Lam Research Corporation

Good afternoon, and welcome to the LAM Research March 2025 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. Please note, this event is being recorded. I would now like to send the conference over to Ram Ganesh, Vice President, 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 will review our financial results for the March 2025 quarter and our outlook for the June 2025 quarter. The press release detailing our financial results was distributed a little after 1 p.m. Pacific time. The release can 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. Great.

Thank you, Ram, and thank you all for joining the call today. LAM's March quarter results reflect continued strong execution across the company, with revenues, gross margin, operating margin, and EPS all exceeding the midpoint of our guidance. We delivered a record quarter for foundry revenues, demonstrating our solid product momentum in leading-edge technology inflections. Gross margin percentage was also a record for the company since the Novellus merger. as the investments we have made over the past several years in our manufacturing and supply chain operations are contributing positively as we scale the business. As our guidance indicates, gross margins are set to expand again in the June quarter. On our January earnings call, we laid out what we saw as the fundamental drivers of WFP spending in the year ahead. To date, these have played out largely as expected, with strength in leading-edge foundry logic technology-driven conversions in NAND, and a focus on high-bandwidth memory in DDR5 and DRAM. From an overall industry perspective, we continue to forecast calendar year 2025 WFE spending in the $100 billion range. We recognize that the current tariff and global economic environment is dynamic, but thus far we have not seen any meaningful changes for our customers' plans. We are closely monitoring the situation alongside our customers and ecosystem partners. We believe that the agile manufacturing and supply chain capability that we have developed in recent years provides us with the flexibility to lessen the direct impact of tariffs. Our strategic focus in this environment remains on delivering the new products, advanced services, and digital transformation initiatives required to achieve the growth and profitability outperformance goals we described at our investor day in February. As a reminder, we identified three key drivers that underpin our ability to outperform overall WFE growth over the next several years. First, we expect to expand our served market, or SAM, faster than WFE, as deposition and etch intensity rises due to greater semiconductor device complexity. Second, we expect to gain share with the strongest product portfolio in the company's history, targeted at billion-dollar-plus technology inflections such as gate all-around, backside power distribution, advanced packaging, and dry EUV photoresist processing. And third, we expect to grow our CSBG revenue faster than our installed base as customers look to LAM's upgrade, automation, and equipment intelligence offerings to enhance productivity and execution as they expand their global fab operations. Year to date, we are already witnessing incredible momentum in these areas. In deposition, LAM's atomic layer deposition or ALD products are making strong gains. Our Stryker Spark ALD tool delivers the industry's densest conformal low K carbide dielectric films. Leveraging this capability, we have secured multiple key wins for spacer applications and a leading edge foundry. Our Altus Halo system enables barrierless atomic layer deposition of molybdenum, reducing the resistance of critical contact and interconnect layers by 50% compared to legacy technologies. In the case of 3D NAND, this reduction is critical to achieving the superior IO performance needed for AI applications. As a result, LAM's Halo molybdenum process is seeing increased adoption across our leading 3D NAND customers. In edge, our new ACARA system has gotten off to a great start, rapidly solidifying and expanding our market-leading position in conductor edge. Featuring a proprietary industry-first innovation for ultra-fast plasma control, ACARA delivers previously unachievable levels of performance in edge selectivity and profile patterning precision. We have previously announced leading edge foundry logic momentum with this tool, And just since our investor day, ACARA has also won multiple critical edge applications at a major DRAM manufacturer. By enabling current DRAM and logic roadmaps with ACARA, we are setting the stage for LAM to make further gains as the industry looks to implement even more challenging device architectures like 3D DRAM and CFET over the next decade. Turning to CSBG, we saw record revenues in our upgrades business. While the growth in upgrades was primarily driven by NAND technology conversions as forecasted at our investor day, key DRAM and FoundryLogic customers are also more actively upgrading and repurposing existing tools for new applications to optimize capital spending. Looking forward, we see the upgradable architecture of our systems being a growing point of differentiation for LAM. We are enabling our customers to cost-effectively scale technology on the equipment they already own while creating revenue and share gain opportunities for us. Our collaboration with customers on operating cost optimization extends across the entirety of our installed-based business and over a longer time horizon. For example, in the March quarter, we signed a new multi-year spares agreement with a large memory customer for their latest technology node. This enables us to deliver value to the customer through assured component quality, cost, and availability. Finally, in specialty technologies, we achieved a couple of key milestones recently. First, we displaced a competitor and shipped multiple 200-millimeter PCVD tools for silicon carbide-based wideband gap power device fabrication. Second, our pulse laser deposition solutions are being extended into more use cases, and we will be shipping our latest tool this year for an advanced memory application. As customers look to accelerate R&D and scale manufacturing globally, we're finding new ways to add value. We've talked in the past about our Semiverse solutions capabilities, which apply advanced modeling, simulation, data science, machine learning, and artificial intelligence to enhance equipment performance and shorten the time required for process optimization. I am pleased to report that recently we signed new licensing agreements with three large customers for our virtual fabrication platform, Simulator 3D. For both its cost and performance benefits, we see virtual fabrication fast becoming a required discipline in advanced technology development, and LAM is leading the industry in this evolution. So to wrap up, when I look at our solid March quarter results and strong June quarter guide, I see LAM executing at a high level on all aspects of the outperformance strategy we described at our February investor day. This includes new product momentum and key customer wins, value creation from the installed base business, and innovation in equipment intelligence and virtual process development. Near term, we're taking steps to lessen the direct impact of tariffs and closely monitoring for longer term indicators of demand changes. Our priority is to continue delivering the technological innovations and world-class support that uniquely enable our customers to scale semiconductor manufacturing faster, more productively, and more cost-effectively. Simply put, our competitive differentiation is enabling our customers' competitive advantage. For this reason, we remain highly confident that LAM is in an excellent position to outperform overall semiconductor industry growth in the years to come. Thank you, and I'll now pass it on to Doug.