Summary
- Revenue: For the quarter ended June 25, 2023, revenue was $3.21 billion, with a 17% decrease compared to the previous quarter.
- Gross Margin: U.S. GAAP gross margin improved to 45.5% of revenue, showing a significant increase of 400 basis points compared to the previous quarter.
- EPS: U.S. GAAP diluted EPS was $5.97, slightly lower by 1% compared to the previous quarter’s EPS of $6.01.
- Guidance: Lam Research provided a positive outlook for the quarter ending September 24, 2023, with revenue guidance of $3.4 billion +/- $300 million and a non-GAAP gross margin of 46.5% +/- 1%. The net income per diluted share is expected to be $6.05 +/- $0.75.
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Lam Research reported a strong quarter performance on June 26th 2023. It’s revenue guidance of $3.4 billion beat expectations. The semiconductor industry is currently dealing with a surge in demand due to the recent adoption of AI technology. This creates a significant opportunity for Lam Research: “Advanced AI servers have significantly higher leading-edge logic, memory, and storage content versus traditional servers. Every incremental 1% penetration of AI servers in data centers expected to add $1B to $1.5B of additional Wafer Fabrication Equipment (WFE) investment.”
Lam Research Corporation is an American corporation that designs, manufactures, markets, and services semiconductor processing equipment used in the fabrication of integrated circuits. It supplies wafer fabrication equipment and services to the worldwide semiconductor industry. Lam Research is one of the leading companies in the semiconductor equipment industry, alongside other major players like Applied Materials and KLA Corporation.
The company strongly focuses on research and development, investing heavily in innovation to maintain its competitive edge in the fast-paced and evolving semiconductor industry.
Lam Research Unveils Coronus DX for Enhanced Wafer Yield
In a world where technology is evolving rapidly, the semiconductor industry plays a critical role. Companies such as Lam Research are leading the way. This company recently unveiled an exciting development, the Coronus DX. It promises to significantly improve the yield of semiconductor wafers, particularly during complex processes like the creation of 3D NAND.
Making solid-state memory devices is a tricky process involving deposition equipment and various thin film processes. But as the number of 3D NAND layers increases, the production time also increases. Not only does this make the process longer, but it also increases the chance of damaging the wafer’s edge. Over time, this repeated layering can cause unwanted residues and roughness to accumulate, possibly leading to semiconductor device failure.
Moreover, the edge of the wafer may be severely damaged during long wet etch processes in 3D NAND manufacturing. Materials from back-end processing can also migrate and contaminate future processing, reducing the quality of wafer-to-wafer bonding.
This is where Lam Research’s Coronus DX comes in. It has been designed to reduce edge damage and contamination on silicon semiconductor substrates. The Coronus DX works by depositing a thin protective dielectric layer on the bevel, all in a single step. This practical solution tackles the usual issues that hamper semiconductor quality.
The result? A dramatic yield increase enables chipmakers to deploy new, cutting-edge processes for next-generation chips, including 3D NAND. Given that the SEMI trade association forecasts growth in demand for 300mm wafer fab equipment in 2024 and 2025, following a slight decline in 2023, the introduction of Lam’s Coronus DX is perfectly timed.
In the end, with Lam Research’s innovative stride in the semiconductor industry, we can look forward to a future where the production of semiconductor devices is more efficient and high-yielding.
Chip Export restrictions from October 2022
Companies in China have shifted to use equipment for older logic and memory chips. The U.S. published a set of export controls in October 2022. They aim to cut off China from the supply chain of specific semiconductor chips made with U.S. equipment.
Lam Research has warned investors in 2022 that it expects a $2 to $2.5 billion revenue hit due to these restrictions. In its most recent report, China accounted for 26% of revenue:
| Region | Revenue Share |
|---|---|
| China | 26% |
| Korea | 24% |
| Taiwan | 20% |
| Japan | 10% |
| United States | 8% |
| Europe | 8% |
| Southeast Asia | 4% |
Our Take on Lam Research
We are just beginning to understand the opportunity of AI and the impact it will have in the semiconductor market. Lam Research is undoubtedly at the forefront of that movement. It will benefit from that growth as a leader in the space. Lam Research continues to invest heavily in Research and Development. This enables the company to stay at the forefront of technological advancements in the semiconductor industry. It can also lead to the introducing of new products and solutions that can drive future growth.
That being said, the geographic risk around China is something we can’t discount. It’s tough to predict what will happen in the following years. It remains something we need to watch very closely. At least the missed revenue can be offset by selling older equipment. We do not believe a hot conflict is on the horizon in the following years. If we are proven wrong, the impact on the semiconductor market could be catastrophic. By managing your portfolio diversification correctly, you can minimize this risk.
You can read more financial results like the one from Intuitive Surgical.
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