Lam Research Corporation

Good day and welcome to LAM Research's June quarter of 2025 earnings conference call. All participants will be in a listen-only mode for the duration of the call. And should you need any assistance today, 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 a touch-tone phone. To withdraw your question, please press star, then two. Please also note that this event is being recorded today. I would now like to turn 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 June 2025 quarter and an outlook for the September 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. Thanks Ram

and good afternoon everyone. LAM delivered another great quarter. Revenues and profitability came in at the upper end of our guided ranges. Our gross margins exceeded 50% for the first time since the merger of LAM and Novellus and EPS hit a new high for the company. We achieved record foundry revenues driven by strong performance in both gate all around and mature node markets. And again, our upgrades business grew to a new high, up mid-teens percent over the prior quarter as NAND customers migrate to higher layer count, higher performance devices to meet the faster read-write requirements and greater storage demands of AI applications. In short, we are executing well on the served market expansion and share growth story we laid out at our investor day earlier this year. 3D scaling of device and advanced packaging architectures is accelerating growth in etch and deposition intensity. And LAM's new products targeting key technology inflections are winning with customers. Furthermore, in advanced services, LAM is at the forefront of realizing the vision of an autonomous fab. We are gaining momentum with our equipment intelligence enabled dextro cobots which provide device makers with an unprecedented level of equipment maintenance precision and repeatability. The result is enhanced -to-tool matching, improved machine availability, lower operational costs and in some cases, higher yield. In the June quarter, LAM expanded our dextro capabilities to cover three additional tool types and we are accelerating the roadmap to support more products and more shipments in coming quarters. Turning to the overall market environment for calendar year 2025, we expect wafer fabrication equipment or WFE spending to be in the $105 billion range, up from our prior view of approximately $100 billion, predominantly due to an uptick in domestic China-related spending. We see non-China investments remaining broadly consistent with our prior view. Currently, we expect WFE in the second half of the calendar year to be roughly flat with the first half. Looking forward to 2026, it is still too early to comment on the overall level of WFE spending. However, our strong position in gate all around, advanced packaging, high bandwidth memory and NAND layer conversions, we feel confident that LAM is well positioned to outperform. In 2025, LAM's Served Available Market or SAM is set to expand to around mid-30s percent of WFE due to these industry drivers and we expect them to work in LAM's favor again in 2026. Longer term, we are on a solid path to grow our SAM to the high 30% range of WFE by continuing to deliver critical solutions for atomic-level device scaling, new materials innovation and advanced packaging integration. The key R&D investments that we've made over the last several years have enabled us to create the broadest, most competitive product portfolio in the company's history, thereby putting us in a strong position to win over 50% share of the incremental SAM over time. I'll share a couple of examples that underscore our early progress toward our SAM expansion and share gain goals. First is our Halo ALD Mali tool, which is ramping at multiple NAND customers this year. We expect Mali adoption to increase broadly as more customers convert NAND capacity to 200 layers and higher in the next few years. LAM is leading the industry transition to ALD Mali not only in NAND, but also in Foundry Logic. AI is driving greater transistor performance requirements and in turn accelerating the inflection to -all-around device architectures. However, below 2 nanometers, -all-around structures begin to encounter significant resistance capacitance or RC challenges. Narrower transistor contacts in these devices cause greater electron scattering resulting in higher resistance of the deposited tungsten films. Replacing tungsten with molybdenum solves the resistance problem, but the process of depositing this higher performance material is inherently slower and more complex. This is driving a roughly 3x increase in LAM metal deposition SAM per wafer when transitioning to advanced -all-around nodes. Today we are the only company with ALD Mali tools already in production in Foundry Logic and in the June quarter we secured a key win at another leading Foundry customer for their next generation application. As Mali adoption expands across various metal interconnect layers, the flexibility of LAM's unique multi-station architecture to execute both plasma and thermal processing in the same chamber enables optimization of process conditions and process step sequencing to meet requirements for different applications and over multiple generations of future logic devices. Another area where we have made strong progress is advanced packaging. Advanced packaging is critical for scaling system performance to address next generation AI requirements and so far has enabled up to 100% improvement in memory density, 4x improvement in bandwidth and an approximate 40% gain in power efficiency. LAM SAM is growing with greater adoption of next generation packaging architectures for DRAM, CPUs, GPUs and ASICs used in data centers. In 2021, leading edge Foundry Logic customers spent just 1% of WFE on advanced packaging. With AI's rapid adoption of advanced packaging, that number has grown more than six times. In the future, we expect end consumer devices like mobile application processors and laptop CPUs to also feature more complex packaging schemes as on-device AI becomes mainstream. We are a leader in the advanced packaging inflection and are leveraging our experience to win more opportunities. For example, LAM is a masked unmatched experience in copper plating hardware design and process technology over the last 20 years. We have by far the largest installed base in the industry and recently achieved a significant milestone of 6,000 installed plating cells. By incorporating our learning from the installed base into improvements in our latest Sabre 3D system, we are delivering -in-class coplanarity, uniformity and defectivity in high-volume advanced packaging environments. The experience we have gained at the leading edge is now cascading to additional wins with next tier customers seeking to adopt a proven -in-class solution. Sabre 3D market share in advanced packaging is expected to grow nearly five points year on year in calendar 2025. Finally, let me pivot to the strong momentum we are seeing with our newest generation edge tools. In NAND, we continue to solidify our leadership in high aspect ratio dielectric edge. Equipped with our cryo process, our VanTech system recently won a key multi-generation edge decision at a major NAND customer. This further confirms our differentiation in both technology innovation and high-volume production worthiness in the NAND segment. Across all device types, our -the-art conductor edge tool, Acara, is off to a solid start since its launch earlier this year. By combining direct power coupling with LAM's unique plasma pulsing capabilities, Acara delivers industry-leading depth uniformity and profile control that is vital for DRAM scaling. In the June quarter, Acara secured multiple new application wins at a top DRAM maker. So to wrap up, I am excited by the breadth of opportunities I see ahead for the company and am encouraged by the outstanding progress our team has already made for the long-term goals we communicated at our February investor day. Edge and deposition intensity is rising with 3D scaling. Our products are winning in key technology inflections. And as a result, there is tremendous potential for LAM to continue expanding SAM and to grow share at each successive process technology node. Now here's Doug to talk about our quarterly financial performance in the September outlook.