LAM RESEARCH CORP Q3 FY2025 earnings call

• March quarter results exceeded guidance with record foundry revenues and gross margin at a record since the Novelis merger.
• Fundamental drivers of WFE spending: strength in leading-edge foundry logic, NAND technology-driven conversions, and DRAM focus on high bandwidth memory.
• Strategic focus: expand served market, gain share with strong product portfolio (e.g., Gate All Around, advanced packaging), and grow CSBG revenue.
• Operational highlights: ALD products making gains (Stryker Spark ALD tool, Altus Halo system), ACARA system strong in etch, record upgrades revenue in CSBG, new multiyear spares agreement with a memory customer, and licensing of virtual fabrication platform Simulator 3D to three large customers.

In the March quarter, systems revenue breakdown was: Memory at 43% (non-volatile memory 20%, DRAM 23%), Foundry at 48% (new record in dollar terms), and Logic and Other at 9%. Deferred revenue balance was $2 billion, flat from the December quarter but with advanced payments trending lower and other components trending higher. Revenue for the March quarter was $4.72 billion, up 8% from the prior quarter.

For the June 2025 quarter, guidance includes revenue of $5 billion plus or minus $300 million, gross margin of 49.5% plus or minus one percentage point, operating margin of 33.5% plus or minus one percentage point, and earnings per share of $1.20 plus or minus $0.10. Management states there are no pull-ins from future quarters.

Potential impact of the current tariff and global economic environment dynamics on customers' plans, which could affect business performance.

Q: C.J. Muse asks about the sustainability of NAND upgrades and Lam's share of wallet.

A: Tim Archer responds that there's a large number of bits still at lower layers needing upgrade, Lam benefits from upgrading its own tools and new tooling for higher layer stacking.

Q: C.J. Muse asks about Taiwan revenues and sustainability.

A: Tim Archer and Doug Bettinger state Taiwan revenues are strong due to leading-edge foundry logic strength and new product roadmaps, and it informs thinking on tool shipments.

Q: Timothy Arcuri asks about manufacturing sustainability in the US and service spares in China.

A: Tim Archer and Doug Bettinger discuss global manufacturing footprint flexibility and that spares and services have various moving pieces including China restrictions.

Q: Harlan Sur asks about manufacturing to service US customers and gross margin sustainability.

A: Tim Archer and Doug Bettinger talk about global manufacturing flexibility and that gross margin has improved due to close-to-customer strategy.

Q: Stacy Rasgon asks about gross margin variability and services revenue.

A: Doug Bettinger states gross margin will vary and services revenue is flat-ish with Reliant headwinds offset by upgrades.

Q: Krish Sankar asks about overseas manufacturing and China visibility.

A: Doug Bettinger and Tim Archer discuss manufacturing flexibility and customer roadmaps in China.

Q: Sreenivas Pajjuri asks about Foundry Logic drivers and outperformance.

A: Doug Bettinger details drivers like gate all around, backside power, advanced packaging, and dry EUV photoresist processing.

Q: Atif Malik asks about WFE visibility and June quarter pull-ins.

A: Doug Bettinger states no changes seen in customer plans and guidance is based on known customer plans.

Q: Vivek Arya asks about second half sales and gross margin sustainability.

A: Doug Bettinger talks about market lumpiness and gross margin improvement from close-to-customer strategy.

Q: Blaine Curtis asks about customer conversations on tariffs.

A: Tim Archer states customers are focused on technology investments despite tariff uncertainties.

Q: Mehdi Hosseini asks about WFE strategic vs maintenance and CSBG flat year.

A: Doug Bettinger and Tim Archer discuss R&D investment and CSBG components.

Q: Joe Moore asks about CSBG subsegments and service spares in China.

A: Doug Bettinger and Tim Archer talk about CSBG components including spares, upgrades, and reliance on China.

Q: Tom O'Malley asks about NAND upgrade timeline and capacity utilization.

A: Tim Archer discusses mix of upgrades and new tooling, and cyclical nature of utilization and upgrades.

Q: Tim Scholes Milander asks about CSBG spares and NAND upgrade split.

A: Doug Bettinger and Tim Archer talk about spares performance and mix of upgrades and new tooling in NAND upgrades