Lam Research Corporation Q4 FY2025 earnings call

• Lam delivered a great quarter with revenues and profitability at the upper end of guided ranges, gross margins exceeded 50% for the first time since the merger of Lam and Novellus, and EPS hit a new high.
• Achieved record foundry revenues driven by strong performance in gate-all-around and mature node markets. Upgrades business grew to a new high, up mid-teens percent over the prior quarter.
• 3D scaling of device and advanced packaging architectures is accelerating growth in etch and deposition intensity, and Lam's new products targeting key technology inflections are winning with customers.
• In advanced services, Lam is at the forefront of realizing the vision of an autonomous fab with Equipment Intelligence enabled Dextro cobots, expanding Dextro capabilities to cover 3 additional tool types.

In the June quarter, systems revenue in the foundry segment was 41% of total systems revenue, with record foundry revenues driven by strong performance in gate-all-around and mature node markets. Non-volatile memory accounted for 27% of systems revenue, with investments in NAND upgrades anticipated to require ~$40 billion over several years. DRAM declined to 14% of systems revenue from 23% in the prior quarter, but DRAM revenue reached a new record in dollar terms for the 2025 fiscal year. The logic and other segment was 7% of systems revenue in the June quarter, slightly lower than the prior quarter. The China region came in at 35% of total revenue, an increase from 31% in the prior quarter, with increasing investment from global multinational customers in this region.

• Expect wafer fabrication equipment (WFE) spending to be in the $105 billion range in 2025, up from prior view of approximately $100 billion, predominantly due to an uptick in domestic China related spending.
• Expect WFE in the second half of 2025 to be roughly flat with the first half.
• For the September 2025 quarter, expecting revenue of $5.2 billion ± $300 million, gross margin of 50% ± 1 percentage point, operating margins of 34% ± 1 percentage point, and earnings per share of $1.20 ± $0.10.

• Tariffs ticking up, which may impact gross margins.
• Geopolitical uncertainties, such as potential restrictions on tools for multinational companies in China, which could affect revenue.

Q: Your tool business is likely growing 3x the growth rate of WFE in 2025 and outperformance to continue in 2026. What's the framework for key drivers of this outperformance?

A: It's all the technology drivers like foundry/logic moly, other tools around gate-all-around structure, selective etch, ALD, backside power, and advanced packaging incorporated across device types, where dep and etch intensity continues to rise faster than WFE.

Q: In terms of gross margins, does tailwind from China continue into December quarter and new normalized gross margin ex China?

A: Tim said they are benefiting from favorable mix but tariffs are ticking up, not expecting as favorable mix in December, should think about December gross margin around consensus 48%.

Q: China business was strong in June quarter, up about 20% sequentially. Is it a pull forward of equipment ahead of tariffs or more focused on bringing manufacturing capabilities domestically?

A: Douglas said it's hard to isolate, just a little bit more spending from a handful of customers, nearly impossible to say it's a pull-in due to specific reason.

Q: On advanced packaging, is that business coming in better versus expectation and helping second half shipment and revenue profile?

A: Douglas said advanced packaging total is probably a little bit stronger than expected, HPM is strong with some upside.

Q: Relative to 2026 outlook, do you have confidence Lam's business can grow even if CapEx not up for broader industry?

A: Douglas said they're not going to give 2026 number, but feel great about relative outperformance into next several years with strong product portfolio.

Q: NAND was strong in the quarter, do you see that strength sustaining through end of year or next couple of quarters?

A: Douglas said not going to get into quarterly breakdown of NAND spending, but view of NAND needing to spend roughly $40 billion over several years for technology conversions hasn't changed.