Lam Research (LRCX) 25 Jan 232023 Q2 Earnings call transcript

Good day and welcome to the Lam Research December 2022 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Tina Correia, Corporate VP of Investor Relations and Corporate Finance. Please go ahead.

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 our X:XX on financial p.m. our press for the can call, During outlook results overview and Investor XXXX release Pacific results this share today’s little was XXXX financial the for we review release and detailing found the the on distributed March today’s call. will afternoon. with slides business will of also section quarter after environment be along the our December the a our The Relations The website, that Time company’s presentation quarter. accompany

basis risks our later reflected A disclosed the detailed be Today’s our discussion risk a slides our factors public GAAP and SEC presentation the Today’s of presentation A accompanying results Q&A subject this financial be found uncertainties This for can Pacific between forward-looking and unless in slides in last X:XX otherwise results call available on p.m. call in accompanying presentation. include the Please statements of filings. until non-GAAP will see in made that Time. information. specified. scheduled financial and this in on be additional to presented to the afternoon replay non-GAAP is website. are will reconciliation

And with Tim. that, I to the will over hand call

Systems and faster are a that for equipment applications the foundry our to Year growth installed exceeded demonstrating new share progress revenues year. that units. strong In revenues December business, earnings record New joining posted XXXX installed base in the segment Logic base today. in We our tools and expanded Happy continued and CSBG both growth, our and Foundry calendar all wafer than launching logic fabrication winning revenue space. Tina our you, quarter note. Lam us in Thank ended on growth the per

dividends cash in over than cash also stockholders of $X.X free to We from share billion flow XXX% of returned operations more generated and form buybacks. and the in

pandemic We the an we results there additional strong of in our on executed chip Lam the we global the pressures with hit actions the our of of where attention March COVID focus, performance in opportunity of profitability inflationary well supply in laid long-term XXXX. and and and constraints Overall, for needed year acute delivered and abating, growth our shortage pressures. to the is out this recognize objectives Still, are chain solid elements XXXX. environment

and and chain of demand in COVID remote accelerated in others Lam supply by work Beginning to investments throughout the quickly resources early the pandemic, global the digitization unprecedented the ramped and trends infrastructure driven meet economy.

today, results approximately billion than higher saw these what our quarter, in the we in of Lam than achieve per investments to revenues $X greater have up-cycle. seen As enabled last XX%

and customers As high, possible. are especially levels and quickly not we prudent and demand fab capacity but all lowering substantially those NAND as across the are additions, very look segments forward operations into bring inventory also to the and Customers corresponding make priorities. near-term environment into XXXX, weaker to to our exercising however, we changes see in caution, need a as levels DRAM memory reducing Inventory markets. only both excess remain balance in new utilization

in the declining in for China services on addition, demand technologies a further parts restrictions specific In government’s and equipment U.S. equipment, of market. impacting sales new are customers and

supply chain spending mid-$XX due constraints. to WFE XXXX, ended range, prior the higher billion in In our easing the than slightly view year

earnings last billion expect our in calendar to WFE year indicated call, we we range. be mid-$XX in XXXX As the

global overall decision of workforce reduce the X,XXX the quarter, our X% we made our have business to base. difficult Given end about levels March employees of the year, decreased approximately expected by this the by employee

we company, I taken Lam’s the in are have are growth critical believe While efforts cases, the long-term care key our across to competitiveness. special R&D in some and which investments and preserve, the to increase reductions broad-based

in Despite increase to to reductions percentage in compared XXXX. overall company spending, expenses of R&D as we XXXX expect a operating

be be that March specific contribute our as levels transform XXXX well-positioned enterprise expect and and to actions operating business improvement than and to global gross points WFE benefit we our slightly will year will of is We stronger returns, actions to our systems with scale company across processes efficiently These taking basis also the that. quickly spending exit ensure margin quarter calendar XXX to we margin to the higher from infrastructure.

closer collaborations, resilience, than a customers years critical stronger ecosystem also They to term. provide of growth set the in to on just for few robust in in In Korea, be believe to partners, in as engineering the scalability more importance that of manufacturing ramped online development years, to we place years, few would demand secular our see and longer investments opened a capabilities Lam new we operation globally. X new built new Lam’s Over technology we been past we fabs and trends being next greater ability Malaysia. have and our business. the benefit state-of-the-art strengthen a center center which past strategies the have These greater wider we strategic ahead brought a India, supporting of on XX increased access talent all executing capitalize critical over our see

also to have on from our rapidly roadmaps. manufacturing our support base installed drawing been We customers’ learnings growing

fab also comprehensive XX,XXX products long-term, A and generate Difficulty] than approximately Lam. another contracts of cycle. results expected us of in for for the intelligence than productivity from process. innovations revenue more is to installed a XXXX prior and efficient drive in in extract chambers and to growth business more of this are delivers from offerings, predictive for improvements helping provides The learnings [Technical our The with the year value is to key an and solutions. base service engineer product equipment opportunity tremendous XXXX. not XX% strong down chambers At data like platform installed there larger base scale, customers base based only number our onsite labor, a that solid growth capabilities standard data helps are installed but our migrate we Our stable smart

strategically inflections, in XXXX, with Lam’s on notably foundry market goal continued to segment been where progress. we a In devices, of technology have broadening have We under-indexed. focused the in positioning logic we make been

gaining which our released etch the Argos, deliver intelligence We have our through yield. to leading best-in-class equipment Prevos Kiyo a to business, selective are Foundry traction. uniformity Selis and uses customer In and conductor doubled recently of share node at node success product, etch our improved Logic increasing the tools,

product for a our foundry at leading and Prevos customer, XX applications. in and production roughly tools, adjacent selective Our applications Selis logic tool is applications record gate-all-around and in our of Argos another customer,

Continued from nodes creating us tremendous expected through opportunity share scaling new gain thus existing for etch devices logic of increase deposition and for is XX%, to future to to intensity devices. innovations XX% foundry around

Lastly, the we steps and our make inorganic tool memory customers process Driver expand market. logic and won of to innovative fabrication with in continued have we actively has customers record both technology development investments the positions Lam’s both organic segments. Assist for key and across engaged patterning are foundry multiple to at

more announce on to XXXX. expect this We in

within have and In our of leading-edge Advanced logic the SEMSYSCO, capabilities our segments. we acquisition expanded chiplet Packaging, recent

benefit view We and wafer key this a plating critical have packaging Customers we trend. rapidly from wet Lam already win well positioned computing and is processing to market-leading achieved this and applications SEMSYSCO future solutions substrate AI to formats are integrating in area. in technology in as enabling and Lam’s advanced capabilities with and both high-performance

an am the accelerate strategic us were So changes reset year to wrap many in team’s opportunity today, to up, customers’ when growth make the a and also actions to difficult it’s revenues stronger industry execution, our deliver and in announced our to and have needed This coming taking the we a challenges. portfolio. market we confident are but we expand technology in returns. presented Lam I that With capitalize our spending XXXX needs, able for priorities. strong and our record putting represents our position business, to product meet by focus

to pass it I With that, Doug. will on

know Tim. financial year Thank for XXXX. had Great. a our We Good during and season. today you, thank a earnings what you calendar in record is afternoon, joining I everyone call busy

Overall, business pleased challenging performance at this with achieved year I ‘XX. calendar environment $XX with for am and restrictions. a constraints, significant a operational earnings chain billion share past delivered was we share the all-time we $XX.XX, and per in year high of regulatory navigating an fluid while came over supply inflationary which earnings headwinds per revenue XX% global delivered Our growth in

X% the revenue over Supply constraints sales of quarter by etch to billion, delivered the quarter offset Revenue and record the achieved levels metrics, of higher September that’s dollars fill a at an in billion, for and also million a multiple revenue, for have end deposition Deferred quarter. income of December critical somewhat CSBG shipments of revenue many Lam decrease across including the and system was parts December the improved $X.XX in required quarter quarter. of were chain able from $XXX prior decline was we in of levels earnings $X increase revenue. per recognition. just share. operating the We performance from

in was decrease Our spoke to revenue continue to due deferred The in by advanced backordered to outstanding customer partially and last complete March expectations some decrease are shipments noted fully as quarter will balance quarter. related I we balance deposits, increases revenue that systems. offset also just the deferred the about cash deferred which I

throughout we somewhat level level historically of revenue at we will deposits balance March anticipate deferred that deferred backorders to expect the deferred I here from calendar today, the at levels in than normalized exit type quarter. these I a be the keeping we XXXX, As have of revenue as sit seen. higher some have

compared devices. coming to the meaningfully above XXX-layer of were September concentration for decline The expect DRAM of nodes. the revenue, DRAM systems the September the level prior March December is Included primarily I quarter XX% from we Let’s investments flat the DRAM revenue at represented quarter. decreased systems which XX% sequentially in in down segment focused from quarter. NAND segment the our class quarter. Memory on and revenue, targeted NAND turn represented The systems in of memory, and segment the X-alpha was in of towards XX%. the with and XX% mainly XX% prior see revenue quarter, The Xz spending both revenue will slightly quarter. to details that

DRAM. XXXX, to calendar decline expect I NAND more spending For than

Foundry our in We of continue to segment see quarter concentration comprising December with the XX% systems revenues. the strength

Investments December bit Logic for XX% devices. a at this in advanced compared quarter. While and XX% microprocessor, quarter investments and perform watermark packaging is Other was image expect node Lam little mature had record leading we Other and contributed technologies. systems calendar microprocessor I in continue company, in us high a related level with the level quarter revenue strong a with both this segment. sensor a revenue. to September the well amount dollar of Logic came prior in and focused The were flat revenue will XXXX. this for throughout that percentage revenue XX%, the was in in mention lower I’d mix segment than on of in of the momentum

and for have clearly while We a been up. here showing talking about momentum it’s

comprised region from XX%. quarter. top Korea With XX% to in which respect the a put revenue, sales XXXX. the place level XX% decreased prior XX% the was certain up October prior China total customers in restrictions for due and revenue, was to of Taiwan the government to revenue total, in U.S. the of composition down This of the were quarter up in from compared locations, early of of concentration of of to XX% regional our the XX% September region Rounding domestic the quarter reduction total

approximately December which the business higher September support customer The calendar quarter XX% were X% quarter in $X.X from quarter, it the XXXX. though of group down was was results the billion, than

have the and lines December spending. utilizations CSBG revenues system in noted on And the I product in quarterly As with will quarter, in a in reductions the CSBG past, we basis. fluctuate declines experienced

historic in memory spending Going in regulatory levels XXXX, into and to factors well of below in our the taking to levels actions inventory. underutilized are have factories negatively device at supply services These we and restrictions business. having elevated customer spares China impact impacting XXXX, calendar customers and manage addition resulting their

in unprecedented perform overall be an believe expect the better segment XXXX. spending, While somewhat are CSBG calendar node WFE will the and business in to we continue we than business year environment could down mature

September about margin The quarter mix. from pivot was in guided me XX%. quarter’s Let quarter came the September but and decrease the The midpoint XX.X% margin down customer now of to at our performance. gross product of over tied from gross September range, the to

a field our volumes expect lower utilizations gross and With to the impact decline in basis. we margin quarter, on factory unfavorably XXXX business March in sequential

be were spending amount up projects, expenses quarter, our in million. we customers’ comprised guidance quarter $XXX other was $XXX level December of company. was continues a Supporting prior the the Operating of roadmap our while focus mainly areas top due of R&D us margin. to operating of from spending nearly million XX% discretionary X% the margin December midpoint higher in the and the which total quarter over The on priority for managing within higher of to spending. gross revenue XX.X%

tax line with rate was non-GAAP Our expectations. in XX.X%,

or This tax the estimate mid-teens Looking tax does into be the rate impacts some potential global low any U.S. calendar will rate XXXX, we changes. include in policy fluctuations believe not to quarter-by-quarter. with from

the approximately for came increasing of which million exchange higher $XX level and OI&E by quarter the our subject prior to returns negative will million offset Other that on $X due cause of foreign some in quarter-by-quarter. income income was fluctuations to fluctuations from will market-related continue be higher of interest cash quarter, expense, to and at because volatility somewhat expense mainly investments.

side approximately allocated December On million to $XXX we the quarter, capital repurchases. open market in return the share

$XXX paid million quarter. in Additionally, we in the dividends

lower For the long-term was Diluted billion somewhat $X.X than our XXX%. year, XX% $XX.XX, and XXX share September diluted was of returned our our quarter December was the shares, line in was earnings totaling free we high-end our at December per with cash XXXX than million quarter share, which which capital which range. quarter expectations. higher was of of XXX% count the plans return to flow, calendar guidance

our shares program. During XXXX, buyback we million through X lowered share count by nearly share

to sheet. balance moving Now the

billion. billion quarter cash by due of Our payments $X.X December quarter working XX were investments, dividend turns $X.X to flow of and lower year outstanding the expect and days billion the Operating expenditures. capital to to capital the prior including was and Days I levels. strong sales cash, short-term X.Xx. in were days, be would cash-generating decrease X that out cash as restricted quarter XXXX strong up versus repurchases, September cash with were point comes a allocated in business maybe we $X.X from to Inventory a share offset level collections linearity within the quarter. improved down

in equity $XX included expenses and for Our million December in approximately for million the non-cash quarter amortization. $XX compensation, million $XX depreciation

The increase including the people quarter slight full-time from $XXX for approximately and a were the were spending was with quarter prior December employees, Korea an and in XXX of increase manufacturing, Malaysia over We XX,XXX expenditures of the quarter Capital million, Technology the September approximately expenditures our ended quarter. our Center $XXX R&D which regular million. factory. approximately

the growth customers’ that quarter. field December as and Our of manufacturing this growth in support in employees was in included installation the completed factory the SEMSYSCO headcount at well tools our to as acquisition the was were Also from fabs. XXX

in As approximately employees. full-time we release, be X,XXX you will regular heard headcount earnings from by our Tim reducing our and saw

be We largely quarter expect ending June in to these our reflected reductions headcount.

the by reductions, adjusted in addition December XXX to be our full-time In quarter. temporary lowering our approximately We’ve workforce workforce down XXX we already people expect by the people March in quarter. the to temporary

Let our to for me the turn non-GAAP March quarter. XXXX now guidance

$X.XX currently we somewhat as or million. mention deferred year billion, in $X.X the of revenue Gross of expecting consume or X $XXX XXX weighted result plus or margin that this think quarter. revenue also decrease margin minus March count share share Operating or The business plus just a the I’ll this half minus first in earnings be lower minus will and reduction plus minus X XX%, the per based percentage shares. point; percentage XX.X%, We’re revenue of of finally, of on million we $X.XX of approximately point. in plus is volumes.

We spoke actions $XXX charge that other will charges the headcount million $XX near-term in Including XX March next a the months. to quarter Tim are taking a of of in the million be this anticipating and incurred be million we over total $XXX from impact, to reduction. about, approximately

charges through environment. headcount, cost restructuring, realignment facilities we potential from team savings to the structure. anticipate incentive driving Currently, the and initiatives greater top are focus we’re business rationalization. and In compensation activities, metrics transformation will from of On we product a structurally leadership at given our inclusion additional senior annual These low volumes our of profitability profitability. our in business addition improve

operating by laid roughly X complete margins expand these As out, exit Tim already higher and point as a calendar be more by margin little and than to gross we the expect that activities. to year percentage we

of a has successfully years business. managing established record Over many cycles, proven track Lam in this

actions we to improves, stronger, enhance more technology expect will, we With and the and our When execute know business Lam we growth. operations the our efficient leadership will year, strengthen profitability with profile returning throughout the to positioned, a plan company. it further company’s and be better

Operator, would open that prepared our call now We up questions. concludes for the like remarks. to

Sur Instructions] you. from go will with JPMorgan. Thank we first And take Harlan our Please [Operator ahead. question

question. afternoon. taking my Good for Thanks

Given the the that, and will environment exiting memory memory in significant back normalization year? XX% team believe still your this industry? And spending view your memory pullback view? in of the supply-demand within spending the this year, memory then WFE in pulled on mix accelerate that what’s excess and does expansion inventories What’s in the spend

Yes. I’ll Harlan, one. on that start

to think a in from I market general perspective. memory predict timing the our is that market difficult and

in and in out, we’ve technology couple and hard. even utilization, year I within but spending as measures time try it’s ending of market the cuts one, But Doug some points. So when on of only delays of memory mean, cases, you in the fab laid investments. extraordinary a there reductions, kind seen of to put it, a not also terms is

market in balance. to bring terms somewhat trying this are these unprecedented of into think I

as WFE of that levels years. at memory haven’t XX a seen we see also the percent mix We in total that’s

demand that a will frame that the I the will talked changes guess lot we’re accelerate, came taking cycle, of nimble A respond the were around that. ensure that when impacted in point ready about And walk more lot confidence is the next on are with were to we the spending we but what we memory to that far we’re by up an of so this in that actually to be put company at actions time ramp exact to away we in pandemic. COVID not than

really of how ensure thinking a profitable company more and we less about, in the but ramp that’s and lot our be way on how we spending, do where positive. to spending to that So to memory timing most going time inevitably that in we’re the do comes, when it about can is respond prepared efficient

a then And Perfect. regulatory change impact put prior view on China impact $X entities of and formally Did controls, on mid-December. calendar due restrictions? year export this billion, YMTC this was from $X.X list move the the to the in to revenues billion your China

impact. No. were the at ship put $X today, the $X.X that billion to that restricted $X.X technologies the an still change didn’t I range comprehended it. When we would that is fundamentally inability our operating say were by to that $X in out so billion customers point to at view it billion billion, China,

No change at all, Harlan.

Perfect. you. Thank

Thanks, Harlan.

take Joe from our next ahead. question Moore Morgan with Stanley. Please We go will

down you means more $X.X kind of kind to sort But running much just on And close that little levels you’re wanted fall in if below the a us of you with the March, at bit that Great. down doesn’t March? it it June drawing ask well CSBG are could that deferred Thank revenue about draw that in normal give much. level. the what quarter of I guess shipments can it clarity to deferred. you. to implies it I guess I like seem billion,

back-order just there lower March you. as back that number from more no more as, of are would of that Joe. deferred It the really to, tell shipments And we than end describe any means have to I is a I what revenue standpoint. normalized level quarter, kind left at the get the yes, don’t than

being Okay. would normal think a it in you’ve the little And as that? around math? higher you said $XXX that described and Is the I million, than past be right

I the it’s level is which customer slightly Yes, to Joe. going that’s than through as I got, cash shipped the think haven’t past. we’ve higher yet see them tools. And What stay right happening that and it’s a we now from call I at we advanced ‘XX, category been deposits, right, in go

than a just that So I you think mentioned. number little it’s bit somewhat higher that higher,

much. you Great. Thank very

Joe. Thanks,

ahead. We will question from Timothy with go take Arcuri our Please UBS next Securities.

Hi, I had two thanks. questions. Doug,

question sort rest your it on is of revenue, you not through but just your is Joe’s all, that asked. the of in shipments year. the First more of the sort system profile, And in of

I like – off from and your would You fair? said loaded the perspective, March probably from it be that assume to are slightly first flattens half is sort revenue a system like going but of bottom that shipments Is there.

that’s Yes, Tim. fair,

balanced I think question. WFE fairly Revenue through think think When I down somewhat described, balance. different revenue year. mid-XXs a weighted answer that we’re half it’s Tim maybe the in about because drawing deferred that first I’ll the I slightly

just So point is that scripted wanted out, which way. why I it I that to

then sort imply WFE of that XX% system And guys in would just March XX%, in WFE Thanks. usually XX% March. Doug. of shipments is to and that point, are your on you XX% Perfect,

year. like more for versus mid-XXs the the number that’s So mid-XXs

that plus heard SML making is lists obviously, up year. So us the the today of this systems up all and difference answer XX% because, are

really litho to xxx to year because billion going math? year-over-year. that an you’re extra the So is Is that this story you’re predominantly the of mid-XXs adding Thanks. get is

decrease and spend. is at on strongest a the out guys segment know which, than more Foundry position part of all is our Foundry in at I the less. point it. think as Litho down of percent a Yes, this want that. look I year, Tim, a heavier than you specifically from lot NAND, call, WFE standpoint And a good more When is I XX% biggest Lam. memory this Logic down Logic, segment to that’s is deal

the I of pointed through I specifically I that’s and to think, why as to that went understand, important So commentary. kind

Doug. you, Thank

Thanks, Tim.

We will with next C.J. take go question Please our ISI. ahead. Muse Evercore from

Thank hoping the taking you more for could perhaps the on afternoon. you restructuring. little guess good question, I granularity first Hey, was question. a provide I

You than out there to we how margin more of bps bit a kind we leverage any give see a specifically that. calendar should on and gross play throughout ‘XX? talked OpEx And of that way what little Is of side? the XXX see sense kind should

Yes. category. There is Obviously, every some reductions Tim. OpEx, taking we’re in in spending

So Tim in you’ll and said I operating margin. everywhere. gross why would margin see That’s be more improvement than the

way Is look there any to that quantify like? might what

the comprehends we’re you to give March can activity quarter headcount all mean describing. That’s thing some guide right into, back that now, of is going the this I in C.J. implied the we’re other you obviously, spending

So if – guidance. think, you’re of decompose I go that’s seeing you in it – March the the some quarter,

Okay. Great. I question. guess a follow-up

there of that about think that a business? moving the you how you’ve core rest to And doing business you for then what’s way maybe do you what’s see Does Reliant. talked CSBG, order the parts guess, rank I and As got core is worse? obviously, well year-over-year a doing headwind, about perhaps China grow?

that. C.J., let me take Yes,

CSBG Just to upgrades Reliance. remind spare, people, four service, segments in and

customers and And China think impacted of of really, chunk a impact your and base. so service, if impossible previously pretty made it provide it kind terms in spares spares us had service tools to sizable in their for think to you of that installed both I

product product those utilization. from impacted cuts China. of both in customers lines memory Those lines two by impact same So on

just business, see trailing obviously the we’re that running same other to taken offset said. customers comfortable by why talking impacted Foundry that the tools again, DRAM and there, offline not so number need about our heard say, pretty So two do business don’t not fabs. those and from and and you’ve you Logic, two edge don’t they lines impacts, in in the main enough Reliant you’re seen tools, those that’s would Obviously, if other their I changes. you of need The continued strength I product maybe the service, obviously, spares that have with we

two in times business down, extraordinary combination We’re China go thought hit the would of that a bit of have those and we harder. lines that little utilization both that, previously couldn’t plus but product

begin base that to is they do that to Now customers online. tools the have back bring again, as we to in spend their know first installed already the thing

And so could and service business cuts utilization spares we that as to the business as quickly immediately starts would and soon the to service that was expect that recover improve. impacted by we

helpful. Very Thank you.

C.J. Thanks,

next from will Sankar go & our take question with We Krish ahead. Cowen Company. Please

Yes. Hi, them. I two thanks my for have taking question. of

But you either the WFE utilization and one, First about talk to Doug it’s for publicly understand thanks spoken Tim they ‘XX on too I at about and calendar customers, early down. for the of color memory have or ‘XX. if rates look some your taking

quarterly basis, WFE? year, bottom next rates, year, you on there Or better could think WFE a follow-up. could the adding scenario So and year, is And year? a this sometime I improve a where they be necessarily hopefully, utilization and improve a wafer bit next do without have output

Yes.

to addition. and I bring about And think There is, year gets quite by second their scenario at utilization I cuts, the have think start technology mean, we’re low the as Okay. don’t forward. listening obviously, you you just make remember, customers investments – move a our factor capacity let spent, substantial additions a talking also pretty is utilization of you’re levels very been add at now, about I’ll think this if say, unutilized get could that’s though, look growth which why estimate to back supply – our what tools that, cuts. WFE and portion customers you where there often to mean just I a online. not and utilization I least Doug result I so of right lack of of

that And so to I to invest you efficiencies that before the node to to do so that the going have you customers only go in next move gain there. long think and technology are

point. So course, think that, with productivity, at think there’ll I online we back – utilization will our bring some be I of tools I on get and spending think work but work will customers to return

it. How top mixed revenue Got quick the I fact think then it. gross is that Malaysia, Tim. bag. thanks be as follow-up Thanks about line ramping decelerating a Got the for just the seems first on for half. the And China – given a Doug. margin, comment you for back-half that, up you’re to also do

So about you. how they about or gross to potentially where I’m wondering how think kind could of think Thank just to draw. margins

I, Yes, taking, Chris, gross the describe is guarantee both kind believe we but we I now. margin to the we to and with what bouncing along of bottom year. I hope Tim is specifically, upward actions there momentum that, right we’re as we’re try these exit can’t that

to of of kind there capacity so staffing point plus or the trying gross a where We’re rights exit capacity year, at. as think we minus the margin we we’re right of that upside, get is

it. Got you. a it. lot, Doug. Thank Got Thanks

Thanks, Yes. Krish.

will Bernstein our next with Stacy Please ahead. question We take Research. Rasgon from go

My I Hi, questions. to guys. have wanted touch make on the want to one, just my deferred right. first just Thanks for I I again. taking sure it

It you $X So you’re billion $X deferred normalized billion. sounds like think might be running now.

$X are where where of of that’s to guide potentially March? $X in demand, think forward… sort and of billion coming going about way is underlying the out is Is where then just we So that it or short short like got you the like like billion right the

these be going to go think well, I to was going is don’t $X that not deferred payments I think I think. of referencing. because I that stay. It’s going it’s than to invented Stacy, And higher billion cash

be believe hundred-million-dollar that multiple I revenue everybody I’ve range. would to high in think led previously deferred

other category $X I decently billion think because stuff I see. now of it’s of above this

that? It’s give a like on billion? us Or you more little $X.X can color

Yes. It’s like $X.X billion.

the state it that question ‘XX, know, the My function ask ‘XX? like relates a you And WFE Like, like in some doing, of we’re philosophical did, how want workforce a if to sense, in mean, we just level, get if in grows as thanks. billion ever? lot follow-up, of reductions. more you’re sort be That’s that ‘XX. to I ‘XX to off are helpful, memory how might in probably in memory and view does little for sort maybe it long-term cost I coming steady – I they I cuts do WFE, take WP do going like a where it versus it’s in long And back of to down on that Okay. to $XX even don’t ‘XX

Yes, these well, is, this make maybe as this combines and question to we’re company the maybe efficient cuts last we had the making at taking little business. of it a action which level profitable Stacy, bit and

reposition, And operations we to we about global afterwards. so when as a that need did keep that ramp we I have we comes we saying big we make we in focus cuts But because really not much as it infrastructure, or quickly expect. we back people and justify think know especially the comes faster mention looking rapid therefore, can than increase how business what up often on and ensuring the increase we’re back, memory

ramp side, that can’t And you But we’re able that tell it sure efficiently. it so I make to and I does to is in back when to to when numbers. spending up memory gets these stronger the return do it want what

So the we’ve lot headwinds talking we really months. the been a of XX for don’t about to XX last profitability have that

the more have, more market I the that should level supply But quickly, systems to overshoot about infrastructure and get the way efficiently and think is. the available business now the the right the business. the and that’s for it to us with estimate our chain where to company this idea we size so infrastructure And of ramp

ago, But only months right? was to why headcount you more to six take back cut than you where don’t because cuts need the like

at am of revenue levels. the the I levels profitability Stacy, these comfortable at business

We the structured things that way looks are right acceptable. getting P&L the so in

those the volume not I the Stacy, as well. of were business heads in side added think all

is look company we and you are preserve think R&D future to our trying talked the P&L, are of spending for the competitiveness of and we you I so will the – at when growth and where I what see think about strategic that the business. side products And important the on

in memory both well. still spending have business there the our logic of the foundry the and the model as committed, is some I We are beginning, and of market as share through at of side said gaining the

cycle. the the these for to through we appropriate this run business cuts that we think So, be are are seems how think

Got guys. helpful. it. you, That’s Thank

Stacy. Thanks

next Goldman Please Hari Sachs. We will ahead. with go Toshiya go to

I clarification then you and so Thank one much. follow-up question. Great. a had

calendar the guys $X.X potential systems billion the Are sized restrictions those in On at change the for export think billion, quarter you your in three I side, $X there? impact last China to quarter, clarification, ‘XX your I business services. quarters from expectation believe to on a numbers still ‘XX? calendar Any

change. no Yes,

year, through a talked a talked and component freight those we dynamics offset should lever the we for in about terms Thank of costs How also you you you. Got it. being headwinds. progress? margin, And progress about and to potential probably of headwind any pricing about as question Doug as then my some think ‘XX, last gross

is for been inflationary about I of it, some getting it’s better. Toshiya, the talking have somewhat over some buckets the I in guess describe about talking what line of Yes. I

of it, not better, think are And I yet. it we some but will get seeing

that. about. quarter, some in to So, forward. that’s level with And the conversations continue about things and we go pricing, in continue right activity, pricing as work then have showing of we P&L we we March are up relative the ongoing customers but There will what talking on in have that been the continue to already to that’s

is that all-in And the basis XXX full factors? talk an those the embedding when improvement exiting all point about number, you year,

adjustments our the terms yes, making and now, reception down Yes. we company. right business To of the best of in sit minuses, in all the as from the of the footprint we of are going that’s here the pluses,

much. it. Got so you Thank

Toshiya. Thanks Yes.

Arya Bank will go our America Securities. of ahead. We from with next question take Vivek Please

that out trough power is But math, $XXX think let’s might billion or this earnings Does revenue trough So, conceptually revenue a trough do I deferred quarter billion. for so understand about this Thanks more that of am get is trough revenue the can to say pure trying your conceptually to through come? memory for for $X.X kind don’t March trough that forecast. what year, this and million sort the $X could quarter to number. suggest quarter gauge all conceptually, I year another give go closer of we if what shipped exact is so China your you be. sense to gauge other my comes just right? is some that taking am I trying the you reflect what question. or is there so cuts CapEx revenue of quarter, be I later year, this

Toshiya, down said. half March. March, deferred I guess because be. sorry where already it’s In we I I down – somewhat say what are do Revenue in going to the just best is it’s weighted, largely Vivek, to is pulled can the pulling have first

half. think you of so you, the to first And about close will second should think you be. think got you through, to is where if that told fact kind pretty we get plus balanced that half, WFE And I that think I it fairly it

in a it. and that have do I total I in percentage was China us And have much is, And ‘XX? as number be question then March sales second domestic? that if calendar of China Got sales believe you you then XX%, of China for December. for you of But sense how a a your give were roughly could to expect what

the of than Yes. domestic forget Vivek, the with to exact In it number, it you, December, more trying honest but to certainly was was China. number. domestic half China. I be of More remember

China going $X.X to impacted from to through, ship billion As billion the is we we to. be the can’t go customers to $X

‘XX. is down – I somewhat means think think I that going to when be WFE China about in China WFE,

Okay.

that to billion wanted rate sense this $X That’s billion, get for. what So, reflected March of to is just outlook? I kind in a your run $X.X

things that quarter. billion, lost nothing The is of that have $X we $X.X from there kind billion March in the Yes. to

am making of not $X quarter, March that billion. is to to what I China understand always the clear any but through describe. There forward. different customers be going there in it, timing So, is in is the is already reduction of and and $X.X the from up go will spending as trying impact the China am not March billion It’s But it we the down to isn’t effect am that’s part we more as expect. to go Vivek, fully from money. sure I up be regulations I quarter I

Got it.

take I down. deferred basically, that’s of ex run is it billion, let So, assume shape just quarterly kind of level, If March and the should of ‘XX revenue rate calendar right? Doug, be, the of how right, to $X.X sort at kind

Listen, time. earnings next guide the at we June only I will quarter one when revenue numbers. a we guide quarter to get

you. Thank

Yes. Thank you.

ahead. Malik will take We from question next our Please Atif go with Citi.

equipment from is can supply you my Doug, for you your Thank now receive suppliers? that taking questions. Hi. the demand the below

below about sorry, constraints? it Is is the supply – chain question

demand supply fully they line? and below are the mean the I now fallen Right. removed has

the deliver Yes. we chain supply said, partly revenue. is saw Well, a we why than to as in which higher we the December the were in constraints significant quarter, anticipated improvement able

remain say went say and would are dramatically are where in fully if that There that back So, would compare not I XX supply you chain constraints easing. always today ago, chain I months supply improved. that some is the and versus of we still parts recovered. – But are

work issues. to remaining on those year continue will through we that think I that this remainder on probably the of

share gate timing next about big around, for you your logic more production the help it. second node-to-node edge around? maker infection all prepared or a year presumably about talked you remarks, and is Can conductor should of Tim, guys. technology market in one Got that half, ramp doubling you XXXX-year a all story, gate it it like And at Is talk event? the is

Yes.

say. about issue I timing. of you mean customers qualification – kind is our to own starting better But for cycle, XXXX think I for talk that let’s a material obviously, Yes, it’s limited announce production. see to them there not talk numbers, probably their just a about and

I logic bear. types new if there in increasing things of that is and logic. foundry where of use our tools those again, deposition etch, in increased But technology XXXX-and-beyond it’s tools advanced are talked space want this the our technology to those So, foundry Part and our applications, use about are, architectures. critical And like just in and we of into The are this about suitable, where AI etch again, things we packaging big like where areas ratio can market high-aspect inflections increasing selective these of to that business. edge. XD those The the bring event. exposure most those for need, things Lam are of increasing and most intensity think where about that, a tremendous is etch take

hard So, timing stages. early the tool tool as we think record development of we for again, that’s are to progress making of that production Lam. markets ramp, I and predict, good but those great And record see

Thank you.

Atif. Thanks

Bank. will go ahead. We Please to go Sidney Deutsche with Ho next

on CSBG, play can Hi. the taking And buckets guide how segment’s Zaman Khan if us these to overall that afternoon. the performance you apologize for follow-up. in I Sidney. have each [ph] into my see but a XXXX? for you contribute just And will missed Good Thanks on CSBG? How have of question. might this, I I quick

and that was was grow the during base, technologies out along And fact base And but that this base. with Sure. We year business installed the in installed was spares would in I talked service, Yes. unique, certain in the that that I particular, that, expanding cannot kind year, restrictions Reliant. it did normal and see that. customers business the of segments impact installed basically earlier, of pull our somewhat spares plan little spares hit the again, upgrades the revenue the it larger spares is immediately four substantially cycle. to a given China we in spare, actually sell a down on China. growing just last our we with grow about always to than

spares that’s those So, reset then unique when a are need obviously, to customers that the business. don’t utilization, cut And spares. impacts thing that is idled, second tools

technologies by or don’t save when utilization we themselves customers tools service to say So, spares the also restricted impacts. I money that during customers those they is tools in tend impacted and to the similarly, these can’t service. look are service the business offline, need doing two times and would Service, by are China

most still lines reliant, are two the product and impacted, would say, I kind those because edge of And these by changes, trailing grows again, growing so upgrades.

part While might some perspective, to I would say in a from a some delaying I be is just impact less business. sensitivity that CapEx – said upgrades of the people there again,

infrastructure more your diversify I of guess And guess obviously are what then helpful. Got of me. cost, the to they capacity Asia. try I as the pretty noted fab Xx for customers roughly spend when one it. to like of major customers outside That’s build a to across equipment very one elevated capacity Xx out regions? long-term implications question

I same. there question. where think a fabs. I I the good story are We the regions, are certainly of all is is building move mean know mean customers and obviously, think compete excellent talked based we tools win business trending technology we they productivity. that And about thought perspective, an I I from It’s cost costlier on – sensitive people regardless if into equipment as high intelligence. what lot I deliver building that about probably with equipment a that means

higher, You costs think tools interaction, and some that human about the it, region keep up are less try a can a already less servicing want to that of order require tools where higher them utilize rate. if at going to you you to into base more work in do are moving predictive are

if of invested. smart can think for where the some extract of see tools and down more I will types and our of pull you so you And pull often up those of content you that that labor solutions kind you that keep can capital from some running have customers therefore, more

very that’s Thanks Tim, for helpful. color. the

Thanks.

question We our ahead. will with take Please Barclays. next from go Blayne Curtis

just two and had XX I the lot Hey. Thanks correction months in for huge has I a a over to in. memory. transpired me – clearly obviously, wanted last squeezing questions. One,

obviously, am You just curious than I pulling utilizations markets. of you thinking work back had that. kind the about on I and foundry is. the group through low and the they logic are how now something capacity are end are overall to same mean saying memory odds down less

year of So, or thinking kind kind foundry are just this how you about of progressing over next?

being Yes. less still logic memory this down as I see, said, or memory guess than substantially the year. now, obviously, we we right foundry

at seen that made memory years. as have percent total We is haven’t in of XX WFE we the also comment that levels a

devices strong through be at logic one and memory created, perhaps the that I with the either foundry and founder And and are causes in usage guess applications actually spending of see accelerates that will it think that so memory that we we another look that and we it’s logic therefore, pulls spending, drivers but recovery. a

but additions And timing intricately I see now. two end terms in think that’s applications, the capacity absent the of sometimes think of that are we so such are tied and I right the the what

Blayne, I would ahead, I your ask guess question. – what is go next describe

Doug. what hear I you want to would say,

the just got you the right the is say on day, extent, at What going right. memory, on accelerators all just this same you devices look of have hyperscale When if got end It’s going least significant architecture. now consumed. have go to kind of will. to of at was without in the my area it’s need logic at you don’t in to I architecture, and all the system got a on, should memory are excess perspective all motherboard, just inventory and you we we get

is are the was I Blayne. a to We at in different what describe point cycle going classic

– going the look am Okay. also semis on across – I it’s want follow question to I I going up. it’s I to mean in are question, industry inventories to a own you I guess mean but yourself. – for one my

right? I with be high might exceeds So, at one, as can I I memory, memory seen that’s a well, guess companies the inventories kind question but leading this are as your think relates you, semiconductor I also very level. it guess logic I you So, it in why foundry there. demand, and think continue right? inventories to capacity have why But of guess show and suggests

of where as your kind think just about? production, So, to think play there have you do on your need to gross to is I if headwinds inventories And another any you back curious kind margin margin, dial of am go? gross to

what to is go Blayne, would is I is lower, inventory coming right. I our Business describe, Yes. guess going down.

We less come of down, I to tell inventory a you business, sure. supply can lower it that will will level need for

any gross margin? does impact that to have And

fact Yes, I is and as is absorption, will and that the bringing be forth point exit utilization the a describe we describe little inventory higher, factory bit. we to expectation that lower, so down. margin be I expectation, a going an an I But contemplates when year, that gross mean

Awesome. Appreciate Thank you. it.

Thanks, Blayne.

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

with Thank you. ahead. Please And from we Quatrochi question Fargo. Wells go will take our Joe last

or Yes. Thanks decline taking one kind you you of in business impacted. weakness it that, consumer then maybe the kind does of way little guess constructive sounds I this the could on more be the And talked are just electronics business for right in a Last with that negatively quarter, Reliant the that had it? business. quarter, questions. what’s two, WFE about also to and that, Is bit that? driving like think about maybe And

we it describe any Yes. differently. mean to Joe, No, didn’t

last think foundry and segment expect we and better quarter, quarter I logic be WFE. that of than to somewhat we this said overall

said that saying pretty we we we did last again. that are think am time. I I sure and

think a I ranking from than them – more or lines was about came stacking by least intention those. I No utilization. was last why that a kind the may message they bit product other a within it across restriction CSBG, think think there though. the like maybe to way. have – little Joe, across was just I come and impacted – maybe question little of That constructive quarter, It’s the that a different time changes send that were why

impact would be, China it. without kind But negative that from about business, total And flat, restrictions? utilization a export the impact. in obviously, it’s China the just of we just CSBG across then the restrictions, business the export think coming down the helpful. closer I terms Got just is guess the That’s board when to of like-to-like

business described the have said, being said certainly with It’s I that should likely I and I as wish couldn’t always China in I have somewhat. is doing historically, it down in year. better because grow we every single so envision utilization environment a this we And wouldn’t and that are forth.

you kind right the just are land the of lay Joe. giving of we now, So,

Okay. Thank much. you very

you, Thank operator.

concludes us. I call think that for the

We are wrapped up here.

joining. all for you Thank

today’s you. your you participation. concludes Thank for call. Thank This

You disconnect. now may