1.29.25
There are signs of spring, perhaps a harbinger for the end of the NAND nuclear winter. System sales to NAND customers were $630M in the quarter, at 71% sequential rise from the prior quarter. Two years ago, Lam’s NAND system sales were almost $1.4B, then they fell off a cliff and have yet to recover. Over the last seven quarters, prior to this one, NAND system sales averaged $380M per quarter. This is a single data point, but a significant one. DRAM is looking up as well. Lam sold $683M worth of systems to DRAM customers in the quarter. Except for the fourth quarter of last year, when Chinese customers pulled in purchases ahead of export restrictions, this is the first time this number has been above $600M in almost three years. Company guidance for next quarter indicates the good times will continue to roll. The company set a midpoint for revenue in the current quarter at $4.65B. This follows actual sales of $4.38B in December quarter, and $4.17B the quarter before. Total WFE sales for the full calendar year 2024 will be in the mid-$90B range.
The rest of this is from the analyst conference call, focusing on comments that pertain to the memory markets. The company sees calendar 2025 WFE spending rising slightly to approximately $100B. NAND system spending in the quarter was driven by tech conversion from 1xx-layer devices to 256-layer. These conversion are expected to continue in calendar 2025. DRAM system spending was focused on tech upgrades to the 1-alpha, 1-beta, and some initial ramp of the 1-gamma nodes to enable DDR5 and HBM. Most of their China revenue comes from domestic China customers. They see NAND systems sales up in 2025 over 2024. One of their peers said those sales will double. Lam wasn’t willing to say that. They characterized last year in DRAM as “very strong” and said this segment will continue to be “pretty strong.” The CEO said that demand for NAND equipment is “starting to come back.” He detailed the reason being that a lot of wafers are still being made on older technology nodes and migration will drive a recovery in equipment demand. For 2025, they think China WFE is going to be softer compared to 2024. That is important. I thought that the indigenous Chinese manufacturers would continue to ramp into 2025. The total NAND capacity in the world is “a million-plus wafer starts per month.” Man, that is a lot. In summary, I’m surprised the quarter was as good as it was for NAND equipment sales. I’m also surprised they see NAND being up next year. Granted, that is off of a low base. I think the NAND makers must be doing node migrations they have been holding off on, to get their cost per bit down. So NAND makers investing in tech transitions and slower spending in China. This is contradictory to what we heard from Micron last month, when they said they would start idling NAND capacity and slow down investment, in the face of market weakness.
– Smooth Hughes (no MU position)