Earnings call transcript Q4 2023

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Operator

Good day, everyone, and welcome to the Lam Research Corporation's June 2023 Quarterly Financial Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note today's event is being recorded.

At this time, I'd like to turn the floor over to Tina Correia. Ma'am, please go ahead.

Tina Correia

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

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

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

Tim Archer

of key above to earnings in to with well strength wafer continues the otherwise Lam stand-out margin, strong for quarter spending in results stability Thank for share of everyone gross at an ranges. quarter, weak as the CSBG the posted Lam and margin the you, joining a and XX% guided equipment fabrication Tina, and area call environment. revenues welcome today. operating June per

levels. delivery these improvement Operationally, back at in we performance pre-pandemic see now on-time normalized metrics the quarter and and backorder significant critical achieved in

the is more on WFE of in and chain manufacturing scale network term, focus but inevitably positions growth Our more when importantly, supply to predictability greater short resiliency delivering us global resumes. our the efficiently

memory XXXX China strong near-term, mid range domestic segments, memory as see to tracking or to well By HBM related from with spending to demand. Looking in billion compared last spending the upside expect year down device and the overall WFE high bandwidth coming as mid-XX% we $XX related in be WFE XX%. growth we down to in segments non-memory approximately be the range

half. to half continue first We tracking than second see higher XXXX WFE

are the the a growth year the their over WFE, While of only drivers years. in stages increased are both for fabs XXXX is and in semiconductor investment dynamics foundry growth driving long-term such logic for memory be will several generative fundamental initial to and down industry strong. next as adoption Emerging AI

greater etch have Advanced drive higher investment. logic of and X% significantly servers storage And Lam edge AI and to servers. billion billion AI higher expected opportunity leading device and This every to as incremental additional intensity for memory penetration needed tremendous centers is servers and data $X.X creates enable traditional architectures. WFE more content to is $X scalable deposition versus of performance

drive NAND product the established we positioned we is making in Lam and processing term, investments best To are scale. win portfolio atomic have broaden to long we the been are significant ensure at expected our device move leader to XD for share around, benefit inflections are in packaging underway Gate growth to strong for other advanced segments. are DRAM XD to to important positioned that Lam. and SAM the from XD well XD all and

AI. high-performance packaging Customers including variety adopting schemes enable integration. and power cost generative and becoming applications, of packaging of logic vital to a memory is performance, Advanced increasingly to are the roadmaps wide

in bandwidth in gain of the with improvement to up XX strong proven has in track enable of efficiency. manufacturing schemes Lam power these segment of and a improved packaging a products. excellence Some XX% advanced times density, set XX% record memory

XXX% Overall, XD stacking More SABRE tool high hold our through-silicon system established high geometry have our market across all memory. etching etch in share specifically, we customers greater of expertise than share advanced a electroplating required as edge memory aspect for result ratio XX% leading XD structures. copper formation via filling of bandwidth for and long and in and market deposition Syndion solutions

years. Overall, we expect in SAM packaging five double the our to next

as also productivity technology address opportunities. strengthening and emerging we our We bring see market innovation position to

inter-die chiplet the foundry-logic For June at key gapfill had for example, in we a quarter, new their for architecture. customer application a win critical a

into a secured latest top for this the position three share application customers. have ramps As foundry-logic win leading production, this we across will

this application won reasons. of for a We couple

productivity steps. First, clean and run platform sequential higher wafers enables XX of delivered between unique to competition quad the allowing we more greater our triple to multi-station by a the single relative design. leveraging customer pass, chamber in deposition than chamber film deposition architecture microns This

superior stress wafter Second, including better management, to versus competition. and wafer defectivity, we enhanced delivered improved film on-wafer the performance, uniformity

in to to platform proven and to markets hybrid critical tools be bonding the Lam within our expand specialty are die-to-wafer existing packaging to technologies, portfolio to new leverage In the highly recent suited has we example, and long-established offerings which like Kiyo we our schemes. efficiently. applications R&D As high-growth XD position most broaden newer enabling our etch product have looked

By quarter delivering we profile foundry-logic better secured leading win competition, customer. etch at in June a a than the key the

in the of the are at for new start suite tool customer to XXXX. and this resist record currently We revenue and expect steps a strip application of etches recognizing for

to continues revenue future several our over them As years. we double packaging with to iterations, opportunity the this have bonding the next hybrid dimensions with customer shrink

from XG customers ranging Lam high-efficiency applications electronics of GaN within the challenges consumer devices. millimeter infrastructure. atomic in millimeter working the XXX XXX specialty to another with to solutions, instance, nitride charging technology to manufacturing across has to key etch, In layer RF segment port Adoption been accelerating gallium including for devices automotive etch overcome is and multiple of

devices damage such of requires and ultra-low fabrication the processes complex is atomic-scale etch with precision. However,

and improve research of result material device the of our understanding suite Lam's properties other as deliver that These of solutions, deep a institutions. roughness required partnerships process a key were customers with GaN well With we and as impact solutions technology, etch can developed surface as performance. that

term, three executing we on rising differentiation look see decade. focusing to create semiconductor Longer complexity. the competitive end outperform trillion-dollar strategy forecasted for vectors in the are the to we of by Lam, what as key of we industry At a

the segments. associated First transition all to complexity market architectures enabling the across is device technical packaging with and XD

as the sustainability complexity complexity the And we momentum. is semiconductor regionalization impact support the is from to responsibly the arising trillion. the third build and as Second workforce output efforts $X the as industry grows carbon geographic manage expanding footprint, of

component that industry Semiverse to in believe the footprint innovate with global combining Lam's detailed and across as of These help by products are designed process the a our to We get our solutions strategy our digital grows will physical an development and capabilities we diverse Solutions at of we advantages to the of quarter, excellent be R&D lower release simulation global twin and our Solutions, press position Semiverse in effectiveness. the develop for portfolio of products greater future. This new one ecosystem virtual outperform engineers into products. with faster, modeling and collaborate and advanced cost manufacturing

to I over will turn Doug. you. that, Thank With it

Doug Bettinger

afternoon, our Good today very earnings for Tim. you, Thank know is what during call season. and I busy everyone, thank joining you a Excellent.

guidance. end We quarter metrics of June our revenue exceeding executed in XXXX of high profitability coming the the our well the guided in and with midpoint above range

our While on to control We're laser-focused memory executing focus efficiencies well. notably we continue work is improving most low a operational our our and WFE challenging on in favorably showing our up spending, investment through year, what's in with very direct results.

We had into revenue revenue decrease June the supply improvement reduced expected. parts prior declined $X.X related which to $XXX completely got billion, quarter-over-quarter came closed a revenue constraints. deferred revenue Let quarter revenue. as $X.X as sequentially. levels. dig decrease quarter revenue levels back quarter of was the in deferred million normal June me in deferred at the Systems of to the from with outstanding chain sheet, all the with we in We've back order balance on a million we

currently last levels. deferred is quarter higher we at than though, our historic As revenue balance discussed still

revenue advanced to tied deposits from newer increased orders includes balance customers. and deferred customer cash The

significant a XXXX. these year of deposits calendar to of half expect second to portion We the convert revenue during

quarter percentage this XX% flat down from remained at the segment the of The came level of of turn And quarter concentration DRAM now to XX%. for in revenue. of percentage to down within details. the me revenue low was our was level and Memory a Let lowest June which XX% as a the the quarter segment March last revenue NAND X% prior XX%, in memory of decline systems from revenue, decade. at systems systems segment

spending levels of We year. I seen continue advent levels at at of the XXXX to since to architecture. mentioned, we've spending remainder remain expect NAND low NAND the the the is calendar lowest XD NAND the And for just

see the saw prior leading-edge Investments we in to to we quarter. with nodes. XX% in towards with more There quarter, strong versus devices. foundry support continues quarter June be robust March concentration also at revenue percentage revenue the spending the of Consistent segment were specialty that systems XX% mature the biased

broad-based in a and sensors and applications. These are There segment momentum revenue We the June such spending areas out solutions, quarter, record as just systems logic with they analog, that packaging, distributed XX% the of level image the in had we've areas quarter. point XX% are concentration with in strong with power technology of demonstrated I'd and geographically. advanced was microprocessors, in other compared where our prior broadly

customers XX%. composition the declined majority which up the bit revenue was the XX% revenue, China which regional our to the domestic quarter. was region the June due strong The of quarter, respect regional of the respectively, the quarter, XX% in little Korea China from prior result our quarter. The last customers With total, was of was Taiwan investments that region of of total a were China the our to revenues, timing level record which the and region, in projects. in customer XX% we June US the from total and the largely saw concentration of for comprised

revenues. than quarter high strength low is The at serviced continue Spares and the XX% in calendar June decrease largely portions by of to Group CSBG memory fab Business XXXX. continued largest was approximately X% CSBG in June been concentration a which are Reliant impacted The quarter levels, from particularly represented negatively service the lower customers. the by utilization historically individual node spares represent Support investments had business. X% quarter specialty $X.X Reliant by driven of a systems our our and in June the our totaled prior businesses revenue This Both businesses level which revenue. percentage, Customer of the and quarter billion,

above our from XX.X%, well of range On at cost increase a side saw March we The the and things, and efficiency that the came profitability in product up improvements, guided quarter. mix. to quarter gross June margin favorable as related our in quarter-on-quarter as was XX%

to make We continue we further progress to operational on expect forward. execution our go as

June development of continues concentrated quarter, two-thirds over although top Operating $XXX original in be ensuring was that into on came differentiation product down and to research from a it priority We're expense our remains for coming than bit competitiveness was $XXX with million Lam, our in March Investing very expenses extending focused estimates strong. higher our R&D. million, operating and our the for the in the little at in quarter. which a

performance. of in the The our due jurisdictional over a because came came margin X.X% low non-GAAP at was and tax mix The which June XX.X%, rate margin for in quarter largely of quarter. for XXXX our And at the to that income rate quarter this favorable guidance rate remainder more always, the of strong some gross provision operating end be true-ups year. tax low the calendar of fiscal will the quarter in mid-teens fluctuation to level. estimate the at have We year occurred to will as the range

cash standpoint, our fluctuations discussed in capital debt and the cash interest cause to longer-term balances, market-related we're the quarter And higher out, quarter realizing was rates. on level from the in expense interest rates million on with duration paying on our of income higher balances we're cash volatility. as return point now expense, And some as Other as approximately amount to just the than a structure. I'd in for well is prior will that OI&E strong June and consistent past, $X quarterly related our primarily we've subject

and buyback On million activities, $XXX return capital we we share quarter. to the approximately in allocated million our June market in $XXX paid open dividends

buyback We our authorized $X.X remaining have billion on Board plan. share

XX% our very line For XXX% long-term to capital with of flow. the flow, returned XXX% free in return June plans quarter, of returning cash and cash of we we're much free

and This share revenue, March of track share our tax $X.XX, range. the improved quarter the from was and from per on count June end expectations million lower our at high gross guidance earnings margin XXX was diluted came enabled in shares, Diluted quarter. stronger over rate. down that with

Let totaled the level with $X.X sheet. restricted came to from the days quarter. the billion, Cash turns times March quarter. balance me Days and June now down cash, prior June was were including pivot times. X.X sales outstanding investments, flat the inventory quarter to short-term in quarter which of X.X XX

we slightly While historic did levels. during inventory is quarter, from the bring down June the elevated balance

As cancel suppliers. of purchase to a orders need business our reduce, volumes volume we significant with

to frankly. slowly this taking been term. down process through more more the able This to. drive we cancellations, keep do come have it higher ongoing expect we'd these year, inventory to inventory like may As than than near work albeit we're will we in inventory need We though, we than historically

the in the mainly expenses $XX centered activities global million expenditures amortization. and approximately infrastructure. quarter million $XX million. product by for were March $XX was included compensation, $XX Capital approximately on lab which for Non-cash quarter equity our and June in down development $XX from Spending depreciation million, million

ended a year, Most the quarter. June is which with took we track as quarter. stand improve initiatives quarter to anticipated quarter, year-to-date calendar full-time this XX,XXX showing prior year $XXX at million was up we incurred in of headcount end Overall, calendar in we of transformation related the approximately the to actions earlier the And decrease from timing on of the people regular X,XXX reduction range our approximately out operations. We restructuring with the June our $XXX employees, the approximately estimated of the of we're the an with XXXX. for decrease million

plus or September percentage point. $XXX of me ‘XX Gross revenue to This million. $X.X our improvement minus of gross X in efforts or We're expecting for our is now plus well XX.X%, guidance plus as the margin turn a of function Let non-GAAP margin quarter. X half billion, minus operational as in of plus finally, XX%, And share $X.XX, XXX a percentage margins million more earnings Operating spending on or beneficial shares. based the purposely per R&D declining of little second We're minus mix. of approximately minus a share a of XXXX. in or count $X.XX, point.

profitability resumes. that well-positioned elements improving operations our The outperformance summarize. solid we're quarter of WFE the a this and to profile. I to I'll path results business We're just reiterate So, all solidifying and company for demonstrate, let what on think, strengthen Tim growth me and foundation And optimizing our Lam's we're ensure when said.

We see this year. weighted a to little second WFE half bit continue

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

Operator

ahead Our at from from gentlemen, first session. comes begin time Please and Ladies this today question-and-answer question we’ll [Operator Harlan Instructions] the Sur go your JPMorgan. question. with

Harlan Sur

solid the and good execution. on congratulations afternoon Hi,

but trends, period pushouts, you your there of the stabilization being level and the reschedules As quite noisy, fundamentals level cancellations. period business activity be progress right, come industry, we utilization that things will fundamentals and like the this of through can business-wise, track, right, for weaker and can customers' the of a

normalized I team rescheduling at So, more of the with down that, utilizations stabilize, guess, also seen to levels? And low rate has pushouts, to starting albeit magnitude levels? shipment the come has

Tim Archer

Thanks, Yeah. Yeah. Harlan.

operations of clearly but of more we've segments. about customers, majority device we've within say -- the as allowing slowing market about, just made in cuts ways, would our recently be even talking and year the more comment a feel Clearly, down I kind business in the I it heard I probably do are predictable. some by is cuts I it's that effect. segment, that the to normalizing certain varies think some made like, the half first taking utilization our of were of

the made end same think and I have the been as the are markets starting customer already that to the been reductions how capex thing are side a on flow made of getting is people cuts have well, and where that already sense through. happening how

bit And WFE this mid-XXs, little And on of feel parts the of to see spending. as our like a mid-XXs at we starting we're one mentioned, point, low to up of domestic certain prior China of little yeah, do from that I the strength So ticked you're we, HBM them. just to in position. market, being in also as guidance some

months So, I getting things are to ago. where would feel like people able little the than, say, are to the six predict point a better bit business

Doug Bettinger

to quite And thing would getting any Tim Harlan, I only add said this we is is the better, Doug. haven't Maybe seen frankly. really what utilizations

spares CSBG. that point. last us today, that the call we here our at and we you're see talked from about, of sit as quarter seeing service You'll remember in on components not And you'll this

at any term. the near low and it's So better see getting it level really fairly a in we don't

Tim Archer

have our think And memory improvements other sort our Lam this spares space, that had utilization turning the said benefit the exposure the back in thing given just only we that you from that to year. and on, it's service of when we about being and space business especially utilization the would on half that first of first in through anticipate impact the

Harlan Sur

then, And that. you also opportunity. advanced guys the appreciate packaging Appreciate highlighting I

timely because to due out demand. better strong WFE quite HBM I guys slightly memory DRAM think you trends a called it's right,

and now guys in you your portfolio as core outlined, silicon your So both benefit advanced memory tools you right? packaging

strong overall memory, across driving the capacity-constrained are this given here. recent compute demand of for networking, customers advanced GPU, pull mean so, CPU, AI and packaging I just is demand your and And accelerated sort But capabilities, right?

for how on do segment So this give can to And is advanced packaging us anticipate year? big just guys this grow sense your Lam? you segment some you

Tim Archer

business areas, and, in it especially etch plating we copper TSVs, building highlighted things pretty we've for haven't but the externally, like those is don't as that of structure packaging exactly advanced it’s we Yeah. TSVs, deposition. I through of certain related much -- I sized anything this to and filling -- think for growing etch

a the So in area weaknesses of strong the seen especially given of market. other our the it business relative that’s is now, right parts

Harlan Sur

Thank you.

Tim Archer

Harlan. Thanks,

Operator

comes question ahead next Evercore. from CJ Our question. Muse go from Please your with

CJ Muse

Yeah. Good for bps last for guess first the at question, the quarter talked question. exiting taking improvement about year. Thanks you expectations I afternoon. Doug, least XXX

away. that blown clearly You've

kind garnered? is for that about thinking 'XX? So rate the guide for of September greater curious be what we And how is calendar much that that mix you've versus the to of should kind new in due efficiencies exit of

Doug Bettinger

well that I'm precisely I'd Yeah, certainly. CJ. all Except, I pretty yet. but at if team we're we to time operational the to able that drive efficiencies where quite I you think to point for not I'm Actually, that its recall, you operationally. for the been we think Lam, gone about, XXX call, talk I going we're quicker, of like, we're real I we've leadership first Company in and obviously we're to, the January I pleased are that, say not on point I it talked if of quantify doing pretty think, that point a expected the improvement XXX sort ready related. mix -- the at guide beyond we're basis basis than we have beyond Having and where pleased component We're you, about would numbers I December to said improvement. think well it. September talked that though, do

CJ Muse

you kind September thinking I you contemplate we And to hand-off how how memory, the second a other for do and the of up of CSBG. then, beyond? And to should question picking business modeling of from the kind you. guess sustainability one are into be CSBG and part how relates of thank of you timing maybe as Reliant? see utilization about Great, the

Tim Archer

Yeah.

seen. driving obviously products we're right historically is you much I all to still strong. our I of of mean, talked think that's out, service quite component I for seeing we've as there lower mean now a strong spares quite is and technologies, than about levels different those sort specialty at that Reliant segments. pointed I Utilization demand across

the the I think in does that people the the about and talk the maybe roll-off And so, come fabs. utilization leading-edge worry at picks time memory and technologies, up that in as specialty

just at demand focused yet still demand say trailing over. be edge is I quite yet, rolling it point, for actually strong this us, those to feels But forecast nothing new something applications, tool but us haven't we're we on we're broadening not new I it's said to now. and mean, as good would to seen although, for forever, that pretty grows right technologies ready the types really again, we've

CJ Muse

So in up we should modeling CSBG be September?

Doug Bettinger

$X.X whatever do you guided I you competition. to the do to in with can you'd revenue, CJ, like billion

total got the You've number.

CJ Muse

and it. Tim. Thank Appreciate you, Doug

Tim Archer

Yeah.

Doug Bettinger

CJ. Thanks,

Operator

next Cowen. comes TD from Sankar question Our go question. Please with from your Krish ahead

Krish Sankar

question. Yeah. I Hi, have two thanks And questions. for taking my

etch and or Tim for a curious, spoke a SEMICON Kind product couple ago, Doug. spoken about remember you West maybe of a it at ago. years Tokyo weeks one, had First of I Electron few about cryo

So market how obviously share. And I'm and etch towards lot ratio kind very curious level. think geared aspect of about to XD NAND of NAND high spending your low at is understanding is it was, my

number curious, your etch cetera the follow-up. So market one, that and then of about a share how high in aspect ratio to have I And et route? kind cryo think product, I'm

Tim Archer

take Okay, I'll it thanks, great. Krish, Well, first. and

-- XX% etch I only at more high cryo cryo than at company to as guess I in that low more than think down just levels, point, this point I the Lam say volume out, probably to and that I this relative very year-on-year production. it's -- pointed would you etch, now. But spending with NAND, is is mean of right

area of So it's where I right now. have mean experience an hundreds strength, we of do chambers

technology I for off. customer in in variety in and node. this when R&D that from regularly of for more the ways on have vendor recent these this And everybody at been all as different than and DTOR mean, knows, a call space. etch. applications. aspect probably at I out quite leading stage robust that experience critical future are one I this a pass customers for that we the at on of all we in our think has We've process I competition a case, the of engaged leader years innovations. one conference, We're position high Lam a developed the you're competitiveness. take talking about look But know ratio customer with engage a roadmap. our production We're still decisions hardware memory

our still only But has really production. competitiveness, are counts vendor about the high-volume this we're I we stage about every And most processes think that huge the base think long-term importantly, from learning share. when ultimately from what that's installed to which getting how take R&D into I day for affecting market

we And think at are so, in where always the this in not maintaining about we've I certainly the said past, every stage. very space. from, decision, DTOR and come and don't leadership we we've market But share given we're win confident where

Krish Sankar

a will actually then you had Got lot it looked I when And goes it. understand went be to Syndion $XXX you Tim. and last this helpful, remember, folks I HBM you kind you of SABRE SAM for all did a and And where I packaging those metal spoke for $XXX curious. XXXX I of said Very understand since then. XD the in in million the you said And XXXX, updated back, doubled about I'm it follow-up the then mention on I dep. just packaging. And a etch Syndion advanced like think my at double. if and could to opportunity. Got things. notes, it. SABRE TSV million

about your can k think some to high understanding used. how is from my of the packaging, be for also ALD for opportunity advanced gate here? of realm metal old also where And AI, like DRAM that from So

high where Thank you. think how gate? it I about SABRE it? if is your numbers altogether, there for So a how to about think way And Syndion, today also, to revenue put metal and to quantify ALD k are

Tim Archer

products. Well, those about you the mean, We threw from from hundreds. I sizable used doubling just it's out there, for a of business of that us. a opportunity, specifically for quantified I to point. talk dollar in mean, puts it's becoming haven't numbers. hundred it We two Yeah. growing couple couple a million

chip packaging. can away about -- you share I into think part what very is of a position. and also we HBM market fast-growing our everybody stacking, products advanced We talked take of I our elements play those XD knows other think know business. It's

And think stacking so, I our without those XD forecast can about is and giving how you markets, momentum. chip what you building for apply think you packaging

You have market share. XXX% know we

I of market. to just think transpiring what's that the see very happy in -- we're part

Doug Bettinger

Krish, I just would And add. Yeah.

how You're dollars, about component long it we frame pointed is of not quantified you. as out. just million it fast-growing for as -- hundred don't business of very I right of back, But know billions it kind the few a Tim dollars, to

to all maybe about we're from listen its when every and think it. in that's of memory everybody about something way good very a you the excited enablement middle AI, So, It's high-bandwidth of that to and right talk packaging is of stuff a standpoint.

Tim Archer

actually accelerated pulling -- those tool sets are Krish, of terms deliveries. for that what I it's in are would say is environment, people the the in this

sense you And in so gives of that I think that market. some demand

Krish Sankar

it. Got

Krish Sankar

you, Thanks, Got it. Thank Doug. Tim.

Operator

from And UBS. question. Arcuri with our next question Tim your Please from go comes ahead

Tim Arcuri

hear growth, that a sort drive of XXs. major of been mid-XX% $XX Tim, saying vendors. And bit all lot $XX have lot. been give lot and sensitivity you there's since to bit I a around to of Thanks some year the Micron growth, long-term the used NAND this ticking producers to it. suggested model per obviously, have basically now you the down there billion on is then, on was But a that of share NAND WFE. highest And billion debate low

about not than old get drive so just $XX you've something per year to up. the like and if that that so billion use model, know higher that $X I steps ton that's you year. this more But number a of So to low billion $XX we're billion or to spending kind growth. you gone has talked XXs optically, bit it's

just going is terms keep come to in ton And so back. WFE NAND of on debate I how of getting much a

to new I'm in a growth you what's lower old sort asking bit for going that a seems forward model handicap vis-a-vis where you model, So [indiscernible]? than be market changed not but what can of like

Tim Archer

I long-term forecast certainly it's not of market terms we crossways what about space our etch to we look the are. requirements their I the get debate out. the that's our a new equal a is in to probably there of we growth think volume where of coming applications and some and going such mean satisfy But versus customers, I NAND customers position roadmaps in am Well, the have that kind with of technology is again, where ours. ultimately strong -- with

extremely right this we So is low. know now, NAND year,

it's back close it something mean without giving number, where higher a you are lot to to And if -- would that model, spending gets I our today. I than it's we say even

what's not for think that that talked applications. of what terms is our management a of different steps have bunch opportunity how only sacrificial plug whole of for be ALD doing has backside of stacking of is -- gapfills through is increased in depth I we fills, I types capture different that might mean, for complexity from in fill, lots and stress SAM other Lam, past multi-tier gapfill -- of taken we've of about carbon we the much too specifically, the happened model plug

NAND than do would lot didn't And so a such I better think even environment. do in we Lam whole an better. better model, where low environment where are a lot than lot today and a do we a the you spending

that's So now. I we picture, you model for can Tim, view I of but the a right new think a better once end best see do demand we the will get out

Tim Arcuri

of inventory on then, get imagine how slowly kind play you I a just down, as of And said still the kind going half it's I of back follow-up, come that it's the guess situation gross to pretty out? Doug, Tim. drag your does year. Thanks, you to you margin, and a said as

So anymore high costs, quantify a not you parts? and drag as still it you're margin? sort of is gets would how it normalized to -- when a on And pretty to much can these have then you headwind as you Thanks. of back I think imagine, level some it's do

Doug Bettinger

down to now margin, think Yeah, will right as Tim, stuff some margin have in right? the we It that really inventory a already gross have that it gross So -- of you've that I improvement don't balance sitting honestly. costs there, extent about we as consume some prevent consume the right, the negotiating got of is stuff to on drag the sheet, first. to on the of we're

think near about the drag that's So it right a way think I don't really to it. in as term. the of

do what will because a able say lot script drive I slowly was of purchase going to a in it to the seen down past orders, it's a tried down, as of come my lot be come we in material to more canceled Tim, us in that to although bit perhaps you've And in it taking perhaps than little part than of to able need But of delay little you've you be that, us we'll over little reduction bit up it to negotiating past. you inventory near of the a a time. a create end the the just more in term, in consume seen through bit going it's that

it's think year. little the the get then but year, come bit And So And think a it's think, a I be improve it through going will through to bit next you'll Tim, into will little I to down it sticky, see then as going we I year. it sticky. be --

Tim Arcuri

Thanks, Doug.

Doug Bettinger

Tim. Thanks, Yeah.

Operator

from Please question Chin Stifel. next with ahead comes go from your our And question. Brian

Brian Chin

should oriented? about, I and XQ Hi, calendar that increase us letting $X upside billion second there. WFE thanks to I backtrack on afternoon to just Maybe this between to it, and Good how think the, is guess in guess, mainly billion of let's the increase, $X call the we questions. is of a year few XQ? timing situated for ask much half? And How HBM

Doug Bettinger

guess things don't I little fourth little scripts high we're the second to bit second and the put Brian, between in going what I little I'd to Yeah, weighted, to quantification of of a our is think a a in calendar bit domestic year, we half upside of is say the third and were China, and China a bit it half pointed it's quarter memory. quarter little bandwidth weighted. bit the except say

Brian Chin

Tim, of flash Maybe lot storage I role investment? AI? generative to could servers might in on the $X.X play And kind enough. high of WFE for X% sure of thoughts factored DRAM. into and that you But wondering, I'm my of penetration role follow-up, in fair focus interject the billion That's $X Okay. that there's for SSD was AI billion clearly, your sort that's maybe bandwidth a on

Tim Archer

of even was there that to this, think in to my as last still I how driven a lot that I demand some there. really much but And there's debate is believer is. in a of the think It answer was, gets storage question driven we're element

of size, I things also of some. increase I'm closely be. our greater dynamic HBM you again, increases side feels not sure of the terms seeing on drives in out a what is, think NAND even to well willing I model further that be silicon the let but the packaging die And play associated little that see in marketplace side. what should think, the to well. new of know. like that sort in as perhaps One they're see we same course, play there with a couple both the customers as of terms as to But when of the consumption, we think And WFE side, that about this talk exists to DRAM, leads it. it there's what as at I'm should

Doug Bettinger

this enabling class Brian, roughly up servers, at I the of bit is from will is I some head these more an storage if and the it. DRAM but little DRAM storage But the times side, compute around of don't I times like picks wrapped a know there's demand this when nominally, also. if a look clearly versus that Doug. know AI server helps. three standpoint. enterprise composition eight Yeah, get you your help But don't on

Brian Chin

could of for storage that And language that. these it. over scale potential Appreciate also models Got time. out increase your But probably thanks probably inputs. Okay.

Doug Bettinger

Brian. you, Thank

Operator

Sachs. question. Toshiya with go from comes question Hari next from Our ahead Goldman Please your

Toshiya Hari

Hi, guys. Doug. question. Tim taking or for Thanks the

guys directly application, revenue think Just to the give Doug, What’s And could was about hard of given strategic, seeing right? memory other? I foundry, a by was going sustainability we tell of not and standpoint, sort forward? It's ground. It's makeup think near-term to was the China color so and hoping on spend you that China, on said from I I just guess, you economics. what chunk tied the is a necessarily importantly, our terms of domestic. XX% really more big in of little how should you're

But from what us. hearing it's So are And in forward? customers, is much for of the what they visibility terms feedback? how hard you're giving going you

Tim Archer

Yeah.

between I end automotive obviously, markets. edge split. lot side markets, think of I focus with mean, as and we're industrial familiar on specialty all I domestic well of on those think trailing it's the as a investments and some memory technologies, that China types

we impacted deferred least As these you have those of that of last are visibility mentioned, markets. about a that view we in the where within edge I in a are of fair horizon element forecasts. continues fabs we to capture strategic. pretty giving long-term it's mean, talked at China, payments, by feel quarter are especially to us emerging try that bit trailing are good some revenues new customers specialty technology those some the investment down this of end markets Doug need,

Toshiya Hari

gross as a And follow-up, helpful. Thank Doug then That's margin. for you. on one maybe

And the volumes benefits? this, Thanks. talked we inning there's a the think year tailwind things years you ago, of recover You headwind where you are know efforts And to and of as talk but ago, Malaysia terms you doing times. reaping I the some What a ending should as are you today? X.X no with used in, which to about like in about how exactly about of couple forward? a going ramp are operational initiatives there?

Doug Bettinger

Yeah.

the about anywhere. to it is I really business now, think, way not think growing down. we're is Toshi, Right

back, what that more to from the us. see Malaysia whenever it's today, factory, pivot has I an think doing largely is, than as you we to which growth see that opportunity come do will be

embarked of best cost at footprint activities, it, we're of think kind help quarter. restructure to the think you of the about point. million the at to forecast. We've maybe plans to going way million And $XXX $XXX with maybe to last charges of the we a end Now this given I've company. the We on the restructuring take taken

we still have on. things So some working we're

done you the Although of is aspect I of portion workforce with would We're it. it tell that complete.

believe. So we that's behind us,

repositioning we are around doing be other efficiencies upon just you're things little embarked the a initiative some next there's looking inventory, will at transformation product, company, at several of the maybe infrastructure years. over multiyear digital will which what So deliver stuff, a bit

is things what that of guess, still describe. I are handful a there's I coming would So future, in the

Toshiya Hari

Appreciate the color. you. Thank

Tim Archer

Toshiya. Thanks,

Operator

your ahead go Atif next Our question with from comes question. Malik Citi. from Please

Atif Malik

billion And adoption billion I for investments. interesting I gave like listened X%, When AI leads in years Taiwan, point next have $X.X on you the XX% $X questions. that semi AI few leading-edge server data you we Thank about incremental not X%. in we is my Hi. adoption taking they foundry believe did thought questions AI major server to I this raise but really digit, the any WFE. probably talked X% rate high growth to two single to CapEx year. an

Maybe the So in server higher from it's the seeing not investments of in explains a markets. discrepancy adoption? what terms lift other just leading-edge underutilization end in

Doug Bettinger

is about, statements we're I longer-term Atif, I think these are making. guess what

AI the over you're the occur in frankly. right going WFE, several see not really a In next is years. meaningful going composition to servers. This I you're the term, of to about think short uptick

right, don't you're and I server to, call mid- -- mid-single percent I know, volumes it, of servers. of digit more As largely, I'd think total

grows in that term, you short It for time. sort it short demand. happen the really occur of meaningful investments really think show think. way doesn't That But as doesn't as in to over capital the in might requires quickly a I term. future up

Atif Malik

this they get a the to been waiting And follow-up, have side guys last all Got three inflection technology on as around, leveraged for particularly are it, then for very well you and years. the edge Doug.

about orders ago. about six months in in versus December peer having better is Europe visibility spoke talking quarter And this line Your pilot year. Tim

the half question of or the second kind opportunity first all my next is, year So it you? Is to meaningful of next gate year? see grow when you do around of you half for

Tim Archer

talked at growth sort -- next the for of mean with timeline are applications starts it to and the ramp and all there gate see about, those are like that lumped tools talked that are gate first specialized faster But specialized 'XX. think, of into just those line where like selective it's We'll in going point that of to the think all I through in we segments, that with we I products see think and growth I in 'XX half as move second first through more else. year. around that etch products in then about We'll is these very tend on around. traditional in things that's we everything -- you suite the meaningful. become half I some and of

maybe but move in trends the the market we're that to ready of yet, technology 'XX overcomes favor. of starting guide We're at that are in some How 'XX? key dynamics not yeah, rest those point. So inflection to our

Atif Malik

Thank you.

Tim Archer

Thanks, Atif.

Operator

Our next go Moore with question your comes Morgan Please ahead from Stanley. from question. Joe

Joe Moore

Do headwinds? pretty I Great. Have follow-up thought into on like? controls. well what what Thank China last would then business look be you there restrictions guess, question. have then that of to been how controls? -- you. seeing of been that's the any your Is since visibility I the could year's be? the rumblings done have China And that impact different? has to Is obviously additional they you given anything there continue wanted are the you export there

Tim Archer

shipments etch restrictions, what right we estimate the restrictions $X we this year the around Joe, that make announcement -- last business, billion. $X.X the be year, able that billion on revenues. had still not could, to last clarified closer memory to going $X We last the Yeah, to that our because was That at X year some we the for billion to of -- were business that whether is talked earlier October our would impact impact be towards had sure trailing the impact year's of -- $X October we mark. we weren't this of the billion to end we end X

China logic through moved bit towards as focus can what spoke this trailing its memory, that's that some shifted just has and Now trailing seen same as time, etch, upticking we we've foundry year, areas a we've in they the invest, edge these and the about. the of

or regulations future that really So I speak may to may can't not contemplated. be

semiconductor in the we right business now. of We team they regularly Washington can do the with about understand our engaged and have government, make industry, best that's and details DC sure the the that's a

Joe Moore

you very much. Thank Okay.

Tim Archer

Joe. Thanks,

Operator

Our ahead next Bank your Vivek with America. question Please go of Arya question. comes from from

Vivek Arya

an my to should question. And Thanks should I'm for for, when should we trends, at orders you up? be signs look what pricing taking should improvement, two we waiting to on are when quarters like WFE be quarter improve? look for pricing Just be start should external utilization we to Tim, to curious, eye for guys when if metrics start of memory pick try historical the keeping one predict memory kind starts the of to improvement? pick So what of and you up?

Tim Archer

customers that, to improvement fab. utilization in the Okay, in we a get greater memory, just start little bit standpoint difficult, from tend of pricing the obviously, to I guess, interested

of going start of side why back, been first was of recovery indicator turn uptick going deep CSBG from on, come mentioned service. the your our to are easier, to that spares fabs answer of probably one greater will our Lam. be Lam's When and so on. earlier there in I degree and that would obviously, have reporting relative be that little what's to than That's in the they utilization revenue we spares in I of it's you'd been fabs, an have service consuming businesses, has once more, expecting I spares that numbers are should reported utilized those an Obviously, to in really such think because and what to first be expected. cuts starting a that back service we we a -- beneficiaries memory the much the and a therefore, impacted memory and business indications see

Vivek Arya

you origin do industry there in then But right, you an were of the scenario is in on sequentially I up I the around utilization, from CSBG visibility that guess what pick I quarter. that perspective. the is was the heard a revenues the which call, to memory next from think suggesting mentioned there really start because question not

still there the is a delta So two? between

Doug Bettinger

CSBG suggest anybody the not a quarter. picking in next call not statement we the is Vivek, on That was made. did up

said maybe you you did perhaps that something we misspoke or we if said. that led So something misinterpreted we conclusion, else

Vivek Arya

Okay.

Sorry. the it sizable. was such upside. Maybe Doug, I margin gross question, strong QX, don't remember had quite upside maybe a I second you in margin time misheard. the for last my right, Then gross

point? sustainability at about something the I of likely that the some reverse, the way at mix. What to is margins think right these gross that is to unsustainable? think you mentioned levels. along mix lines Like of Is right,

your that plus these So grow can change the trajectory margins? is gross sequentially, let's levels? to sales to be change if dramatically to the Or say mix that at gross in there continue assume margins then of minus you continue would something

Doug Bettinger

I'd point anything is two I our ahead things. efficiencies further where whatnot, operational mix in and to I of Vivek, would if And don't efforts know just it quarter. the did is maybe I favorable to I that there's have suggested One, terms it point in little dramatic. a current of thought been.

that to things that you'll But up of are in pleased as in I done extremely both we've see very the as we've bit tell control, able a run too wouldn't far own we always well what we and the benefit stuff, benefiting with and mix are from products will. know where I now see in December. down, The September customer would into anyway. the if You away you, magnitude same operational right I mix near quarter. don't mix. little term I'm been execute well. We're our

Vivek Arya

you. Thank

Doug Bettinger

Thank you.

Operator

go your Our Please Bernstein next Rasgon with Research. ahead from question. Stacy from comes question

Stacy Rasgon

questions. Hi guys. Thanks for taking my

of it second QX, on actually in in my deferred is coming that How in more see $X.X first billion of in idea yourself you half? talked half. of is second that? And you timing of Do much you bulk do the recognizing the the much about selling the through one, that billion any QX? For how China $X.X And the China? have from actually

Doug Bettinger

require not cash before Yeah. we in I've how number of the of much newer creditworthiness, Customers I've we I never on is said it it as new that tools. advance how a the is China. put China. build are we're it in haven't much that right? sure of exactly described customers,

a second is. said, of as Although how amount to the the turns much decent of to year. turns the what half that I majority it revenue, And it revenue in of I said on

Stacy Rasgon

of billion amount $X.X be [indiscernible]? have in from deferred? will that you half revenue like, So, what recognized be the second normal would that the Like,

Tim Archer

deferred expect always No, expect Stacy, been here. to it always a a normalized It's elevated. a you've seen be the to always of revenue cash has past. just why that's of should there's We've got be here, I here, regular this probably and billion us is advance in now. than payments think, from right you that. to different million level it's That's what $XXX on lot basis, I wouldn't too $X in

Stacy Rasgon

Got it. you. Thank

of views not a give see where talking ago? on versus out XX memory breaking that? down so in question, in last For you feeling my your second both have mid-XXs. were a Can changed how And whether or us quarter we you're WP for NAND DRAM over like those you days the versus the

Tim Archer

Yeah, we've -- far by obviously said that year-on-year. about NAND XX% is said We about worse.

to at that a down DRAM then signs obviously, least in of trends. So our we've about obviously little these talked a just just mid-XXs. be listening as HBM of some of, I terms just the and some think result first part customers bit with some XX and last bit mean we've was more the I of cuts on further quite that about And heard optimism the hours. NAND And less that. improvement, seen in of than to would to change, as a them, little that talk we've again, our DRAM in talking recover customers

So...

Stacy Rasgon

DRAM falling? is still Like, you think do utilization in

Doug Bettinger

pretty a Stacy. low at still It's level,

Stacy Rasgon

got it. Thank Okay, you.

Doug Bettinger

You're welcome.

Tim Archer

Thanks.

Operator

comes question with question. Curtis from next from Our Blayne ahead go Barclays. Please your

Blayne Curtis

kind just the what there inflection. seeing just kind back you're and you squeezing of much for seems like when the Stacy by memory, just is DRAM? for billion Stacy was then in. you the flattish. asking it kind memory, kind dollars, WFE I'm was the raised And about was of about? part is thanks asked. in China curious following But in more Hey, seemed couple that just talk was like of it of me confused, growth Or just really Maybe it this increase that of outlook on is September NAND how I up a

Doug Bettinger

and not little uptick high-bandwidth Yeah, Blayne, Tim bit those in more A but WFE, the things. pointed to as memory China are two in it's huge a contributors.

Blayne Curtis

pieces in commentary Got at just there's I of I foundry leading you've delays moving kind etch. are understand, between non-China back piece, you some some two of then the you. And moving for pieces, the the to year? half and what those want guess, seen just Can this you logic, seeing

Doug Bettinger

didn't logic. we Perhaps not anything sure did. We in things roughly you're memory others when they down how run you described sooner incremental. We see some I'm up about in yeah, WFE is bit leading-edge that's right, right see generally, like setting than suggested quarter. saw looks describing where know softening it's a that down, of now. logic, mid-XXs, talked rating things And where is at just been down that kind foundry of look last a a foundry little is and little XX%. you probably bit we're we But it

Blayne Curtis

Doug. Thanks, Okay.

Doug Bettinger

Thanks, Blayne.

Tina Correia

question we please. Operator, time for one more have

Operator

ladies from our with final your ahead come And go Rakesh Vijay question. and question from Mizuho. Please gentlemen, will

Vijay Rakesh

Yeah. Hi.

any next fabs much on these next onshore thoughts a look for Just you year, how as CapEx on at contribute could greenfield year? question some for of -- WFE to

Tim Archer

world. of -- we'll as momentum. becoming see it's a too parts the in we efforts absolute about just not think other number. that as to year, about clearly, I -- to years, middle through from these contributor move meaningful building this only think an couple I but regionalization talk regional this But Well, of the I spending, here next early do talked the that it's we're in 'XX of

Vijay Rakesh

see big on how it. Thanks. is packaging, growing I AI exposure as on you look your what have the any you guess? CoWoS packaging how roadmap much there Got there. When obviously, side, then you a thoughts mentioned and year, And that at -- next

Tim Archer

Yeah. I And exposure kind etching in the of to strong. related board packaging very everything would now. deposition Lam's is across advanced say mean growing right is I

CoWoS-X So we sell but exposure the I specifically you HBM, at importance to right. tools like there. there you're even and the in things types system, our called mean I out of packaged of broadens look further that AI when

processing. point, And atomic I technologies in mentioned this to new if scale packaging, caught people even advanced having invest it, we're for in

advanced ALD things see now. used And so in being can packaging you like

is advanced for used world GaN. ALD And where so we're is used really for packaging, in a ALE being XXX-millimeter being

portfolio I these exciting. it think is opportunities. that leverage And new growth creating pretty opportunities tremendous broad all really our Lam technologies of for to for it's emerging

Vijay Rakesh

Thank it. Got you.

Tim Archer

you. Thank Yeah.

Doug Bettinger

Vijay. Thanks,

Operator

conference that and back are you gentlemen, floor to to and gentlemen, me? We ladies be closing management with for And hear able over And we'll we'll call. Ladies team closing the turning for thank remarks. the today's management, any you be joining.

now You lines. disconnect may your

Lam Research (LRCX) 26 Jul 232023 Q4 Earnings call transcript