The paragraph is from the beginning of the Lam Research September Q1 Earnings Conference Call. The operator introduces the call and explains that it will be in a listen-only mode until the Q&A session. Ram Ganesh, the Vice President of Investor Relations, welcomes participants and introduces Tim Archer (President and CEO) and Doug Bettinger (Executive VP and CFO), who will discuss the business environment, financial results for the September 2024 quarter, and the outlook for the December 2024 quarter. Ganesh mentions the press release detailing these results is available online, and emphasizes that forward-looking statements carry risks outlined in the company's SEC filings. The presentation will focus on non-GAAP financial results unless otherwise specified. The call is scheduled to last until 3:00 p.m. Pacific time, with a replay available on the website later.

Lam reported strong financial results for the September quarter, exceeding expectations in revenue and earnings per share, marking five consecutive quarters of growth. The company maintains a positive outlook for the December quarter despite ongoing challenges in NAND spending. For 2024, spending in wafer fab equipment (WFE) is expected to stay around the mid-$90 billion range, driven by AI investments in advanced logic nodes and packaging, though domestic China WFE is projected to decrease. Lam anticipates WFE growth in 2025, with a significant opportunity to outperform due to its expertise in etch and deposition technologies. The company is well-positioned to benefit from potential recoveries in NAND spending and increased investments in foundry, logic, and DRAM sectors.

The paragraph discusses advancements in technology related to etch and deposition, anticipating increased adoption across various segments by 2025. In NAND, despite a cyclical downturn, there is a shift towards advanced nodes to meet demands for high-speed, high-capacity storage. Over two-thirds of production still uses older technologies, but updates are expected, benefiting companies like Lam with a large base of 3D NAND equipment. The shift from tungsten to molybdenum for word line resistance is significant, with Lam leading in this transition due to their expertise in metal atomic layer deposition. Beyond NAND, Lam is also progressing in gate-all-around nodes and advanced EUV patterning with new tools gaining traction among key customers.

The paragraph discusses Lam's advancements and growth in the semiconductor industry, focusing on backside power distribution and advanced packaging. In 2025, Lam expects market expansion in dielectric etch and copper plating due to new VF steps and metal layers. The company highlights its early leadership in deposition for advanced packaging and its successful SABRE 3D technology, which has significantly increased revenue. Lam's customer support is seeing strong demand for productivity enhancements, with a focus on cost-efficient reuse of tools in DRAM and NAND, leading to market share gains. The paragraph concludes by emphasizing Lam's preparedness for semiconductor growth in the AI era through business transformation and product expansion.

The paragraph outlines the financial performance of a company, highlighting key results for the September 2024 quarter. The company experienced an 8% increase in revenue from the previous quarter, totaling $4.17 billion, with strong earnings per share and profitability exceeding guidance. A 10-for-one stock split announced on May 21, 2024, was effective October 2, 2024, affecting share-related metrics. The deferred revenue increased by $495 million due to customer advanced payments but is expected to decrease in 2025, although it may fluctuate quarterly. The memory segment, especially DRAM, saw significant growth, with DRAM systems revenue rising from 19% to 24% due to technology upgrades and the ramp-up of new nodes for DDR5 and high bandwidth memory.

The paragraph outlines changes in revenue segments for a company, noting a decline in the non-volatile memory segment due to reduced customer investment in specialty DRAM. The NAND segment faces a prolonged decline but may rebound by 2025 with investments in advanced devices. The foundry segment's share of revenue slightly decreased, with dollar spending remaining stable, while the logic and other segment saw an increase due to higher demand for certain logic devices. Geographically, China's revenue contribution decreased but remained above expectations, with further declines anticipated, while Korea's share stayed flat. Taiwan and the United States also contributed to top regional revenue. The customer support business group reported $1.8 billion in revenue, marking sequential and year-over-year growth, split equally between Reliant Systems and other components.

In the September quarter, the spare parts component of CSBG remained the largest revenue contributor. The gross margin was 48.2%, surpassing expectations but slightly down due to changes in customer mix and higher incentive compensation, offset by better factory utilization. Operating expenses increased to $722 million, driven by program spending and incentive compensation linked to better profitability, with 67% attributed to R&D. The operating margin rose to 30.9%, above guidance, due to higher revenue and strong gross margins. The non-GAAP tax rate was 13.8%, expected to remain in the low- to mid-teens. Other income and expense decreased to $13 million, mainly due to foreign exchange variations. The company allocated $1 billion to share repurchases and paid $261 million in dividends, with a 15% dividend growth announced in August.

The company has consistently increased its dividend for 10 years since 2014 and has $9.8 billion left in its share repurchase program. It aims to return 75-100% of its free cash flow to shareholders. In the September quarter, the diluted earnings per share were $0.86, with a reduced diluted share count of 1.3 billion. Cash and cash equivalents rose to $6.1 billion, primarily due to operating activities, despite expenditures on share buybacks, dividends, and capital investments. Days sales outstanding increased to 64 days, while inventory improved with higher turnover. Non-cash expenses included $80 million for equity compensation and depreciation each, and $14 million for amortization. Capital expenditures were $111 million, mainly for lab and manufacturing investments in the US and Asia. The company ended the quarter with 17,700 employees, up by 500 from the previous quarter.

The article discusses the company's financial guidance for the December 2024 quarter, projecting revenues of $4.3 billion, with a gross margin of 47% and operating margins of 30%. Despite customer mix headwinds affecting gross margin, the company is committed to managing expenses while prioritizing critical R&D investments. Earnings per share are expected to be $0.87. The company believes it will continue executing well into 2024, aiming for modest improvement in operating leverage and making investments to benefit from future technological advancements. For 2025, the company anticipates it will outperform in the wafer fabrication equipment (WFE) market and achieve top-line growth. The paragraph concludes with a transition to a Q&A session, where Tim Arcuri from UBS asks about the outlook for 2025 WFE, especially concerning China.

The paragraph discusses the expected changes in the semiconductor industry, specifically regarding China's market share and overall revenue projections. Tim Archer mentions that the consolidation of legacy nodes connected to companies like Huawei and BYD might impact the industry along with additions to the entity list. He highlights that although the year-on-year wafer fab equipment (WFE) revenue is expected to increase overall, the revenue from China is projected to decrease and represent a smaller percentage of Lam's total revenue next year. Doug Bettinger adds that outside of China, sectors like leading-edge foundry, logic, and DRAM with DDR5 high-bandwidth memory are performing well. He suggests that despite current inventory issues, trends are favorable across most industries.

The paragraph is a discussion between multiple people, including Tim, Doug Bettinger, and Harlan Sur, focusing on technology investments and their impact on revenue, particularly in China. They note that many technology upgrades, such as NAND, occur outside of China due to existing restrictions and technology stages. This situation leads to a declining percentage of revenue from China for the company, Lam. Doug Bettinger mentions that growth in their CSBG segment is driven by strong performance in Reliant and other factors. Harlan Sur asks about trends in NAND utilization and WFE (wafer fab equipment) spending, and Tim Archer confirms continued strong NAND utilization and confidence in WFE growth for the coming year.

The paragraph discusses the growing demand for higher quality and performance in enterprise SSDs and applications related to AI, driving a shift in manufacturing technologies to stay competitive. This shift, which includes advancements like QLC and cell-under-array technologies, is crucial for Lam, as their product portfolio is well-positioned to benefit from these technology upgrades. Harlan Sur inquires about the strong demand for HBM (High Bandwidth Memory) due to AI and accelerated computing, noting a substantial increase in HBM revenues this year. Although HBM will constitute a small percentage of total bit supply, it will significantly impact DRAM wafer capacity, anticipated to rise by 60% to 70% compared to the current year.

In the paragraph, Tim Archer discusses the growth trajectory of their High-Performance Manufacturing (HPM) and advanced packaging business, driven by advancements in AI. He highlights that their advanced packaging segment has surpassed expectations, particularly in areas like SABRE 3D and copper plating. Archer believes that companies with exposure to these technologies, such as etch and deposition firms, are benefitting greatly. He does not foresee a slowdown in advanced packaging, citing its role in enabling system-level performance, which chips alone cannot achieve. Archer expresses optimism for the coming year and indicates that more concrete figures will be shared in January. Additionally, Toshiya Hari from Goldman Sachs asks about the adoption of Moly in 3D NAND and other technologies, seeking insights on growth opportunities beyond 2025, although specific numbers are not provided.

In the paragraph, Tim Archer discusses the company's strength in the Tungsten space, particularly in NAND, and how the introduction of molybdenum (moly) presents a net gain due to technology upgrades and new high-value technologies. This transition helps address industry issues like word line resistance and supports the company's business growth across various nodes in NAND, foundry logic, and DRAM sectors, extending opportunities into future years. Responding to Toshiya Hari's question about the '25 outlook for leading-edge foundry logic, Archer notes that their outlook remains unchanged over the last 90 days. This stability is attributed to their focus on technology inflections rather than volume, as advancements to new nodes like gate-all-around generate consistent opportunities for the company.

The paragraph is a discussion featuring Tim Archer and Doug Bettinger, addressing questions from Vivek Arya of Bank of America Securities about Lam's position with emerging technologies and the company's outlook on the Chinese market. Tim Archer discusses the positive opportunities presented by new tools and technology transitions for Lam's portfolio. Vivek Arya inquires about the forecast for the Chinese market, noting a projected decline and changes in the outlook for 2025. Doug Bettinger responds, acknowledging a downward trend in China’s revenue contribution but clarifies that the market is not disappearing, just becoming a smaller percentage of their overall revenue due to lower wafer production expectations.

The paragraph discusses the shifting revenue dynamics for Lam's business, highlighting that while China's contribution to total revenue is expected to decrease, it is not disappearing. Tim Archer notes the normalization of business in strong markets like NAND and emerging areas like advanced packaging by 2025. Vivek Arya asks about gross margins, noting a strong performance in Q3 and a projected 47% margin for Q4. Doug Bettinger explains that various factors, such as customer and product mix and operational efficiencies, influence gross margins. He cautions that the shift in customer mix could pose a short-term challenge as China's revenue share declines, which is reflected in the December guidance.

The paragraph discusses the company's strategic shift towards operational efficiency, particularly by expanding its footprint in Asian factories. This shift is starting to yield benefits, as evidenced by an increase in China's contribution to the company's revenue from 46% to 47%. Despite this progress, many factors influence the gross margin, and specific guidance on this is not provided. In response to a question from C.J. Muse, Doug Bettinger explains that the Reliant business, which deals with specialty and trailing edge nodes, could face headwinds due to reduced investment in China's wafer fab equipment (WFE) as a result of restrictions, although there is still good investment potential outside China.

In this paragraph, Tim Archer and Doug Bettinger discuss the company's focus on service upgrades and operational expenses. Tim Archer highlights the growing importance of data-driven troubleshooting and automated maintenance in their revenue stream. Doug Bettinger explains that the company has funded necessary projects and experienced stronger-than-expected revenue growth, leading to over a full percentage point of operating margin leverage. He is optimistic about continuing to achieve operating leverage into the next year, depending on growth outcomes.

In the paragraph, Krish Sankar from TD Cowen asks Tim Archer about the drivers behind Lam's expected revenue outperformance relative to WFE, particularly in the context of the NAND market and advancements like Cryo-edge technology. Tim Archer highlights Lam's recent Cryo 3.0 technology, emphasizing its role in enhancing technology upgrades, particularly for NAND. He explains that the most efficient way to increase NAND layer counts involves upgrading existing systems in fabs, which favors Lam's capabilities. Archer expresses confidence that technology upgrades will dominate NAND spending in 2025, positioning Lam advantageously, though it's too early to predict exact spending details. He also mentions that requirements for higher quality bids are being influenced by new AI applications.

In the paragraph, Doug Bettinger and Tim Archer discuss the advancements and strategic positioning in technology, particularly in areas like advanced packaging, backside power, and gate-all-around technology. Tim highlights the importance of etching and deposition equipment in creating three-dimensional architectures, which are crucial for power consumption and high computation devices. Doug addresses questions about inventory management, indicating a shift towards more efficient and potentially just-in-time inventory strategies, especially considering the anticipated up-cycle in the technology sector next year.

The article discusses the inventory challenges related to NAND memory, noting that a decrease in inventory will only happen when the NAND business improves, which is expected to occur within the year. Meanwhile, other areas are strengthening, as evidenced by a new guidance figure of 4.3. In response to a question from Srinivas Pajjuri of Raymond James, Tim Archer comments on the outlook for wafer fabrication equipment (WFE) growth, suggesting that despite uncertainty, there is expected growth in the NAND segment following a prolonged downturn, and continued strength in leading-edge logic investments driven by technology upgrades. Archer also mentions advancements in packaging.

The paragraph discusses the strengthening of advanced packaging in recent months and anticipates this trend will continue through 2025. The conversation shifts to technology transitions, particularly in NAND and the revenue mix of logic and foundry, which now constitutes 60% of the company’s mix. Tim Archer, the speaker, highlights opportunities for market share growth, especially in leading-edge foundry logic areas like gate-all-around, where their company's expanded product portfolio allows them to enter new markets and gain share, particularly in selective etch and ALD markets. Archer emphasizes that transforming their product portfolio has opened up new market opportunities and potential share gains.

The paragraph discusses the potential for Lam, a company in the semiconductor industry, to increase its market share due to advancements in technology and equipment intensity. Specifically, the focus is on their strong positioning in advanced packaging and copper plating. The conversation shifts to the effects of China's market dynamics on Lam's gross margins. Despite potential negative impacts from a reduced China mix, the dialogue suggests that other factors could help maintain or improve gross margins. Stacy Rasgon from Bernstein Research is probing whether these factors are sufficient to offset the mix changes and how to think about gross margins going forward. Doug Bettinger responds by indicating that other drivers should be considered holistically in assessing this situation.

The paragraph discusses the company's strategic adjustments to be closer to customer fabs, with a focus on reducing costs and improving supply chain efficiency. Although specific revenue predictions for the next year are not provided, there is confidence in operational improvements driving gross margin growth. The customer mix poses a challenge, but the details will be elaborated in the future. Stacy Rasgon inquires whether revenue forecasts are positive, and Doug Bettinger confirms. Rasgon then questions the company's preference between a capacity-driven or technology transition market. Tim Archer responds by expressing that tech transitions are more beneficial, despite skepticism regarding current market investment in additional capacity.

The paragraph discusses a conversation between Stacy Rasgon and Doug Bettinger regarding the financial performance and investment dynamics in the NAND market, specifically whether it is driven by capacity or upgrades. Bettinger explains that the financial outcomes depend on the overall level of investment, and that in transition or upgrade years, their company tends to spend more and outperform the market. Further, Atif Malik from Citi asks about the expected decrease in China WFE (Wafer Fab Equipment) sales compared to a peer company projecting a 30% decline. Bettinger responds that it is difficult to compare their expectations with other companies because they are not privy to their specific thoughts or projections.

The paragraph discusses the challenges in comparing growth figures in a specific region between the speaker's company and its peers, citing differences in shipping rates and lead times for various tools as complicating factors. Tim Archer acknowledges the difficulty in making such comparisons. Atif Malik raises a question about the adoption of Dry Resist technology by a major Korean memory maker, noting surprise at its use before the high NA was expected. Tim Archer responds by clarifying misconceptions about the relationship between Dry Resist and high NA, emphasizing the economic and quality benefits of Dry EUV and dry UV processing, which include reduced exposure times, improved pattern fidelity, and lower defect rates.

The paragraph features a conversation during an earnings call, where Joe Moore from Morgan Stanley asks Tim Archer about the potential impact of the U.S. Commerce Department's export controls on their business in China. Tim Archer responds by stating that their outlook is based on their best understanding and estimate of the situation, implying an educated guess informed by available sources. Joe Moore then inquires about the company's growth expectations excluding China, noting a potential drop in China's contribution to 30% and asking what gives them confidence in double-digit growth outside of China. Doug Bettinger responds by saying they rely on their usual methods for providing guidance.

In the paragraph, various individuals are discussing the company's forecasting process and recent guidance concerning China. Doug Bettinger mentions that while they usually don't provide geographic-specific data, they've made an exception due to heightened interest, revealing a $4.3 million figure for China, derived through their usual quarterly data compilation process. Blayne Curtis from Jefferies asks about expectations concerning the potential impacts on the Chinese DRAM segment and queries if the CSBG segment might be down in the next quarter. Doug Bettinger admits uncertainty in pinpointing which segment might face headwinds, noting correlations to certain factors like specialty node and utilization cycles, but is unsure if he's adequately answering the question.

The paragraph is a dialogue from a conference call discussing the semiconductor market, specifically focusing on NAND and DRAM technologies. Tim Archer addresses a question about NAND, indicating that upgrades are expected more from a 2025 perspective due to a long down cycle and potential improvements at current technology nodes. Doug Bettinger responds to a question from Chris Caso about DRAM, stating that there hasn't been much change in the outlook over the last 90 days despite mixed signals. He notes a product cycle transition from DDR4 to DDR5 and high bandwidth memory, predicting growth in the need for incremental equipment next year.

In the discussion, Doug Bettinger suggests that it is reasonable to expect that China's contribution to the company's total revenue might fall below 30% by the end of the year, particularly as growth is anticipated in other segments like Foundry Logic and NAND. However, it's too early to provide a specific numerical forecast for next year, and further guidance will be offered in the next quarterly call. The conversation concludes with thanks to the participants, and the call ends.

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