• Net revenue increased 21% YoY in the April-June quarter driven by strong memory demand and robust spending in specialty and mature nodes in China.
• Customer Support Business Group (CSBG) revenue increased 14% YoY, its highest point since CY2022.
• DRAM revenue surged 168% YoY helped by customer focus on DDR5 and HBM enablement.
• Advanced packaging and HBM will drive long-term growth and combined revenue will surpass $1 billion in CY2024.
• The company has introduced new etch technology that delivers industry-leading control of the NAND memory channel hole profile. It is expected to boost revenue in the long term.

Lam Research has reported a 21% YoY increase in its April-June quarter revenue, driven by strong memory demand and robust spending on specialty and mature nodes in China. For its financial year (July 1, 2023-June 30, 2024), the company reported a revenue decline of 14% YoY to $14.91 billion.

The company’s strategic focus on prioritizing investment in product development, R&D infrastructure, and technology upgrades to capitalize on AI-driven growth is expected to sustain long-term revenue growth. Besides, technology inflection and transition to Gate-All-Around (GAA), HBM, and advanced packaging are expected to further reinforce revenue growth. During the quarter, the company also launched a new patented cryogenic etch process that delivers industry-leading control of the NAND memory channel hole profile.

Launch of Lam Cryo 3.0, third-generation cryogenic etch technology

According to CEO Timothy M Archer, this technology delivers a memory channel hole profile with a top-to-bottom deviation of less than 0.1% relative to its depth. Archer emphasizes that such tight profile control allows customers to increase bit density by packing more cells per layer while also having the flexibility to add more layers per tier. He further adds that Lam Cryo 3.0 addresses the industry’s need for more sustainable solutions compared to conventional etchers.

Analysis

• Enhanced focus on process efficiencies and materials innovation, unlike previous NAND technologies, will optimize manufacturing processes, result in better performance, increase yield and reduce costs, enabling 3D NAND FLASH roadmap extension to the next decade.
• Delivering the required tools and solutions to address manufacturing challenges becomes significant as the complexity increases with the 3D NAND stack growing taller with each successive generation.
• Lam Cryo 3.0 will help OEMs accelerate the pace of development in 3D NAND FLASH and meet increased capacity and bit growth requirement due to AI proliferation across end markets.
• The new process involving low temperature coupled with lean chemistry offers an additional window of improvement to NAND manufacturers as it paves the way for better hole shape control, unlike conventional processes. Innovations with such precision and uniformity, along with delivering lower environmental impact, are needed to overcome the AI era’s key manufacturing hurdles, especially when employed in high-volume production.
• These new innovations in etch and deposition will be key drivers in generating long-term revenue growth.

April-June quarter highlights

• Financial highlights
  • Net revenue increased 21% YoY in the quarter to reach $3.87 billion. The growth was driven by robust demand for memory and an increase in sales in China.
  • Gross margin improved 280 basis points to 48.5%, compared to the same quarter last year, due to continued improvement in factory efficiencies which helped offset headwinds from customer mix.
  • Customer Support Business Group (CSBG) revenue increased 14% YoY to $1.7 billion, the highest since CY2022. The increase was primarily driven by growth in spares and Reliant systems which sell into mature nodes.
  • System revenue constituted 56% of the net revenue, amounting to $2.17 billion and growing by 27% YoY.

• System segment-wise revenue
  • Foundry and Logic segment: Mature nodes’ key drivers

Foundry and Logic accounted for 64% of the total system revenue with Foundry growing by 16% YoY to $933 million. The growth stemmed from higher shipments for advanced technology GAA nodes and increased spending on mature nodes from China.

• • Memory segment: HBM drove memory revenue

DRAM reported a revenue increase of 168% YoY to $413 million. The growth in DRAM was due to increased spending on DDR5 and HBM as well as the 1Y node. The increasing adoption of AI will drive the DRAM and HBM growth further. Non-volatile memory (NVM) revenue increased 20% YoY to $369 million.

• China constituted 39% of the system revenue for the quarter, which grew by 90% YoY to $847 million. The growth was attributed to increased spending on specialty and mature nodes and increased investment in DRAM.

• Developments in April-June quarter
  • The company unveiled Lam Cryo 3.0, the latest advancement in cryogenic etching systems.
  • The company’s manufacturing plant in Malaysia reached a milestone by dispatching its 5,000th chamber.

FY2024 highlights

• Financial highlights
  • Lam Research’s revenue decreased by 14% YoY to $14.9 billion due to reduced revenues from the Foundry, Logic and NVM segments. The NVM segment’s revenue declined 54% YoY to $1.57 billion.
  • Gross margin increased by 290 basis points to 48.2% due to improvement in factory efficiencies and cost management.
  • Customer Support Business Group (CSBG) revenue was $5.98 billion, down 11% YoY. However, increased spending from China on Reliant Systems for specialty and mature nodes brought revenue growth, along with higher spare revenue due to better utilization by memory customers and inventory stocking.
  • System revenue represented 60% of the overall revenue for the year, accounting for $8.92 billion.

• Capex: The capex for FY2024 was $397 million, focused on lab investments in the US and Asia, along with an expansion of manufacturing facilities in Asia.

Guidance for July-Sept quarter and H2 CY2024 outlook

• Q3 CY2024 (July-September) revenue is projected to range between $3.75 billion and $4.05 billion, with gross margin anticipated to be between 46% and 48%. A sequential decline in gross margin is expected due to changes in customer mix.
• DRAM revenue is predicted to decrease in H2 CY2024 and will be offset by growth in HBM.
• Advanced packaging and HBM will drive long-term growth and combined revenue will surpass $1 billion in CY2024.
• The strength in mature node spending in China will continue in H2 CY2024 while global mature node spending will be flat YoY.
• NAND revenue is likely to rise in H2 CY2024 as utilization rates normalize, and customers increase spending for conversion to 2xx- and 3xx-layer devices.
• CSBG revenue is expected to see modest growth in H2 CY2024 due to improvement in utilization at memory customers.
• On the Foundry side, mature node spending will remain strong in China.
• Unfavorable QoQ change in customer mix will continue to be a slightly incremental headwind going into H2 CY2024.

Etch and deposition intensive technology inflections including GAA, backside power delivery, advanced packaging and dry EUV resist processing, along with implementation of more EUV layers in memory and Foundry/Logic transition from EUV to high-end EUV, are key drivers for long-term growth.