Lam Research (LRCX) 2025 Conference September 03, 2025 08:50 AM ET Company ParticipantsDouglas Bettinger - EVP & CFOConference Call ParticipantsAtif Malik - U.S. Specialty Semiconductors AnalystAtif MalikCiti Global TMT Conference. My name is Atif Malik. I cover U.S. semiconductors, semiconductor equipment, and networking equipment stocks. It's my pleasure to welcome Doug Bettinger, EVP, CFO, Lam Research, as well as Ram Ganesh, Friendly Neighborhood IR. I'm going to kick it off with my questions, and if yo ...

Summary of Lam Research (LRCX) 2025 Conference Call Company Overview - **Company**: Lam Research Corporation (LRCX) - **Date of Conference**: June 03, 2025 Industry Insights - **Industry**: Semiconductor Equipment - **Market Size**: Wafer fab equipment spending is projected to be approximately $100 billion in 2025, reflecting mid-single-digit growth from the previous year [7] - **Key Segments**: - **Foundry**: Strong demand, particularly in leading-edge foundry [7] - **DRAM**: Growth driven by DDR5 and high bandwidth memory (HBM) [7] - **NAND**: Undergoing upgrades, with a projected $40 billion addressable opportunity over the next several years [28][29] Core Points and Arguments - **Gross Margins**: - Current gross margin is guided at 49.5%, up from 46% in the previous comparable quarter [17][18] - The company has adopted a "close to customer" strategy, enhancing margins by aligning production closer to Asia-based customers [18][19] - **NAND Market Dynamics**: - NAND upgrades are expected to be a significant growth driver, with two-thirds of the installed base below 200 layers, necessitating upgrades for QLC (Quad-Level Cell) production [32][33] - The company anticipates broad industry adoption of NAND upgrades this year, not limited to a single customer [30] - **Long-term Growth**: - The evolution of 3D device architectures is expected to increase the addressable market for Lam Research, with a shift in etch and deposition share from low 30% to high 30% [14][15] - The company is positioned to capture at least half of the growth in the etch and deposition market due to a strong product portfolio [15] - **China Market Impact**: - Revenue from China is expected to decline from approximately 40% to 30% of total revenue due to geopolitical factors [23][24] - The company does not foresee significant incremental impacts from recent U.S. Department of Commerce restrictions on China [22] - **Free Cash Flow Generation**: - Lam Research has demonstrated strong free cash flow generation, even during downturns, with a commitment to return at least 85% of free cash flow to shareholders [86][88] Additional Important Insights - **Customer Support Business Group (CSBG)**: - The upgrade segment within CSBG is expected to show significant strength this year, although overall growth may be flat due to reduced spending in China [45] - **Competitive Landscape**: - Lam Research maintains a strong market position in etch and deposition despite competition from domestic Chinese vendors [66][70] - The company is investing approximately $2 billion in R&D to stay ahead technologically [71] - **Future Outlook**: - The company anticipates that the current geopolitical concerns regarding China will diminish over the next five years as the market stabilizes [84] - **Dividend and Buyback Strategy**: - Lam Research plans to grow dividends annually and maintain a competitive position in the industry regarding shareholder returns [88][89]