Lam Research Corp ((LRCX)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Lam Research Corp’s latest earnings call revealed a generally positive sentiment, with the company reporting robust financial results for 2024. The sentiment was bolstered by notable growth in their Customer Support Business Group (CSBG) and advanced packaging sectors, and strategic investments that are yielding returns. However, the company acknowledged potential risks, particularly in the Chinese market and issues related to customer concentration.
Strong Financial Performance
Lam Research delivered a remarkable financial performance in 2024, reporting a total revenue of $16.2 billion and diluted earnings per share of $3.36, both exceeding market expectations. The CSBG segment was a standout performer, with a revenue increase of 11% to $6.6 billion, showcasing the company’s ability to drive growth through its diversified business segments.
Record Gross Margin
The company’s gross margin reached an impressive 48.2% in 2024, marking the highest annual result since its merger with Novellus in 2013. This achievement highlights Lam Research’s operational efficiency and successful cost management strategies.
Advanced Packaging and Technology Growth
Lam Research saw significant growth in its advanced packaging and technology shipments, particularly for gate-all-around nodes, which exceeded $1 billion in 2024. The company anticipates this figure to rise above $3 billion in 2025, reflecting ongoing advancements in semiconductor technology.
Strategic Investments Paying Off
The company’s strategic investments in research and development, as well as infrastructure, have resulted in notable product advancements such as Cryo 3.0 and Aether dry-resist solutions. These innovations are not only enhancing Lam Research’s product offerings but are also supporting improved operational margins.
Customer Support Business Group Growth
The CSBG reported a revenue of $1.8 billion for the December quarter, representing a 20% increase compared to the same period in 2023. This growth is indicative of Lam Research’s strong customer relations and its ability to capitalize on the growing installed base.
Challenges in China
Lam Research faced challenges in China, as revenue from this region decreased to 31% in the December quarter from 37% in the previous quarter. The introduction of new regulations in December affected the company’s revenue forecasts, with a projected $700 million impact from restricted Chinese customers.
Decreased Revenue from Mature Nodes
The company also reported a decrease in foundry revenue from 41% in the September quarter to 35% in the December quarter. This decline was attributed to reduced spending in mature nodes, indicating a shift in market dynamics.
Customer Concentration Headwinds
Lam Research identified customer concentration as an ongoing headwind that could affect its margins. As the company’s customer mix continues to evolve, managing these relationships will be crucial for maintaining profitability.
Forward-Looking Guidance
Looking ahead, Lam Research provided optimistic guidance for 2025. The company expects wafer fabrication equipment (WFE) spending to slightly increase to approximately $100 billion, driven by technological innovations. The company also anticipates over $3 billion in shipments to gate-all-around nodes and advanced packaging, supported by strategic investments in R&D and operations, which have already contributed to a 160 basis point improvement in operating margins for 2024.
In conclusion, Lam Research Corp’s earnings call for 2024 painted a picture of a company on a strong growth trajectory, underpinned by strategic investments and operational efficiency. While challenges remain, particularly in China and customer concentration, the overall sentiment remains optimistic, with positive forward-looking guidance suggesting continued success in the coming year.
