Lam Research March Quarter 2024 Results


Lam increased their view of total WFE spending in calendar year 2024 from mid-to-high $80B to low-to-mid $90B range. The primary reason behind this increase is higher lithography shipments into China. I imagine a meaningful portion of this is to get ahead of technology restrictions into the PRC. For DRAM, the company cites HBM demand and shipments into China for domestic manufacturers. NAND is finally thawing. Lam sees shipments to NAND growing in CY24. NAND fab utilization is increasing in an “early sign of a strong set-up for CY 2025.” DRAM shipments were down from the record level last quarter, to $551M. This is more than double the trough seen early last year of $154M. HBM DRAM needs high aspect ratio contact etchers to process through silicon vias. HARC processing is Lam’s expertise, so I think most of this higher DRAM spending is for these HBM-related processing. NAND is still fully in the regime of an equipment downturn this quarter. When equipment investment is high in NAND, LAM sells $1B or more to these customers. For the last five quarters, NAND purchases have averaged $406M per quarter. This explains why they commented in fab utilization increasing in NAND. It is the only good news they can point to in their core market. DRAM spending was focused on 1y, 1-alpha, and 1-beta nodes, driven by DDR5 and HBM. NAND investment is for technology conversions to 2xx and 3xx layer devices. Sales to domestic China are across the spectrum of customers, DRAM, foundry/logic, and NAND. In summary, NAND capacity is still far from experiencing expansion beyond what comes from technology node migrations. Higher fab utilizations and rising ASPs are the only visible indication that a recovery in the NAND market is coming. The company commented they are setting up for a strong calendar 2025. From the seat of a NAND WFE company at the end of the bullwhip, that likely means they don’t see spending on NAND equipment recovering to upturn levels until at least late calendar 2024. In DRAM, the view of capacity expansion is muddled by indigenous China and by investment in HBM capacity. I think most of the rise in WFE for DRAM is to these two sources of demand, versus increasing DRAM capacity. My conclusion is Lam is not shipping tools to expand DRAM capacity at this time. We are still in the first phase of the upturn in DRAM, where bookings are rising but shipments are not yet. Lam doesn’t provide bookings information, so I am filling in the blanks on that.

  • S. Hughes (cyclical long MU)