growth of memory a very that there, early early rate change the you from the the said XXXX. signs, of year. those December ordering And when managing big industry meaning kind I our in the likely it's in view and -- quarter, maintain see projects, would I it's supply do that of year what growth maybe as exit beginning projects starting is such customers that think talked signs, see still is transpire we're going growth, here to it's and remain we've about you

So exact it's to want to looks now, -- coming. timing, really we right that you give don't be it but

Toshiya Hari

Got I into foundry XXXX. then spending the job in logic buckets. a past and a of share great hit it. the assume just guys in couple and wanted done Obviously, years And over dynamic have as gaining you If to foundry to you and logic follow-up, that application both Based in Thanks. flat perspective, opportunity still revenues if guys EUV that backdrop? grow. logic largely win and or of XXXX, you on in grow can win environment and design continues is adoption from assume foundry a you sort what know we

Tim Archer

things; transition based WFE, yes, of face to of is in forward, you SAM even more would in same opportunity percent that at the it's successive increases as that Yes, advanced each even occur of on technology the and deposition move as a we answer EUV. increase nodes. couple one, the Etch should to WFE question expect node, continued scenario, as still great a grow on to and our a

we expect to believe in a well think scenario described, therefore that we're the grow. larger as I have we we opportunity and So winning would do share would and

Operator

from you. Cowen and with hear Thank now Company. We'll Sankar Krish

Krish Sankar

demand year, next growth you is XXX do more it's below you I it XXX had layer two low More you bit growth taking cost to my ask kind is XX%. because industry Tim bit one of spending layers focused exiting your question get is spoke thanks going go still might NAND in about like them; NAND, the for next expect Do growth either think Yes. Or throttle back nature? ramping slower? for demand question. strategic, or if a XX%, curious year first if Doug. through this Hi, start to how year of, customers be bit

Doug Bettinger

that mean, Tim then looked are a to year this what's one add-on. was and something to going that node because allocated better would adds, think conversions bit, opposed don't I and Krish take lowers think cost to in to I'll most happen. be can economics of that happened, that. you the we're spending But the as per what what year industry -- you Maybe see of I like capacity that's all new I that

year. look we based I'll set I would next the thing into this year, will as other half add-on. next When a want to year, I and rate of first supply The decline rate moving have Because continue Tim, Tim this early say, have believe you're the declining into and look on they year growth, of right? then growth so let reduced add? occurred you we investment anything into to

Tim Archer

the of every I Yes, benefit simply think to year, bit mean, to we think transitions occur reiterate technology because just I cost. point, Doug's

I guess, transition say in to is technology a of in this times etch one transitions. and see that we any point a few And that we've other deposition. which majority supply from is XXX view mentioned layers, to would of spend the not I still key XX technology the the declining for layers think about, would year, there majority guess spend And our is growth of so, in I say

So to technology there's outperformance if spend definitely continues on statement an be based there, transitions. just

Krish Sankar

curious etch Tim you XXX% prepared I That's you And it, guys helpful. spoke as how successfully a fair layer follow-up, your tools to side, are higher in it XXX or layer is than think, comments up that defended got XXX if XXX look layers? NAND past statement, then is dielectric more you the market I'm Got it. share. DTOR very enough of on a kind about

Tim Archer

in Well, made. are statement our always as those decisions is

speak always we accomplishing So about made.

XXX know decisions don't made been layer beyond I if node. have well So any the

through a So very it that of etch piece running I'd wafers point learning node. our we of us it's important what millions from tools. something -- compete that out come there obviously is for I guess every has we is now dielectric But,

a Those And again productivity, question of reliability, all are and defect millions of experience. things millions was we wafers have about, there stability, that earlier performance.

with node to every of come in you compete have that And so an the edge as incumbent. for kind

since bucket you most made. XXX that could decisions -- that I node already of but in think, specifically, their and So below those nanometer

Operator

from Stifel. hear Thank with Ho you. We'll Patrick

Patrick Ho

also of Tim, those Thank ReRAM. qualitative maybe, memory the market MRAM, quarter, generation like of you But -- congrats nice Can on view a Lam have on just very lot give is maybe a questions capitalize much. And generation next really how end. a a positioning on my to next first, opportunities? itself been technologies look answered as you at you

Tim Archer

the statement make markets. leadership maybe I running Yes, is guess we're memory, that in includes not I inside from emerging in these our that memory new and position the simpler Company

devices needs this that develop We've used very for we're is particular MRAM in are looking development of phase-change strong ion there to beam we edge tool, applications, one companies. them far engaged about, in devices. have so a with year, leading position application, particular new those we for that's that the And tools memory other and established the the ReRAM, spoken new meet of so are actively which actively

it us, our I for we that argue a in already of, we space market target sort it's one might think memory we, So own sort and fact, that focus. feel of is

Doug Bettinger

Dough. It's

really Just memory to Flash we emerging Memory at more architectures. Tim transcript these how detail can view of where Rick add-on, about look the if the time talking Summit, and you lots you spent go of Gottscho want

Patrick Ho

I it Thanks, this about Great. of you opportunity. position for -- looks And side memory maybe a onto from talked my total atomic you follow-up layer as see like where how the market bit expanding Doug. a guess side Can do a the the your things? strong picture you available big deposition have thing. little question, perspective, of you it in that? expand also foundry/logic do from on you And see

Tim Archer

expanded, ALD memory mean, not specific. has is already we'd I So

ALD use devices will that we become etching, logic the to atomic structures and films deposition technologies continue complex. and be foundry more etching layer become these and smaller on atomic and are these side. and layer layer also as smaller atomic So increasingly used

for an going coming again inflections for wafer you'll So forward. expanding instance uniformity in just type and from to think of I to start requirements processing ALD the tools opportunity, batch think market in see I and single fact years, processes of it's those wafer

we it's the area feel So development tools in and activities we're themselves. confident about growing an where our

Operator

Thank you. We'll B. hear now from with FBR. Craig Ellis Riley

Craig Ellis

the comments Tim, you that taking for follow-up be the just for versus very to a a be else the I spot of something Lam. of wanted in that moving sweet understand from expansion? much that's nice question. year upturn would how occur help Thanks calendar Can to help you like that been deeper that share gain maybe NAND us outperformance to and you've starting the 'XX foundry/logic to about made comes what that you talking of from appears Yes. get on or encouraging into SAM

Tim Archer

for give think the WFE Yes, mean, I we it's I kind just break more our to I But in about -- to next detail wait way said. out you'll think on have we until that you what quarter. on it, XXXX, of us you the speak to actually hit you outperformance XXXX outlook

memory next in to -- First and spending do the we market, mix our everyone back are moves that leveraged we favor and knows foremost that year. believe highly you

face benefit advanced stronger our Doug remain will well that's memory CSBG to strength strong. to continues SAM and as in and the logic our portfolio as improve even so foundry foundry share some a position of We've foundry in of continued logic expand that continuing space. logic mentioned strengthened And services extent. as also and grow in as and as and we And opportunity,

you, for but much of contributes, each XXXX. them each And of so of it is can in break part story the out how those important

Craig Ellis

trough-to-trough there's is Doug. there And significant XXX have do is then of The operating expense as the improvement Doug further of sales. with noted, operating margin And dramatic expense is much you leverage? improvement And Tim. you from in much question how Thanks, I'll SG&A? drive a mix been how about shift that there benefit R&D. as model within to points. operating basis And impressive room increased further R&D do toward for the follow-up to percentage

Doug Bettinger

years ago, was It's been Tim on out on keep rigorous in spend. working every behind rest totally rally going that. to something those driving about in dollar we We're be years, squeeze want We of honestly we've I to efficiency SG&A companies for mean, it.

culture the way We're all-time an an I to So Company. that more know words better, but we the to at haven't memory this think might XX%, obviously, improvement. was be to all-time be can can of get of that, going going we're it how back, dollars working keep to going in high. allocate XX% for but of high to don't to get try we that continuous every continue to those my Company all on quarter do we're keep we on R&D, the that I I part it. focused the last recent gone

Operator

now you. hear Bank We'll Arya from Thank America. of Vivek with

Vivek Arya

wondering what late, I But I And caused DRAM was quarter. the apologize I'm this in my a if strong trend? taking is joined was that question. for so that how And quite asked. little sustainable Thanks and

Tim Archer

entire and it, node for is spending. conversions, we've what flow. the seen That's it at conversion it's look on I primarily year will ebb When really focused

the similar we exiting look DRAM you what The important DRAM. understand to NAND were year about we be, growth demand thing when you got describing believe is where to when to think similar story at we a below in

investments at that year is go, inventory continue in burn out the growth is teens. we high exiting As this of to in demand And believe the look are in occurring growth approaching year long-term the maybe channel. we probably a teens to to ways supply XX%. low DRAM the Vivek There is

be what point I more In under are is going know longer. some that's what will dependent off at grow at inventory take do customers. will to think projects quarter-by-quarter, a going it's little on I spending burned be significantly. and what bit the to But just way

Vivek Arya

And plus year? follow-up, inflow capital looking a helpful. 'XX think lot from so I'm Thank fiscal we noticed of flow I model kind and there working minus at very this capital it, generation, you. cash then from right. of, as Got was cash what How the working that looking at from should a about your the

Doug Bettinger

cash Vivek capital. cash operational from -- quarters year I think really just terms had came that was around working year, this right. in of half much calendar calendar think consecutive first year. mean we're I the at again. I we fiscal never and million flow you're too two lot of strong, look super in you $XXX -- A If of

normally see it's meaning consume and so build capital, when working it cash take Now what receivables with and the you inventory to will growing, forth. it business will

couple will year. cash happens. and it the ebb quite what the was it practical cash in of business around think about reality business The a cycle. of flow sustainable flow a below it's operational that's the to flow mean, first the generate I free the the cash should off read When wherever or where that's But and we ebb what flow in of will went but right points levels is half of contracts, cash on on really way and managed be proactively, business basis. it

Operator

take question We'll next Lachky with our Fargo. you. Wells Joe Thank from

Joe Lachky

question. the taking for thanks Yes,

NAND if installed factory talk the about to could flash. extent and your was inventory wondering, seen talked base? that and improvements about, You you rates you've across can, utilization I you the

Tim Archer

are. always a pulled utilizations this know -- a mean running utilizations put back we saw customers. better it from it's And in them, their question to don't and year. both exactly NAND what was to put are But well-telegraphed on we us actually exactly our I I at. DRAM pretty think hard to finger bit that better It's little for our what

Joe Lachky

that. Okay, And follow-up maybe then to fair enough. a

guess, maybe You that to of talked do the about this growth, about potentially the exiting year -- part we the I year going NAND I guess, XX% first think XXXX? for hit than is the year. lower capacity supply expansion growth expected of of and the I kind for how needed question at and on mean, level demand next

Doug Bettinger

exceptions. how occurred what question through -- if such at But supply you rate exit you and of obviously, NAND, growth look saw so answer much but maybe have year we said be Tough What's XX%. it. this year WFE as maybe we to quite Joe, couple year decline. to know year, NAND long-term high a think about adding 'XXs, going if few it the we the year, to I seen this been and didn't in has conversions, I with honest. that's growth was don't the this helps think a and but you, largely you've declining supply I that need XX% and every be year XX% that's on NAND To happen single growth wafers is and so supply that growth,

Operator

take Capital Thank question next Steves you. Mitch from We'll our with RBC Markets.

Mitch Steves

been Hey and question. about better most of kind answered. do mean, guys guys, really my had a thanks two of taking talking But have them a I market for for I high from memory you level, XXXX. in

you or this upgrades? all when see upgrades to technology think is do going capacity be we'll So

of And you secondly, then color gave lot not guys on a NAND, but much so DRAM. in

think bottom So kind supply that -- and see we're to do to an the of QX, for increase that's year, balance that going demand start exiting guys in think mean to based of server going be the does commentary DRAM? or kind the on you demand about you that

Tim Archer

view NAND Well, are far a been of for next because that our right Simply point It's first is maybe more said more are and much as develop so through color our place that we've being of now. I I we half demand result was full the Obviously at us quickly think XXXX remains supply in of this upon the Inventory that as now. guess this half DRAM next outlook. elevated that it's what just for occurring catalysts constraints the more NAND year year. through more really have worked not, right maybe maybe a DRAM also just and that about think is issues the year. we'll give second we story

Mitch Steves

will Got a think it. you do And at begin that? is that XXXX or what back is half like upgrades upgrades time capacity than in capacity earlier

Doug Bettinger

for bit off still on hold one us detail. to little too soon get you we'll a quarter in far better give it. It's to too away for us any XXXX, visibility little a detail Mitch into talk about for

Operator

to the or to Correia additional does Thank for session. turn today's any you. like that I'd closing And Ms. question-and-answer conclude remarks. conference over back

Tina Correia

for us joining everyone thank wanted Just it. to appreciate you today,

Operator

Thank and conference. does you that for all conclude Thank you today's participants.

disconnect. now may You

Lam Research (LRCX) 23 Oct 192020 Q1 Earnings call transcript