Lam Research Corporation

Good afternoon and welcome to the LAM Research December 2024 Earnings Conference Call. All participants will be in 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 then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Ram Ganesh, Vice President of Investor Relations. 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 Bettinger, 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 December 2024 quarter and our outlook for the March 2025 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's 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 accompanying slides in the presentation for additional information. Today's discussion of our 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 on our website. And with that, I'll hand the call over to Tim.

Thank you, Ram, and thank you all for joining the call today. LAM closed out 2024 with another solid performance. December quarter revenue, gross margin, operating margin, and EPS were all above our guidance midpoints, reflecting strong and consistent operational execution. Wafer fabrication equipment spending for 2024 finished in line with the mid $90 billion range we guided earlier in the year. Overall, 2024 was a good year for LAM, even as NAND spending remained at muted levels. System revenues in both DRAM and Foundry Logic grew to record highs, and the size of our installed base increased to approximately 96,000 chambers. Our results show that we are making good progress on our strategy of broadening LAMS exposure across end-market device segments. It also demonstrates the increasing strength of our product portfolio as semiconductors move into the AI era. For example, gate-all-around and advanced packaging technologies are critical enablers for AI device manufacturing, including GPUs and high bandwidth memory. They are also highly deposition and etch intensive. And as a result, we saw LAMS shipments for gate-all-around nodes and advanced packaging each grow to exceed $1 billion in 2024. In calendar 2025, we see WFE spending rising slightly to approximately $100 billion. Again, we expect technology inflections to lead to faster growth for LAMS. as AI applications demand greater device and package-level performance. In 2025, LAMP shipments to gate all-around nodes and advanced packaging combined should be well over $3 billion. Customer migration towards backside power distribution and dry-resist processing technologies will add further opportunity in the coming year. As we look forward, we view the increasing importance of deposition and etch technology as a differentiator for LAM and an opportunity to outperform. With this in mind, we have made strategic investments over the past few years to expand our R&D infrastructure, scale our organization, and transform our innovation process for greater speed. We are now seeing these investments yield important product advances. Our recently introduced Cryo 3.0 technology is winning at the leading edge. delivering best-in-class results for high aspect ratio dielectric edge applications on our latest VANTEX CX Plus product, and also helping extend the capabilities of our large flex install base through cryo upgrades. Our breakthrough dry resist capability for EUV is enabling patterning of extremely fine device features with greater precision, reduced defectivity, higher productivity, and reduced environmental impact. You may have seen that earlier today, we announced that our Ether dry resist solution has achieved a major milestone, having just been selected as the production tool of record for high bandwidth DRAM at a leading memory customer. Technology inflections in DRAM and Foundry Logic, combined with an upgrade-focused NAND environment, create what we believe is a unique setup for LAM to outgrow WFE spending and strengthen our bottom line in calendar 2025. In NAND, the industry is looking to transition the current installed capacity to higher layer counts to achieve better device performance at lower bit cost. Here, several trends play to our favor. One is the transition to molybdenum, or moly. LAM's patented multi-station sequential deposition technology allows us to employ a differentiated liner and fill process sequence that is proving to be a winner with customers. The momentum for our new MOLLE product is strong. A second trend is the adoption of carbon gap fill to enable higher bit density and lower cost through multi-tier stacking. Our innovative PCVD-based pure carbon gap fill process provides high-etch selectivity, superior mechanical properties, and simplified dry process removability. While we are in the early innings of these transitions and early in the industry upgrade cycle overall, we expect adoption of MOLLE and carbon gap fill to drive several hundred million dollars in NAND shipments for LAM in calendar 2025. LAM's opportunity will grow even further in future years as more of the million plus wafer starts per month installed capacity converts to higher layer counts. The differentiation we're delivering for customers runs deeper than the process technology itself. Our semi-versed solutions capabilities apply advanced modeling, simulation, data science, analytics, machine learning, and artificial intelligence to further enhance our equipment performance and reduce the time needed for process optimization. This is strengthening our competitiveness, and most recently, we used our semi-versed solutions capabilities to successfully defend a key dielectric edge application at a major memory manufacturer. Furthermore, we are leveraging these capabilities to help address the semiconductor industry's global workforce shortage. Through collaborations with universities in the United States, India, and Korea, Semiverse solution software is already being used to educate the next generation of semiconductor industry innovators. and our goal is to provide access to LAMS semiconductor simulation technology to tens of thousands of aspiring engineering students through the rest of the decade. In CSBG, our equipment intelligence and in-fab service automation solutions are seeing significant traction with customers. Last month, we announced the industry's first collaborative maintenance robot. Since then, We have shipped our Dextro Cobot to a third major memory manufacturer, and it is being installed in their fab as part of a multi-year services agreement. Over the next decade, the semiconductor industry is expected to witness a strong expansion of fab capacity globally, and our Cobot technology offers an important and cost-effective solution to enable precise and repeatable maintenance beyond what human workers alone can achieve. Lastly, our strategic investments in scaling our operations are paying off. Our Asia operations continue to ramp very efficiently and in 2024 help drive meaningful improvement in both our responsiveness to rising customer demand and our gross margin. Doug will provide some additional detail in his prepared remarks, but as a headline, I am pleased we delivered in calendar 2024 approximately 160 basis points of operating margin expansion, even as we invested heavily in new products and infrastructure to fuel future growth. So to wrap up, LAM is in a strong position as we enter the new year. Deposition and etch are becoming increasingly vital to semiconductor manufacturing, and we have made key investments to strengthen LAM's product portfolio. I look forward to sharing more on this at our upcoming investor day. Thank you, and I'll now pass it on to Doug.