LAM RESEARCH CORP Q2 FY2025 earnings call

• Lam closed 2024 with solid performance; December quarter metrics above guidance midpoints. Wafer fabrication equipment spending in 2024 was mid $90 billion. System revenues in DRAM and Foundry Logic hit record highs; installed base at ~96,000 chambers.
• In 2025, WFE spending expected to rise to ~$100 billion. Lam expects to outgrow WFE spending; shipments to gate-all-around nodes and advanced packaging combined to be over $3 billion in 2025.
• Strategic investments in R&D yielding product advances: Cryo 3.0 technology for etch, dry resist capability for EUV, Aether dry-resist solution selected as production tool for high bandwidth DRAM.
• In NAND, transition to higher layer counts with trends like Moly and Carbon gapfill; Lam's technologies positioned well, expecting several hundred million dollars in NAND shipments in 2025.
• Semiverse Solutions apply advanced tech to enhance equipment performance and address workforce shortage. CSBG equipment intelligence and cobot solutions seeing traction.
• 2024 operating margin improved by 160 basis points despite heavy investments in new products and infrastructure.

In the December quarter, systems revenue in memory was 50% (non-volatile memory at 24% of systems revenue, DRAM at 26%), foundry was 35%, and Logic and Other Markets was 15%. Customer Support Business Group (CSBG) generated almost $1.8 billion in revenue for the December quarter, consistent with the September quarter and 20% higher than the same period in 2023. CSBG revenue growth was driven by upgrade revenue offsetting decline in Reliant Systems. Revenue for the December quarter was $4.38 billion, up 5% from prior quarter. Deferred revenue balance was $2 billion, flat with September quarter. China region accounted for 31% of revenue, down from 37% prior quarter; Korea was 25%, up from 18% prior quarter.

• March 2025 quarter guidance: Revenue $4.65B ± $300M, gross margin 48% ± 1%, operating margin 32% ± 1%, earnings per share $1 ± $0.10.
• 2025 outlook: Technology inflections in DRAM and Foundry Logic, plus upgrade-focused NAND environment create opportunity to outgrow WFE spending and strengthen bottom-line. Plan to continue delivering incremental leverage to bottom-line while growing R&D and digital transformation investments.

• Unfavorable customer mix impacting gross margin.
• China export controls affecting forecasted revenue from certain customers, particularly in the second half of 2025.
• Fluctuations in other income and expense due to market-related factors.

Q: Can you speak about gross margin and the impact of customer mix and Asia operations?

A: Doug Bettinger said gross margin would be in a tight range, with customer concentration headwinds and Asia operation strategy offsetting somewhat.

Q: Any color on WFE by end market, especially NAND?

A: Doug Bettinger said NAND would be up in 2025, but not necessarily doubling; leading edge foundry and DRAM also expected to be strong.

Q: On China, visibility in lead times and impact of export controls?

A: Doug Bettinger said lead times unchanged, and China export controls impacted ~$700M in forecasted revenue for 2025, second half weighted.

Q: Incremental drivers for 2025, especially NAND upgrades?

A: Tim Archer said NAND upgrades and new tool shipments are largest year-on-year difference, with transitions to higher layer counts driving demand for new tools like carbon gapfill and moly.

Q: Guidance for CSBG in 2025?

A: Doug Bettinger said CSBG expected to be flattish year-over-year, with Reliant down offset by upgrade spending.