Lam Research Corporation

Good day, everyone, and welcome to the LAM Research March 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Ram Ganesh, Head of Investor Relations. Sir, please go ahead.

Thank you, and good afternoon, everyone. Welcome to the LAM Research Quarterly Earnings Conference call. With me today are Tim Archer, President and Chief Executive Officer, and Doug Bittinger, Executive Vice President and Chief Financial Officer. During today's call, we will share our overview on the business environment, and we'll review our financial results for the March 2024 quarter and our outlook for the June 2024 quarter. The press release detailing our financial results was distributed a little after 1 p.m. Pacific time. The release can also be found on the investor relations section of the company website, along with the presentation slides that accompany today's call. Today's presentation and Q&A include forward-looking statements that are subject to risks and uncertainties reflected in the risk factors disclosed in our SEC public filings. Please see the accompanying slides in the presentation for additional information. Today's discussion of financial results will be presented on a non-GAAP financial basis, unless otherwise specified. A detailed reconciliation between GAAP and non-GAAP results can be found in the accompanying slides in the presentation. This call is scheduled to last until 3 p.m. Pacific time. A replay of this call will be made available later this afternoon. We're having some technical difficulties posting our earnings call slides externally. We will try to post it as the call is going on. If not, we will post it on our website after this call. And with that, I'll hand the call over to Tim.

Thanks, Ram, and thank you to everyone joining us today. LAM is off to a strong start in calendar 2024, with revenues, profitability, and earnings per share for the March quarter all exceeding the midpoint of our guidance. These results, as well as our outlook for the June quarter, point to LAM's solid execution in an industry environment that is progressing much as we predicted in our January call. Today, we see industry WFE spending for calendar 2024 in the low to mid $90 billion range. with the modest increase from our prior view driven mainly by additional lithography shipments into China. We see no meaningful change to our outlook for LAM's overall 2024 revenue profile. From an industry perspective, DRAM remains strong, with WFP spending driven by growing demand for high bandwidth memory and sustained investment in domestic China. In Foundry logic, growth in leading edge spending this year is being partially offset by a decline in mature note spending outside of domestic China. Domestic China spending is running higher than we had previously expected. However, we still see it being first half weighted with LAM's revenue contribution from China declining as the year progresses. In NAND, we continue to expect year-on-year growth in WFE spending in calendar 2024. Encouragingly, we've seen an uptick in FAB utilization and in the March quarter, This translated into double digit percent growth quarter over quarter in our spares revenues. As supply and demand continues to normalize through the remainder of the year, we see a strong setup developing for 2025 NAMM spending. As we move toward a broader WFE recovery, LAM stands to benefit from powerful secular drivers of semiconductor growth and innovation. Generative AI and other emerging smart applications are built on a foundation of semiconductor technology and are expected to deliver trillions of dollars of economic benefit at a global level over the next decade. AI's transformative use cases, foreseen in both consumer and enterprise markets, are only in the early stages of realization, and we believe that significant investment in semiconductor manufacturing capacity will be required to satisfy the coming demand for advanced compute, memory, and storage. In this environment, the winners will be the equipment companies that can accelerate the pace of technology advancement while at the same time deliver innovations that disrupt the rising cost and complexity of semiconductor fabrication. To this end, LAM is investing in two differentiated approaches. First, we are putting more capabilities and resources close to our customers to strengthen collaboration. And second, we are leveraging LAM's proprietary semi-verse solutions digital twin capabilities to reduce the time and cost of technology development. Already, we are seeing LAM's distributed R&D footprint having a positive effect. In the past quarter, we've used our customer-centric lab investments in Korea, Taiwan, and the US to accelerate cycles of learning on new applications, resulting in important wins for LAM in both DRAM and FoundryLogic advanced packaging. With respect to Semiverse solutions, We leverage a portfolio of digital twins created at the scale of the device, the process, and the reactor to model complex interactions that influence tool performance and productivity. LAMS engineers now regularly use these capabilities to optimize multidimensional etching deposition process recipes faster and with less on-tool wafer experimentation. Turning to demand related to AI. The early impact has been most prominent in DRAM and Foundry logic. We believe, however, that AI's impact on storage is still ahead and represents a key vector of long-term growth for our NAND business. More advanced AI applications need faster, more power efficient, and higher density NAND storage. NAND-based enterprise solid state drives, or ESSDs, are 50 times faster in read-write capability, two to five times more power efficient, and use 50% less space at the system level compared to hard disk drives or HDDs. Today, over 80% of enterprise data is stored on HDDs, and we expect this mix to shift in favor of SSDs as NAND capability and cost continues to improve. This is where LAM is playing a key role by enabling technologies which are critical for both performance and cost scaling. In deposition, for example, LAM is leading the transition from tungsten to molybdenum in the word line to improve device access time and reduce stack height per storage cell. In etch, LAM is using high aspect ratio cryogenic etch to enhance productivity of memory hole formation. Today we are approaching 1,000 cryo etch chambers in our high volume manufacturing installed base. In partnership with our customers, we're using the tremendous amount of data coming from this installed base to rapidly improve technology and cost at each successive layer transition in NAND. Recently, we combined the learning from the installed base with the capabilities of our Semiverse solutions simulation tools to further strengthen our differentiation. As a result of our accelerated innovation, we have defended every NAND high aspect ratio memory hole edge production decision made so far by customers. With respect to DRAM, AI servers use high bandwidth memory, or HBM, to increase read-write speed and reduce server power consumption. HBM stacks multiple DRAM dies using TSVs, enabling 15 times more data throughput than standard DRAM. However, HBM also requires an approximately three-fold increase in wafers per bit compared to conventional memory. With this in mind, it's important that our Sabre 3D and Syndian tools not only provide best-in-class plating and edge capabilities, but also deliver industry-leading throughput and productivity to keep overall costs low for our customers. We are the leading player in TSV applications for HBM and expect our HBM-related shipments to grow more than three times in calendar year 2024. Finally, on the Foundry logic side, LAM tools, including Selective Edge and ALV, are well positioned to help enable the move from FinFET to gate-all-around, a key transition needed to improve transistor performance per watt by 15% to 20%. We see our shipments for gate-all-around nodes in calendar year 2024 exceeding $1 billion. LAM tools are also enabling foundry logic inflection, such as backside power delivery, molybdenum interconnects, and dry fold resist processes for EUV patterning. Our traction with customers is strong on these inflections, And together, they represent a multibillion-dollar growth opportunity for LAM as AI drives a greater need for faster, more power-efficient devices. To conclude, the proliferation of AI, the global push for localized chip manufacturing capacity, and the ubiquity of semiconductors in new consumer and commercial products represent powerful secular drivers for LAM and the rest of the semiconductor equipment industry in the years ahead. We are pleased with the company's execution and our results in the March quarter and remain focused on our opportunity to outperform through this next leg of industry growth. Thank you, and I'll now turn it over to Doug.