Lam Research (LRCX) 19 Oct 222023 Q1 Earnings call transcript

Good day, and welcome to the Lam Research September 2022 Quarter Earnings Conference Call. At this time, I would like to turn the conference over to Ms. Tina Correia. Please go ahead, ma'am.

Thank you, operator and good afternoon everyone. Research conference Lam the to quarterly call. earnings Welcome Archer, Chief Vice Executive me and today and and Tim are Executive With Officer President Doug Financial Officer. Chief President Bettinger,

we filings. the A be slides with of Pacific last can PM slides also statements section until presentation call in distributed release found our financial today’s Time. will hand Time in our on I scheduled our press website, for and Relations that, The non-GAAP results A the our presentation to PM between Today’s Pacific non-GAAP include call, that this Today’s During outlook can This Investor be of overview this and additional our information. SEC disclosed GAAP in risks XXXX release to along uncertainties the a afternoon. the detailed financial forward-looking results be call. X:XX is be over X:XX subject Q&A factors share accompanying XXXX call for and we review and will with that afternoon on see later reflected detailing the will company’s Tim. the are on made December risk to today’s little the will in And the available after this business public on the will in replay presentation otherwise accompany the quarter and environment presentation. was our September results accompanying specified. for website. basis, our unless The results call quarter. presented of slides discussion reconciliation Please found the financial financial a

to Tina, call the and thank everyone joining Thank you, you today.

company's topping exceeded and per continued end Gross by reflect guidance history. of higher guidance time results $X margins operating the in strong the revenues earnings share margin execution quarter for both in came the the September at first billion range. with Lam, Our and

the government our wafer regulations the US release expect new the States United press solid and fabrication from can you Recently, including today, parts semiconductor performance in and also related equipment in export despite announced China, quarter environment. December see As services. sold we technology for challenging

the have with shipments to full and compliance have support ceased ensure taken and rules as the steps necessary required. We

Our guidance for includes issued the of quarter today changes. impact financial December the these

XXXX, to For range be restrictions the of billion. calendar impact billion $X.X these year to we revenue in from the estimate $X total

the offset fabrication year Turning to low supply the $XX wafer broader restrictions in of lower demand, and impact partially calendar includes China-related XXXX picture, demand equipment in billion chain the see we new outlook conditions. This spending improving range. by

to our in down of demand been indicated normalized are inventories some within year adjusting the investment to has segments. next bring deterioration recently, rapid channel As a memory there Customers into particularly fundamentals, have plans levels. customers more

see bit our quarters. our end we our result, cadence, we on below earnings normal the WFE memory first shipments tracking In provide of a XXXX demand for view As next call. January few would

expect next we decline. However, Inclusive accounting we memory be XX% WFE with large the estimate calendar year's providing for preliminary current environment, year that China XXXX. of than today, given the a to of portion more are down restrictions, for our investments

increase growth we setup our for earnings color to for customer of But will create on memory percent We believe reduce will call. favorable outlook XXXX. beyond as it bit supply memory detailed our overall to more WFE a mix in provide now, actions next that a

long-term, greater as deposition higher and semiconductor These opportunity win To the the for include rapidly structures. including positioned end factors that etch is of customer First, to efficiency. expanding architectures, scalable As on ensuring key performance our continue enable factors a content by transition to operating tools customers growth growing three to device XD intensity cyclical base larger and and to supporting tremendous sizes. our focused device success WFE demonstrate adjustments require the remain they at maximum play These we out, commitment complexity devices, unchanged. we more rising installed ensure Lam, structural are best in strategies: die Lam long-term to are create at

device sustaining expanded leveraging be third, Second, for R&D customer and maps. chain most our and global customers partnerships partner to manufacturing R&D trusted a technology their And investment is deepen critical and our innovation development by Lam's accelerate fully by recently in the our that road infrastructure. supply long-term scaling

is installed in XX,XXX in pullback the in chambers continues field. than CSBG record the $X.X Lam's in over higher drive revenue. base performance September approaching in quarter installed now another to billion business, with Our our growing base WFE. XX% memory-related which XXXX approximately the in This strong is hit

While downturns. every spending WFE we more quarter, our base ever become business won't installed model, new has records our to important particularly in hit

existing customers During times, upgrades tools. such their their while can optimizing advance through continue to technology, capital efficiency to

including We defects, is find enhancement. An customers bit per scaling. cost opportunity to efficiencies, our impair this seen which customers by can Lam's line. can employed prevent to the double-etched yield are Coronus of with help process engaging other product creates in also be example Coronus process-related

successive As technology the a a result, in steady we at seen number node. of have passes each double-etched NAND used increase

in positively can to growing we data are that customers, large base. volume customers' Another being be upgrades equipment key opportunity services efficiency installed impact process deliver and enormous with our of Together to operations. and our generated help using from drive and found learnings

release the new recently production example, memory Services time were XX%. support deployed Using we than tools by installation manufacturer. at Intelligence we For to to these capabilities, large to a more to Equipment equipment able shorten

opportunity the across progress from made creates our pull key warrant efficiencies, increased and customers. with it customers the While Lam operational dynamics demand for focus the continues. growth strong technology in on quarter We technology for September multiple an advancement wins the near-term solid

at a our improved leading layers ability these films lithography DRAM to lower overlay capacities customer. wins For deposit critical to led device for example, performance to and

world-class purpose modifications at well and from to position integrating collaboration application our innovative be focus bring our delivering solutions For a Lam's in NAND cost-effective R&D it and multiple close Korea, investments to in facility talent. of to customer to the with partners advanced by of partnerships will including access wins month, in two both or of Engineering is our a R&D in structures. over as secured global leverage made learning our we we key logic, product the foundry customers, the In and Bengaluru. applications, manufacturing we our DRAM Whether for Consequently, our our addition strategic customers. long-term ecosystem ecosystem building new as have on and footprint, to last success used efficiency years, our past the India our across valuable Center and network, and and leadership XD lab opening an testing to a characteristics Lam for film infrastructure believe Malaysia, center lines. ALD This to design rooted on software an hardware expand in gate just operational global specializing is technology, our required close manufacturing and all-around addition we

And our current how good see in time Doug. So, exciting manufacturing, we overall, to over opportunities and I'll the I position you turn us This the pleased we semiconductor emerge in cyclical a technology, puts to as call service. am navigate to and stronger capture very are foundation the continuing now over we to both in joining Thank foundation again industry. look dynamics the today. with for strengthen

on metrics, $X today. the Tim. revenue, operational our ability focus history, time performance billion our record to with Revenue share. Thanks financials mark operating for quarter excellence of everyone Excellent. thank results environment. first call in levels approximately our you in needs September industry afternoon a our reflect the including joining for Good the multiple across deliver and of in meet solid and in dynamic September our coming and at crossed delivered Lam per income, customers $X.X earnings the in September billion. and quarter the The

We continue XX% gone have Supply prior issues output nearly ease levels, to somewhat. completely, ramp chain to however. the have growth They away begun quarter. not revenue over delivering

macro December my quarter. the fab revenue constraints. was cash equipment revenue advanced followed with deferred wafer backlog on for expect as $X.X declining, we quarter approximately our of due and information continue later provide to as and year This in weakening and With customer I more pressures exit as by primarily September spending in down was I'll billion regarding and calendar conditions shipments levels grew output by scripted Deferred deposits million. outstanding $XXX inflationary timing deal remarks. and the growth orders. XXXX the will to We well focus guidance come certain December

XXX-layer XG. continue investments a represented compared customers. segment quarter. of segment as revenues, respectable June in positive primarily in from were comprising Xz the quarter. to Included XX% to investments in mainly of with consistent revenues The segment. and that level of at now devices. we we the dollar DRAM the capacity systems X-alpha the of quarter myriad investments system segment from Other the XX% for XX% areas the level revenue, node from record XX% strength AI, the the These XX% the Let coming IoT, We conversions. in June supporting to quarter, of XX% represented quarter. details are I'll XX% of June The in system see and customers quarter automotive leading the a with revenue in September quarter NAND class in reaching for for of and quarter, segment The results in standpoint. DRAM node XX% me in record prior Foundry contributed mature for down investments had both have by cloud, in of result you and was XX%. devices the revenue of systems compared occurring the as concentration in slightly Logic increase quarter. momentum remind continued The prior this was a conversions the quarter in Logic adds our September and a the which were the Memory, and the Memory September NAND prior turn concentration systems to quarter across compared such segment prior XX%

revenue. additional quarter higher line domestic up with base Chinese June lower XX%. XX% September in revenue strong regions. The September All total XX% to Support of quarter June prior go of XX% us Business here to in discussed, the revenue these versus investing Our continue now significantly the was Chinese to the regions into is the than parts was in Reliant results at sequential advanced to as the Group XX% Customer September. region of which product were calendar quarter. plans came we reached flat The was certain decreased two Notably, our CSBG the $X.X I as of and domestic customer record as will packaging record the The region the of total biggest be of in region image solutions. this Reliant in the in revenue a September increased the strong for in from I'll as business level microprocessors, expect in towards to in on year. in China our expect XXXX. customer be at September in XX% growth our XX% good and quarter. Taiwan from now contributor Revenue the Tim and next have customers restrictions nearly a concentration the the we quarter. here billion, Korea for quarter. more of The concentrated relatively sensors well to prior the those China composition total, spares regional based XX% customers revenues of base performance turn were levels. the quarter the and delivered

platform value softer past, and have a WFE spending. offset basis, nonetheless, in on potentially base revenues As will decline installed year trailing in relatively weather specialty next WFE our believe, provide the demand, up We to strength total. added likelihood specialty the do quarterly creates segment macro that the services a CSBG the will than better we while in the noted a of edge of set fluctuate

$XXX to negatively investing due and high million. mind. the mix. Operating I raw impact The coming short our at supporting we address for related like guided decline concentration a customer margin XX% see which level of of high-end continue range benefited the We June's levels Moving committed managing to increase September freight on a as company. logistics, gross to We're have and next manufacturing the year well long-term do our objectives quarter customers' in areas from semiconductors. plans September those at XX.X%. guidance. of to our million, customer favorable certain amount and the spending obviously levels. margin, it which water as revenue which and with was nearly comprised focused as from from year for XXXX in was to to expenses of came XX% We will the cost in spending, headwinds $XXX gross were the I'll as in R&D, product increased higher The output talk and We're both in fab the when operating was which December margin pressures up equipment mix, XX.X% range see and our improved and wafer September our spending well as levels in quarter guidance calendar for gross in spending, margin. our the higher quarter prior over I of material quarter revenue was

rate due the for R&D the coupled the impact of required mix tax geographic income, XX.X%, was than quarter capitalization slightly US to higher of expected Our with rules. non-GAAP

XXXX September strong return XX% diluted remind quarter $XXX long-term we calendar reminder, paid meaningful a allocated the OI&E as to Act tax favorable estimate than to returning at XXXX reflect expect as decrease cause global continue the is not market-related with of XXX second and the items open cash a tax during September in rate We we impact in the line repurchases. just December the liquidated ASR you, during foreign to of be expected the the share Other And our that higher fluctuations item performance because which impact policy and quarter. for foreign an markets. XXXX market June Other of execute year. well at million in range XXX% tax US as September improved share came plan. quarter a for balance June in about. million our $XX the changes last rates an approximately and of impacts from the now Diluted free quarter-to-quarter. in to million repurchases any related for not I in the lower is count $XX note, mid-teens capital $XX.XX, the the in potential was declines target slightly income in Please was the equity tax spoke fluctuate our the flow from rate was you of interest continued effective and quarter was expense. because above until the venture do Our per you considered. in investments discussed as for policy any a little was our mainly expense cash level change, the quarter, And exchange one better the impacts. this past, and The from $XXX such is to We quarter to we've will The us expect the expected, for does share are Inflation to provisions XXXX, as revenue shares, minimum From should bit came have to compared some quarter. than loss not The estimate the low million capital June rate being This and return that Reduction was dividends September which of expense I'll increasing this due fiscal deployed to to which in of The exchange, however. and perspective, with we in quarter. million line guided related level. quarter. remind tax incurred half as quarter of P&L of expectations. also, quarter was to expense just we in cash we that September subject volatility that to position. profitability to also quarter earnings market year

the and totaled a the X.X $X.X was generated cash of was Days investments, Let $X.X growth days September decrease higher were in payments. million partially the repurchases facilities for which which which billion. the prior was solid consistent days, in from million outstanding $XXX was me operations June and Malaysia. sheet. prior level and equity coming billion, are now up billion, XX Inventory a the from were $XX quarter than quarter balance including expenditures the quarter June, the times. in slight short-term approximately little Non-cash expenses dividend Cash quarter and million, was at bit by XX of manufacturing supporting to from $XX million. for the with United for offset cash pivot level, share which the for quarter. million quarter depreciation, $XX $XXX the included September in turns for in restricted We expenditures amortization. $X.X sales Capital States September Capital comp,

factory short research Additionally, R&D support chain we're trajectory increase had to approximately manage our decided installations. centers quarter. growth full-time and from output critical Korea an we're some to well and We've regular we in technology XXXX. prior Oregon to only and headcount address and quarter employees, the the India. going into We with assess to the hiring slow organizations, California customer in supply deliveries field of the as in Overall, XX,XXX and which and business down term. positions to people higher We September investing well development ended in executing new and X,XXX as constraints, in levels primarily in as the infrastructure the approximately is

during a WFE the prudently to business that know down a down year we for cycle. in manage business XXXX. year While you I'll remind calendar we plan to how this manage

December different that backdrop, provide I'll constructed quarter. and many non-GAAP model the for Our years business has With in guidance for our tested XXXX operating environments. been

$XXX to plus minus This estimate regulations in ability $X.X expecting China. been includes our current customers or are to of impact the billion, of new products services revenue We supply our million. primarily certain on and would of one if due to regulations. Gross margin point, down guidance higher quarter, XX.X%, plus customer of September from these is this have revenue decently minus percentage new mix. or This not for the

business plus more point; $X.XX finally, XX.X%, have a region. Operating We per count margins $XX plus minus the of lost earnings one based on approximately even profitable share XXX or million minus percentage China shares. from or of share of and

ability in Throughout volatile up. chain of year the confident and the prepared now it wrap leadership questions. inflationary to changes. growth. see record profitable we success in pressures my would and We're just calendar prepared me supply that up in open we're been solid let financial the and XXXX, built like XXXX, continued a robust foundation Operator, call and for It's we've evidenced Tim industry we've a and demonstrated base. installed So to technology challenges performance I our for constraints, for concludes deliver the regulatory remarks.

[Operator you, Arcuri. take Timothy Thank the sir. from on will Instructions] first We queue the question

Your go line open. is Please, ahead.

is have Hi. couple Tim on a Thanks I a lot. questions. This of just from Jason for UBS.

question first my is December guidance. on So your

just deferred revenue down. come You to guided to

us whether follow-up. for was I can much of and curious I just revenue contemplating December how Then you a guide. Thanks. So realizing quantify excess you're your into deferred have

you. sure Yes, completely I I'm not heard

to deferred is going do. quantify I revenue tell asked I'm is for in going not we it think you. to to all what down. And go going you it to I'm expect you I think December

Could second please margin you. lot. you facing the how a can we Got December a costs elevated Yes, on the headwind is there? Thank quantify for eventually? in to When question it. of for like facility gross freight much you're December my still expect normalize Thanks margin so in Malaysia things quarter. gross

it still not that I'm scripted wouldn't It's I headwind, remarks. have to the No, for put in you going otherwise, a quantify Yes. either.

headwinds next go gets I think year, mitigate. and up with of we I some freight whatnot. supply terms As the thing there challenges in in expect and demand inflationary caught we're of expect the supply to having. some into same I the of

get put it, to on year. next number a going into not that better I'm expect will do we but So I go as that,

lot. a Thanks

We from from will JPMorgan. Sur take the next Harlan question

go Please, open. line Your is ahead.

afternoon. Good my question. Hi. taking Thanks for Yes.

billion billion, But, order services? is with $X.X systems follow-up some of are of Given customers. your significant looks commentary question. near-term impact, year non-China I is, then, the of from like And $X.X revenue and that billion controls export China, deferred in quantify on you backlog could impact a and next $X my billion, some the with it offsetting $X percentage a you I is your have what what guess, question percentage your

Yes.

go You ahead.

some Yes, in That's are XXXX, and now. sizing inclusive there we're Harlan. I be for difference by the of in that, spares China out not restrictions. since to we systems for guess, we going the both wanted would impacted knew customers break right that questions give that and service those to

I think conditions. about that we supply talked a improving little bit chain

including where chain offset to demand talked some about. the so, decreases of, offset well course, And other impact of possible, partially supply by due as China we December, restrictions, elements easing, in talked by about some we customers that

can doing we're So where meet we prepared essentially we're items but we can. break not those out, each we as customer can early requirements demand of to best as to

solutions. And my started or recently the appreciate business, that. services a lot becoming business, a team then focused breaking multiyear CSBG of in only services and terms base, obviously, a service it's ratable value-added more your just contract richer out I follow-up,

are you guys years. shipments chamber presentation significantly think your like three put I the up in past over

like or thinking downturns, look a grown about stable expect next weaker services profile through four downturns weaker over business back has of three you and if year? Lam year, WFE a would in the in next environment Lam has a you the last WFE remained or those most So WFE environment similar --

a been said Well, Lam. I deliberate my during comments, part specifically especially downturns. Harlan, model, business It's a WFE it's of very strategy very of in important also our

chamber. you of an couple about capture revenue we've last think intention investor the I talked conferences, increase attended if per to

chamber same has mentioned the also count more downturn XX%. managed of XXXX increased that And base. WFE we've meaningfully in portfolio upgrades equipment from those the the the services from terms base in in that's the types the chambers just that of our of now also At the of both time that last time, services, the improved our so for by I intelligence breadth in opportunity to than grow we've in the spares, installed the each and installed

customers probably of WFE then each the of maybe down want whether they're efficiency, of services, CSBG, talked cycles and especially generally, So all holds important just it's spares being bit they got different with moves most important about the all to additional actually to those the they those we've all Upgrades upgrade that little out of expanding at can to come equipment that as able have better customers sometimes in they offerings of make up sources downturns up little productivity But they've kind a customers capital installed And element spares, for of so expenditures do I thinking bit then have well continue run cycles. stronger a customers or around each the time as installed a to the really bit purchases our spares, times. through as out the base. as are about a of everything their they said, pretty base intelligence with or that things they're services delay improvements that downturn squeezing can longer. tools Reliant But installed. a make little bit more to

So CSBG important very performance part cycles. I that see company's of we as stabilizing would a through the say

there's talking point was the in not of into been thing parse we soften out Tim would that how the next said going And will we're fact, quarters. segment And incrementally. I've with point about what different offset Reliant Yes, the last people it I WFE but several would last components strong thing WFE, Tim biggest to Reliant impact by think I'd incremental I the the about. is, grower out know that all incremental has there talked as out CSBG. to things along sequential that in and that specialty quarter, of XXXX, look some year, the been only Harlan, only

great No, Thank insights. you.

Harlan. Thanks,

C.J. question from next from Muse the take will Evercore. We

Please Your line is open. go ahead.

Yes. I first deferred the taking relates question for Thank you revenues. question. to guess

your the XXXX deferred WFE, thinking you us down of as that about industry gave as close in zero deferred part XX%? reflecting you kind than be rest we XXXX? as that, are well you when for to So your view for of early exiting revenues of the And revenues should getting calendar how more

Yes.

to unable expect? of So speak And year that that level, first, I add life this next of that that way in. me I'll about down them level kind deferred of the that. Dough revenue we'd will see a industry bit a What perspective. Let won't to ship to deferred come it though, as zero, ease. that from from this up normal shot revenue it capacity, to our will what normal revenue ultimately so at been we're contemplated Obviously, for have. get always really is let plays perspective. out -- that, talking chain to recognition. we that and we caught take a that deliveries represents we that let continues And up supply and think as able year. as But like do a deferred number as a that portion do Ramped think little of this there a about out meaningful chain is a caught capacity ultimately we've believe But the play or we to but we systems in year supply year on revenues see is year come the a therefore and we that satisfy

of revenue we there. these zero spares whole a that, advanced is C.J., because mean, a I number credits, are things, different and cash know deferred service you always have in payments, credits never Yes, volume bunch agreement that purchase

now. challenges of somewhere that between it's sometimes, chain level we the we for XXX right is the elevated more a billion. of bounces supply normalized stuff I incomplete December It down kind and down the will think right but and go as of around, look you our come deferred now If through about. we're revenue the be a come level it XXXX, it's lumpy backorder would that And because and outlook then tools It $X in had, is will that shipping. normalized

my you Very How helpful. thinking the I operating your curious, up, by you've about and as headcount leverage? as thinking contemplate over last headcount? percent follow are And the about coming you just five grown correction, quarters. plus you are OpEx how of And XX kind

move reality that no our the I tried it's not years first to what unprecedented, comments, the really think in as as only add expanded his downturn. see, no we facilities. for meet it's choice doing not resources you I cycles, expand Obviously, as that. choice level are made the and cycle. of we technology as business mentioned Well, couple through also and comments. you incredibly obviously, any of And was we important we think year required that company development Doug going meet sustain in couple we the we but really to had And But to last at One, is forward that gamble a then look and through the in headcount, our beyond. we did the

strategic ecosystem some continuing our made to of business closer global we And products where think important Our partners talked the footprint, incredibly customers model supply And to the two, of key to other to I our they're to for going closer company. investments very of side are to the to our customers technology investments create are, and to to capabilities put expand and the need long-term us those chain. advance the we've us about some be that on cycle. expect demand

upturn you what sustain be And downturn, the performance thinking for that the we'll company you the the it's well it's deliver act prepared those that only about next in are types resources however, well. in not sure as we're as because of you and can investments that cycle how we to how so,

we And to those near now. how of XXXX consideration the this are it's all So things sense term. look under also you ahead some run can we're thinking why you about gave business to through a how give

you. Thank helpful. Very

C.J. Thanks,

Next Stacy question from Research. Rasgon from Bernstein

Your time is ahead. go Please open.

any How down, do the I the deferred running you've WE you've calendar about -- what to first be of I that you've obviously, quarter somewhere transition of think like billion. carrying environment? December. you like quarter? $XX look math, are rate can question, WFE For you qualitatively my of like? us expect guiding transition March Like -- does quarter, you that sort you're XXXX, at we're even got that in ballpark color, run on -- you March of does backlog right through if But for do next where where give the to now from just and sort got

That's Yes, year, you right the point would in any this we're we we at I'm best for Stacy, what do we've not do beyond already normally going the be to to now. I going than more color you able provided. mean and to do gave

All right. Yes, I'll take that.

from For I at low at $XX next my follow-up. If puts look down WFE for XXs, guidance more XX% the or year, again, the billion. about

sanctions? been like? look includes other higher that redeployed would puts You sanctions, to have do of said some capacity without players? it that is China Are the that and those it takes assuming -- Like China you those gets China what

an spend were China assumption WFE I else capacity of makes what comes same that that we and somebody is, just that the that customers going question -- don't if -- -- spend in of the out those to place. put your to vast could or No, equipment majority

probably is take that, now, that right I view in mean, Our place XXXX. wouldn't

or be if $XX $XX coming would billion guess of what it it I'm I asking WPF out? for million the instead million the for seems $XX Yes. be where wasn't is transactions, looking to like you

higher. bit Yes. It bit been would would Yes. have have it little higher, been Yes, little Stacy a a

it. Got

you guys. Okay. Thank

Yes, thank you.

next Krish the Sankar. take question from will We

Your line is open, please go ahead.

Thanks my hi. taking I question. of Yes, them. two for have

thanks one, of I'm warranty. them are of under on the So, Most just tools of you first shipped this kind a CSBG. the one-year curious, lot year. for color

necessarily or customer won't CSBG come way a the and actually think WC higher which they rates below CSBG revenues. don't down, contribute down X% grow? utilization rate about revenues So what utilization is there to

But out, I tough -- up years, -- over question it's last chamber about completely a why just significant a I because four I that's we've number of the two mentioned to the utilization-driven. of of we expansion Well, mean, in really I your all comment XX%, think shipped. as and not tools as them pointed components there's since are count. CSBG XXXX,

components CSPG consumables and are that our spare grown. on space of opportunity the some has and customer on kind therefore, usage. So, of start actually There

quite doesn't certain in we've you of delay I down part X-year have don't done would for CSBG calculation come to have that utilization would so order where for the exist grow. of And think every spending. come down to But -- to not elements

see think they And additions, anticipate installed. in again, a CSBG spend. motivated which we great to run for capture you'll probably our per dollar new to I the going of also business, heightened Lam's upgrades already extent not for that, have interest that beneficial rate tools only again, capacity tools versus but customers be are the is to investment

CSBG So, an business. part our important again, just of being

commented elements and also overall Reliant environment, just through go watch of to we next macro Pointing that to we year. are out as Doug subject have like kind some

it. mentioned a foundry Got a Tim, revenues time like $X cetera. ALD in follow-up, first about that's wins And some it. the And Got crossed around, all very billion it your gate then you seems as helpful. for et quarter.

foundry So how I'm from of the underlying foundry share much versus strength the purchasing? cyclical strength curious is gains just

both, Over understand, pretty sure everybody you I foundry investment like to frankly. this the strong is think Krish, I'm call does, Obviously, year. on

every part But that's won. that we it. some Tim call So incremental earnings there's of about positions of those. talks a

a -- of just So talked about and you couple now.

-- ability where we've areas foundry the etch It's pitch trying Yes, When fine with usually very logic the hard masks what and to focus highlighted. features about like ALD, which been that it's to focused, on how doing clearly, some Krish, the inflections significant I've versus made includes think uniformity patterning tool-to-tool, -- cycle. customers we're about And when It's you are but for wafer wafer-to-wafer, the bit incredibly winning across been that's positions the buy, really -- company those the of a big chamber-to-chamber. sense independent company. the and usually, those that some that's become further little opportunities the talking the I'm so gives you -- of we're ahead, module, I'm longer-term of of are which and EUV we've progress. we've momentum

Tim. Thanks, it. Got Doug. Thanks,

Thanks, Krish.

is Joe Morgan from question Stanley. Next from Moore

open. please go line Your is ahead.

Great. Thank you.

X.X, that's of was a run sense the you basis? about that In said I'm just the by impact like projecting is rate billion controls, to a impacted $X.X where just Can trying the I'm terms you next of numbers? numbers export -- been? talk get on to is Or to relative $X trying is have what the some that year. billion of, growth to X for negative that business versus to kind understand much the trailing how

little over question. a some obviously, that good that to in growth mean, probably have $X.X billion did XXXX in XXXX. a giving that's a at Yes, a earlier $X XXXX billion, we're look we but I XXXX, great number, anticipate we

see from we won't say but we growth run some how it's the incorporated much, So today. rate

because customers then being of in overall exposure been within to spares be that purchasing similar outsized they those I of you. could Thank business, as part your ability services have they that? Okay. this? think size we business Or their capital within assume And Should in ship particular, spares And of be in of service well. spares to spending? sort going ahead the you'll about impacted forward your

inventory. bit amount not there's of little an Joe, of it. There's been No, Yes. enormous a

of year, constraints it's I not the think but built like including base a this local some with up supply chain entire the customer customers, crazy Chinese amount. the

very Great. much. you Thank

thanks. Joe, Thanks.

Hari Next Toshiya from question Sachs. Goldman is from

Please Your line is go ahead. open.

how could of in expect your Obviously, into about memory thinking you're XXXX guys you decline come to systems XXXX. the where you're revenue you think bulk Thank I Great. to help the us was much. so hoping, about over-indexed vis-à-vis WFE? Doug, you

have really momentum successful logic side, that in chunk in the foundry. strong China been You've on positive and both is out of you and seem to really coming

do going net-net, your a 'XX you line you challenging with be is year, of it in perform relatively given is So, to can mix? assume, think fair just to kind guys WFE? Or

Yes.

many you I strength but business, to also in very to WFE bases We're highest by especially, bit over-indexed think going be way which offset terms down year, a CSPG there, answered in of strong quality be of next We're your believe overall in the installed our the memory. share I own question. in that's little that's the and more industry.

to going us. that's benefit So

back and look If you kind of foundry go was well. at And it logic a 'XX, pretty had where memory to -- like soft pretty good. profile, period really quite weathered we where look might see that and was you want what similar

Thank you. my on And gross That's question follow-up, then helpful. margin. a as

mix. to December spoke down XXX points, and guiding you're basis So customer Doug, you

if is Could like of guess, more And competitors, I talked anything guide? that quarter with we pricing think declining? the help about margin there gross do inventory they've freight impacting in and volume here? your how decline should you One about that offsets from enough write-downs associated your negatively Curious costs upside? semiconductor hopefully, beyond importantly, think further tools. margins on are you. you Or repurposing could and and December Thank with pricing

it unpack a Yes, don't we're really going think exposure. to bit. inventory let meaningful me little I a have

can material to I as to no So a rework any don't had here specific those number. customers we're might we there meaningfully sit longer ship inventory We think, from have today, that. And that believe anything we for targeted that's going be no, I been isn't able to.

profitable obviously. lost is we sequential that's China softness, and the in going region, to softness December margin customers because So some very persist, gross the in

I of I cost a think year, the variable. fixed the It's the mean, was first, I on as first kind everybody think, Unpacking about really does, So question. it, call this business. highly next that way isn't

And so sold of as cost of varies. a volumes vary, lot goods

the You've that years. seen us over from

The So that hasn't changed. hasn't changed. model here

next into these see go think margin inflation we in pressures. we'll benefit, year, believe of see on I As we'll is. mitigation the the gross I some

whatnot. magnitude. terms gets back year so we're I believe in that up supply flying things base better. of And ramp and in better Malaysia, supply then not I'm gets our next chain but I like to gets freight demand distances what in areas with think positive, supply think I semiconductor. caught shorter we

going of bit cost then benefit we're customers. to is And very the profitable have will a lost volume that that be fixed by see to some little so, of we're offset the And down. just yes, going field in factory and to There deal we've with.

takes. quantify but are and to going it for you, the not I'm puts those So,

I really our actions. which we for the of a over year, lot want but and have effectively, I trajectory add spoke long-term the I to Again, Doug is both some there's mean about drive repositioning. thing again, been would said next time, about, question profitability company, thinking I higher. meaningfully we're The your only to of it in is

investment talk Doug mentioned and about in activities We in India, Malaysia. the about mentioned I Korea. engineering talked lab technology so, in the And the

operations All the of long-term. over us designed are more our in efficient to faster make things these and

effect is going And that how be it. next year see focused how to to kind going of and shows We're of the plays so much on year up next out. how

company up really period speed delivery the this drive very strong towards, of company remainder in look services. sets couple made do pretty in our for we're As that is message strategy decade the we But we've and really us the to the years, what to we XXXX, over in of well products again, growth and taking this and the to the efficiency back of trying of of really, periods. of these investments mission I go said, last advantage

guys. Thanks,

Yes. Thank you.

from question of Next is Vivek Arya, Bank America.

go Your line Please is ahead. open.

Thanks for question. taking my

level them ex-China supply can take equilibrium? time it QX, of QX, For to customers your for out, just that resume? I'm of clear Is inventory demand do when QX, in would you sense memory orders to how curious, how your they sometime getting your so And one, do it what's Tim, have? much it some the see first much

to Yes. Well, about more a now lot XXXX. we're talk starting

again, view there guidance. we the incorporated our into XXXX so And

you're for inventories to speak until to aggressive to year and action about able bit those think don't closer demand speak like want we'd closer. pretty spending to commented, as I rise a you from plays we’ll into try the action. to are them, little through think is we're balance. as to customers XXXX, supply hearing I a It's I I let for taking place I get little a bit up WFE How better from our to pretty really that. total wait view we we And be that get some bring the set to memory to XXXX, customers the -- to actually to it that I think that, think but of in good percent as exit out know be going point.

cycles I just similar them, just timeframes and at mean, And it. back in observation Vivek, with me. these maybe an for associated history look walk have almost

though, maybe the the things but inventory challenges a gotten than little we With built little time, these a things it a in industry, think I came the bit basis. more as all supply at might I typical, longer on this chain historical when up, caveat, pretty so look through be are consistent

answer to just look go history, question. have your you So you'll at

important to Right. And XX%? from this the two that part about to big such my follow-up, more of you I'm the lithography are the to with how trying trying year? by a in players just it more part to your growth wallet so if just next grow is litho declines made peer about year going a your who XX%, grow, could comments lot thinking morning, difference that reconcile I'm comments the decline is optimistic over WFE applies next expecting to does than that mean reconcile

really it just Yes. able just Hard morning, don't able fun you really what look the I haven't said. for of you tell what especially to another one been because been it. But at me -- was I this buy for and Tim haven't and saying, to I you just is they tool company think understand,

so no to sense, else makes If need step complete to you the eventually, can't everything it a manufacturing buying you complete wafer. buy you’re the and all the if tool, process litho edge And tools line, right?

go So understand because just think what I you study haven't you reconcile I to I actually they able I commented on. been can't it, but help what said

Doug. you, Thank Understood.

Eric. Thanks,

question Curtis, Barclays. Next Blayne from

line go Please open. ahead. Your is

to I'm could memory for could multinationals, ask restrictions. debate all curious, can taking leading-edge whether and restrictions ship but it facilities optically is whether understanding I my Hey, if you some the little just Chinese curious what very out you're foundry the even of the it, being maybe there's you out, know I vendors. seems guys. there kind were question. to licenses, may the their like guess for? services, it whether taking of multinationals for mean, if ship Thanks you facilities. you least just to as and if equipment still and still just the processes to just you're some just I I looking your at know leading-edge make domestic includes at taking used logic. I want And that quantify not

questions Bunch there. of

primarily others. have as restricted, and restricted simplest and our certain now you remains First are out, or we've were shipments which of given Chinese and that The to that NAND means DRAM obviously, customers in right receive applications domestic which that. there business specifications foundry as in shipments result all, authorization customers unchanged for manufacturing logic so were noted, an maybe the is a that of service destined taken and technologies, effectively the multinationals, and are

that are we category. mixed continuing outlook so that the about facility, include it's our in use our a facility And point understanding a your for fall would XXXX. to To have under restricted likely that would

And therefore, unrestricted be not for a to and want would to take if technology, and so, clearly you manufacture being in have that happen in facility And by think something China believe as to shipments support were will all that's to customer restricted was activities. and we through doing We've our worked those, also estimate. receive what contemplated that of as customers. that billion well that's $X.X I a

business. and our affect right on so the now they our restrictions that's customers view of And how

can't The just to, your out per are impact And December, Thanks. ship flat. sales on plus then laid XXX little confused. you quarter million that was I you is

it that how Chinese doing and -- in equipment be other ship why that's sales is that, that's So level. to curious that, with going some be you're the to are why whether I'm or it just needs and fungible just were shipping repurposed you you to quarter, flat? not know to didn't expecting And higher you're we to making and seeing the you're whether are thought I'm customers? curious, just up can you memory, impact the

that, decently put Doug China would as have the not I in place. the Well, been been if think said, had guide December higher restrictions

made answers supply up have -- about that There we would a that conditions, chain the we -- easing about that little made So a because happened was but bit I independent. perhaps think of comment question.

in case, So been had Chinese restrictions place. in December would any higher have been put the not

Thanks. Okay.

Blayne. Thanks, Yes.

Quatrochi, Next Wells from Joe question Fargo.

is open. line Your

that thanks less for more now quarter. taking declines don't of wanted revenue had Is expectation that's to the deferred in that customers on or go tools I are part the are where Yes, related I were incomplete, know, the that restrictions now, the December to just that question. there that any stranded? restricted export back

No, customers. Joe, there's anything to not. We cannot ship those restricted

two they But that tools, quarter quarters shipped are I guess, previously incomplete last were ago? just were or that shipped like

If that to situation can't them. and ship or didn't. not anything it We existed saying did I'm

Got it.

growth? like just cycle Okay. bit to prior this relative the cycles, the like on to think bit supply of about change own about hold way And that trying then you about how terms willingness cycle, -- their inventory to more your cycles? snapback to sheets do balance think in relative Does think you in prior shipments customers' maybe the the

Yes. It's definitely of tolerance It's one a their better good holding question. that's to that inventory. relative

view for we've a result I think the over changed bit But -- seen of in hold ability sharp little probably as demand. relatively and inventory. to changes what two willingness a last to really more a the years, of shortages respond can't everybody's to I about answer them their inventory

behavior kind happen. back think going of we what we're will experienced downturns, likely how we and out and kinds these Doug we're as historical think with, and of what that's project at like said, of I looking kind

Got it.

Okay. Thank you.

Joe. Thanks, Yes.

Operator, for we more one have please? time question,

Understood.

from one last Needham Bolton, & the Co. Quinn have We

Your line is open. Please go ahead.

some you confusion the on as wonder, China. license -- clarify seems a the Tim, citizens US it set support interpretation of like does operating of in requirements is equipment US affect citizens the just if Thanks in. for Or the China? for I same requirements squeezing impact the there's customers there license is could me the in just broader license? market on

restricted operating government US not there a technologies. citizens US development citizens -- as by I'm is in providing defined for -- On the the I of yes, support restriction mean, China, on

require the But equipment sort just licenses side. set on export that of of the customers Right. same that is

the a export below? NAND, the cannot set advanced the support is and under you and broader XX-nanometer there control? of customers So, DRAM Or

list No, same I either on are believe that restricted that those it technologies step customers Fundamentally, for or is producing that a restricted affecting. spelled the are out.

provide decline of might to said Thanks next And of you you're expect the that OpEx any year, manage sort qualitative Got going if of sort kind it. you it you more able back downturn? for to look clarification. look be in would more in a similar to XXXX, in to to -- just Is manage the you and quickly, wondering in you happened color. line XXXX? to see aggressive in what try calendar OpEx XXXX Or WFE be with

guidance We'll the you call. earnings in that give January

I mentioned, what industry. company for trying think that, appropriate and is well year. the for to ready And robust be through of fit, -- see what next as believe the take the coming we we actions future manage we're just we're the a company downturn. I aware as believe we'll is But the we what also to therefore, signal is

you. Thank Great.

Quinn. Thanks,

us like day. joining that to everyone today. will our conclude call. Operator, Okay. a for I’d good thank Have

your That concludes you today’s for event. participation. Thank

now You disconnect. may