LRCX - Earnings call transcript Q3 2020 | Lam Research Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Lam Research's March Quarter Earnings Conference Call. At this time, I would like to turn the conference over to Tina Correia, Corporate Vice President of Investor Relations. Please go ahead.

Tina Correia

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

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

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

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

Tim Archer

these times. and results I challenging pandemic, you are hope in financial delivered COVID-XX Tina, well and of solid March everyone. in you, welcome families Thank quarter. the very Lam evolving the Great. doing the Against backdrop your

allowing across in manufacturing quarter of and around us more I'm regions. disruptions commitment latter to say The We've manufacturing impact customer critical and effectively in these to to meet who operating, and deliverables. operations remains managing are Lam how and world, that with effect usual, began environment. supply focus start responded I very many went near-term facilities as partners while part from to current employees to labs chain virus the difficult want risen I discussing orders into essential March tremendous the we our by have the are on to challenges. predictability shelter-in-place the than our grateful globally-spreading to am extraordinary dedication, materialize pleased and the through our

at focus areas. in is this time Our concentrated three key

implemented are priority partners including we we to First, have in protective roles have directives From in guidance equipment which our and the employees through safety protocols. and our health the protect sought we our we of we And actively productive on-site our remote execute employees, employees at of top with plans response have mandatory cadence. remains social safety are of working their locations on-site Lam capabilities, health can our strict our infrastructure public locations, remotely IT our temperature families. the best start, monitoring, operate. work and expansion the To are All a maintained all distancing doing complying that and practices, use available formulate so. rigorous personal their that

throughout plans chain and continuity our Second, network. business we are manufacturing executing our supply

as beginning worked we availability. to improving of degrees, Korea investments both regions customers' different most suppliers with proven countries normal operations signs have capability COVID-XX conditions. and on footprint and times chain we we successfully partners Our valuable still to their closely and stabilization see have world in supply at of global but in to our are we capabilities Similarly, reported made limited Taiwan our support the have the different earlier to impacted compared production are of Past and parts critical challenges to has material our with of local different our those specific operation, US leveraging pandemic priorities. have complement as are

of at expertise anticipate and capability our the increasing cross-region of the on systems. ongoing field installation least information support technologies. and base are our focused data be future teams using with including newly-shipped to customers' discouraged collection travel the therefore capabilities We will near sharing needs, customers meet regional for are installed we Third, advanced significantly to and we working enhance remote closely

provide impacted to early by around to extremely how affected deployed to to direct also business. are Overall, our build communities a customers relief executed teams our of committed pandemic. to that able $XX the the I difficult funds impact have us and very our half than mitigate April, our am be that the on and to time have to million of been we only crisis. our of and three and say this assistance I'm this in weeks, our COVID-XX give that creation people strong we in immediate fund already our by employees others more pleased this In announced most relief global pandemic us to help happy fortunate helped with have I the employees, employees back recognize company.

I'll in to We as by manufacturing we in the shelter-in-place and broader delivered and expected withdrew now global transition determined industry guidance, we capacity Both and original per the which unchanged the saw in late several of In quarter was that of billion are emerge chain view. the operate. months distancing share term the quarter, and results March results our constraints continue locations to our primarily the orders. environment. earnings $X.XX. below were social we from near for our our supply as Customer $X.X original and of will which next due we restrictions demand be quarter the in revenue supply in production to suppliers revenue our believe our network

Q&A. seeing be our to and comments our guidance however uncertainties of in the we quarter. in risks of currently and crisis I both the will and will best While suppliers, assessment those provide own and for related Consequently, environment improvements providing we financial operations usual are remain. our COVID-XX Doug our June our the not

strong spending both is by continues emerge WFE will that critical driven We perspective, being initiatives, when be including and investing demand of from global eventually the strategic competitiveness and memory of capability in the for that technology largely our foundry in very transitions to XXXX. customer pandemic. first customers From markets believe to effects both half remain equipment the

The with backlog is We supply currently quarter unmet and expect equipment the industry record fulfill would this to March months. the constrained. exited over coming demand

we recent the weakness into and logic remain spending our underlying strong well to believers the embedded saw become as Looking cycles. impact, every of memory beyond portfolio expect such areas we have see resiliency strength near-term industry, to and Lam foundry broad we in spending the industry decline results. of industry. support help offsetting through revenues weakness. year semiconductor experience so up compared fundamentals equipment memory and Semiconductors increased where This calendar semiconductor to was companies nearly XXXX, so cycle held a offset in our prior XX% of Despite trough the in the

impact to the assess smartphones end least COVID-XX may business, we recent customer weakness the be strength cloud future potential an to offset As seen of in our at points like and markets commentary in enterprise consumer-oriented that auto. part on as and more

in service creating initiatives support the capacity work potential a server for surge equipment demand. cloud causing is home and to CapEx, providers The to increase from for need

the workloads XX-fold Third-party to estimates as into capacity to service shelter-in-place cloud seen need increase suggest peak that went effect. rules would

as Although will dependence in capabilities more expand for daily companies event short-term to infrastructure underscore the these invest need heightened economy workloads continues over technology this business are likely and phenomenon, to time. on continuity the and a our

memory and near-term notwithstanding. that growth supply And believe server well DRAM of we the market, under-invested there to customers industry in be The below memory when consider with additions healthy to XXXX fundamentals and confident half capacity nearly PC on long-term good demand exit reason is markets year demand, you for causing the the in uncertainty also average. account of NAND the bit in

Longer event term, we our the on Day Investor our is in at focus March. strategy outlined executing

value to we capture business, as our CSBG, this cover serves this March And but growing with Reliant in Company Xth grew revenues revenue poised see disclosing Our year CSBG Doug point, growth, foundation quarter business we At installed our in and activity we strong our the growth quarter. another base will faster unit calendar we increase Business see and record than consistent our Support Within to this stable additional for quarter, more as Group installed wanted highlight which offerings. performance. a service for or to base the installed our objective in that continue started consecutive in I with revenue level. strong business reached CSBG XXXX. have grew committed, Customer another added also tool detail, per base yet for

Investor our targeted far and innovative event, segments, seen perspective, a well From and new wins foundry year. both defenses on executing etch all this are both so platform penetrations NAND, share COVID-XX related strengthening our supply launched we launch. a schedule DRAM, Sense.i space. logic. since applications In Sense.i etch, and At we've has critical our gain manufacturing from across our in our by lead we customer semi-critical two strengthened our have and month widening original backed chain set at in or but plan, pull disruptions for and the competitiveness Day

need customers served system. the be can value required technology accelerating smart accelerate believe set. Sense.i deliver on-site both be adoption with we In technologies analysis to is on to technologies. by of awareness was will focused capabilities accessed data market deposition, collection layer intervention a to to from Sense-i of atomic the human enhanced designed ALD our they can to successful. look deliver these capabilities intelligence, opportunities our older Customers and available process and to self-maintenance capabilities advanced and solution positioned well highly-productive equipment expect have or deliver minimize expansion deposition we're that we heightened the data their advanced fab conversions

March on process quarter in nodes advanced fill with from in additional We these older solution. gap displaced Lam cases, a and metallization opportunities more continued we for XD new to competitors logic dielectric NAND. wins In the extendable both penetrations ALD our execute technologies with

current Lam's confident opportunities in the Overall, of position for we our are the market growth when strength subsides. the in crisis and

is time. during a very wrap up, to the executing So well difficult Company

COVID-XX, are secular near-term operational sustainable growth demand for visibility that WFE semiconductors Our cycles. global believe long-term low, impacts teams to is working to drive mitigate from will while tirelessly we continue and across

you turn Doug. Thank to support. now it your again I'll joining, over all for for and

Doug Bettinger

all of afternoon Tim. safe are know joining and you, thank challenging you us. today all and I time of a us Good for Thank what families and your in hope I healthy. Great. you is for everyone

on around world March operational related you're COVID-XX, withdrew business given the aware, with the solid As guidance the we in we our quarter. uncertainties delivered disruptions March the results March Despite XX. to challenges,

million. Our from strong remained demand The $XXX through at had $X.X the billion, million quarter was entirely the to exiting quarter out for revenues March was of quarter. at This end materials. the level interruptions. in the $XX strong December that we're of decrease point revenue Customer the the occurred quarter the production that quarter. that partly due down with due came at to deferred shipments I'd backordered

the perspective, the memory gross an favorable XXX-layer focused to increased Xy of per spending system to well XX spending was on rate. tax saw Xz. and primarily March From increases transitions in quarter as investments margin management The on initial at quarter. investments a to earnings XX, devices. conversions came from at and December quarter XX%. with be strong segment as segment increased share expense combined NAND performance, From in focused expected, XX% node on We DRAM revenues, a March focused continues by rising $X.XX, memory driven as in which perspective, the system

NAND at X was XX%. investments coming at with Foundry with memory of DRAM the XX% customer X-nanometer. strength revenue, in there on continued revenue and of systems majority focused investments

majority was in XX% December revenue, of in represented business. As system highest. in XX% all-time of continues image quarter-to-quarter, logic percent compared both and our foundry the revenues dollar a XX second the is of domestic March from invest coming was of at customers. system the China the revenue The came sensors total flat The quarter. spending came high other revenue China quarter foundry other and segment to by XX% again Chinese the revenue at and driven systems quarter. to systems markets. region XX% December for for of percent and revenue. in Logic The March concentration was nanometer as level fairly specialty

first noted, is quarter. amount. Also Support Customer Group March the the revenue revenue disclosing Tim to we're grow the Business as our This specific in quarter continued

is the an seen The installed at approximately release. tables X.X% quarter our a which $XXX in likely earnings year came business of ago. You've same the million, base in increase from

actual from mix. for Gross to margin as lower-than-expected The of just the quarter-to-quarter. expect quarter our product Gross negatively margins output XX.X%. product and factors volume, increased March manufacturing March margin And the a strength and and mix margin the as quarter in somewhat supply concentration are business was variability as in impacted spending to you reminder, customer should such several function and was is gross customer gross see chain. related well a

the for quarter year. March December flat has quarter. were does essentially expense down other calendar our it $XXX increases beginning We seasonal address operations. the COVID-XX during as normal as two-thirds in expenses projects we our development. the on research with The on million, the quarter expenses our critical managed Operating the which March and focused of was always of quarter variable We the maintained customers business impacts our operating focus for at with

mismatched in the and that non-GAAP costs I deferred for program longer are compensation results. our of also to no our want benefits highlight you

this the offset excuse with the we statement the showing historically mitigate this the to with plan income I've hedged to and expense. other income up in As - the to up in OpEx discussed exposure past, me,

You impacts These program can remain in deferred hedging fluctuations in offsets market see mismatched related the the to GAAP of GAAP earnings the results. release. tables compensation in our reconciliation our

$XXX quarter the margin million in March income was was operating XX.X%. Operating and

from tax rate during This to exercises quarter. due quarter lower deductions was expected to than X.X%. rate was compensation non-GAAP Our the related incremental this equity

and in have calendar from the to we rate We quarter-to-quarter fluctuations teens be level. our for tax will rate low year the in expect XXXX

expense that expense. outstanding line $XX income main offset income other our balance, quarter, up from incremental investment of March and and expense We late in in the million was interest of did facility debt. the income related occurred the Other small in amount cash in expense from expense are by coming at components and have on drawdown our to approximately interest revolving a quarter. interest our credit The

items other interest that quarter-to-quarter and income will rates on like exchange. several expect based related should expense foreign You fluctuate and market

Let move me capital on now to return.

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

we Day, discussed XXX% cash of at to to we for return have our capital As XX% Investor long-term a of free plan flow.

excuse billion likely, authorized We our our we $X any slowing will have won't back activity. buyback current in the $X.X buy plan. In - remaining environment, June is million billion stock board approximately the $X.X be we on me quarter. buyback It

I'll December shares diluted This The consecutive share count your includes the down was notes. We a dilutive impact shares approximately ended earnings the of at quarter where a quarter notes little Investor Diluted dilution more remaining XXXX diluted than from shares, quarter And in per XXX our has X level. share is Xth website share on available March our again the million came $X.XX. reference. of schedules Relations you, convertible is the which with declined. for the from the million remind for convertible XXXX count

on to now balance move me Let the sheet.

flows short-term facility. drawdown and strong million billion revolving billion as cash operations a on the from from to well cash cash to quarter-to-quarter restricted increase in $X.X $XXX Our as was our investments, billion $X.X $X.XX increased in credit including December March The quarter. the due quarter of

We more debt redemptions in the than and also cash of quarter balance. had million $XXX that March obviously the maturities reduced

and of quarter. the Our was provide point June strong And shipments balance timing quarter. $XXX the than increased on to and days collected XX end first cash generation that days we largely out liquidity. continue in XX day the of robust the capability million. I invoiced, at revenue of sheet but DSO collections the increase yet more occurred not would quarter, versus the to The prior due to

million for to Non-cash quarter turns million, included quarter expenses higher March and the million compensation, December depreciation $XX Inventory X.X quarter. quarter. due slowed compared March X.X $XX that situation. amortization. in in $XX from the $XX fact approximately the million was from Inventory COVID-XX output was for to capital expenditures were in the for were million decrease $XX equity which December a the turns

an full-time which employees, factory Ending the support to March XXX XX,XXX mainly increase regular of December field headcount people, the end was quarter operations. from of is and approximately as approximately quarter

to although June For about guidance, thinking official when things we're for not I'll June share some you performance. consider the quarter, financial quarter our providing

our output operations limitations We to to coming during add are capability. as adjustments the from We Capacity as chain considering plan our maximize following supply factory remained seeing output social quarter the distancing Demand resources dynamics. well to are challenges. and strong. increase

should be We will are higher output gross uncertainty quarter statement. around constrained. correct, the that These June challenges capacity revenue margins. our current negatively out turns March. and in If to is There our impact of capability than output be assessment revenue obviously

business resilient. CSBG remains

of as and as health the of care our partners our well employees safety customers. are priorities taking Our and

areas We revolver be drawdown cost will in areas. and count up share actively from these spend other control Interest in will to flat. expense be is we will and incrementally likely the

strength So continued in see into the foundry quarter. going to June we and summarize, logic

We March. also outlook to our us for see - continues be business solid Investor heard early in from strengthen. excuse our at with Day what continuing to me, you consistent memory and demand The long-term

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

Operator

Instructions] C.J. Evercore. question you. Muse of go comes ahead. first [Operator from Our Thank Please

C.J. Muse

Yes, to healthy. good taking you glad question hear afternoon all and and thank the for you're

to First prioritizing disruption and about demand customer guess, seen have are question, any too anything you you early I works just out around guess, that front? demand see talked supply constraints. COVID? revolves obviously, side, to you, Or given I How the on just uncertainty demand

Tim Archer

help for order I of shipments closely with we very, need we, customer. the of to our all C.J., customers prioritize very the Yes. guess in are working greatest

to their to of there's customers imagine that technology programs, it of factory capacity tool, one kind output a where theirs. critical can R&D a you specific delivery conversion, critical or requires So are a bottlenecks specific

these strong that things operations we built understand have others of Lam them with having about a specific to our very to their certain years own tools priorities. all for really relationships customer. do flexibility over one is so partnered we And the customer And fair within great of ahead prioritize

One And demand customers change that's the the their simple answer so coordination customers to It's disruption, conversation guess, I'd say maybe sensed we that. a no through change is, close say, But I demand. to early say could see I any no with - really too the with in in haven't today very, meet needs. we've - who it's are very in trying maybe seen would demand.

on how them So really tools our is get they focus need. to that to the

C.J. Muse

Very helpful.

guess, side, is - ability I as on gross of actually that supply in help if the is you then supply follow-up, upstream demand parts, to margins customers' to bring guess could crazy resources logistics tools, that, obviously customers? to get more more produce Malaysia? we at the more issues chain my satisfy how part the the Or it your tools about of getting to As do in on And implications I you world? in Doug, think all, this as perhaps

Doug Bettinger

challenges, but operation to which is our - tends strengths, in - most that aware It of chain are one I'd and people I merging financially, been of first Malaysia, large orders in I'll are think clearly, call the take operationally many the place of we've a across a kind part we of subsystem some the - supply to what say quite of that transit. be control allows that. companies, they're has us board, the Lam, supply do for equipment both supplier.

sites. don't arrive come some actually therefore, If obviously, system never directly cannot at those the And the of so ship arrive facilities. complete. Lam customer to subsystems They

out and our also as places major across suppliers right of Malaysia we the places, quite operating coming subsystem you are in it's others. which Materials into feel effectively coming now, So like but noted, board. facilities,

that's… So

Tim Archer

what flavor a in but means one specifically, going C.J, happening have square the of drag I out you that distancing, have we're you. per give And needing square further what's Basically, some probably quantify that foot, think gross less mean bit how about. are give on need to people I'll generate we things in the areas away be output another little margin. to running a to little of you won't And factory from is, I meter, per we're environment. a social I'll stuff obviously, to can space it given

of other So essentially, we margin take environment in that, where but do C.J., going you're moving we what to matter, doing into to have for ability everything terms incremental be gross incremental it, incremental that less where line. trying some customer revenue care have the space generate efficient that and to you people an it space. on super-efficient Obviously, bring we're can be you're to and space of like in take is your to the

I'm you're aware, things more a freight going expensive and It's as are areas. in that up logistics Other is certain amount right sure on, decent now.

to been it the factory seven to about having years. more coming the customers. would spend as quantify want giving the the way it you specifically, we're to materials not I into in be to them as is get but So gross you over five, for to well thinking we've range last six, I'm going margin

seen going end described. I I given think what you're the where think frame. of dynamic over we've gross the our in, but the be will we see towards been towards the go we'll below think you've lower don't end, time trend we range to I that I is, will margin lower

C.J. Muse

Thank helpful. Very you.

Tim Archer

C.J. Thanks,

Operator

Please question next John Credit of Pitzer go Suisse. our from take ahead. We'll

John Pitzer

year, is of is ask quarter the just issue? expect going half in of supply be the these supply Yes, despite Doug, end of an June you And impact you the me the get so the as have less go into it given to quarter? in letting of most quarter, And behind being do of March the of June to quantify I'm the you up? June kind second what calendar good revenue you by you to guys. for Thanks the the larger questions. was color the can afternoon curious, Appreciate kind uncertainty. all revenue

Tim Archer

Yes. John, I'll back. you take

and ending $XXX of did. we low the the guide of end end plus/minus we that our was might range, limited million. ability, realized $X.X and original billion, And we below quarter kind up of last couple the Our weeks of

billion. into basically but and I'll the expecting impact. impact. the quarter, to demand deliver said, out be going the beginning to we And that, in than to last was as that quarter chain we came $X.X there that to we stronger you actually supply So it beginning able things knew began remind of was Wuhan, be break We was is some

went of John. there, kind that's So on what

obviously, better we're moving got getting environment. in online. much hiring We're We factory We're operating back brought at Now this the incremental We to into space. work. people back people.

I to going So mitigate better it than lap. we're to our be in it when able think just kind fell of

how And business think be is June. to I higher based that. on will more we situation. get much going execute This believe and be continues plans, stronger to and able supply a than operate to we're output continuity in Demand our revenue be

John Pitzer

Doug, the these will Second half, second not? do of have or the supply calendar mitigated And year? issues think you all by half you

Doug Bettinger

Tim in I we're place. our hope, maybe get longer Yes. us I business those mean, comment well. than hope as and It's quarter executing so. on I a continuity to not take to this can plans. going

Tim Archer

think level key. I that supply important commented, did at first, of I No, that is thing capability Most being and improvements. production we a a our believe we're chain But as stable supply is, as clearly prioritized Yes. XXX%. less establish as I the to than well source stability continuously seeing

critical projects, with I bottlenecks. as We have customers, critical mentioned, production

and level. chain a fast and supply supply and too to back beyond that that beyond, avoiding endangering moving somehow of or And that so taking our endangering partners. then step was having we actually way course, what But we stable at in the build not wanted were to back come employees any ensure

level this we'll production capability sure. I day the off day, So And this higher working demand I months. Doug inch for probably as And stable think next at several to by customer exit be a we able think we're quarter, up. said, output production as that over stronger

Doug Bettinger

not things just I while you decided we we just number change. now. reason a maybe a what we and to The to hard That's is number a one comment Obviously, John. execute concerned is. could that number, a not guidance provide and was formally dynamic This give as really to is, right decided fluid talked, we're plan And why know very situation. to we have Tim thinking number to other a

John Pitzer

That's for quarter, on lot helpful. did my future And plates you and follow-up, you growth. job investments pulling OpEx OpEx then some good guys on a But levers clearly, the March down. Tim, in a of still for bringing your have

you're kind about we that I'm pull, on on manage think Or How SG&A revenue? think how more growth should we in Should curious can there this So environment? to R&D it you OpEx going but through levers just about are with keep of that continuing? growing line dynamic?

Tim Archer

continue platform, ALD Investor progress. related will R&D. the aggressive we for clearly, of prioritize see opportunities well, etch out Yes, progress. continued to introductions, new laid great system We to Company really I our new where mentioned some we pretty plans, new at Day couple a today, them

fullest can. the We to those we continue to that fund will

very seeing, nice not are offsets. traveling. some of course, OpEx We're We

elements lines coming expense there are that And down so the are of dramatically. quite

the going of our that around to. come So lot to don't A we we'll have where and course we not meetings out going be We're reallocating R&D we to this to take be will things to went normally in. and and prudent. events of occurring ensure spending be money other and we're kind that spend discretionary things business, normal not stronger of than those other of

Doug Bettinger

Thanks, John.

John Pitzer

you. Thank

Operator

Please of UBS. question ahead. from go Timothy Arcuri next comes Your

Timothy Arcuri

demand in I But to June. the thanks. was want quantify or $X.X it in you billion see of question of of give the maybe billion we if meet that know be what constraint could and in March. can all constraint us you [ph]? excess in $X sort And just sense maybe if obviously, Hi, Doug, to billion, the a be? maybe you Would June, where would revenue $X.X could follow-on

Doug Bettinger

that I'll but a guided you number, I'm you, of the deferred specifically incomplete we but not was shipped, And strong. that's I million know plus come higher originally is system. to end going in going million delivered that you an simply wasn't like were stuff remind I than quarter. Demand stuff is that. $XXX didn't we to change. to revenue what going a functional demand Tim, revenue. a fully March question Obviously, the give what And It with mentioned was system. the at it because very in $XXX

So demand. working supply there that we're is decent situation through. way right upside It's now our we're a - to in just

Timothy Arcuri

And the the great. that topics repo of is it. the pretty down balance maybe suspension little of right opportunistic bit now And got get is that's of share stock around supportive are the then not typically the on the maybe stock, that based the repo. I a just on stock. you sheet. Okay, answer, and The but

is you why retail can give as the to there. some Thanks. you So and it could you us comments could opposite, but if just maybe now maybe comment

Doug Bettinger

when the be We're up. impacted. disruption. semiconductor day, buyback, is a our not take pause on demand business But consumer-facing of bit focused generation Yes of and at Tim, the anything the it's Hook to CFO do just end customers [ph], see a to on I end world utmost little head to in do I'm of today up from there think every highly will look is beginning prudent the on I little making being to liquidity. thing liquidity capability just Company. focused bit their yet. prudent, some And is the the at cash just of I like demand seeing cash. get have think in kind it confident a be right? of sure ends companies, felt conserving the the OpEx you the But where

is the Tim, like trying want little to right cash - with more just to and time at prudent day. actually So look now get the assess I just a what end us, behind the all. of be this might And I

Timothy Arcuri

Sure.

Thanks. awesome. Okay,

Operator

next Sur ahead. Please question from our Morgan. take We'll go J.P. of Harlan

Harlan Sur

challenges. afternoon great the execution the Good given just chain on and supply business job

to characterized is You your guys the [ph] describe you qualitatively demand way remaining or strong. environment system Any somewhat demand. quantitatively this can

the actually You this you sequentially quarter started did systems in backlog. with say quarter? Did that you March record grow bookings

Doug Bettinger

You want that, to Tim? take

Tim Archer

gave - mean, mean, year. Yes. the it's did. I our at to is guess our they I we the comment look our way mean, outlook I for I it best on January call, - about

later. the Doug for about of with spoke means said. and the memory a continued also foundry where the under-invested, things play and as demand the demand the being situation add the fair just through the strengthening good strong the we're year There's year in year about space But not demand logic, talking and out year, bit first may space. reiterating a eventually that this uncertainty in the Now we at in that's in demand need very in environment felt macroeconomic recognize, memory we of to which call, we're January that the about of because really strength DRAM outlook the the half recall exited the unchanged, we we because how

book, And we customers. level a And of haven't tools being I order full after say need have and same plans tools how would they really, to was And January. XXX% I some with we see kind it that to means in is now at to how as challenge get will the And seen and them. how - demand for customers change continue Doug to affected. of demand we're And of those is my will are remains which period get that time. that think our said, period that these to we reassess conversation the about right

Doug Bettinger

mean, long just trying obviously time We're day for consumer-facing going expected are just have me, change. wouldn't anything cautious be and to that one isn't is incremental investing to the in And comment our at strong. customers Harlan. be a anything business of the maybe I about, lead I monitoring to as very end items.

just anything funny on yet, of the we're from about thinking thinking [ph]. we're how environment, through what's - We but customers Tim think, is I'm going aware I be haven't is trying how to seen move our

Harlan Sur

guidelines facility other customers pipeline, the and has then for business or under by on engagement internal or projects insights Lam federal Thanks slowed design being are the with essential of win innovation in the at our given are And process there. in short-term place just the collaborative Fremont staffed Or this if Bay of or some Area, wondering globally? the your Great. the they team? research considered here state labs either an labs

Tim Archer

of Yes, labs. just spoke our priority they as safety - Lam in comments, working are our is employees top others to, operational. I is mentioned our are and as But they're being they in and And staffed. Doug my

who social at strict the very implemented distancing be we've given limit so time. people in does And lab which any protocols, can number of the overall

not our event. operating. mention say or we one-month of social these And did in weeks the only but at through so labs restart [indiscernible], couple they delay critical some this for comments the because would not of and I here clearly are the a But we're then of we're delay R&D my projects, to orders prioritize the a customers. operating full distancing. maybe have capacity local taken, shutdown We're able I programs two-month for probably say,

and I not So them, they - is time, in the focused their long-term out say this disruption of schedules. but not to a and projects a sense that how it's over remain play on R&D would - major we

over with is comment But customers. in travel is difficult. focused how one building strength other is our we're your Now, the thing more on engaged on just Lam regions. Clearly, years is

process we with of that's do a changed most our engineers into and in in out operate engineers before. and a have And the customers hardware way engaged And to deployed from that region customers. dramatically have not continued lot so cases, are

on-site them critical able engage we're to so on And those projects. with

Harlan Sur

Thank All right. you.

Operator

of ahead. we'll and our question go Company. from And take Krish Sankar next Cowen Please

Krish Sankar

the for Thanks times. my hi. Yes, in congrats question these and taking tough on good execution

How it how Then versus Is First can versus were domestic segment question memory Tim. strong. much have anything it was there sales China between for you multinational? of for of follow-up is Doug, foundry? Doug. much it I a very

Doug Bettinger

reasonable broad-based in think region, versus We've little bit a the set that foundry. China Maybe Krish. local got might I'll color, customers. XX% multinationals. a half Yes. Yes, a be NAND, you little customers the to of local it way about China, global over a XX% like in Chinese give of DRAM,

or about Krish. is across other, of broad all should one that you It's spectrum. the isn't it. it This think the way So

Krish Sankar

given upgrades really productivity at Got group. where curious of for you within industry in of just doesn't question, business been think a this And would big slows it? you single-wafer where product. just you suite it think the the down, broad clean, demand has when and If see have you'd then, a do it. that picture Tim, helpful. That's a while, Lam and in same or I'm customer be like would matter the it of all [indiscernible] kind time it happen and nitpicking products

Tim Archer

in I than not fact, No, could the mean, who saw memory customers actually just past. knows, be in see, of to maybe memory I'm say, the out and down, if base how those a they have. to last example, in almost an future get it's Yes. they when spend down things we the was question. the I and But mean, talked and I most extract cases, I about can market, that year, we look the fact last we different saying XX% year the think as turn great slow installed

So see and services we during tend those things advanced upgrades periods. to increase actually like

weather can capacity of you that's our and areas that that that strength additions what about the customers, strategic. the we China at of it are conversions, believe would from because a of we're actually is focused and the business we've places, one worse condition. ongoing technology very investments why long-term So help fall it lot installed strategic a so base we're and talked Obviously, on investments other market of away. is But again in lot is looking

R&D, probably And least so those would affected. I to places don't - I investments, last technology, think those the see be be the strategic would

Krish Sankar

Thanks, Tim.

Tim Archer

Thank, Krish.

Operator

ahead. our go from take of next Securities. Vivek America question of Please Arya We'll Bank

Vivek Arya

Thank there and best can WFE you where plans way certain be I land you slowly where more on where extremely really than you changing, understand year directionally I'm would visibility saying this taking be my others? it to useful year? say, improving could it Even But limited. resilient question. not be any is qualitative are curious, is think is hear what that for when can us? comments to would areas Just CapEx capacity customers' I be very your situation useful. Are guess your this

Doug Bettinger

be much mean, is to were We of and still Vivek. logic, would same debating But memory of the recovery, how as things, just the expecting think. come this. how foundry it a I Yes, see we you, beginning I ago. came think I all see into to it in and tell continued year how things, strength remiss we that about quarter exactly say it's the in I was

XX is low ago, seeing it, days To honestly, customers. we're Something probably from to don't it know, of mid-high-XXs, We yet, quantify softer, what kind get I mid-XXs hard. not we're going although things from think right know. hearing do might facing way that don't I now. you'd… I not anything be an Tim, about to the we're unreasonable going at see some it else and softness are point think to said consumer.

Tim Archer

way think to it. reasonable look a I No, Yes. that's at

the actual be maybe you're is, issues, otherwise, start at maybe in other they must executed with some is, The this I point, digestion the and everything as thought manufacturing, where can not of from also going and because the the to We on that's the resolve shipping we year. of WFE up that customers can't our a supply installation pile affect year customers' possible half makeup own the back to in that and the equipment.

see that constraints. executed some So be we working huge to said, we point because point a we as yet, see with at the backlog I revenue supply if quite if on the to, I us But but I simply through would higher continue to spoke constraints Doug it we're that of things don't don't then the at progress, and and issues be think certain, that where the couldn't June WFE. know

Vivek Arya

ratio All the That side, from the the environment? current group? one-third for following quarters, another? about on services macro of Or providing or services is the something that right. kind and kind disclosure, so of remains for way do impacts thanks that one proportion that think there And you June

Doug Bettinger

Vivek. accelerate just a can with kind slow more which see bit grower is installed little some volatility I happening a case ways a what and one, in in stuff equipment frame sometimes That's has business base of - over the a installed base. along I and it hard the is I mean, time steady to mean, multi-year

So there. a stability lot of

more I the think I quarters, total pick will quickly, probably of revenues over as hope. least next up equipment little up, couple at tick a bit

math historically, will I've it it's but what on than XX% go down, as flow. it would And And I obviously, you and saw, do described percent XX%. more if ebb the XX%. so just to we how the mean,

Tim Archer

finally the so and we I the why it are directly very disclose new any I obviously, But was quarter this to system felt on we mean, is we shipments not so CSBG business why the like important details reason business because think particular much. that - in That's linked. more

people from is think it about recommend business it we the to components services so grow upgrades our as advanced And every and multiple and that business as not a it would the And start it Reliant and that spares resiliency give percentage expect I much year. to systems. said of as has we've would

and in tools the upgrades depend of think they as so, And but comes little indicator have itself, there's have the go lagging and a I on then to bit, and of that start They ship. maybe consume of such. does it time a there warranty, parts installed growth to base, to out

you think own. so it business can So that's a growing we're I as about it, of think to disclosing on its kind start

Doug Bettinger

Vivek. Thanks,

Vivek Arya

Thank you. Good luck.

Operator

We'll take next of ahead. from Citi. go Malik question Please Atif our

Atif Malik

for you questions. my thank taking Hi,

March, stretched if current in in And And are demand? up much? $X by a in talked the looking terms Doug, follow-up, $X billion for the environment? yes, about times how billion you. year strength in as domestic you spending full given one, And have China those to First your Thank the lead of expectations January.

Doug Bettinger

take question, I'll first. let the time lead Tim

Tim Archer

it Yes, about on. - mean, take clearly to me talking own I I we're and guess challenges They let what relative stretched. have supply challenges. that's our

their would out, them the stretched about why that's original high we're customers conversation lead imagine, you provided. to with the it's that to lead get tools have again, on - in mean have - and to quantify but priority I something lead times can reasons, don't out. though. closer it's have So how for I originally times actually you it's call, it we stretched times this competitive want

Doug Bettinger

it, an that and a Atif, we million. above $X local I has it $X is and that think lot about XXXX, to million, kind billion a Yes regard. in of incremental WFE we've $X what above about China that expected or whole little million Still obviously. how bit said changed I in know $X was don't

Atif Malik

you. Thank

Operator

Sidney from Please is question next go Deutsche of Bank. ahead. Ho our take We'll

Sidney Ho

question. my taking for Thanks

have If midpoint different still saying. color which What geography the down you $XXX but guys decent shortfall. or there market would Taiwan there there, is million the was there's like compare growth, were the most pretty over bit, a end Any China It looks quite what to guidance a great. than impacted? foundry of big be Thanks.

Doug Bettinger

versus I wasn't geographic you said able answer an what head, my to what between any distribution ship. there's don't to know give we supplied be that that [indiscernible]. unique in Nothing did Sidney, is

Tim Archer

Yes.

the those - I we - not think even products even lot it the those to facilities the chain that it's And And back the maybe and the have products each for previous way manufacturing the same. is same. not a about supply of bit all is are I question our makeup would little of the products. think of for a different

would bit I certain little out lead not tools And tools receiving a of chunk out time particular kind the as having those big say much slipping of any less a of the tools and about customer it pushed was quarter. as so

say, us chain would heavily supply result a than impacted, I were types as where their tool more of certain so So was concentrated.

Sidney Ho

what based to maybe additions, guess, for be? the foundry to how NAND quarters think But are expect, Okay, revenue capacity I second you the go is if the bit is, on is of which you in that's leading quarter helpful. your My still they're the and you thoughts your way half follow-up more does going year. edge guess June I year think come that higher, DRAM for and two on growth

Doug Bettinger

thing view the good answer, first I long-term tell is mean, really to of Hard I'd is Sidney. demand our you unchanged.

so given that, which what gotten see bits to don't that's uptick in I many you quantify two the Tim going are for his it That's ready The space, having right? whatnot the home, just the exposure wants pieces space, from the script Now offset. consumed is [indiscernible], Tim unless the consumer. work obviously, to by and stuff. said in to on there's the lot are because Those hyperscale softer about a mobile going you quantify? had to there. and direct likely in offset, I'm also of though, know that moving probably more

Tim Archer

we No, but debated it, no.

kind that year, disruption affecting do times, be Doug macro here And the of this to spending have weakness. effect. and will the of other of no said, how, economic challenges said sit would many need as think I see really has today we we wouldn't market. later in consumer in the there think recognize and I We is we segments strength areas say obviously,

just hard quantify. so And to

year. economic out comfort of just we feel been - into I we without lot situation come knowing of having like we ended of that in we like think a this a and have came this last some disruption spending year

So year, that one it's if in pretty so was overlining, enter a there that from last perspective? we underinvestment good there's space

Doug Bettinger

of continues will trajectory was declining that on exited growth as year into first second The Yes. we depend half that occur. the investments and year, the the last of half this and

maybe So to Sidney. about something think

Sidney Ho

much. All right. Thank you very

Operator

next from Joe of take Quatrochi go Fargo. question Wells We will our Please ahead.

Joe Quatrochi

Yes, thanks for question. the taking

technology growth think what WFE baked capacity Going we transitions? for it back any just you was should expansion us expectations, how about versus prior on to your - provide into color that could

Tim Archer

almost that such demand no read adjusting of and supply NAND that we're node had growth growth conversions, was much to then below both just memory, we where decline and what where all level And Joe, down the stuff. in We was break logic. pretty to continued all the better, our be spending And in getting it seeing. Yes, year that a about year kind strength What DRAM, last foundry rate in we That inventory - said created didn't view didn't - I recovery capacity. situation it specifically. of to right? through in wafer pricing continued that is was was a be of going was the some NAND

is on going going okay, quite to think the wait of I'm demand that's that what real yet. year. not all question do I is, into our minds one this to

an 'XX, few wafers. was really in DRAM, probably continued we XX to little described we we're going ago. what assess that saw. saw of tick that's bit see trajectory most And out seeing up to that's how DRAM a uptick. 'XX little I bit, what what of plays through That's going days this to happen a a think we beginning to just no. saw adding But So ago. we were maybe there. NAND what's wait XX a days and We

Joe Quatrochi

in on in the China, have sounds the into mean, March that been slipped that that quarter. strength stronger like quarter? have could guess even could to given true, just further I if Okay. the grow And in some Is June you then do it of And fair? it this I expect that's quarter, that then

Doug Bettinger

I have supply geography, every mean, percent, grown a don't was honestly. the I it that issue would as quite Joe. know across

billion, see $X pretty of expected. see Last what think we incremental billion China local have not little terms and local a an I above all a much WFE. statement you then terms, on saw China, in don't if to And $X we was had billion supply. been in would So that was in that's what different. that we that around still year $X - know from in China, challenges to - of percentage Everything just frame again, expected we WFE and going

Joe Quatrochi

Thank Okay. you.

Doug Bettinger

Operator, we'll do question. one more

Operator

Okay.

Your final Company. Needham question Please go & will Quinn Bolton of ahead. come from

Quinn Bolton

for in. squeezing guys my Thanks,

does you guys you you CapEx an then downturn? that? that any period to Or try lower was, when where you in reduce Thanks. of your number up the and First question, the cycle just second do of sort foundry for And plan in before in when get to your footprints time your think place manufacturing do for quarterly sort you March expand a back the Taiwan went output of Is you revenue into say, slow the social in capacity? CapEx? timing question, that put manufacturing TSMC and TSMC quarter. the your that of times operations, extended can put revenue COVID place just that in distancing recognizes out trying have a to record reconcile the the Or put thoughts on

Tim Archer

Okay, great.

me timing. mean there, take your that - to The story both I we in quarter. those. relative there's as than Taiwan no of questions Doug Let other I had just first think and systems impacted said,

factories, have I within From once So Doug was I social the there. what distancing, the perspective anything don't capacity same area, strict was in implemented and that social part distancing, fewer we've our speaking space. Clearly, think can we there's of people to. mean

cycle out. to so does extent, our that And time stretch

an longer so existing take have capacity tasks overall otherwise Some than decline have and been what of out from would space would pre-COVID. our they does

gain some capability we're at up see that grow we're clearly That moving as areas and - mentioned, we takes to a continue and we but little time, of finding actually our capacity, some as of our would we capacity. as will ways Now, see bit will we expanding continuing plans. those execute we to hold output. demand we time, back. need But if that that to Doug And to additional into the space, reroute same lines and recapture and have other also access expect we to

Quinn Bolton

you. Thank

Doug Bettinger

Yes. Thanks, Quinn.

Tina Correia

Okay, operator.

Research. call our conclude for Lam will that think I today

all you for thank joining. So

Operator

This concludes your for today's call. We thank you participation.

have your You lines, all everyone. Take disconnect care. day, a wonderful and may

Lam Research (LRCX) 23 Apr 202020 Q3 Earnings call transcript