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][16] - Gross margin reached 50.6%, a record in the post-Novellus period, improving from 50.3% in the previous quarter [16][20] - Operating margin was also a record at 35%, reflecting strong company-wide execution [5][20] - The deferred revenue balance increased to $2.77 billion, driven by services and system-related transactions [16] Business Line Data and Key Metrics Changes - Foundry accounted for 60% of systems revenue, up from 52% in the June quarter, marking a third consecutive record quarter [17] - Memory contributed 34% of systems revenue, down from 41% in the prior quarter, with non-volatile memory at 18%, down from 27% [17] - DRAM increased to 16% of systems revenue from 14%, driven by high-bandwidth memory demand [17] Market Data and Key Metrics Changes - China represented 43% of total revenue, up from 35% in the prior quarter, with domestic customers driving growth [18] - Taiwan accounted for 19% of revenue, flat sequentially, while Korea decreased to 15% from 22% [18] Company Strategy and Development Direction - The company anticipates a $600 million revenue impact in 2026 due to the 50% affiliate rule affecting shipments to certain domestic China customers [5] - AI-related demand is expected to support sustained strength in leading-edge foundry logic and DRAM, with significant WFE spending anticipated in 2026 [6][7] - The company is investing in advanced packaging technologies to meet future demands, with a focus on panel-level packaging [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenges posed by the new regulations in China while capitalizing on global multinationals' spending [5][41] - The outlook for WFE spending in 2026 is expected to be robust, with AI-related investments driving demand [6][7] - Management noted that the company is well-positioned for both upgrade activity and new capacity builds in the future [9][10] Other Important Information - The company allocated approximately $990 million to share buybacks in the September quarter, with a remaining $6.5 billion on the repurchase plan [22][23] - Capital expenditures for the quarter were $185 million, focused on lab investments and manufacturing site expansions [25] Q&A Session Summary Question: Insights on customer conversations regarding AI infrastructure spending - Management indicated that while recent announcements provide future demand guidance, current equipment needs are focused on enterprise SSDs and NAND upgrades [30][31] Question: Drivers for relative outperformance in 2026 - Management expressed confidence that Lam's markets in etch and deposition will outgrow WFE due to ongoing technology trends in semiconductor manufacturing [34] Question: Clarification on December revenue guidance - Management noted that the stronger-than-expected WFE and high-bandwidth memory investments contributed to the revised revenue guidance for December [39] Question: Expectations for NAND market growth - Management anticipates that NAND growth will primarily be driven by upgrades rather than new tools, with a focus on existing installed base upgrades [66] Question: Impact of clean room space on growth - Management acknowledged that clean room space could limit growth across various segments, but emphasized that the equipment supply chain is generally responsive to demand [57] Question: Dynamics of CSPG growth - Management confirmed that core spare services and upgrades are growing faster than overall CSPG, which remains accretive to operating margins [60]

Lam Research (NasdaqGS:LRCX) Q1 2026 Earnings Call October 22, 2025 05:00 PM ET Speaker0Good day and welcome to the Lam Research Corporation September Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ram Ganesh of Investor Relations.Please go ahead.Speaker1Thank you, and good afternoon, everyon ...