Lam Research (LRCX) Q1 FY2027 Earnings Call: Q&A Summary

Q: Timothy Arcuri of UBS asked about the impact of supply constraints on December guidance and the potential for a recovery in the March quarter.

A: Doug Bettinger stated that while he would not quantify the exact cost, the revenue guidance would have been higher without these constraints, and the delayed shipments will likely occur in the March quarter.

Q: Melissa Weathers of Deutsche Bank asked about actions being taken to resolve supply bottlenecks and potential co-investments.

A: Doug Bettinger and Tim Archer explained that they are managing the tightness as they always do, noting that suppliers are well capitalized and that they are communicating expectations clearly to avoid shortages.

Q: Krish Sankar of TD Cowen asked if the implied WFE for the December quarter contained any episodic revenues.

A: Doug Bettinger confirmed there is nothing unique or one-off in the December quarter and that the results are consistent with customer demand.

Q: Krish Sankar of TD Cowen asked about the China revenue mix for the December quarter.

A: Doug Bettinger noted that China revenue will be meaningfully down in the December quarter, driven primarily by domestic customers.

Q: Vivek Arya of Bank of America asked what helped increase WFE expectations and what constraints might limit growth next year.

A: Doug Bettinger explained that customers squeezed more output from existing clean rooms and pulled projects forward, and that the $200 billion figure is a starting point.

Q: Vivek Arya of Bank of America asked about the magnitude and duration of the accelerated share repurchase program.

A: Doug Bettinger stated the program will continue to execute in December and that the company remains committed to returning 85% of free cash flow to shareholders.

Q: Jim Schneider of Goldman Sachs asked about the moving pieces that could adjust the WFE outlook for 2027.

A: Doug Bettinger and Tim Archer highlighted that 10 new Tier 1 fabs are coming online throughout the year, and the company will have better visibility on clean room schedules by the January call.

Q: Stacy Rasgon of Bernstein Research asked what the WFE number would be if it were not constrained.

A: Doug Bettinger acknowledged that the number would be higher but declined to provide a specific figure.

Q: Brian Chin of Stifel asked about current inventory levels and turns.

A: Doug Bettinger stated the company is comfortable with the current inventory position and noted that inventory turns reached 3.4x.

Q: Timothy Arcuri of UBS asked about the company's position in 3D DRAM versus 4F square architectures.

A: Doug Bettinger and Tim Archer explained that as architectures move to 3D, etch and deposition intensity rises, which benefits the company.

Q: Melissa Weathers of Deutsche Bank asked about the NAND upgrade cycle and SLC opportunities.

A: Tim Archer stated that the upgrade cycle will continue through 2027 and that SLC NAND is emerging as a performance driver for AI workloads.

Q: Blayne Curtis of Jefferies asked if the transition to SLC NAND is currently happening.

A: Tim Archer noted that customers are discussing this, and the shift increases wafer capacity needs and equipment intensity for the company.

Q: Blayne Curtis of Jefferies asked for an update on advanced packaging growth.

A: Doug Bettinger confirmed that the 70% growth target for this year remains correct.

Q: Atif Malik of Citi asked about the ramp of panel-level packaging.

A: Tim Archer said the company is in the very early stages but that panel-level packaging makes sense for larger system-level solutions.

Q: Atif Malik of Citi asked if the gap between DRAM and foundry logic expectations has narrowed.

A: Doug Bettinger stated that expectations have not changed.

Q: Shane Brett of Morgan Stanley asked about foundry logic SAM growth.

A: Tim Archer explained that the company is roughly halfway through the 2x SAM expansion shift, with advanced patterning and packaging playing key roles.

Q: Shane Brett of Morgan Stanley asked how the company enables hybrid bonding.

A: Tim Archer stated that the company participates by providing enabling films in the dielectric and metal space.

Q: Vijay Rakesh of Mizuho asked for sizing of the SLC NAND market opportunity.

A: Tim Archer said it is too early to provide specific comments.

Q: Vijay Rakesh of Mizuho asked for sizing of the advanced packaging opportunity.

A: Tim Archer stated the company is not prepared to size that opportunity today.

Q: Brian Chin of Stifel asked about the drivers for the revenue outlook increase.

A: Tim Archer attributed it to a combination of new customer adoptions and volume growth in fast-growing market segments.

Q: Harlan Sur of JPMorgan asked to rank the growth drivers for CSBG and the impact on operating margins.

A: Tim Archer highlighted equipment intelligence and cobots as new growth drivers, while Doug Bettinger noted that spares remain the largest individual component.

Q: Harlan Sur of JPMorgan asked if mature node spending outside of China would grow this year.

A: Doug Bettinger said it would not be meaningful this year but expects strength in 2027.

Q: Stacy Rasgon of Bernstein Research asked if NAND upgrades drove the growth in CSBG.

A: Doug Bettinger clarified that both new equipment purchases and upgrades were meaningful contributors to the growth.

Q: Srinivas Pajjuri of RBC asked about the drivers for outgrowing WFE next year.

A: Tim Archer cited the increase in deposition and etch intensity across all devices, advanced packaging, and success in gate-all-around products.

Q: Srinivas Pajjuri of RBC asked about the outlook for gross margins.

A: Doug Bettinger stated that margins will likely remain near current levels in the near term, with a long-term goal of reaching the mid-50s.