LRCX - Earnings call transcript Q2 2020 | Lam Research Corporation

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Operator

Good day, and welcome to the Lam Research Corporation December Quarter 2019 Financial Results Conference Call.

At this time, I would like to turn the conference over to Ms. Tina Correia, Corporate VP of Investor Relations. Ma’am, please begin.

Tina Correia

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

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

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

I that, Tim. call hand will to With over the

Tim Archer

December Lam we closing with increasing midpoint spending an in Lam. revenues to year, of delivered and quarter, throughout Consistent enter strong mix the believe year and per XXXX this outperformance lead improved In solid everyone. calendar marking by guidance, our of the comments and will XXXX. performance welcome environment another share which a earnings and with above momentum Tina, we quarter Thanks, out execution diluted of

Lam our organization culture I to and on on been past achieved. perform emphasis completed as financial global best. our of an of I employees proud first Lam's companywide our what have valued focus for of their customers execution Underpinning can a and course this partners year for support. people their CEO and where and our has all have my thank efforts am across Research their want employees our I strong incredibly year now results

I take coronavirus the situation. to also a moment want to address

Our is the of our customers and business concern mind well have with health implemented first partners and our operations. precautionary this within foremost with and measures being we employees, and in global

people Additionally, coronavirus we are efforts and to the donating to the impacted Chinese outbreak. by relief support communities

time flows company research technology business dollars In XXXX, the at our same invested to and operating turning results. we record calendar a differentiation. and product cash to Now generated in innovation fuel we solid development and

the history, spending second memory in was declined the noteworthy given XXXX. EPS best Our significantly especially that company's in year-over-year performance, XX-year

from the of by the quality support highlighting our our group, of revenue impact spending and saw business of mitigated our partially the record product importance of lower was execution in also In opportunity outstanding XXXX, recurring to overall company. we earnings spares organizations. The memory customer service

for foundry net the spend potential performance next additional of recorded defense We and revenue grew ever in application measured laid as as our foundation the over we memory three in gains share we and and WFE wins best our years. by revenue logic, penetration

materials. solutions We new architectures, for those inflection technologies scaling are focusing high-volume memory on by manufacturing associated including new winning new with emerging challenges, technology and

of our that the tools We of enables capitalizing deposition applications. on some etch most critical the installed learning base today are from industry's and

in customers Flex needs. partner Strata, with applications early high-volume process ALTUS over For example, generation unique X manufacturing XD on wafers tools and in way to allowing the our three a for million our NAND, in most per and each well critical month next us

to enhanced designed for stress Similarly, as such of this above. of we to the which stacks and to production the layers NAND XXXX, new products Corvus our depositing importantly share portfolio is during but our our These the problems product XX layers by of the products wafer led VECTOR success. exemplify protection. the they our improve address family XD capabilities of spend, bevel encountered served commitment to high-volume wafer of addition In device WFE yield expand to DT customer just encapsulating and at as our edge

on enhancing the provide at position to number upgrades largest a due improved their that competitive is suppliers we two support XXXX, base. or performance ranking installed our this improvement and scorecards. for customers to of investment in In our based In productivity number detailed, all quality, of part, one our

become conductor cost in systems reduce of helping For instance, have solutions edge wafer for our etch have manufacturing in and been customers ownership. our high-volume key differentiators Corvus and dielectric instrumental

and opportunity announced of to maintaining human to new Corvus-enabled advanced manufacturing Multiple our their In product heterogeneous XXXX, tool year self ran for high-volume growth. in XXXX portfolio integration we a this capability. areas XD base tools as include to We in intervention. etch that now one are packaging learning highlighted drive in installed customers leverage high-value-added without upgrading

momentum with multiple on In customers. packaging advanced additional our we system for electroplating our quarter, the December in space this XD wins at growing built SABRE

market. two latest these wins, firmly established via increasingly the the market years as technology and in of gained With more in share estimate XX the we than have ourselves we we that through-silicon points important leader last have

atomic area deposition has been for ALD. layer the of in Another company growth or

such served traction more CVD market. higher WFE process critical the the hyperactivity properties Our applications our into defects. on our with ALD and to replacing Striker low market delivering as ALD Due film quality along spending SA and of systems in spin pulling for solutions advantages and are comparability, best-in-class oxide inherent film older dielectric by gaining alternatives significant are

our wafer spacer versus has used scaling better replace systems are driving significant for in with integrated the ALD Striker barrier ALTUS an resistance cost-effective high on approach requirements able to conventional applications, a carbide ALD a and liner in with note fill logic/foundry metallization sequence increased to for XX% to competing The system demand closed ALTUS been single wins our we RC lower way. our device for Similarly, metallization Striker RC When look tools. customers achieve low-k carbide systems. batch properties out XXXX as

Across XXXX XX,XXX all we exited approximately installed our base. with chambers products, in

base which contribution grew our year-over-year installed record reached in record levels. significant also business, and Reliant reached from with levels Our XXXX revenues

contracts stream Lam. Productivity customer while have significantly upgrades multiyear and solutions customers grew than Lam more reduce contracts. year-over-year worked their the help of several customers These we as to running signed assets. XX% for generating revenue recurring to performance Furthermore, we new enhance a multiyear costs enable support existing

estimate range, slightly mid to billion higher billion ended to turning driven WFE WFE. our estimate. prior XXXX than billion Now higher We the increase by $XX was in spending. The foundry/logic $XX $XX predominantly

view outlook, in and significantly year mid-to-high Lam XXXX, calendar year-on-year to material improved For in from logic assuming led expect in the NAND. for memory spending up coronavirus Overall, XXXX. calls sustained on and first spend be our billion WFE foundry/logic for impact segments and in by $XX in spending range memory foundry supported no full our spending strong by we

drive with with strong X. we to as spending. is Day up, look wrap memory at very the more suggests, the To in are on our with in forward you Lam product innovation in Investor March position way, more sharing pipeline Lam's on upcoming And and performance great financial a we calendar improvement in to XXXX higher our delivered guidance quarter strong XXXX. March

now here's And Doug. Thanks.

Doug Bettinger

stronger little expected, base afternoon, thank with bit due of than for very the is business. the season. in better NAND us investment uptick XXXX Great. strong what Thank an calendar year installed We know you, you as we December busy quarterly and to I Tim. joining Good primarily in a performance. today everyone, Results earnings concluded a ended as well up our middle

guidance Our delivered mentioned, results in the history. installed share business at from end in earnings stable all perspective, metrics and us. earnings XX-year came another second was year diluted year essentially with be of record as quarter for a Tim per range. base The And continued it business share the high profitable best for financial of to and per our our the over guidance December midpoint

solid we’re challenging and noted, also profitability Tim memory with year XXXX a within environment. calendar levels in As performance we our delivered pleased

we As the history highest system the segment the XXXX foundry for was quarter. last We and its and had quarter. segments concentration were earnings in December the quarter, strong foundry our call revenue discussed revenue highest the level dollars there at the investments our September in at logic continued in since

focus by in other and revenue other the system and in flat continued quarter at with years its highest specialty the intensity other dollar grew two represent sensors it X in Foundry revenues. the revenue. coming XX-nanometer, logic The X terms December essentially level prior was image XX% It system quarter level and markets. driven of on dollar nanometer in and spending and terms nodes was of our and segment logic XX%

We For was to memory in XX%. to revenues from memory, quarter the segment September the XX%. nonvolatile combined XX% segment of the had a system XX% December the decreased which going decrease from quarter in at

Going perspective, in from increased. actually a the dollar segment revenue

to segment transitions. XXX DRAM and initial system layer XX spending to devices on to of decreased focused XX% The primarily NAND investment node XX, and revenue. XX% on be from be focused DRAM continues continues

Revenues above for was the quarter were which the midpoint. $X,XXX million

continued logic investments in and XX% Chinese we with total customers. from mentioned, in the came China coming the In saw December. majority China again edge at addition leading in I geographic strength the of revenue to revenue foundry domestic region

gross margin midpoint. basis came margin levels in related to to is product XX as customer points Gross the The in relative mix increased quarter. at well strength quarter above prior and December the factory utilization the as XX.X%,

and always and to of such I’ll you variability that quarter-to-quarter. margins remind mix some are a you should product factors several concentration as I actual customer gross expect function as see volumes, business do

in expense came for at quarter the December million. $XXX Operating

Spending was on quarter level quarter cost plan. market compensation due in quarter the to December tied appreciation of the spending the higher of the of our and profitability. it’s impact the to resulting the deferred the compensation variable as increased during increased the in also Our

income past, hedge mitigate we the I’ve to to this mentioned the in do statement. As the exposure

expense. However, because share rules, a income the this to impact shows end of basically per expense the other in earnings offset and It's the day. of neutral accounting to up at the

increases our to programs seasonal related you continue look commitment also hear at March. research critical spending leadership and Investor’s and Day in normal the calendar our I’ll as quarter. see ahead to we you’ll the productivity remind in technology March you’ll that and our XXXX development to more year, about to invest the We upcoming

Operating income quarter would tax I margin rate quarter the of essentially million highlight was to the Non-GAAP and in was at was the XX.X%, like guidance. midpoint in December the difference that operating which XX.X%. tax the and benefit compensation reversal the XX.X% between tax rate of the stock-based to rate from the tax was was December case. quarter GAAP Altera the non-GAAP related $XXX

lots this the space. companies of you're from seeing in technology think I

rate million the a You the will for be of XXXX, occur into the to rate And low-teens was quarter up should tax income expect we that as fluctuations the the in total it prior approximately slightly expense expect $XX in level. in calendar quarter-to-quarter. at expense. Other year and look from I

The of expense from are main components income outstanding the investment our cash balances and OI&E related to by interest debt. offset interest

income items, quarter-to-quarter expense that are and what talking will foreign like You other expect fluctuate exchange several things on should about. market-related based I’m

Moving capital to return. now

$XXX of December in quarter, billion $X the For was share and cash dividends million repurchase. deployed in

We frequently our done return. share XXXX track the share in with were structured quarter. done capital the to we’ve commitment that through remain cover the program repurchases repurchase As repurchases through a past, June on

free activities year represented $X billion In XXXX. authorization. $X flow current our approximately calendar cash completed XXXX, return of our billion total, we buyback XXX% of capital For in

share earnings was per Diluted $X.XX.

December shares our eighth diluted share continue million at with shares. diluted decline consecutive approximately This Our count the we quarter to has XXX the quarter ended and is shares where declined. diluted

impact for schedule reference. on approximately dilutive And the from Web shares million the site The IR share for remind a the converts of count our is notes. I'll dilution XXXX XXXX X that convertible includes you available your

to move balance the now sheet. me Let

dividend to Our the short-term in share cash quarter-to-quarter flows from restricted and $X.X by quarter billion including was $X.X billion investments December from offset repurchase operations activity, million. September the and quarter. $XXX due cash the of cash decreased decrease in to The

demonstrates cash see capital through believe sustainability a operations industry cash December. you the levels when flow flow XXXX spend before, the history in grow, truly generally period. mentioned increase highest lower level from business I’ve levels second $X.X with our this company's business I which billion. calendar concluded at impacted working free as our of And of over the year We in

December days the turns XX slightly increased Inventory DSO receivables collections days improved the prior timing the as Both X.X in and to by. due to during of increased versus levels September from grew turns dollars quarter. business to inventory X.X quarter. in XX in

million million to $XX for expenditures quarter. $XX $XX million increased September quarter approximately included in million for equity December and $XX expenses compensation, Non-cash depreciation the from for $XX capital million amortization.

December flat approximately XX,XXX with as of quarter employees. at quarter headcount regular the the Ending was prior full-time

the revenue growing, as are headcount we’ll add We expected increasing levels to business. support

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

gross point; We’re based of one minus expecting share plus or $XXX $X,XXX and million; finally, revenue XX.X% XXX XX% margins of approximately percentage plus point; margin of operating minus minus or shares. of one share percentage minus plus $X.XX million or $X.XX or of per earnings on million count the plus

impact the China. March guidance and from our in continued XXXX. March including The to NAND see quarter environment, foundry logic of the We of and the additionally see strength into spending business going we view potential situation health assessment in continue quarter our increase spending public into current the going reflects

that potentially Absent We our this disruptions essentially been see lunar the through Year have are suppliers February X. business numbers situation, extending somewhat higher. and New holiday customers both would with

EPS We consideration the these issue developing We revenue into but take believe temporary also is uncertainty the to increased impact by activities. the is day. the of and ranges day this from

to prudent taking with what we’re a think the approach doing numbers. I we’re

conclude, XXXX. positioned into we’re heading to So well

strong as like Tim Operator, my open a outperform concludes to trajectory remarks. I now based to our strategies. the would that well product And as on on call We’re portfolio up questions. for prepared and operational

Operator

[Operator come Pitzer question Credit And John Instructions]. Suisse. from Yes, first sir. our will with

John Pitzer

year market. the December. of of about were you much on how And should versus how question forecast as if between can the is WFE the majority logic? then Good business letting you and China kind afternoon, how tell domestic your question. what sort of domestic the was. guys. help look China China first least the the it in Thanks at majority was wondering calendar we memory a that? logic/foundry important sort of XX% me out enough the focusing think split and is the 'XX, Doug, for been to it us to us My And ask was of understand of just growth memory side in market the you I’m

Doug Bettinger

Yes, is mentioning And $X the it tell local multinationals. been in that China. domestic been it’s DRAM, is couple billion the And I’m and December like quarters based; into spending broad quarter precise look case into from foundry then in into reason probably guess logic. the add think not different And last that was finished to XXXX. I’ll couple last have it’s little giving John, $X on. the the up best quarter the local majority billion Tim NAND, except every the the is over my XXXX answer and you something to a quantification I from in let from actually how that’s going than majority your billion, habit it’s of it’s I’ll of the last bit get we relative quarters. And of years has I’ve above as been question several where probably to XXXX, the Then China. the looking it’s from XXXX John customers think I $X it’s China WFE to China, that growing global and we’re a with come

other. add So [ph] you it’s Tim, based not or settled It’s for anything. spending. customer want the to broad one

Tim Archer

it. covers much pretty that think I No,

John Pitzer

you how think where growth a EUV my prepared that? EUV kind of talked a a bit comments about follow of XXXX And business should future for your WFE your little as to share, a and did kind the then deployment, or about your that And nice projections Is share of you indicator that of on your more WFE. leading good job on EUV becomes about of we year? sort your just year gaining is Tim, difficult as is important this how we or addition with in think

Tim Archer

think times. talked we’ve about I Yes, that EUV of a number –

a themselves maybe general, comments. few guess a transitions is I maybe Lam. for In good I just are said and very repeat that what we’ve of said couple I’ll so And add things technology

served times the actually grows EUV. Lam’s of within even of highlighted each at technology market that node with have a introduction foundry/logic We number

of able want to as So customers their in the like has you we want Specific Lam to what forward. we case say PECVD starting moving EUV strong more X from the patterning what be position. really see is you’re even is is, to use our and metals high-quality very spin a technologies to moving nanometer, towards deposition the hard keep of masks increased X market dielectrics from on move where away to

applications done because our now that increasing so actually before processes we’re in into many space. actually they’re a and And in critical pulling coming more is cases, older SAM with were

And and SAM think and for a talked seeing further the foundry ourselves. nodes. because I see we see technology EUV now about Doug evidence, that’s highest therefore so with right even dollars at increase market we that, from those investments growing EUV with we’re logic just and

as as our said those nodes Now more is indicator, John, technology is signs we complex leading and grows, shipments EUV these SAM that obviously the what – far of opportunity so again are grows.

Doug Bettinger

know seen only the you pricing a of think would NAND share I in the share clearly industry into in is as period about XXXX XXXX, WFE we’ve profitability stronger investment going is add, And very John, think and wallet SAM of to for thing be good. stabilize. kind our going our NAND and view I you as

had that in is the addition be Tim will the think I to a actually wallet fact NAND actually have stronger. spending EUV to of going share our commentary from So tailwind

Tim Archer

That’s right.

John Pitzer

Congratulations Thanks, again. guys.

Tim Archer

Thanks, John.

Operator

right. you. Thank All

comes question Muse with next from C.J. Our Evercore.

C.J. Muse

guess Is think memory much us billion as increase of XXXX, first XX/XX I kind for logic? that are $X be and And foundry billion question afternoon. into in of you Thank could you as that is taking a within year-on-year the roughly uplift or Good $XX part how that that question. is then can tell about of the on upside? further the to including that, that material something Yes. versus split? of you you an DRAM WFE source

Tim Archer

NAND what don’t What great back maybe think as I I can as it the we questions. signs said had seeing last market NAND starting DRAM in the but we’re characterized strong Okay, C.J., early exiting very just said give we the to come to going and year. were – in improved. spending would was to think you that that we see we after look we’ve improvement we felt you foundry/logic exact of were that were breakout, and we

And think so you’re Except strong I think later XXXX on a our WFE. in in as that SAM for the is foundry that significant which would again uptick as last year seeing just investment in least outlook what at until for DRAM, additions. Relative starting our very of spending sustained is outlook change little NAND a the with our Doug year sustained doesn’t to at play I in year percent this characterized for is certainly strong commented in primarily we tailwind and general say a as much of logic, that out. capacity much the to I and that terms spending emphasis technology in And year. us

and foundry NAND. uptick primarily So and strong I’d a say strong in sustained logic

C.J. Muse

helpful. And on side, providing a you base Great. service the numbers, follow-up very installed as thank the question for

the Thank rate total Can reached to growth in I up service that in X% it help think service about calendar of for mid-XXs fair what you. think look you calendar say like? XXXX revenues? could And 'XX, roughly up kind us in So 'XX. of is XX%

Doug Bettinger

much. C.J., that in So last it XX you above wasn’t give one. was I’ll XXXX, It I’ll quite comfortably take the high, that but

Tim Archer

customers growing are base, it I’ve business a think kind dynamic that the you that which of very their they installed bit a of little said productivity they’re we’re I to customer How on where a upgrades fabs talked more year of We’ve where do one have saw already that squeeze year. about very lot because the XXXX – grows and highlighted depending will year spend a grows is each in year. bit and utilization of overall every things last looking I customers spending strong the support confident. in and little for on in assets things. out different that the us of on we when

find some product with as that you ramping feel transition installed to the general, I But the year in comparison we more dynamics our then given and portfolio, think value-added and much in yourself the services with very its base. market busy year-on-year confident now grow a to ability this aggressively, our very of part. about you’ll customers and

C.J. Muse

Thank you.

Tim Archer

Thanks, C.J.

Operator

you. Thank

Harlan question comes JPMorgan. Our Sur with from next

Harlan Sur

the Good afternoon and execution. business solid great job on

ask that the year the I in-sync second check middle this just to that goodness weighted? the layering value is times, the reason of pull going combined with shipment typically tool half With complexity months. to install around the on the maybe I a on kind is longer into kind do is memory to And want tool a the hopefully is time of lead six some that call demand think from same the memory manufacturing that and of which time seeing, more and for expansion? Is production, specifications, you’re around to is process put capacity average of I why greenfield incremental the this for be ship time with higher you that sanity of conversion full time for

Tim Archer

really out. we’ve think don’t it I broken

not called? time and to the they’re take different product for was I fact, say I a to it lead know material don’t your difference that the conversion I even the terms cycle of have really lead does in be in caught If speak same I was if question, guess time. dramatically a the that upgrade approximately could In I place question, would to times.

Doug Bettinger

believe guessing while. of and Harlan, 'XX this the NAND, the 'XX, into XX% decline supply will in remind we were we – you growth a occurred the When look spending second rate saying half the growth might at in your year-on-year. we the saw half half Based of question maybe way 'XX, we industry’s decline And first that occurring be. believe the we right. in for supply on will Yes. exited what year of investments I’m We I second the

in you’re a see investment effect will producing And uptick starting output. so an that it be won’t and to to have it lag immediately

you’re I think right? what asking, that’s inherently

Harlan Sur

right anticipated supply And you guys actually exiting so exactly bit around That’s had on below I appreciate NAND the and as demand Exactly. growth a that, response. XXXX the follow XX% to rate.

I seeing in of teens DRAM kind of before your mid low think were some bit customers to rates. the again demand of supply kind

the improving year, fundamentals the So growth in do from supply of in kind memory requirements and this this given see extrapolating year, of this kind bit levels NAND from guys DRAM your equipment year? how customer exiting year depressed last you

Doug Bettinger

below so long-term exactly well growth said. the right with what demand see DRAM. exited even year We it ourselves we growing we both bit the given, under in and this long-term terms NAND of trend. And actually guidance year actually in just in Yes, you demand we’ve got the supply

Harlan Sur

Great. Thank you.

Tim Archer

Harlan. Thanks,

Operator

Thank you.

Malik Atif with will from question come Citi. next Our

Atif Malik

look we your a for on your taking WFE line and good Xx line my you so. by growth at results relative questions should outperformed I WFE top How this for year? guide. job growth think Thanks about to top Hi. and If or historically,

Doug Bettinger

already NAND Atif, again investment. is in you what I said give it’s an is think the I’d I’ve uptick color

Our really SAM strong. and NAND is

really Our share NAND is strong. in

we when is other memory do driving will well is to more, And an seen we the spending when to in extent NAND times way, it’s going that that do do less well. you’ve in WFE, really and Lam the over And uptick well. real years so

not You outperform quantify for not sure. we if history don’t should going same year. good I’ll a very is expect you I’m it disappointed the completely I’m whether this But indicator, thing. to be

Atif Malik

year what we follow talk were sensor, opportunity number And just and bigger than you your for Doug. this about Can that XX WFE advanced big packaging, for up, in your like things helpful, this is thinking billion. year? a number how in that even Very WFE number as is which the

Tim Archer

foundry 'XX logic we’ve 'XX. and in so I foundry indicated question. other Yes, It’s for TSV big. know logic grow of grand terms sensor of the of it’s number, image But expect grower your to what image it is can’t scheme not But something that secular to and aspect is, in that is I really don’t logic put in space. well exact we all the and answer Doug a sensors. sure. how really, we And the the do in, big exact actually

Doug Bettinger

is decoupled is, a would and the some us Yes, the heterogeneous products one and on MRAM all many XXXX of a that I you’ve and are more advanced of WFE reasons those integration focusing we little that lot and applications specialty sensors talk about heard in add technologies the was really image from are year-by-year somewhat of because packaging items growing the bit from larger cycle. introduced

primarily in WFE again we even down, records the we And is tools. served which so setting prefer our Reliant kind was were last year’s what by of to as specialty business technologies

Tim Archer

gain can areas where we technology continue technology plays that bringing market. those cost us focus portion because quite point can they’re we to you And as well. Doug places of and very by I so in our large think see really a the right And said, can

Atif Malik

you. Thank

Doug Bettinger

Thank you.

Operator

Thank you.

with of America Bank come Arya Vivek will question next from Securities. Our

Vivek Arya

execution. two for and have strong on question well. I consistent the my as congratulations taking and Thanks questions

such curious part into as half? goes of CapEx, on looks first how shape first second The versus And if us of it? it what because like you you into outlook goes could WFE it just some half orders, that, your I’m what color give curious calculation WFE assumption? think I’m memory a the this also year. is one, it just is it’s pricing for Is strong

Doug Bettinger

go tell I’ll a different in go think customers customer-by-customer, then we’re Customers at it Tim going sure We couple ways. here’s of our and first we I’m foremost. this through We Yes, kind do on what here’s and talk plans, will have to fab-by-fab. comments that. to us

correct. changes. come bottoms-up that’s but precisely the It approach how we It Customers’ that’s it. exactly mean So plans aspect of change, can one it’s to it. doesn’t at

wafers demand? The that does year? okay, pretty don’t aspect don’t it for to what relative process like we what perfect, we to together. second What approaches it’s we going does but IC is a our which exactly is but And do actually electronics job. robust to and two try tops-down we We GDP technology? always And and read mean a But decent and always does is unit approach, that growth? then get revenue we correlate Tim, a What get look right, anything? global think mean do this semi for best. it that take the a on, I mean

Tim Archer

pretty it Doug from think I said, Yes, conversations customers. with extensive stems, as

this relationships in and about customers time. things they business deep deliver having that with technology they’re nice us very on the just need of One is developed as have we interested the

I when pretty it’s are when about tools so And needed going open occur. ramp is to sharing the think

So into quite the that a bit factors calculation.

Vivek Arya

first versus half? anything half And on second

Doug Bettinger

be Yes, weighted going half a that foundry really and bit of I a year it’s by first driven little logic. think to

spending think a probably the weighted. steady going I be pretty memory little is foundry’s bit first but half through think to year, I

Vivek Arya

base volatility grown question Thank for think All installed those have how and right. your kind And at five the in and the is years a base your My has grown to installed during annual about my remarkable services fast follow WFE. the XX% for services the two up, growth of which three years? how you. next annually should years, five pretty is XX%, last base given we

Doug Bettinger

day Yes, innovative I’ll things business more lot a deliver if around Having to Vivek, little give customers best it’s grow to this really give us have that, the like. ways because just business growth you our that offerings different what a that count. you objective, probably is said you see to chamber value we’re faster is little in advanced growing looks color in indicator at around And March, opportunity. The drives of what service of the how than we’ll color. chamber count, in doing the come drives the of end dollars just

Tim Archer

Yes. in And cost I solutions I’d business. – comments running think that the upgrades their is reduce part to of customer obviously productivity the and only a every I add, their driving made It’s thing about fabs.

recover higher as to for more I base. that with XX% as think first-time past of of and existing ability fast very data-enabled And really so and year-on-year has with growing outgrow upgrades actually growing just a year is between less the help the it offer business we right. services ability to the probability the well of as part did That tools labor tools installed new quickly the

And we’re in area. investing that so

Vivek Arya

Thanks very much.

Tim Archer

Thanks, Vivek.

Operator

you. Thank

with and Krish Our Cowen question will come from next Company. Sankar

Krish Sankar

and for the congrats Thanks guys the taking results. Hi. great on question Yes.

other? quick loaded two XXXX and ones the you either in When front like bias worry the then back has in I or one Doug. a half. margin probably Tim mostly we about Are than margin there the gross and half have or at follow profile look any Just you mentioned calendar towards up. is a should segment nuances memory gross WFE better going And there year like foundry/logic is

Doug Bettinger

overall thinking It mix then what No, gross product and that specific every with I’ve company, business be language. I’ve varies the to with customer been there’s margin should you by that about. it segment it’s nothing think mix, at said the is volumes varies single I same quarter

isn’t anything So segment. specific by there

Krish Sankar

the go-forward metric? seasonality – like XX% plus use OpEx. on rate of the with then a a the basis? et the follow And but about rate on a how we all merit think Doug. just I quarterly bogey Is run good Got XXX run right sales the March to is million has cetera, do up OpEx understand or increase, it,

Doug Bettinger

at we If less see grown you’re we term, give let a together. you well. updated line I’ve rate than see thinking last, what at in know, come the see you don’t front as the And March in year two of as to model over an over stronger has I And way top the think financial we’ve us same a again, us. going I that us companies brought look since the longer we’ve done spending grow

Krish Sankar

Thanks, Doug. it. Got

Doug Bettinger

welcome. You’re

Operator

Thank you. right. All

from we UBS. Arcuri a with Next question Timothy have

Timothy Arcuri

two. Thanks Doug, had lot. a I

it all, of it to be the revenue would been And percent has of of the revenue like past First China about three that still running as be XX% XX% about I vast guys. assume that domestic quarters. in that a within March? – it majority of would Is be correct? expect Should we the for

Doug Bettinger

it going I earlier. you I’ll I’m remind telling you get quarter-by-quarter Yes, what what kind is, not to into of said but

to you goes. ramp I good has then little for Tim, know think billion this lumpy. year. base X-ish takes billion then going how a you that the going of a around It a a give color it There’s exact digest for it grows above a – – it, it March will $X will on local tools, I’m project for think I $X year not to X kicks while in. and to something be guide, the else but year. this of China

Timothy Arcuri

think given kind to there’s this to are Thanks, export China what’s that to maybe where so going is saying timelines on Thanks. great. road they within picture add billion incremental question, with billion any access in stuff going someday going WFE. fabs? guess on control, domestic but is these calling Okay, this tools, X a the get of can’t that down X of concerned you And maybe XXXX then Do of they’re you’re to bigger about and China maybe Doug. customers I

Tim Archer

times. no Yes, plans what take solid they’re and appear to do that tool to can. are answered ship to they pull-ins. indication quickly We’ve this trying behind be I I’ll Tim. of see ramp We every trying one, a China they guess couple as we buys the as are that There

with really what’s I that, could details said going the think we plays that don’t even are watching that no point Having we comment talk it. at but regulatory into controls, really on on. about this So

Timothy Arcuri

Thanks Tim. Awesome, so much.

Doug Bettinger

Thanks, Tim.

Operator

you. Thank

Joe Our Moore Morgan Stanley. next come question will from with

Joseph Moore

number sovereign to business, this you China back I you. if of Thank give Great. – the color some customers. topic on of us could the wonder

memory that memory, and breadth think think of for I’m not but specifics, how an indication just I people much the stuff versus you’re other it about of just to but seeing? is tend looking

Tim Archer

Yes.

demand So about based. pretty Doug made comment a the being broad

think of of market address power see demand. market and that people to trying whether about IoT is what’s in again, image be it – being – automotive, seeing in drivers. technologies breadth end of just are China sort end you We sensors, driver the – great that of a devices, all of kind right about our There’s specialty lot

number and And talked so outsized broad it’s revenue that in about very especially $X across DRAM to billion of areas. and customers. not importance isolated watch to XXXX increase any one really billion thing. based what But Clearly basically the we and Doug the the uptick quite happens has in outlook $X NAND is a our in Lam’s pretty for closely memory

Joseph Moore

about have for supply growth of trajectory. Okay, great. that billion NAND WFE of guys right And five-year Is And kind then of a a kind talked kind you $XX keeping the on ballpark? now. lower kind still the historic a right about of WFE to we framework still ought we right that be thinking a if in what demand that bit quite would be seem context? to historical Is for than stay us

Tim Archer

long-term year we That billion establishes our I uptick the just to $XX our strong as we quite demand slightly see in NAND, Yes. rate. still way were enter this long-term that is demand. long-term said even five-year still under still we below was that were said a maybe point, investment. this year at actually That’s look what the as as demand we the ourselves through And a as we you of expect bit last year our we And at below investing commentary it. comment said for part

Joseph Moore

Perfect. very Thank you much.

Doug Bettinger

Joe. Thanks,

Operator

you. All right. Thank

Patrick question comes next with Ho Our Stifel. from

Patrick Ho

first guess that fix of of a can in to how business Maybe, growth business visibility more few cash of you and of stream gives contract the transactional a Doug, and growth, has sustainability base into color which little are of just you of much there transitioned the Thank bit an the base that business of congrats maybe the being you’ve terms and how business? seeing of revenue forward last the the seen and give you flow type I very kind going a installed break years better and and you also. over from

Doug Bettinger

give think than I comprehensive to more a it redirect going actually I’m answer would. Patrick, you I to Tim he’ll because

Tim Archer

I this try about seen that do can transactional but more Doug that’s it. and just add much I transition have we strategy one also something more us. driving It’s long to And my in less happened not term. business we’ve value and much to make certainly a which talked think way been been it’s Yes, there, in something we and script to add

control to their to profile longer transactional the makes contracts. better customer in less through you’re the way on predictable services running gives a from install upgrades us help change the transition I our of think going this little a that able is visibility transactional. But that that much costs multiyear You transitioned more forward, business Even term products there and biggest the focus cost and base. way customer their of transactional new to we’ve in really the allow through strategic business the to portfolio the

then technology, yourself engineer consumable about much technicians And R more you some have entire new the than type I and for Corvus SAM base. And so us. for this next replacement in to those parts that work. the they looking it to and where that way engineer the the the its do upgrade of go that can installed that installed And revenue having and rather of talked replaces in make older of upgrade, that offer recognize your as for system, all and meantime in tool within customers. automated base, When an strategic. itself going upgrade self-maintaining of that to ongoing the we the they create we’re would we of are value system now customers creates tools another source to new

happens I think becoming of much is And focused targeted strategically it’s product shipped. more a installed so already business. base market its that just and the It we’ve

Patrick Ho

applications you follow-up And On made helpful. share in driving foundry you’ve market about for the in Tim other is top segment to logic well additional there. opportunity for there that’s gains remarks about your growing ALD as question Great, segments, the market and opportunity prepared market the maybe expansion maybe an space, my foundry/logic it to and or of it and since talked the you the that as like do as this at growth particularly in DRAM? expand see

Tim Archer

creating that for The again markets. other deposit only you’re and platform technology, into a is us. platforms. thing films with very good expanding the portfolio we then And that is opportunities application being that a expand more deposition at ALD already of it high-productivity difference creates creating and one is Lam that’s Yes, we’re can we essentially

it developed other time. are of there to needs layer that and carbides, think are I oxides device As also type a that level point And about every atomic reaches films talked processing. I some ultimately do same where being

is term certain this so older think and why ALD process just the And that’s as see alternatives going replace, technology where said, for steps. you to I I some the long is starting

Patrick Ho

Great. Thank you.

Doug Bettinger

Thanks, Patrick.

Operator

Thank you.

comes question Wells next Our Joe with Fargo. Quatrochi from

Joe Quatrochi

results. on that’s amount the was today I on versus the of talk could kind think it the Congrats you bit across if industry’s the curious I do past industry clean empty. room wondering about use just how you of side. filling the space you cycles? little NAND about flash see a that was then on And

Doug Bettinger

Joe, you broke up end. are Sorry, still you the at there?

of plenty base. across in space out There’s sure all the industry of for Okay. there customer the

we I And always or – that tracking quarter in know of I new so a two what say we about fabs the double-digit number ago in were fact don’t I is fact XXXX. think talked

long-term equipment real there. And when a they room buy customers – is the of and tomorrow, That’s the money fabs. the I The thing output. think is the XXXX, to But a same but then in space plenty doesn’t indicate understand cheap it memory they it’s to those equip capital being intention. the where number’s a there’s the mean gets It probably it does to deployed. shell out we’re need really going right. with clean call about of our future, lot on option building you

Tim Archer

about thing I tell thought on. I that room space importance the focus to was of perhaps ask going the the going were to guess that’s one you that add. be we clean I’d I Yes, only to of you able things and

Even space consumed space, lots use fab industry. it of is there’s You is from number important might the output within says to why I the the with, it’s always customer. Doug certainly the of in a some understood of the products, the that popular commentary fab how NAND they that when square of benefit best market we from is of that which and the like That’s past in metric. tool that Strata important our meter have actually an per wafers agree past

we key call density platform, so tools really we as the new And of we through think footprint one what focus or metrics that design again launching on. and is density throughput

Joe Quatrochi

that And year about then demand, that on start a services XXXX? think acceleration just we to business you. rebound is the in your with us in revenue That’s back side, just memory to helpful. this base growth fair think of the see in it given I year-over-year would for an should accelerating installed Thank to growth

Doug Bettinger

the and generally of about Joe, time the I is it think over after way chambers period monetize a ship they ship. they then

that bit a which saw how count, the you we’ve of one number it a indicator to chamber XXXX. chambers after growth lag why you little fact I That’s given And is of time year. the in of about drive year to so chamber in historically the the count a a at end grow going that’s XXXX, good generally what’s a There’s think it.

Joe Quatrochi

you. Thank

Doug Bettinger

you. Thank

Operator

Thank you.

Mehdi Our next from with SIG. question Hosseini comes

Mehdi Hosseini

ones have Yes. good Thanks the All my been question. asked. already taking for

about Just follow a beyond How quarter? OpEx the roughly just should March think quick I for Doug. up

Doug Bettinger

That’s management still that’s the grow we over I’ll of to how company here to kind see been spending last while. years is to let the the that that think of But than much you financial we the leverage I how what around a what already. And answer model team I kind answered it. line. a want it I same is March. for in We faster it. I didn’t we I so revenue some was about several give in answered said that grow like said Yes, new bottom deliver very

Mehdi Hosseini

know But fine quarter but model estimate, a March going I until just be and should the at our seasonal wait minimum a shows of I kind one-time at OpEx X, level? remaining we got to tune we think the as not uptick this to March It’s your of same your typical event.

Doug Bettinger

an now, not unreasonable it way probably about Yes, that’s for thinking Mehdi. be to

Mehdi Hosseini

Good. Very Thank reasonable answer. you.

Doug Bettinger

Thank you, Mehdi.

Operator

you. Thank right. All

Steves Mitch Capital from RBC comes question Markets. next with Our

Mitch Steves

question. Hi, taking for guys. my Thanks

but things. I two been I think want clarify small to maybe answered, majority the has just

expect to so want wasn’t sounds XXXX? DRAM, right to and that’s So from be year-over-year just other number going it you’re in up to anything numbers there between message the I 'XX? I there? read then like comments the more believe for relative guys don’t to one going gain is is markets but that in the to you on share that’s make And NAND secondly, sure this,

Doug Bettinger

in Tim that you, first of push of just I demand see sorry, I it then be way at to the Foundry take I’ll WFE, you we in share. yes. kind continue wouldn’t comment color I’ll logic NAND, recovery on and strong. the DRAM the channel. look a in I we describe let – and off. out don’t is. clearly at And But real bit is NAND is DRAM. the see when still really one at that demand continue supply think growth in minus. growth can’t growth. in burned we below in there’s to where a the bit some plus And happening DRAM or inventory supply It’s point what And little when below growth, growth look got we XXXX sustain to get is gave

Tim Archer

in are longer I comments We’ve server little by we where very the terms bit you’re in and up content encouraged the step been also XG a the clearing understand of drivers DRAM; of And think growth term for DRAM market, the seeing inventory. per pretty we’ve about handset. what introduction substantial to relative heard

past, a more DRAM so this not when, And bit and little matter said but – of even the it’s I in if. Doug think for

a just we now the we you push have, outlook you. given – right think So as for maybe just I it’s about said, that have

Doug Bettinger

when share think things our to share of are we’ve that spend, us of for and is guess total And about taller in stacks are NAND strength those continues Your talked as NAND comment – stacks. key share total taller the and WFE we the our increase. enablers about about one is or of of increase, we NAND, I obviously tools building

year-on-year total to our spend continue given so increase. see spend portion a devices, of that share greater on NAND will of spent taller we And being

Mitch Steves

Perfect. thanks. Okay,

idea? like What to guys virus dollar QX really small taking was that one to of impact just a you Just if I a out just could. the the get an are

Doug Bettinger

we was we’re what think is going hearing describe amount It not consistent from with dollars. and that those customers specific I’m suppliers. an to

Mitch Steves

understood. you. Okay, Thank

Operator

you. Thank

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

Quinn Bolton

in. me squeezing for Thanks guys. One one longer-term question. Hi, question, near-term

the it or the travel guys base are able On coronavirus question, is guys in having fab of to delivering outbreak, and to the near-term the given business the in service near term? you business or in installed access can tools here still new China tools difficulty the say in restrictions some fabs either accessing you around usual as you have you’re deliver the somewhat and tools the

Tim Archer

Wuhan. I of very are specifically out travel think I placed on think people most and have aware travel of been the in restrictions

implemented the few obviously And kind are be that delays of a to where which only. Lunar that could think of for is just customers got moving think from change to chain this Lam impact and as picture abundance and therefore also supply Year of the customers any people real you we’ve can’t though business New And restrictions in hopefully weeks we’ve is about caution so next there standpoint But some I in way of that has said, normalize the travel and at outlined talking to travel really the been and over or to we it demand as there see general we’re located. seeing critical looked Doug few now don’t the into we’re shipments extended that weeks. situations area I our

Quinn Bolton

out to the than the Do comes higher that is that’s helpful were XXXX thinking. sounds probably of And forecast color. as is I higher think back? part many can not what you XXXX longer-term spending if it of DRAM your forecast. I then WFE think to question Okay, DRAM XXXX, is guess continue trend us WFE look I like XXXX

Doug Bettinger

'XX years, for it not about what we’re know talking don’t intact. I the know going answer We’ve I When right. to about drivers totally think is. are that. though, You Even growth this long-term been

You exploding got society. in data

You hyperscale, the in in that’s year, what good. you more and got X Big crowd equipment investing have this

XG You’ve good. line, come that’s on got the

got density in there every growing phone. You’ve

the the for it position and very where the good in about really So industry we’re feel really term sitting. our industry long positive enabling we is

Quinn Bolton

you. Thank

Tina Correia

more Okay, question operator, for one we time have please.

Operator

Okay.

last Sidney Our comes Deutsche Ho Bank. with from question

Sidney Ho

[ph] thinking question memory the for still My is Hi. you $XX year. parse this in below way out way in bit increase first billion that NAND CapEx on guys supply said forecasting. in you think, out trying be know Thanks in. run billion If that you waited growth. me I to billion squeezing you below things I’m are the the that stay $XX that a WFE I spending will rate? $X you guess XX% to are

Doug Bettinger

not going is in know first that. It to half exiting never to segment year demand long-term anyway give we we the still numbers Sidney, demand in you leave I’m is. grow think getting this Time to by balance. is going NAND now. below it But going WFE is to growth described, below year. probably at where closer I’m being you bit segment it’s where think it’s growth and And and in the as we

Sidney Ho

is Okay. – growth is there – if being CapEx How year to DRAM if a point about DRAM bit push? the there your exiting supply

Doug Bettinger

would also said as was long-term this undergo bit we DRAM think I year. demand

Sidney Ho

think your and was and we sales. memory foundry to and exposure memory was next total longer-term close should year. logic between versus last have gains the five as as it years, a cycle? I the about like averaging the XX% in I through foundry Maybe maybe think and How high of XX% share Okay. you this think last question, logic with year revenue

Doug Bettinger

going very We’ve got because strong and to good we’re WFE nice foundry. in continue put that where really well. I’ll we’re not had feel just both I’m memory about record strong. on very expect level to strong rather pinpoint trajectory be way. versus a as foundry than logic. going in memory logic I what our We foundry exactly to quarter, is it December it and really I share positioned, in of in what’s

Tim Archer

share a think way it, across WFE segments. think our improve I about to objective of all is our simplest Well, company the as revenue to

Sidney Ho

Okay, great. Thanks.

Doug Bettinger

Thanks, Sidney.

Operator

I’d our turn back All closing remarks. right. to over like any to for it you. Thank speakers

Tina Correia

We appreciate call to everyone want for joining our just We thank it. today.

Operator

and Ladies Please you. now and Thank gentlemen, day. of this your today’s the you disconnect. may enjoy teleconference concludes rest

Lam Research (LRCX) 29 Jan 202020 Q2 Earnings call transcript