The operator introduces the Lam Research June Quarterly Earnings Call and mentions that the call is being recorded. Ram Ganesh, VP Investor Relations, then introduces the speakers and mentions that they will discuss the business environment, financial results, and outlook. He also reminds listeners that the call may include forward-looking statements and will be presented on a non-GAAP basis. The call is scheduled to last until 3:00 p.m. Pacific Time and a replay will be available on the company's website. Tim Archer, President and CEO, then begins his presentation.

In the June quarter, Lam reported strong results with revenue, profitability, and earnings per share exceeding expectations. Their CSBG business saw significant growth, and their Malaysia factory achieved a milestone in shipping its 5,000th chamber. Lam is also investing in product development, R&D infrastructure, and digital transformation to prepare for future growth. They expect WFE spending to be in the mid $90 billion range this year, with continued growth expected in 2025 due to the increasing demand for AI technology. This plays well to Lam's strengths in etch devices.

Lam expects memory customers to prioritize technology upgrades of their current production lines in order to increase capacity and reduce costs. This presents a significant opportunity for Lam, as they have a large installed base in the memory market. In the long term, Lam's focus on research and development will allow them to expand their market share and provide solutions for advanced semiconductor technologies. Their new product, DIRECTDRIVE, utilizes direct power coupling and plasma pulsing to achieve exceptional performance in 4F2 DRAM applications.

Lam is introducing new conductor etch and dielectric etch and deposition capabilities to support EUV patterning for gate-all-around and DRAM, as well as to meet the increasing demand for faster and higher-capacity enterprise SSDs. Their new Cryo 3.0 technology offers industry-leading control of the NAND memory channel hole profile, allowing for increased bit density and more sustainable solutions.

The article discusses the advancements in deposition technology and its importance in addressing the complex requirements of the growing AI environment. Lam's innovative PECVD-based pure carbon and gap fill process is mentioned as a promising alternative to traditional methods. The company also highlights potential growth opportunities in gate all around backside power delivery, advanced packaging, and [indiscernible] processing. The financial performance of the company in the June 2024 quarter is also mentioned, with strong execution and achieving the highest gross margin percentage since the merging of Lam with Novellus in 2013.

The June quarter results for the company showed an increase in revenue and a decrease in deferred revenue. The memory segment, specifically DRAM and non-volatile memory, saw a decline in investments while the Foundry segment remained stable. The logic and other segment saw an increase in spending, driven by mature node investments in China. The company expects gradual improvement in NAND investment in the next year.

In the June quarter, the China region accounted for 39% of total revenue, followed by Korea at 18% and Taiwan at 15%. The customer support business group revenue increased by 22% from the previous quarter and represented 44% of total revenues. Gross margin for the quarter was 48.5%, with operating expenses of $689 million, mainly focused on research and development.

In the June quarter, the company's operating margin was strong at 30.7%, and their non-GAAP tax rate was 11.5%. Other income and expense increased due to fluctuations in the fair value of their venture investments. The company allocated $382 million to share repurchases and paid $261 million in dividends. They also announced a $10 billion share repurchase authorization. For fiscal year 2024, they returned $3.7 billion or 88% of free cash flow. Diluted earnings per share were $8.14, and the diluted share count was 131 million shares. The company's cash and cash equivalents increased slightly, and their day sales outstanding and inventory turns also saw slight changes. The company is working on reducing inventory levels throughout the rest of the year.

In the June quarter, our noncash expenses included equity compensation, depreciation, and amortization. Capital expenditures remained flat from the previous quarter and we ended with the same number of employees. For the September quarter, we expect revenue of $4.05 billion and a gross margin decline due to customer mix. Operating margins will also be impacted by ongoing transformation costs. We are focused on improving our systems and operations, as well as implementing AI at a greater scale. Our forecasted earnings per share for the quarter is $8. We have successfully executed our objectives for the first half of the year, prioritizing investment in technology and driving operational improvements. The spares business is beginning to recover and we anticipate an increase in upgrade activity by the end of the year.

In the long term, Lam is well positioned to take advantage of the increase in etch and deposition intensity and deliver new capabilities for the semiconductor industry. They plan to discuss these opportunities at their Investor Day in February. The call was then opened for questions, with the first one asking about the service system mix in the guidance. The speaker clarified that they expect service to grow modestly for the year, with a particularly strong quarter in June. They also mentioned investments in DRAM and advanced packaging, but did not provide specific details on their forecast.

Timothy Archer, President and CEO of Lam Research, discusses the company's progress in the semiconductor industry, particularly in NAND and DRAM. He highlights their new tool for conductor etching, which is targeted towards future DRAM nodes, and their strong position in TSV electroplating for HBM. Archer also mentions the potential for increased demand for DRAM wafers, which would result in more equipment sales for Lam. On the topic of China, CFO Doug Bettinger provides some color on the company's business in the country.

The speaker is curious about China's performance in the second half of 2021 and into 2025. The company's CFO mentions that China's growth will be somewhat first half weighted this year, but overall it should be a solid year. He also hints at a slight gross margin headwind in the December quarter due to customer mix. The speaker then asks a question to the company's CEO about upcoming tech inflections, such as gate all around and backside power delivery.

During a recent conference call, Timothy Archer, CEO of Lam Research, discussed the transition from 6F2 DRAM to 4F2 DRAM and the potential impact on the company. He stated that while they are not able to quantify the opportunity at this time, they see each technological shift as an opportunity to increase their market share. Archer also mentioned the importance of addressing new requirements, such as the need for precision and smaller feature sizes, through their etching and deposition capabilities. He also highlighted the potential for growth in EUV technology and how Lam is well-positioned to excel in this area.

Srinivas Pajjuri asks Tim about the decline in DRAM revenue and the potential impact of HBM on wafer demand. Tim explains that the decline is due to a shift from mature DRAM spending to HBM, which is still in its ramping phase. He also mentions that HBM will continue to drive demand for DRAM equipment through 2025 and beyond. Srinivas then asks about the sustainability of the 20% sequential growth in the CSBG business and its impact on overall WFE, but Tim declines to give guidance for the next quarter.

A question is asked about the increase in utilization and whether it is a prelude to something else. The speaker explains that the increase is due to strong performance in the Reliant and spares segments, and that upgrades will likely become a bigger part of WFE spending in the future. They also mention that the CSBG business is expected to grow every year due to an increase in shipped tools.

The speaker addressed questions about gross margins and mentioned the potential for improvement in the next quarter due to a stronger China mix and increased output from factories in Asia. They also discussed the potential for higher margins from the installation of 7,500 high aspect ratio etch chambers in the industry.

The speaker is unable to provide a specific percentage for growth in NAND WFE due to upgrades, but mentions that the installed base can drive revenue during these upgrade cycles. They believe that the next phase will see higher memory fab utilization and the upgrades will provide opportunities for Lam to help customers upgrade technology and reduce bit cost. The speaker also mentions that Lam's capture rate of spending in an upgrade is higher due to their etch and deposition services. The next question asks about the potential for NAND WFE to double year-over-year in 2025, but the speaker declines to provide a specific answer and states that it is still a developing story.

The speaker is responding to a question about the current outlook for NAND investment and utilization. They state that the outlook has not changed significantly and may have slightly improved, but it is still uncertain. They also mention that mature and specialty fabs are still struggling while other sectors such as analog, industrial, and automotive are doing well.

The speaker explains that there is still a lot of inventory in the market and the utilization statements are mostly related to memory fabs. They also mention strong demand for HBM and advanced packaging, with the company seeing a higher revenue projection for the year. The company has invested in expanding their global manufacturing supply chain to better respond to customer demands and is currently able to handle urgent requests. They also mention that they prefer this environment where all parts of the business are supply constrained.

Timothy Archer and Harlan Sur discuss the long-term ramp of demand in the industry, with Archer mentioning that they are in a good place for manageable growth. Atif Malik asks about China sales in 2023, which were down due to a major customer being restricted by regulations, but is expected to bounce back in 2024 with a different customer mix. Archer also mentions improvements in the cryo market that will solidify their market share in the future.

The speaker discusses the investments being made in building labs close to customers in different regions, with a focus on solving difficult etch challenges. The new tool, Lam Cryo 3.0, is designed for 400-plus layer production, but may be pulled in earlier due to its benefits such as 2.5 times etch rate and profile control. The company sees this tool as part of a path towards satisfying the increasing demand for NAND with AI, and expects to reach 1,000 layers in the next decade. The next question asks about the difference between this tool and its nearest competitor.

The speaker asks for clarification on the characteristics of CSBG and then asks about the growth rate for the full year. Douglas Bettinger responds by stating that they expect CSBG to modestly grow this year, with particular strength in Reliant and improvements in spares. Timothy Archer then discusses the differences between Lam Cryo 3.0 and their competitors, highlighting the amazing results achieved on the wafer and the new surface chemistries and hardware capabilities that enable this.

The speaker discusses details about the Vantex system and its ability to deliver high ion energy, which plays a role in etching deep holes with verticality. The next question is about export controls and potential changes in behavior from China customers, but the speaker cannot speculate on the outcome and states that they continue to have discussions with regulatory agencies. There have not been noticeable changes in behavior from customers and the company treats all customers equally.

The speaker, Douglas Bettinger, responds to a question from Blayne Curtis about the company's business in China. Bettinger states that he expects next year to be a solid year for spending in China, but he is not ready to give a specific number. He also mentions that the company's growth for next year will likely be driven by strong etch and DRAM spending, and that NAND spending will need to increase from this year.

The speaker, Douglas Bettinger, discusses the expected increase in NAND spending next year and the potential for upgrades in capacity. He also mentions the loss of a large customer in China and the potential impact on future revenue. Timothy Archer adds that Lam's technical strengths and new technologies position them well for future growth in the NAND market.

The company has expanded its portfolio in the NAND market and is expecting growth in both demand and opportunities. However, global mature node spending is flat due to softness outside of China. Inventory needs to be adjusted before meaningful investment can occur. The company plans to bring down inventory turns and expects a strong WFE year in 2025.

The speaker discusses the impact of declining business on NAND inventory and their plans to consume it in the future. They also mention the growth in other areas and their goal to bring inventory levels back to historical levels. The speaker also briefly touches on gate all around nodes and their potential ramp up in 2024.

The company targeted new markets with selected etch tools and saw wins in gate all around and backside power delivery. They also invested in ALD films for spacers and gate all around and had additional wins in those areas. With increasing demand for high-power computing and AI, their $1 billion forecast for next year may go higher due to their expanding product portfolio and winning share. The call concludes with the company thanking everyone for joining and looking forward to future interactions.

This summary was generated with AI and may contain some inaccuracies.