Lam Research(LRCX)2023-10-19 01:56Financial Data and Key Metrics - September quarter diluted earnings per share was 67 million for equity compensation, 14 million in amortization [2] - Capital expenditures for the September quarter were 3.48 billion, up 9% from the prior quarter but down over 30% year-over-year [122] - Deferred revenue balance at quarter end was 150 million from the June quarter [122] Business Line Data and Key Metrics - Systems revenue in the memory segment was 38% of total revenue, up from 27% in the prior quarter, driven by DRAM growth [123] - DRAM represented 23% of systems revenue, up from 9% in the June quarter [123] - NAND spending was at historic lows, representing 15% of systems revenue, down from 18% in the prior quarter [123] - Foundry segment revenue was 36% of systems revenue, down from 47% in the prior quarter, primarily due to timing of leading-edge investments [124] - Logic and other segments represented 26% of systems revenue, flat with the prior quarter [114] Market Data and Key Metrics - China region revenue reached a high of 48% of total revenue, up from 26% in the prior quarter, with the majority coming from domestic Chinese customers [115] - Korea region revenue was 16% of total revenue, down from 24% in the prior quarter [132] - Customer Support Business Group (CSBG) revenue was 7 plus or minus 0.75 [3] - The company anticipates that 2024 may be a year of R&D spending growth to take advantage of future opportunities, which could temporarily impact leverage [4] - Management believes that China will remain a strong market, albeit potentially not as strong as in September, and expects other markets to recover, mitigating the China mix [6] - The company sees strong demand for high-bandwidth memory (HBM) and expects this business to grow significantly in the next year [20] Other Important Information - The company returned over 120% of free cash flow to shareholders in the September quarter, including 830 million in share repurchases and 1 billion-plus opportunity over the next several years [26] Q&A Session Summary Question: Impact of China Market on Business - Management believes China will remain strong, though potentially not as strong as in September, and expects other markets to recover, which will help balance the China mix [6] - The company does not see a material impact from recent regulations on its forecasted business, as it has already been restricted in shipping certain technologies to China [7] Question: High-Bandwidth Memory (HBM) and Advanced Packaging - The company sees strong demand for HBM, driven by AI-related applications, and expects this business to grow significantly in the next year [20] - Advanced packaging is expected to become a $1 billion-plus opportunity for the company over the next several years [26] Question: Gross Margin and R&D Spending in 2024 - Management expects gross margins to face headwinds in 2024 due to a potential normalization of customer mix, but long-term profitability objectives remain unchanged [129] - The company plans to increase R&D spending in 2024 to capitalize on future technology inflections, which may temporarily flatten operating leverage [40] Question: DRAM Uptick in the Quarter - The DRAM uptick was driven by strong demand for high-bandwidth memory and increased investment from domestic Chinese customers [110] - The company expects DRAM spending to continue to grow, particularly as the industry transitions from DDR4 to DDR5 [29] Question: Impact of Export Restrictions on Business - The company does not see a material incremental impact from recent export restrictions, as it had already factored in the restrictions on certain technologies [161] - The company expects to continue shipping to China, as customers there have long-term investment roadmaps [57] Question: Timing of Memory Spending Recovery - Management expects memory spending recovery to follow a phased approach, starting with increased utilization, followed by technology upgrades, and then capacity expansion [184] - The company anticipates that spares and upgrades will recover first, followed by new equipment purchases as demand improves [184]