Summary of Lam Research Conference Call Company Overview - **Company**: Lam Research - **Industry**: Semiconductor Equipment Key Points and Arguments Industry Dynamics - The semiconductor equipment industry is experiencing a powerful confluence of spending drivers, particularly in non-lithography areas such as High Bandwidth Memory (HBM) and advanced packaging [4][6][10] - There is a notable divergence in performance among peers, with Lam Research expected to outperform the wafer fab equipment (WFE) market by over 20 points this year [6][10] Market Outlook - The WFE outlook is projected at $105 billion, with a flat second half compared to the first half [6] - Lam Research's Serviceable Available Market (SAM) is expected to be in the mid-30% range this year, with long-term goals of reaching the high 30% [6][10] - The company anticipates that etch and deposition will account for a growing share of WFE spending, moving from low 30% to high 30% by the end of the decade [8][10] Product Portfolio Strength - Lam Research has introduced new tools such as Halo (metalization), Akara (conductor etch), and Vantex (dielectric etch), which are seeing strong customer demand [9][10] - The company believes it can capture 50% of the growing SAM due to the strength of its product portfolio [10] Foundry and Logic Market - Foundry sales are becoming a significant part of Lam's business, with gate-all-around technology driving investments [20][22] - The company is seeing a transformation in its revenue composition, with foundry sales now representing 52% of system sales, compared to memory's previous dominance [22] NAND Market Insights - NAND equipment spending is currently at about half of its peak of $20.1 billion, with Lam Research focusing on conversion-related spending to upgrade the installed base [26][28] - The company expects approximately $40 billion in conversion-related spending over the next several years, with a significant share of that going to Lam [28][29] Advanced Packaging Growth - Advanced packaging is projected to grow significantly, from 1% of WFE to 6%, with revenues increasing from over $1 billion to north of $3 billion [30][31] - The growth is driven by high-bandwidth memory and advanced packaging solutions, particularly in AI compute applications [32] Financial Performance and Margins - Lam Research has improved its gross margins to 50%, up from 46% previously, due to a favorable customer mix and a close-to-customer manufacturing strategy [36][37] - Guidance for December suggests a potential decrease in gross margins to around 48% due to a less favorable customer mix and higher tariffs [37][58] Customer Support Business Group (CSBG) - The CSBG is expected to see modest growth driven by higher utilization rates and advanced service offerings [42][46] - The focus is shifting towards outcome-based services, enhancing customer satisfaction and operational efficiency [46][47] Regulatory and Geopolitical Factors - The U.S. Commerce Department's revocation of waivers for international customers will require Lam to apply for licenses in partnership with customers, with expectations for approval [18][60] - The company has a global manufacturing presence, allowing it to adapt to tariff environments effectively [57][58] Capital Allocation Strategy - Lam Research plans to return at least 85% of free cash flow to shareholders through dividends and buybacks, with a recent 13% increase in dividends [60][61] Additional Important Insights - The company is collaborating with ASML on the Aether dry-resist solution, which has the potential to generate $1.5 billion in revenue over the next five years [50][51] - There is a growing share in mature foundries, particularly in China, as the company navigates the end of the inventory cycle [56]

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]