4.23.25
The December quarters was the first data point in spending by Lam’s NAND customers that hinted a thawing may be underway in the nuclear winter. The March quarter continued this. Two data points makes a trend, especially when you only get four data points per company per quarter. NAND customer spending at Lam on WFE was $698M in the quarter, up from $683M in the prior quarter. This is a spending level that has increased 40% from two quarters ago. While that is a thawing in NAND, it is far from a recovery to prior levels. Before the current downturn started at the end of calendar 2022, Lam’s NAND customers were spending twice what they did in the March quarter. I’ll call the increase of the last two quarters a step up in NAND WFE, but it is hardly a recovery. In the March quarter, overall company revenue, gross margin and earnings were all above the midpoints of guidance, a performance that is in line with what company executives expected. Said another way, the market didn’t make a drastic move in the last ninety days. Note that all of this quarter was before the tariff own-goal announcement of April 2. Guidance for the June quarter is for an increase in revenue of 6.3% sequentially.
The rest of this is from the analyst conference call, focusing on comments that pertain to the memory markets. So far this year, the WFE market has played out as the company expected. NAND spending has been driven by technology conversions. HBM and DDR5 continue to drive DRAM spending. They continue to forecast overall WFE spending for calendar 2025 to be in the $100B range. Thus far, the tariff environment has not led to any meaningful changes in their customers’ plans. NAND technology conversions are being led by transition from 1XX to 256-class devices. DRAM spending was focused on upgrades across one-alpha, one-beta, and one-gamma nodes to enable DDR5, LPDDR5, and HBM. In NAND, two-thirds of the industry bits are still around the 128 level, the 1xx generation. They have lost sales in calendar 2025 to indigenous Chinese customers that had been planned on, because of new export restrictions. Year over year, in 2025 Lam’s sales into China will be down.
– S. Hughes (short MU)