15 December 2025 | 11:00PM JST Equity Research JAPAN TECHNOLOGY: SEMICONDUCTOR CAPITAL EQUIPMENT WFE outlook raised; expecting continued robust investment, especially in DRAM; reiterate Buy on TEL Double-digit (%) growth forecast for CY26; WFE demand ex-China to drive growth Against a backdrop of expanding demand for AI semiconductors, demand is growing for a wide range of DRAM types, including not only HBM but also LPDDR and GDDR. As a result, it is increasingly likely that major DRAM manufacturers will in ...

15 December 2025 | 11:31PM JST Equity Research Japan Technology: Semiconductor Capital Equipment: Asia Tech Tour: Reaffirming strong AI-related demand as a whole We hosted group meetings for investors with the IR teams of HOYA (Buy), Advantest (Neutral), and Tokyo Electron (Buy) on our Asia Technology Tour over December 8-12. We summarize our key takeaways below. Our overall impression is that the meetings reaffirmed strong demand for AI-related products as a whole. HOYA: Demand remains robust in all major ...

Core Insights - Polen Capital's "Polen International Growth Strategy" reported a return of -4.23% gross and -4.53% net of fees for Q3 2025, underperforming the MSCI ACWI (ex-USA) which gained 6.89% [1] - The strategy's concentrated quality investing approach did not yield expected results during the quarter [1] Company Performance - ASML Holding N.V. (NASDAQ:ASML) was highlighted as a key stock in the Polen International Growth Strategy, with a one-month return of 9.51% and a 52-week gain of 58.76% [2][3] - ASML's stock closed at $1,119.69 on December 08, 2025, with a market capitalization of $434.605 billion [2] Market Context - The performance of ASML was bolstered by investor optimism surrounding AI, as semiconductor capital equipment companies benefited from the demand for advanced chips essential for AI applications [3] - Concerns regarding a slowdown in the memory chip industry and Intel's performance diminished during the quarter, positively impacting semi-cap stocks [3] Hedge Fund Interest - ASML was held by 82 hedge fund portfolios at the end of Q3 2025, an increase from 78 in the previous quarter, indicating growing interest among institutional investors [4]

Lam Research (NasdaqGS:LRCX) 2025 Conference December 02, 2025 12:55 PM ET Company ParticipantsTim Archer - President and CEODoug Bettinger - EVP and CFOConference Call ParticipantsTim Arcuri - Managing Director and Semiconductors and Semiconductor Equipment Equity Research AnalystTim ArcherI was supposed to say that, Tim? Sorry. The mic just came on.Tim ArcuriWe're going to start. Good morning, good afternoon. I'm Tim Arcuri. I'm the Semi and Semi-Equipment Analyst here at UBS. Very pleased to have Lam Res ...

J P M O R G A N Asia Pacific Equity Research 27 November 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. Semiconductor/SPE sector WFE demand remains high; CoPoS, HBM-TCB, and other back-end technologies noteworthy In this report, we raise our wafer fab ...

Summary of Key Points from the Conference Call on Global Semiconductor Capital Equipment Industry Overview - The focus is on the **Wafer Fabrication Equipment (WFE)** market, particularly imports to **China**. - The data indicates a **year-to-date (YTD)** increase of **7%** in WFE imports to China as of October 2025, reflecting strong demand in the region [2][34]. Import Data Highlights - **October 2025** WFE imports to China totaled **USD 3.23 billion**, showing a **month-over-month (MoM)** decrease of **35%** but a **year-over-year (YoY)** increase of **11%** [2][23]. - The **YTD total** for WFE imports reached **USD 32.2 billion**, maintaining a **YoY growth of 7%** [24]. - The largest segment of imports in October was **Lithography**, accounting for **USD 1.03 billion** (32% of total imports), with a **YoY increase of 90%** [24][57]. Equipment Type Performance - **Lithography**: MoM decrease of **25%**, YTD YoY decrease of **10%** [3][24]. - **Deposition**: MoM decrease of **42%**, YTD YoY increase of **13%** [3][24]. - **Dry Etch**: MoM decrease of **27%**, YTD YoY increase of **58%** [3][24]. - **Process Control**: MoM decrease of **66%**, YTD YoY increase of **11%** [3][24]. Regional Insights - The share of imports from **US, Malaysia, and Singapore** increased to **38%** YTD, up from **33%** last year, while Japan's share decreased to **23%** from **26%** [3][42]. - **Shanghai** and **Guangdong** accounted for **58%** of total imports YTD [3]. Company-Specific Insights - **ASML**: Expected to see **China sales** reach **EUR 2.55 billion** in Q4, up **9% sequentially** and **33% YoY**, driven by strong lithography imports [4][68]. - **LRCX**: Anticipated **China revenues** to decrease by **28% QoQ** in December, with China exposure at **32%** of total revenues [5][87]. - **AMAT**: Reported a **23% QoQ decline** in China revenues, with actual exposure at **29%**, lower than regression estimates [6][90]. - **TEL**: Projected a **17% YoY decline** in China revenue [8]. - **Screen**: Expected a significant **84% YoY decline** in China revenue [9]. Investment Implications - **NAURA**: Rated **Outperform** with a target price of **CNY 480.00**, benefiting from domestic WFE substitution in China [12]. - **AMEC**: Rated **Outperform** with a target price of **CNY 380.00**, recognized for its technology and market share gains [13]. - **Piotech**: Rated **Outperform** with a target price of **CNY 375.00**, noted for product innovation [14]. - **Tokyo Electron**: Rated **Outperform** with a target price of **¥39,400**, expected to gain market share [15]. - **Advantest**: Rated **Market-Perform** with a target price of **¥20,400**, benefiting from increased testing intensity [16]. Conclusion - The WFE market in China shows robust demand despite some month-over-month declines, with significant implications for major players in the semiconductor equipment sector. The data suggests a complex landscape with varying performance across different equipment types and companies, highlighting both opportunities and challenges in the market.

Financial Data and Key Metrics Changes - Third quarter revenue reached $988 million, representing a 10% year-over-year increase and a 2% sequential increase, exceeding guidance expectations [4][12] - Net earnings per diluted share were $1.93, above the midpoint of guidance, with strong free cash flow generation of $147 million, over 100% of net earnings [4][16] - Gross margin for Q3 was 46.6%, stable compared to the previous quarter, with tariff impacts of about 80 basis points [15][16] Business Line Data and Key Metrics Changes - Semiconductor revenue was $415 million, down 4% sequentially but up 10% year-over-year, driven by strong demand in vacuum products and plasma and reactive gas businesses [12][13] - Electronics and packaging revenue grew to $289 million, up 25% year-over-year, driven by robust demand for chemistry and equipment [6][13] - Specialty industrial market revenue was $284 million, a 3% sequential increase but down 1% year-over-year, indicating stable trends [9][14] Market Data and Key Metrics Changes - The semiconductor market showed solid year-over-year growth, with expectations for flat sequential revenue in Q4, translating to double-digit growth for the year [5][12] - Electronics and packaging market revenue is expected to increase sequentially in Q4, with a robust full-year growth forecast of approximately 20% [9][18] - Specialty industrial market revenue is anticipated to remain steady at around $280 million in Q4 [19] Company Strategy and Development Direction - The company is focused on leveraging its comprehensive portfolio to capture emerging AI-driven demand and is well-positioned to support advanced technology roadmaps [4][10] - Continued investments in organic growth opportunities while reducing leverage through principal prepayments are part of the long-term capital allocation strategy [17][21] - The company aims to achieve a net leverage target of 2.5 times by 2027, with ongoing efforts to reduce debt [97] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the semiconductor market's recovery, particularly in memory pricing and demand, with expectations for a more supply-constrained environment [26][60] - The company anticipates continued strength in its chemistry equipment business, supported by AI, despite potential seasonal declines in chemistry sales [9][19] - Management highlighted the importance of adapting to evolving industry trends, particularly in advanced packaging and the increasing complexity of semiconductor applications [68][70] Other Important Information - The company made a voluntary principal prepayment of $100 million in October, totaling $400 million in voluntary payments for 2025 [17] - A dividend of $0.22 per share was paid during the quarter, amounting to $15 million [18] Q&A Session Summary Question: Clarification on E&P business and chemistry flow-through into 2026 - Management indicated that while they are not guiding for 2026, strong equipment sales position them well for additional chemistry revenue starting in 2026 [24][25] Question: Semiconductor order patterns and pricing recovery - Management noted positive trends in memory pricing and a potential supply-constrained environment, but emphasized that customer order patterns remain to be seen [26][60] Question: Growth drivers in E&P business - Management stated that equipment sales contribute significantly to revenue growth, with a historic year for the equipment business expected [31] Question: Visibility on equipment sales and chemistry growth - Management confirmed strong bookings for chemistry equipment and expressed confidence in meeting demand with existing manufacturing capacity [37] Question: Trends in NAND upgrade cycles - Management acknowledged the lumpy nature of NAND upgrades but expressed readiness to meet any uptick in demand [60] Question: Revenue trends by geography - Management highlighted growth driven by Asia, with a shift towards Southeast Asia as customers onshore chip and packaging fabs [77] Question: Direct China business outlook - Management indicated that while direct semiconductor sales to China are limited, advanced electronics packaging remains a significant part of their business [95]

Financial Performance - Q3 2025 total revenue reached $510.0 million[36] - Q3 2025 gross margin was 17.0%[36] - Q3 2025 operating margin was 5.7%[36] - Q3 2025 EPS was $0.28[36] - Q4 2025 revenue guidance is between $480 million and $530 million[38] - Q4 2025 EPS guidance is between $0.11 and $0.31[39] Segment Performance - Q3 2025 products revenue was $445.0 million with a gross margin of 15.1% and an operating margin of 4.9%[37] - Q3 2025 services revenue was $65.0 million with a gross margin of 30.0% and an operating margin of 11.1%[37] Strategic Growth - The company is focused on increasing market share in manufactured components and expanding its customer base[26] - The company aims to reduce the cost of ownership for customers by leveraging advanced technology and integrated solutions[27]

Financial Data and Key Metrics Changes - The company reported record revenues of $5.3 billion for the September quarter, a 3% increase from the June quarter [5][18] - Gross margin reached 50.6%, and operating margin was 35%, both record levels for the company [5][18] - Deferred revenue balance at quarter end was $2.77 billion, slightly up from the June quarter [18] - Diluted earnings per share were $1.26, above the midpoint of the guidance range [25] Business Line Data and Key Metrics Changes - Foundry accounted for 60% of systems revenue, up from 52% in the June quarter, marking the third consecutive record quarter [19] - Memory contributed 34% of systems revenue, down from 41% in the prior quarter, with non-volatile memory at 18% [19] - DRAM increased to 16% of systems revenue from 14%, driven by strong investments in high-bandwidth memory [19][20] - The Customer Support Business Group generated approximately $1.8 billion in revenue, slightly higher sequentially and year over year [22] Market Data and Key Metrics Changes - China represented 43% of total revenue, up from 35% in the prior quarter, with domestic customers growing significantly [21] - Taiwan accounted for 19% of revenue, flat sequentially, while Korea decreased to 15% from 22% [21] Company Strategy and Development Direction - The company anticipates a $200 million revenue impact from the new 50% affiliate rule affecting shipments to certain domestic China customers [6] - AI-related demand is expected to support sustained strength in leading-edge foundry logic and DRAM, with a robust setup for equipment spending in 2026 [7][8] - The company is investing in advanced packaging opportunities, anticipating a shift to panel-level packaging to meet the demand for larger chips [15][16] Management's Comments on Operating Environment and Future Outlook - Management expects the China region to represent less than 30% of overall revenues in 2026 due to the impact of the new regulations [7] - The company sees a strong demand for NAND upgrades and anticipates over $40 billion in spending for upgrades over the next several years [9][20] - Management expressed confidence in outperforming the wafer fabrication equipment (WFE) market in the long term due to technology trends in semiconductor manufacturing [38] Other Important Information - The company plans to provide a detailed 2026 WFE spending outlook in January [8] - Capital expenditures for the September quarter were $185 million, focused on lab investments and manufacturing site expansions [27] - The company remains committed to returning at least 85% of free cash flow to shareholders over time [25] Q&A Session Summary Question: Insights on customer conversations regarding AI infrastructure spending - Management noted that while recent announcements indicate future demand, current equipment needs are focused on enterprise SSDs and NAND upgrades [32][34] Question: Drivers for relative outperformance in 2026 - Management highlighted that Lam's markets in etch and deposition are expected to outgrow WFE due to ongoing technology transitions [36][38] Question: Clarification on December revenue guidance - Management indicated that the stronger-than-expected WFE and high-bandwidth memory investments contributed to the revised guidance [41][42] Question: Expectations for China revenue in 2026 - Management expressed confidence that China revenue would decline due to the anticipated restrictions, despite previous growth trends [43][45] Question: WFE intensity in AI data centers - Management clarified that the $8 billion of WFE for every $100 billion in data center investment reflects the growing opportunity for Lam in AI applications [49][52] Question: NAND market outlook and growth drivers - Management indicated that NAND growth would primarily be driven by upgrades, with potential for new tools if demand remains high [68][69]

Financial Data and Key Metrics Changes - The company reported record revenues of $5.3 billion for the September quarter, up 3% from the June quarter [5][18] - Gross margin reached 50.6%, a record in the post-Novellus period, improving from 50.3% in the June quarter [18][22] - Operating margin was 35%, also a record level for both dollars and percentage terms [18][22] - The deferred revenue balance at quarter end was $2.77 billion, slightly up from the June quarter [18] Business Line Data and Key Metrics Changes - Foundry accounted for 60% of systems revenue, up from 52% in the June quarter, marking the third consecutive record quarter [19] - Memory contributed 34% of systems revenue, down from 41% in the prior quarter, with non-volatile memory at 18%, down from 27% [19] - DRAM increased to 16% of systems revenue from 14%, driven by strong investments in high-bandwidth memory [19][20] - The Customer Support Business Group generated approximately $1.8 billion in revenue, slightly higher sequentially and year-over-year [22] Market Data and Key Metrics Changes - China represented 43% of total revenue, up from 35% in the prior quarter, with domestic Chinese customers growing significantly [21] - Taiwan accounted for 19% of revenue, flat sequentially, while Korea dropped to 15% from 22% [21] Company Strategy and Development Direction - The company anticipates a $200 million revenue impact from the new 50% affiliate rule affecting shipments to certain domestic China customers [6] - AI-related demand is expected to support sustained strength in leading-edge foundry logic and DRAM, with a robust setup for equipment spending in 2026 [7][8] - The company is investing in advanced packaging opportunities to meet future demands, with tools being engineered for panel-level packaging [15][16] Management's Comments on Operating Environment and Future Outlook - Management expects the China region to represent less than 30% of overall revenues in 2026 due to the impact of the new rule [7] - The company sees a strong demand for NAND upgrades, estimating over $40 billion in spending required over the next several years [9][20] - Management expressed confidence in outperforming WFE growth due to technology trends in semiconductor manufacturing [38] Other Important Information - The company allocated approximately $990 million to share buybacks in the September quarter, with a remaining $6.5 billion on the share repurchase plan [25][26] - Capital expenditures for the quarter were $185 million, focused on lab investments and manufacturing site expansions [27] Q&A Session Summary Question: Insights on customer conversations regarding AI infrastructure spending - Management noted that while recent announcements indicate future demand, current equipment needs are focused on enterprise SSDs and NAND upgrades [33][34] Question: Drivers for relative outperformance in 2026 - Management indicated that Lam's markets in etch and deposition are expected to outgrow WFE due to ongoing technology transitions [38] Question: Clarification on December revenue guidance - Management attributed the stronger December guidance to improved expectations in high-bandwidth memory and overall WFE strength [42] Question: Outlook for NAND market and potential for new tools - Management expects continued focus on upgrades in NAND due to a large install base, with potential for new tools if demand remains high [68] Question: Impact of clean room space on growth - Management acknowledged that physical infrastructure limitations could affect growth, but emphasized that demand is accelerating [60] Question: Dynamics of CSPG growth and margins - Management confirmed that CSPG is growing and remains accretive to operating margins, with strong demand in spares and upgrades [62]