Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lam Research Corp (LRCX, Financial) reported a record quarter for foundry revenues, demonstrating strong product momentum in leading-edge technology inflections.
- The company achieved the highest quarterly gross margin percentage since the Novellus merger, indicating successful operational efficiencies.
- Lam Research Corp (LRCX) is witnessing strong momentum in deposition and etch technologies, with significant wins in atomic layer deposition and conductor etch applications.
- The Customer Support Business Group (CSBG) saw record revenues in the upgrades business, driven by NAND technology conversions and active upgrades by key DRAM and foundry logic customers.
- Lam Research Corp (LRCX) is leading in virtual fabrication with new licensing agreements for its SEMulator3D platform, enhancing equipment performance and process optimization.
Negative Points
- The company is facing challenges due to tariffs and a dynamic global economic environment, which could impact future operations.
- Lam Research Corp (LRCX) experienced a decrease in memory systems revenue, with non-volatile memory and DRAM segments showing declines from the previous quarter.
- The logic and other systems revenue decreased, driven by reduced leading-edge spending.
- There is uncertainty regarding the sustainability of the current gross margin levels due to potential changes in customer mix and product mix.
- The company anticipates a first-half-weighted year, with potential revenue declines in the second half due to the loss of business from restricted Chinese customers.
Q & A Highlights
Q: Can you discuss the sustainability of the NAND upgrade cycle beyond June and how it might impact your share of wallet in the industry?
A: Timothy Archer, President and CEO, explained that a significant portion of the industry's bits are still at the 128-layer level, indicating a strong move towards upgrading to 2XX-plus layers. Lam is well-positioned to capture a significant share of the wallet through tool upgrades and new tools needed for higher layer counts, such as the Halo Moly tool, which is gaining momentum.
Q: Taiwan revenues were notably high this quarter. How sustainable is this contribution, and what does it imply for second-half tool shipments?
A: Timothy Archer noted that the strength in Taiwan is sustainable, driven by investments in leading-edge foundry logic and advanced packaging. Douglas Bettinger, CFO, added that the revenue levels are consistent with the company's strategy and are not expected to decline significantly.
Q: How is Lam addressing the impact of tariffs, and what steps are being taken to mitigate these effects?
A: Timothy Archer highlighted Lam's flexible manufacturing and supply chain operations, which allow the company to optimize tool delivery efficiently. Douglas Bettinger emphasized the global footprint of Lam's factories, which provides flexibility in responding to tariff-related challenges.
Q: With the expectation of a first-half weighted year, what are the factors influencing this outlook, and how does it relate to customer plans?
A: Douglas Bettinger confirmed that the year is expected to be first-half weighted due to the loss of some Chinese customers and the timing of customer plans. The company had anticipated this distribution and has not seen significant changes in the overall environment.
Q: How does Lam view the potential impact of tariffs on gross margins, and is there any quantifiable effect included in the guidance?
A: Douglas Bettinger acknowledged that tariffs have an impact, which is factored into the gross margin guidance of 49.5%. However, he did not provide specific quantification but assured that the guidance reflects the current understanding of the tariff situation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
