Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lam Research Corp (LRCX, Financial) posted a strong September quarter with revenues and earnings per share exceeding the midpoint of guidance.
- The company achieved its fifth consecutive quarter of revenue growth, indicating strong execution despite a challenging industry environment.
- Lam Research Corp (LRCX) is well-positioned to benefit from technology upgrades in NAND, which is expected to drive spending recovery.
- The company is seeing strong momentum in advanced packaging, with SABRE 3D revenue more than doubling this year.
- Lam Research Corp (LRCX) is experiencing strong customer demand for productivity enhancements and equipment intelligence services, with increased adoption of its offerings.
Negative Points
- Domestic China WFE is expected to decline in the second half of the year, impacting Lam Research Corp (LRCX)'s revenue from the region.
- Gross margin decreased slightly due to a decline in customer mix and increased incentive compensation.
- Operating expenses increased due to higher program spending and incentive compensation, impacting profitability.
- The NAND segment has experienced a prolonged down cycle, with spending expected to increase only in 2025.
- Lam Research Corp (LRCX) anticipates a headwind in customer mix affecting gross margins due to a lower percentage of revenue from China.
Q & A Highlights
Q: Can you discuss the outlook for 2025 WFE, particularly in relation to China?
A: Timothy Archer, CEO: We expect overall WFE to be up next year, but specifically, China WFE will be lower. China's share of Lam's total revenue is expected to decrease next year compared to this year. More details will be provided in January.
Q: Did NAND utilization trends continue into the September quarter, and how confident are you in NAND WFE growth next year?
A: Timothy Archer, CEO: Yes, NAND utilization remained strong. We expect a shift to higher quality bits to drive technology upgrades, which is favorable for Lam. We are optimistic about NAND, regardless of whether WFE rises significantly.
Q: How do you view the growth trajectory of your HBM and advanced packaging business next year?
A: Timothy Archer, CEO: Our advanced packaging business, driven by AI, has strengthened beyond expectations. We see continued growth in advanced packaging as it enables system-level performance improvements.
Q: Can you elaborate on the adoption of molybdenum (moly) in 3D NAND and its impact on your business?
A: Timothy Archer, CEO: The transition to moly is a net gain for us, as it resolves Wordline resistance issues and represents a significant materials migration. This transition will benefit us in NAND and eventually in foundry logic and DRAM.
Q: How do you view the outlook for leading-edge foundry logic, given competitive dynamics?
A: Timothy Archer, CEO: Our outlook remains positive due to technology inflections like gate all-around, which create opportunities for Lam. We expect to benefit from new tools and technology transitions, such as backside power distribution and advanced packaging.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
