Lam Research Earnings Call $LRCX Q1 2023 10Q

[NYSE: LRCX]

APRIL 18, 2023

Key Takeaway from Lam Research earnings call $LRCX Q1 2023 10Q:

“Lam Research Q1 2023 earnings call transcript highlights strong execution and record-level revenues in foundry related systems. Near-term demand environment remains challenging, but company expects growth opportunities in memory, EUV patterning, and gate all-around devices. Financial results meet guidance, generating record-level free cash flow. Revenue decline attributed to lower WFE investments in memory, while foundry and logic segments show positive momentum. Customer support business resilient. Gross margin at 44%, with focus on cost and efficiency improvements for profitability.”

 

Key points from Lam Research earnings call $LRCX Q1 2023 10Q

– The participants in the earnings call included corporate executives, analysts from Evercore ISI, UBS Group AG, TD Cowen, Morgan Stanley, JPMorgan Chase & Co., Bank of America Securities, Bernstein Research, The Goldman Sachs Group, Inc., Smith Barney Citigroup, Barclays PLC, and Deutsche Bank Aktiengesellschaft.
– The Lam Research executives present were Tina Correia (Vice President, Investor Relations and Corporate Finance), Tim Archer (President and Chief Executive Officer), and Doug Bettinger (Executive Vice President and Chief Financial Officer).
– The call covered an overview of the business environment, financial results for the March 2023 quarter, and the outlook for the June 2023 quarter.
– Lam Research’s revenues, operating margins, and EPS exceeded the midpoint of their guidance for the March quarter, with record levels in foundry-related system revenues.
– The near-term demand environment remains challenging, with expected 2023 WFE spending in the low-to-mid $70 billion range and weakness in memory customers offset by domestic China-related demand.
– The U.S. government notification allows Lam Research to ship certain products to China in the second half of 2023, which were originally excluded from expectations.
– Memory customers are reducing fab utilizations, slowing technology conversions, and limiting investments and capacity additions to lower inventory levels.
– Memory spending for the year is expected to decline approximately 50% from 2022, with memory spending in 2023 at a historic low as a percentage of total WFE.
– Lam Research’s established leadership in memory positions them to outperform as memory conditions improve and data-intensive applications like AI continue to grow.
– Lam Research has made significant investments in new products for EUV patterning and gate all-around devices, two important inflections in the industry.
– Lam Research’s etch portfolio is on-track to win close to 75% share of EUV patterning applications, and their ALD and etching solutions are addressing the manufacturing challenges of gate all-around devices.
– The company expects gate all-around devices to be a close to $1 billion incremental opportunity and sees their share in this market being at least as good as their overall goals.
– Lam Research achieved financial performance in-line with guidance for the March quarter, generating record levels of free cash flow and making progress on business transformation and cost-saving initiatives.
– Revenue for the March quarter was $3.87 billion, with systems revenue driving the decrease due to declining WFE investments in memory.
– The percentage of systems revenue in memory was the lowest in a decade, with NAND and DRAM revenue expected to decline further in the June quarter.
– Foundry had a record dollar level of revenue in the March quarter, representing 46% of systems revenue, while logic and other segments also showed strength.
– Regional contributions to total revenue included Korea and China at 22% each, the United States at 16%, and Taiwan at 18%.
– Lam Research’s Customer Support Business Group generated revenue of approximately $1.6 billion, with a decline in utilization levels at memory customers but strength in the specialty technology market.
– Gross margin for the March quarter was 44%, down from the previous quarter, attributed to lower business volumes and customer mix.

 

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