Q4 2025 Lam Research Corp Earnings Call

Operator: Good day, and welcome to Lam Research's June quarter of 2025 earnings conference call. All participants will be in a listen-only mode for the duration of the call. And should you need any assistance today, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-toned phone. To withdraw your question, please press star, then two. Please also note that this event is being recorded today. I would now like to turn the conference over to Ram Ganesh, the Vice President of Investor Relations. Please go ahead.

Good day and welcome to Lam Research's June quarter of 2025 earnings conference call.

All participants will be in a listen-only mode for the duration of the call. And should you need any assistance today? Please ignore conference specialist by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions.

to ask a question, you may press star then 1 on a touchtone phone,

To withdraw your question. Please. Press star. Then 2

Please also note that this event is being recorded today.

Ram Ganesh: Thank you, and good afternoon, everyone. Welcome to the Lam Research Quarterly Earnings Conference call. With me today are Tim Archer, President and Chief Executive Officer, and Doug Bettinger, Executive Vice President and Chief Financial Officer. During today's call, we will share our overview on the business environment, and we'll review our financial results for the June 2025 quarter and our outlook for the September 2025 quarter. The press release detailing our financial results was distributed a little after 1:00 PM Pacific Time. The release can also be found on the Investor Relations section of the company's website, along with the presentation slides that accompany today's call. Today's presentation and Q&A include forward-looking statements that are subject to risks and uncertainties reflected in the risk factors disclosed in our SEC public filings. Please see accompanying slides in the presentation for additional information.

I would now like to turn the conference over to Ram Ganesh, Vice President of Investor Relations. Please go ahead.

Thank you and good afternoon everyone. Welcome to the lamb research quarterly earnings conference call with me today are Tim president and chief executive officer and that's biting your Executive Vice President and Chief Financial Officer. During today's call. We will share our overview on the business environment and we'll review our financial results for the June 2025 quarter, and our outlook, for the September 2025 quarter,

The press release detailing our financial results was distributed a little after 1:00 p.m. Pacific time.

The release can also be found on the investor relations section of the company's website, along with the presentation slides that accompany today's call.

Today's presentation and Q&A include forward-looking statements that are subject to risks and uncertainties reflected in the risk factors, disclosed in our FCC public filings.

Ram Ganesh: Today's discussion of our financial results will be presented on a non-GAAP financial basis unless otherwise specified. A detailed reconciliation between GAAP and non-GAAP results can be found in the accompanying slides in the presentation. This call is scheduled to last until 3:00 PM Pacific Time. A replay of this call will be made available later this afternoon on our website. And with that, I'll hand the call over to Tim.

Please see. Accompanying slides in the presentation for additional information.

Today's discussion of a financial resource will be presented on a non-GAAP financial basis unless otherwise specified.

A detailed detailed reconciliation between gaap and non-gaap results can be found in the accompanying. Slides in the presentation.

This call is scheduled to last until 3 p.m. Pacific Time. A replay of this call will be made available later this afternoon on our website.

Timothy Archer: Thanks, Ram, and good afternoon, everyone. Lam delivered another great quarter. Revenues and profitability came in at the upper end of our guided ranges. Our gross margins exceeded 50% for the first time since the merger of Lam and Novelis, and EPS hit a new high for the company. We achieved record foundry revenues driven by strong performance in both gate all-around and mature node markets. And again, our upgrades business grew to a new high, up mid-teens percent over the prior quarter, as NAND customers migrate to higher layer count, higher performance devices to meet the faster read/write requirements and greater storage demands of AI applications. In short, we are executing well on the serve market expansion and share growth story we laid out at our Investor Day earlier this year.

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

Thanks Ron and good afternoon everyone. Lamb delivered, another great quarter revenues and profitability came in at the upper end of our guided ranges, our gross margins exceeded 50% for the first time since the merger of lamb and novellas and EPS hit a new high for the company.

We achieved record Foundry, revenues driven by strong performance in both gate, all around, and mature node markets. And again, our upgrades business grew to a new high up mid. Teens percent over the prior quarter as nand. Customers migrate to higher layer counts higher performance devices to meet the faster, read write requirements.

And greater storage demands of AI applications.

Timothy Archer: 3D scaling of device and advanced packaging architectures is accelerating growth in etch and deposition intensity, and Lam's new products targeting key technology inflections are winning with customers. Furthermore, in advanced services, Lam is at the forefront of realizing the vision of an autonomous fab. We are gaining momentum with our equipment intelligence-enabled dextro cobots, which provide device makers with an unprecedented level of equipment maintenance precision and repeatability. The result is enhanced tool-to-tool matching, improved machine availability, lower operational costs, and in some cases, higher yield. In the June quarter, Lam expanded our dextro capabilities to cover three additional tool types, and we are accelerating the roadmap to support more products and more shipments in coming quarters.

In short. We are executing well on the served Market expansion and share. Growth story. We laid out at our investor day earlier this year.

3D scaling of device and advanced packaging architectures is accelerating growth in Edge and deposition intensity and Lamb's new products targeting key. Technology inflections are winning with customers.

Furthermore, in advance Services lamb is at the Forefront of realizing the vision of an autonomous Fab.

We are gaining momentum with our equipment. Intelligence enabled. Dextro cobots which provide device makers with an unprecedented level of equipment. Maintenance, precision and repeatability.

The result is enhanced tool, the tool matching improved machine availability, lower operational costs. And in some cases higher yield,

Timothy Archer: Turning to the overall market environment for calendar year 2025, we expect wafer fabrication equipment or WFE spending to be in the $105 billion range, up from our prior view of approximately $100 billion, predominantly due to an uptick in domestic China-related spending. We see non-China investments remaining broadly consistent with our prior view. Currently, we expect WFE in the second half of the calendar year to be roughly flat with the first half. Looking forward to 2026, it is still too early to comment on the overall level of WFE spending. However, our strong position in gate all-around, advanced packaging, high bandwidth memory, and NAND layer conversions, we feel confident that Lam is well positioned to outperform.

Enough to support more products and more shipments in coming quarters.

Turning to the overall Market environment for calendar year 2025.

We expect wafer fabrication equipment for wfb. Spending to be in the 105 billion dollar range up from our prior view of approximately 100 billion dollars predominantly due to an uptick in domestic China related spending

we see non-china Investments remaining. Broadly consistent with our prior View.

Currently we expect WFC in the second half of the calendar year to be roughly flat with the first half.

Timothy Archer: In 2025, Lam's served available market, or SAM, is set to expand to around mid-30s percent of WFE due to these industry drivers, and we expect them to work in Lam's favor again in 2026. Longer term, we are on a solid path to grow our SAM to the high 30% range of WFE by continuing to deliver critical solutions for atomic level device scaling, new materials innovation, and advanced packaging integration. The key R&D investments that we've made over the last several years have enabled us to create the broadest, most competitive product portfolio in the company's history, thereby putting us in a strong position to win over 50% share of the incremental SAM over time. I'll share a couple of examples that underscore our early progress toward our SAM expansion and share gain goals.

Looking forward to 2026. It is still too early to comment on the overall level of WP spending however our strong position in Gate all around Advanced packaging. High bandwidth, memory and nand layer conversions. We feel confident that lamb is well positioned to outperform.

In 2025 Lambs served available Market or Sam is set to expand to around mid-30s percent of wfp. Due to these industry drivers and we expect them to work in lands favor again in 2026.

Longer term, we are on a solid path to grow our Sam to the high 30% range of wfp, by continuing to deliver critical solutions. For Atomic level device scaling, new materials, Innovation, and advanced packaging integration.

The key R&D Investments that we've made over the last several years have enabled us to create the broadest most competitive product portfolio in the company's history. Thereby, putting us in a strong position to win over 50%. Share of the incremental Sam over time.

Timothy Archer: First is our Halo ALD MOLE tool, which is ramping at multiple NAND customers this year. We expect MOLE adoption to increase broadly as more customers convert NAND capacity to 200 layers and higher in the next few years. Lam is leading the industry transition to ALD MOLE not only in NAND but also in foundry logic. AI is driving greater transistor performance requirements and, in turn, accelerating the inflection to gate all-around device architectures. However, below 2 nanometers, gate all-around structures begin to encounter significant resistance capacitance or RC challenges. Narrower transistor contacts in these devices cause greater electron scattering, resulting in higher resistance of the deposited tungsten films. Replacing tungsten with molybdenum solves the resistance problem, but the process of depositing this higher performance material is inherently slower and more complex.

I'll share a couple of examples that underscore our early progress toward our Sam expansion and share game goals.

First is our halo ald Molly tool, which is ramping at multiple named customers this year.

We expect Molly adoption to increase broadly. As more customers convert and capacity to 200 layers and higher in the next few years.

AI is driving greater transistor performance requirements and in turn accelerating the inflection of the gate all around device architectures. However, below 2, nanometers gate all-around structures. Begin to encounter significant resistance, capacitance or RC challenges.

Narrower transistor contacts in these devices cause greater electron scattering resulting in higher resistance of the deposited tungsten films.

Timothy Archer: This is driving a roughly 3x increase in Lam metal deposition SAM per wafer when transitioning to advanced gate all-around nodes. Today, we are the only company with ALD MOLE tools already in production in foundry logic, and in the June quarter, we've secured a key win at another leading foundry customer for their next generation application. As MOLE adoption expands across various metal interconnect layers, the flexibility of Lam's unique multi-station architecture to execute both plasma and thermal processing in the same chamber enables optimization of process conditions and process step sequencing to meet requirements for different applications and over multiple generations of future logic devices. Another area where we have made strong progress is advanced packaging.

Replacing tungsten with malebe solved the resistance problem. But the process of depositing this higher performance material is inherently slower and more complex.

This is driving a roughly 3x increase in Lamb metal deposition Sam per wafer when transitioning to Advanced deal around nodes.

Today we are the only company with ald Molly tools, already in production and Foundry logic. And in the June quarter, we secured a key win at another leading Foundry customer for their next Generation application.

As Molly adoption expands across various metal. Interconnect layers, the flexibility of Lamb's unique multi-station architecture to execute both, plasma, and thermal processing in the same chamber. Enables optimization of process conditions and process. Step sequencing to meet requirements for different applications and over multiple generations of future logic devices.

Timothy Archer: Advanced packaging is critical for scaling system performance to address next generation AI requirements and so far has enabled up to 100% improvement in memory density, four times improvement in bandwidth, and an approximate 40% gain in power efficiency. Lam's SAM is growing with greater adoption of next generation packaging architectures for DRAM, CPUs, GPUs, and ASICs used in data centers. In 2021, leading edge foundry logic customers spent just 1% of WFE on advanced packaging. With AI's rapid adoption of advanced packaging, that number has grown more than six times. In the future, we expect end consumer devices like mobile application processors and laptop CPUs to also feature more complex packaging schemes as on-device AI becomes mainstream. We are a leader in the advanced packaging inflection and are leveraging our experience to win more opportunities.

Another area where we have made strong progress is Advanced Packaging.

Advanced packaging is critical for scaling system performance to address next-generation AI requirements. So far, it has enabled up to a 100% improvement in memory density, a fourfold improvement in bandwidth, and an approximate 40% gain in power efficiency.

Lamb Sam is growing with greater adoption of Next Generation, packaging architectures for Dram CPUs gpus and A6 used in data centers.

In 2021 Leading Edge Foundry, logic customers. Spent just 1% of wfe on Advanced Packaging,

With ai's rapid, adoption of the advanced packaging, that number has grown more than 6 times.

In the future. We expect end consumer devices. Like mobile application processors and laptop CPUs. To also feature more complex, packaging schemes as on-device, AI becomes mainstream.

Timothy Archer: For example, Lam has amassed unmatched experience in copper plating hardware design and process technology over the last 20 years. We have by far the largest installed base in the industry and recently achieved a significant milestone of 6,000 installed plating cells. By incorporating our learning from the installed base into improvements in our latest Saber 3D system, we are delivering best-in-class coplanarity, uniformity, and defectivity in high volume advanced packaging environments. The experience we have gained at the leading edge is now cascading to additional wins with next-tier customers seeking to adopt a proven best-in-class solution. Saber 3D market share in advanced packaging is expected to grow nearly five points year on year in calendar 2025. Finally, let me pivot to the strong momentum we're seeing with our newest generation etch tools. In NAND, we continue to solidify our leadership in high aspect ratio dielectric etch.

Design and process technology over the last 20 years.

We have, by far, the largest installed base in the industry and recently achieved a significant milestone of 6,000 installed plating cells.

By incorporating our learning from the installed base into improvements in our latest saber 3D system. We are delivering best-in-class coplanarity, uniformity and effectivity in high volume Advanced, packaging environments.

The experience we have gained at the Leading Edge is now cascading to additional wins with next, tier customers seeking to adopt a proven best-in-class solution.

Saber, 3D market share in advanced packaging, is expected to grow nearly 5 Points year on year in calendar 2025.

Finally, let me pivot to the strong momentum. We're seeing with our newest generation etch tools.

Timothy Archer: Equipped with our cryo process, our VanTech system recently won a key multi-generation etch decision at a major NAND customer. This further confirms our differentiation in both technology innovation and high volume production worthiness in the NAND segment. Across all device types, our state-of-the-art conductor etch tool, Aqara, is off to a solid start since its launch earlier this year. By combining direct power coupling with Lam's unique plasma pulsing capabilities, Aqara delivers industry-leading depth uniformity and profile control that is vital for DRAM scaling. In the June quarter, Aqara secured multiple new application wins at a top DRAM maker. So to wrap up, I'm excited by the breadth of opportunities I see ahead for the company and am encouraged by the outstanding progress our team has already made toward the long-term goals we communicated at our February Investor Day. Etch and deposition intensity is rising with 3D scaling.

in land, we continue to solidify our leadership in high aspect ratio, dielectric ditch,

Equipped with our cryo process, our vantex system. Recently won a key multi-generation etch decision at a major Nan customer

This further confirms our differentiation in both Technology Innovation and high volume production worthiness in the man segment.

Across all device types, our state-of-the-art conductor at tool aara is off to a solid start since its launched earlier this year.

By combining direct power, coupling with Lamb's unique, plasma pulsing capabilities, a car, delivers industry-leading depth, uniformity and profile control. It is vital for Dram scaling.

In the June quarter, a car secured multiple new application wins at a top DM maker.

So to wrap up, I'm excited by the breadth of opportunities. I see ahead for the company and am encouraged by the outstanding progress. Our team has already made for the long-term goals. We communicated at our February investor day,

Timothy Archer: Our products are winning in key technology inflections, and as a result, there is tremendous potential for Lam to continue expanding SAM and grow share at each successive process technology node. Now here's Doug to talk about our quarterly financial performance in the September outlook.

Etch and deposition intensity is rising with 3D scaling.

Our products are winning in key technology inflections and as a result there is tremendous potential for lamb to continue expanding Sam and the growth share at each successive process technology node.

Douglas Bettinger: Excellent. Thank you, Tim. Good afternoon, everyone, and thank you for joining our call today during what I know is a busy earnings season. We executed well in the June 2025 quarter, including delivering a record gross margin percentage of 50.3% in the post-Novelis period. These past two quarters represent Lam's highest gross margin percentage since we merged the companies in 2012. Our June quarter financial results came in above the midpoint of all of our guidance ranges, with earnings per share actually exceeding the guidance range. For our 2025 fiscal year, we had record revenue of $18.4 billion and gross margin of 48.8%. Our free cash flow generation fiscal 25 was 29% of revenue and approximately $5.4 billion, which was also a record for the company in dollar terms.

Now, here's Doug talk about our quarterly financial performance in the September Outlook.

Excellent, thank you. Tim, good afternoon, everyone and thank you for joining our call today during what I know is a busy earning season.

We executed well in the June 2025 quarter, including delivering a record gross margin percentage of 50.3% in the post-Novellas period.

These past 2 quarters, represent, Lamb's, highest gross, margin percentage, sensory, merge, the company is in 2012.

Our June quarter financial results came in at the midpoint of all of our guidance ranges, with earnings per share actually exceeding the guidance range.

For our 2025 fiscal year, we had record revenue of 18.4 billion dollars in gross margin of 48.8%.

Our free cash flow generation fiscal. 25 was 29% of Revenue and approximately 5.4 billion dollars.

Douglas Bettinger: We're delivering on the profitability objectives discussed at our Investor Day earlier this year through a growing top line, favorable mix, and strong operational execution. Let's look at the details of our June quarter results. Revenue came in at $5.17 billion, which was an increase of 10% from the prior quarter. Their deferred revenue balance at the end of the quarter was $2.68 billion, which was an increase of approximately $670 million from the March quarter. This was related to customer advanced down payments from several newer customers. From a market segment perspective, June quarter systems revenue in the foundry segment represented 52% of our systems revenue, an increase from the percentage concentration in the March quarter of 48%. In dollar terms, this level represents a second consecutive record quarter, and we also set a new record from a fiscal year perspective.

Which was also a record for the company in dollar terms.

For delivering on the profitability objectives discussed at our investor day earlier this year, through a growing topline.

Favorable, mix and strong. Operational execution.

Also, the details of our June quarter results.

Revenue came in at 5.17% from the prior quarter.

Their deferred revenue balance at the end of the quarter was 2.68 billion which was an increase of approximately 670 million from the March quarter.

This was related to customer Advanced down payments from several newer customers.

From a market segment perspective, June quarter systems revenue in The Foundry segment represented 52% of our systems revenue, an increase from the percentage concentration of the March quarter of 48%.

Douglas Bettinger: We've benefited from continued momentum in leading edge processes, as well as investments in mature nodes by domestic Chinese customers. Memory was 41% of systems revenue, a slight decrease from the prior quarter level of 43%. Non-volatile memory came in at 27% of our systems revenue, which was higher than the March quarter's level of 20%. We continue to encourage you to think of NAND investments focused primarily on upgrades, which we anticipate will require an investment of roughly $40 billion over several years. DRAM declined from the March quarter, coming in at 14% of systems revenue compared with 23% last quarter. The decline in the June quarter was related to the timing of certain customer projects. For the 2025 fiscal year, DRAM revenue reached a new record in dollar terms, with spending focused on technology upgrades to the 1-beta and 1-gamma nodes, enabling DDR5 and LPDDR5.

And dollar terms. This level represents a second consecutive record quarter and we also set a new record from a fiscal year perspective.

We benefited from continued momentum and Leading Edge processes, as well as investments in mature nodes by domestic Chinese customers.

Memory was 41% of the system's revenue, which was a slight decrease from the prior quarter level of 43%.

Non-volatile memory came in at 27% of our systems revenue, which was higher than the March quarter's level of 20%.

And upgrades, which we anticipate will require an investment of roughly $40 billion over several years.

Here. I'm declined from March quarter coming in at 14% of systems Revenue compared with 23% less quarter.

The decline in the June quarter was related to the timing of certain customer projects.

Douglas Bettinger: High bandwidth memory was also a key investment area. The logic and other segment came in at 7% of systems revenue in the June quarter, slightly lower than the prior quarter level of 9%. Now I'll go through the regional composition of our total revenue. The China region came in at 35%, an increase from the prior quarter level of 31%. We saw increasing investment from global multinational customers in this region to the highest level since the December quarter of 2022. The majority of our China revenue, nonetheless, continued to come from domestic Chinese customers. The next largest geographic concentration were Korea at 22% and Taiwan at 19% of revenue in the June quarter, both of which were a decrease from 24% concentration in the March quarter. Japan revenue at 14% was a record for Lam in dollar terms.

For the 2025 fiscal year. DRM Revenue reached a new record. In dollar terms was spending focused on technology upgrades to the 1 beta and 1 gamma nodes enabling ddr5 and lpddr5.

Hi, been with memory was also a key investment area.

The logs and other segments came in at 7:00 systems. Revenue in the June quarter,

Slightly lower than the prior quarter level of 9%.

Now, I'll go through the regional composition of our total revenue. The China region came in at 35% and increased from the prior quarter level of 31%.

We saw increasing investment from Global multinational customers in this region to the highest level since the December quarter of 2022.

The majority of our China Revenue nonetheless continued to come from domestic Chinese customers.

The next largest geographic concentration is Korea at 22% in Taiwan and 19% of revenue in the June quarter, both of which were a decrease from 24% concentration in the March quarter.

Japan Revenue at 14% was a record for lamb in dollar terms.

Douglas Bettinger: The customer support business group revenue in the June quarter totaled approximately $1.7 billion, consistent with the March quarter as well as the June quarter of a year ago. We had a third consecutive record quarter for upgrade revenue driven by NAND technology convergence. We also saw strength in our spares business, offset by a decline in reliant systems. Sitting here today, we do think we will see modest growth in CSPG for the calendar year. Let's look at profitability. The June quarter gross margin came in at 50.3%, close to the top end of our guided range and improving from the March quarter level of 49%. The increase is tied to a stronger mix and continued progress in our operational efficiencies from our close-to-customer manufacturing strategy. Operating expenses for the June quarter were $822 million, up from the prior quarter level of $763 million.

The customer support business group Revenue in the June quarter totaled approximately 1.7 billion dollars consistent with the March quarter as well as the June quarter of a year ago.

We had a third consecutive record quarter for upgrade revenue driven by nanotechnology convergence.

We also saw strength in our spares business offset by a decline in Reliant systems.

Sitting here today, we do think we will see modest growth in csbg for the calendar year.

Let's look at profitability.

The June quarter gross margin came in at 50.3%.

close to the top end of our guided range in improving from the March quarter level of 49%.

The increase is tied to a stronger mix.

And continued progress in our operational, efficiencies from our close to customer manufacturing strategy.

Douglas Bettinger: This was a bit higher than our original estimate coming into the quarter, primarily due to increased incentive compensation tied to the company's improved profitability. R&D accounted for 69% of total operating expenses. The June quarter operating margin was 34.4% and near the high end of our guidance. This operating profit represents a record level for Lam in both dollars as well as percentage terms. Our non-GAAP tax rate for the quarter came in at 4.8%. As I indicated on the last earnings call, the rate in the June quarter reflects a tax reserve release tied to a statute of limitations expiration. Our estimate for the September 25 quarter is for the tax rate to be back in the low to mid-teens range. Other income and expense for the June quarter was approximately $4 million in income compared with $7 million in expense in the March quarter.

Operating expenses for the June quarter, were 822 million up from the prior quarter level of 763 million.

This was a bit higher than our original estimate coming into the quarter, primarily due to increased incentive compensation tied to the company's improved profitability.

R&D accounted for 69% of total operating expenses.

The June quarter, operating margin was 34.4% and near the high end of our guidance.

This operating profit represents a record level for Glam in both dollars as well as percentage terms.

our non-gaap tax rate for the quarter, came in at 4.8%,

As I indicated on the last earnings, call the rate in the June quarter, reflects a tax Reserve, release tied to a statute of limitations expiration.

Our estimate for the September 25th quarter is for the tax rate to be back in the low to mid-teens range.

Douglas Bettinger: The improvement in OINE was primarily the result of increased interest income tied to a higher cash balance as well as gains on our venture investment portfolio. As we've talked about in the past, you should expect to see variability in OINE quarter to quarter. For capital return in the June quarter, we allocated approximately $1.3 billion to share buybacks through a combination of open market share repurchases and an accelerated share repurchase program. That ASR will continue to execute into the September quarter. We also paid $295 million in dividends. The June quarter diluted earnings per share were $1.33, exceeding the high end of our guidance range, driven by that higher revenue, stronger gross margin performance, and the lower tax rate. The diluted share count was 1.28 billion shares, which was a reduction from the March quarter and was consistent with our guidance.

Other income and expense for the June quarter was approximately 4 million dollars in income compared with 7 million dollars in expense in the March quarter.

The improvement in income was primarily the result of increased interest income tied to a higher cash balance.

As well as gains on our inventure Investment Portfolio.

As we've talked about in the past, you should expect to see variability in o and a quarter to quarter.

For Capital return in the June quarter, we allocated approximately 1.3 billion dollars to share BuyBacks.

Through a combination of open market, share repurchases and then accelerated share repurchase program.

That ASR will continue to execute into the September quarter.

We also paid 295 million in dividends.

The June quarter diluted earnings per share were $1.33. Exceeding the high end of our guidance range.

Driven by that higher Revenue.

Stronger, gross margin performance and the lower tax rate.

Douglas Bettinger: We have $7.5 billion remaining on our board authorized share repurchase program. Let me pivot to the balance sheet. Cash and cash equivalents totaled $6.4 billion at the end of the June quarter, an increase from $5.5 billion at the end of the March quarter. The main reason for the cash increase was cash from operating activities, including those customer advanced down payments, which was partially offset by cash allocated to the share buyback, dividends, and capital expenditures. Day sales outstanding was 59 days in the June quarter, which was down from 62 days in the March quarter. June quarter inventory turns improved to 2.4 times compared with 2.2 times in the prior quarter. We're making progress in managing inventory levels, and we'll continue to work on this as we go forward.

Which was a reduction from the March quarter and was consistent with our guidance.

We have 7 and a half billion dollars remaining on our board. Authorized share repurchase programs.

Many pivot to the balance sheet.

Cash and cash equivalents totaled. 6.4 billion at the end of the June quarter, an increase from 5.5 billion at the end of the March quarter.

The main reason for the cash increase was cash from operating activities including the customer Advanced down payments.

Which was partially offset by cash, allocated to the share buyback.

Dividends and capital expenditures.

Their sales outstanding with 59 days in the June quarter, which was down from 62 days in the March quarter.

June quarter inventory, turns improved to 2.4 times, compared with 2.2 times in the prior quarter.

Douglas Bettinger: Our non-cash expenses for the June quarter included approximately $94 million in equity compensation, $86 million in depreciation, and $12 million in amortization. Capital expenditures were $172 million, which was down from the March quarter level of $288 million. Spending in the June quarter was mainly centered on lab investments in the United States and Asia, as well as manufacturing facilities in Asia, supporting our global strategy to be close to our customers' development and manufacturing locations. I would point out that offsetting this capital spending, we received more than $50 million in benefits through the Advanced Manufacturing Investment Credit, as well as other CHIPS Act-related programs. We ended the June quarter with approximately 19,000 regular full-time employees, which was an increase of approximately 400 people from the prior quarter. We had headcount increases primarily within R&D to support the long-term product roadmap.

For making progress and managing inventory levels and will continue to work on this as we go forward.

Our 9 cache expenses for the June quarter included, approximately 94 million dollars in equity compensation.

$86 million in depreciation and $12 million in amortization.

Capital expenditures were 172 million which was down from March quarter level of 288 million.

Spending in the June quarter was mainly centered on lab investments in the United States in Asia, as well as manufacturing facilities in Asia, supporting our Global strategy to be close to our customers development and Manufacturing locations.

I would point out that upsetting this Capital spending we received more than 50 million dollars in benefits through the advanced manufacturing investment credit as well as other chips act related programs.

We ended the June quarter with approximately 19,000 regular full-time employees, which was an increase of approximately 400 people from the prior quarter.

Douglas Bettinger: In addition, we had increases within the factory and field organizations for increasing manufacturing activities and a higher volume of tool installations. Let's look at our non-GAAP guidance for the September 2025 quarter. We're expecting revenue of $5.2 billion, plus or minus $300 million. We expect stronger China revenue driven by foundry spending in the September quarter. We're expecting a gross margin of 50%, plus or minus one percentage point. This guidance includes our current assessment of the direct impact of tariffs on our business. Operating margins of 34%, plus or minus one percentage point, and finally, earnings per share of $1.20, plus or minus 10 cents, based on a share count of approximately 1.27 billion shares. So let me wrap up.

We had headcount increases primarily within R&D to support the long-term product roadmap.

In addition, we had increases within the factory and field organizations for increasing manufacturing activities.

And a higher volume of tool installations.

Let's look at our non-GAAP guidance for the September 2025 quarter.

We're expecting revenue of 5.2 billion plus or minus $300 million.

We expect stronger China, Revenue driven by Foundry spending in the September quarter.

We're expecting gross margin of 50% plus or minus 1 percentage point.

This guidance includes our current assessment of the direct impact of tariffs, on our business.

operating margins of 34% plus or minus 1% of 20 finally earnings per share of a dollar and 20 cents plus, or minus 10 cents, based on a shared count of approximately 1.27 billion shares,

Douglas Bettinger: In completing the first half of the calendar year 2025, I was pleased that we made solid progress on the objectives we shared at the beginning of the year. Sitting here today, as Tim mentioned, we now see WFE relatively balanced half on half. We continue to prioritize strategic investments that extend our technology leadership, operational efficiencies, and profitability, which reinforces our long-term value creation agenda. Operator, that concludes our prepared remarks. Tim and I would now like to open up the call for questions.

So let me wrap up in completing the first half of the calendar year 2025. I was pleased that we made solid progress on the objectives we shared at the beginning of the year.

Sitting here today, as Tim mentioned, we now see WFE relatively balanced half on half.

We continue.

To prioritize strategic Investments that extend our technology leadership.

Operational efficiencies and profitability.

Which reinforces our long-term value creation agenda.

Operator, that concludes our prepared, remarks Jim and I would know like to open up the call for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star and one on your touch-tone phone. If you are using a speaker phone, please pick up your headset before pressing the keys. And if at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will take our first question, which will come from CJ Muse with Kanter Fitzgerald. Please go ahead.

We will now begin the question and answer session.

To ask a question, you may press star, then 1 on your touchtone phone.

If you are using a speakerphone, please pick up your handset before pressing the keys. And if at any time your question has been addressed and you would like to withdraw your question, please press star, then 2.

Timothy Archer: Yeah, good afternoon. Thank you for taking the question. I guess first question, your tool business is likely growing three times the growth rate of WFE here in calendar 25, and you indicated, you know, expectations for relative outperformance to continue in calendar 26. Is there a framework for thinking about rank order of the key drivers of this outperformance that you could share?

At this time, we will take our first question which will come from CJ mu's with kerk. Fitzgerald. Please go ahead.

Yeah, good afternoon. Thank you for taking the question, I guess. First question your tool business is likely growing free times to growth rate of wfe um, here in calendar. 25. Uh, and you indicated you know, expectations for relative outperformance to continue in counter 26. Is there a framework for thinking about rank order of the key drivers of of this outperformance that you could share?

Timothy Archer: Sure. I think it's all the things we've talked about in the past. I mean, clearly, if we look at foundry logic, I mentioned extensively the discussion of MOLE today, but we're also looking at other tools around the gate all-around structure. It's things like selective edge, ALD. We still have backside power to come. That will be an area we believe of outperformance for Lam, given our strength in etch and deposition and the role that it plays there. We continue to see ourselves gaining against WFE the more that advanced packaging is incorporated across every type of device, whether it's foundry logic, HBM, and even in NAND, you're starting to see on every NAND maker's roadmap things like cell bonded to array or cell under array.

uh, sure, I uh I I think it's

Timothy Archer: And so really, as I look to the future, I mean, it basically is one in which depth and etch intensity just continues to rise faster than WFE. Lam has an incredibly strong position already and a portfolio of products that are just doing great in the marketplace. And so I think if we continue to stay focused and execute, you know, it'll be those technology drivers that will carry us forward.

Timothy Archer: Very helpful. And then a question for you, Doug. In terms of gross margins, you've got, it sounds like, some tailwind from China. So curious, does that continue into the December quarter? And is there kind of a new normalized gross margin ex kind of China that we should be thinking about?

Area we believe, about performance for land, given our strength and etching deposition in the role that it plays there. Uh, we continue to see ourselves gaining against wfe, uh, the more that advanced packaging is is, uh, Incorporated across, uh, every type of device. Whether it's Foundry, logic, hbm, um, and even in Nan, you're starting to see on every Nan. Maker's roadmap things like, uh, sell bonded to array, or sell under array. And um so really, as I looked at the future, I mean basically uh is 1 in which depth and depth and etch intensity just continues to rise faster than wfe. Lamb has an incredibly strong position already and a portfolio of products that are just doing great in the marketplace. And so I think if we continue to stay focused and execute um you know it'll be it'll be those technology drivers, that will carry us forward.

Douglas Bettinger: Yeah, Tim, we are benefiting from a favorable mix, both customer and as well as a little bit of product. We do have some level of headwinds as I look forward. Tariffs are ticking up a little bit. I don't expect as we get into the December quarter, we're going to continue to have quite as favorable of a level of mix. And so I'll be pretty direct about how I want everybody thinking about the December gross margin. You should be kind of thinking about where consensus is today, which is about 48%. I think that's what you're going to see in December.

Very helpful. And then a question for you. Doug, in terms of gross margins, you know, you've got it sounds like some Tailwind from China. So curious, does that continue into the December quarter and is there kind of a new normalized? Gross, margin X kind of China that we should be thinking about.

Yeah. Tim, we are benefiting from a favorable mix, both customers, as well as a little bit of product. Uh, we, we do have some level of headwinds as, as I look forward. Uh, tariffs are ticking up a little bit. Uh, I don't expect as we get into the December quarter, we're going to continue to have quite as favorable of a, a level of mix.

Douglas Bettinger: I'm not going to get over the skis yet in terms of what you should be thinking about as we head into next year, because I'm not exactly sure what the mix is going to be, CJ, but I'll give you very direct guidance on December, which I just did.

Timothy Archer: Very helpful. Thank you.

And so I'll be pretty direct about how I want everybody thinking about the December gross margin. You should be kind of thinking about where consensus is today, which is about 48%. I think that's what you're going to see in December. I'm not going to get over the skis yet in terms of what you should be thinking about as we head into next year, because I'm not exactly sure what the mix is going to be, CJ, but I'll give you a very direct guidance on December, which I just did.

Very helpful. Thank you.

Douglas Bettinger: Thanks, CJ.

Timothy Archer: Thanks.

Thanks, CJ, thanks.

Operator: And our next question will come from Timothy Archery with UBS. Please go ahead.

Timothy Archer: Thanks a lot. Doug, so taking your comment about gross margin being down a smidge, and I know it doesn't have a lot to do with volume, and also looking at the commentary about, you know, WFE being pretty flat half on half. I know you're going to gain share on the, you know, system side during the back half of the year for sure, but can you give us just a little bit of a sense? Like, do you think that December revenue is down as well, just like gross margin, or do you think it's pretty flat?

And our next question will come from Timothy artery with UBS. Please go ahead.

Douglas Bettinger: Yeah, Tim, I mean, you should think about our revenue likely mirroring what we described earlier at P2B, right? We told you we think WFE is roughly flat, half on half, flat-ish. And if you think through that, you know what March was. You know that both June and September are roughly the same revenue level, so that you should conclude the December quarter looked largely top line-wise like March did, roughly.

Thanks a lot. Um, Doug, taking your comment about gross margin being down a smidge, and I know it doesn't have a lot to do with volume. Um, also looking at the commentary that, you know, WFZ being pretty flat half on half. I know you're going to gain share on the, you know, system side during the back half of the year for sure. But can you give us just a little bit of a sense? Like, do you think that December revenue is down as well, just like gross margin, or do you think it's pretty flat?

Yeah, Sam. I mean you should think about our Revenue, likely mirroring what we described to you to be right? We told you, we nothing WC is roughly flat half on half flat-ish.

And if you think through that, you know what March was, you know, that both, um, June and September are roughly the same Revenue level so that you should conclude the December quarter. Look largely Topline wise like March did

Timothy Archer: Got it. Okay. So it is down. Okay. Okay. And then.

Roughly.

Douglas Bettinger: Yeah, it will be down. It will be down, and that's part of the gross margin, Tim.

Timothy Archer: Yeah. Okay. Cool. And then, and can you just talk about just there was a, there's like a lot of puts and takes for next year. I know there was a pretty big CapEx cut from the big logic maker, but it sounds like you still feel like the bias to next year, I mean, you know, you're not giving us a number, but if you had to, you would say that the bias to next year is up. Is that fair?

Got it. Okay, so it is down. Okay, okay. And then yeah, it will be ducky, it will be down. And that's part of the gross margin. Tim

Yeah. Okay, cool. Um, and then, um, can you just talk about, um, just

The there was a there's like a lot of puts and takes for next year. I know there was a pretty big capex cut from a big logic maker. Um but it sounds like you still feel like the bias in next year, I mean, you know, you're not getting us the number, but if you had to, you would say that the bias to next year's up is that fair.

Douglas Bettinger: Well, we're not going to give a 2026 number, but I think that what we're trying to do is frame out that regardless of what WFE is, we think that the drivers of WFE spending are significantly in Lam's favor. I think that it's just too early. I mean, there are a tremendous number of projects in play right now. It's hard to know exact timing. But you know, if you look, what are the drivers for '26, '27, '28? You know, it's what I just talked about in the last question, HBM, advanced packaging, gate all-around, NAND layer scaling, MOLE. We didn't talk about, I didn't mention dry resist, EUV patterning. These are all areas where Lam has new products that have been in our customer's R&D facilities for the last several years. They're ready to go.

Well, we're not we're we're not going to give a 2026 number. But uh, I think that what we're trying to do is frame out that regardless of what wfe is we think that the the drivers of WFC spending are significantly in landscaper.

Um, I think that it's just too early. I mean, there are a tremendous number of projects in play right now. It's hard to know exact timing, but, you know, if you look at what are the drivers for 2026, 2027, and 2028,

Douglas Bettinger: We don't control the customer's project timing, but we feel incredibly confident that when those projects go, you know, Lam expands our SAM and gains share. That might be '26. It might be '27, but that's, you know, we'll feel, you know, our strategy doesn't change at this point based on the customer's timing. You know, we're in the right position.

You know, it's it's what I just talked about in the last question. Hbm, Advanced packaging gate all-around man layer scaling. Molly. Uh, we didn't talk about, I didn't mention dry resist the UV patterning. Um, these are all areas where lamb has new products that have been in in our customers R&D facilities for the last several years, they're ready to go, we don't control the customer's project timing but we feel in in incredibly confident that when those projects go you know lamb expands our Sam and gain share.

Timothy Archer: Totally. Got it. Thank you.

That might be 26, it might be 27 but that's, you know, we'll be, you know, our our strategy doesn't change at this point based on, uh, on the customer's timing. It, you know, we're we're in the right position.

Douglas Bettinger: Yep. Thanks, Tim.

Totally got it. Thank you.

Yep, thanks Jim.

Operator: Our next question will come from Harlan Sir with JP Morgan. Please go ahead.

Harlan Sur: Hey, guys. Good afternoon and a great job on the quarterly execution. You know, your China business was strong in the June quarter. It was up about 20% sequentially. Is the team still embedding about a $700 million negative impact from China in the second half of this year due to the restrictions that were put in place back in December? But irrespective of that, on top of all of this, you're anticipating a better overall China business this year, right? So relative to 90 days ago, what has changed within your China customer base? Do you think that this is potential pull forward of equipment, of ahead of any potential tariffs, or just more focus on bringing manufacturing capabilities domestically, just given the choppy geopolitical environment?

Douglas Bettinger: Well, Harlan, you stuck like three or four questions in there. Let me try. Yeah, that $700 million number, that was revenue we had identified to specific customers. Regulations haven't changed, so that's no different. I think when we think about the fact that WFE is a little bit stronger and it's driven by a little bit more spending in China, it's just a little bit more spending from a handful of customers is how I would be thinking about it. It's nearly impossible for us to say it's a pull-in because of any specific reason. They're just spending a little bit more when we unpack it.

Hey guys, good afternoon and a great job on the quarterly execution. You know you're China business was strong in the June quarter, it was up about 20% sequentially. It is the team still embedding about a 700 million negative impact from China in the second half of this year, due to the restrictions that were put in place back in December, but irrespective of that on top of all of this you're anticipating a better overall China business this year, right? So relative to 90 days ago, what has changed within your China? Customer base, do you think that this is potential pull forward of equipment of, of ahead of any potential tariffs or just more focused on bringing manufacturing capabilities, domestically? Just given the the the choppy geopolitical environment

Well Harland you stuck like 3 or 4 questions in there? Let me try. Um yeah that 700 million dollar number that was uh uh

Revenue. We had identified, the specific customers regulations haven't changed, so that's no different. Um I think when we think about the fact that WP is a little bit stronger and it's driven by a little bit more spending in China. It it it's just a little bit more spending from from a handful of customers is how it would be thinking about it. It's nearly impossible for us to say it's a Poland because of any specific reason. They're just spending a little bit more when we when we unpack it.

Harlan Sur: Okay. Perfect. Thank you for that. And then maybe for Tim, you know, as we track a lot of these next generation AI XPU and GPU programs, like many of them are moving from 2.5D to 3D packaging. And then on the flip side, your memory customers, as you pointed out, are gearing up for a strong migration to HBM4 next year. They're also, some of them are actually signaling increases in spending in the second half of this year, right, versus their expectations coming into the year. I think you guys did greater than a billion in advanced packaging and HBM last year. You came into this year targeting greater than $3 billion in advanced packaging and gate all-around. But if you just single out advanced packaging, is that business coming in better versus your expectations entering this year?

Okay, perfect, thank you for that. And then maybe for Tim, you know, as we track a lot of these next Generation, Ai xpu and GPU programs. Like many of them are moving from 2 and a half D to 3D Packaging.

Harlan Sur: And is that what is also helping to drive maybe a slightly better second half shipment and revenue profile?

Douglas Bettinger: Yeah, it's a little bit, Harlan. I think advanced packaging and total is probably a little bit stronger than we expected. It's not wildly stronger, but HBM is strong, and there's probably a little bit of upside related to that as well as the China stuff we were talking about.

And then on the flip side, your memory, customers. As you pointed out are good enough for a strong migration to HPM for next year. They're also, some of them are actually signaling increases in spending in the second half of this year, right versus their expectations coming into the year. I think you guys did greater than a billion in advanced packaging and HPM last year, you came into this year targeting greater than 3 billion in advanced packaging and gate all around. But if you just single out events packaging, is that business coming in better versus your expectations entering this year? And is that what is also helping to drive? Maybe a slightly better second, half shipment and revenue profile.

Timothy Archer: Yeah, and Harlan, I would just say from a technology perspective, I mean, you kind of hit it. The packaging schemes are getting more complex. You mentioned 2.5D to 3D. I've always said for years now, you hear 3D, you should think of LAM, and that means vertical scaling. It means more etch and deposition. HBM3E to 4E, you know, obviously does things that are beneficial for us both from an advanced packaging perspective, but also from a front-end equipment perspective. You know, the die size, cell size gets a little bit bigger. The die gets bigger because of increased number of TSVs to feed the higher I/O count. And you know, by our estimate, and I think some of our customers' commentary, you know, you need approximately 30% more wafers to produce an equivalent number of bits when you move from 3E to 4E.

Yeah, it's a it's a little bit hard and I think Advanced, packaging can tell, there's probably a little bit stronger than we expected. It's not wildly stronger. Um, but but HPM is strong. And there's probably a little bit of upside, uh, related to that, as well as the China stuff we were talking about. Yeah. In Harland, I would just say, from a, from a technology perspective, I mean, you kind of hit it. The uh, packaging schemes are getting more complex. Um, he mentioned 2 and a half to 8 to 3 day. I've always said for years now, you hear 3D you should think of lamb and that means vertical scaling, it means more etching deposition um hbm3 e to 4E. Uh

Timothy Archer: So, you know, look, as AI performance requirements continue to demand these greater capabilities, you know, we're just seeing increased WFE in the etch and deposition spaces. Similarly, SSD speeds, you know, when you talk, I mentioned CBA, which is another, you know, packaging-enabled capability. You know, that's being directly put in for performance, gives as part of the ability to create higher performance for SSDs, higher read/write speeds. So, you know, I think that everywhere, these kind of packaging capabilities are being leveraged for performance and next-gen capabilities.

You know, obviously does things that are are beneficial for us, both from an advanced packaging perspective. But also from a, from a, a front end equipment perspective, you know, the die size cell size, gets a little bit bigger, the dye gets bigger because of increased number of tsvs to feed the higher IO count and, you know, our by our estimate and I think some of our customers commentary, you know, you need approximately 30% more Wafers to produce an equivalent number of bits when you move from 3 to 4 e. So, you, know, look as as AI performance requirements, continue to demand these these greater capabilities. Um, you know, we're, we're just seeing increased WFC in the edge and deposition spaces. Similarly, SSD speeds. You know, when you talk I mentioned CBA, which is another, you know, packaging, uh, enabled capability, you know, that's being directly put in, uh, for performance. Um, gives is part of the the ability to create higher performance for SSD.

Harlan Sur: Thanks, Tim. Thanks, Doug.

Higher read read speeds. So, you know, I think that that everywhere, um, these kind of packaging capabilities are being leveraged for performance and, and uh, nextg capabilities.

Douglas Bettinger: Thanks, Harlan.

Thanks Tim. Thanks, Doug.

Thanks Charlie.

Operator: Our next question will come from Krish Sankar with Cohen & Company. Please go ahead.

Krish Sankar: Yeah, hi. Thanks for taking my question. I have two of them too. Doug, I just want to clarify one thing on China sales. If I heard you right, you said the multinationals grew relatively more in June versus March. If true, do you think it was because of potential for restrictions on tools for MNCs in China, or do you think something else was going on?

All right, next question will come from Chris Sankar with Cowin Company. Please go ahead.

Yeah. Hi, thanks for taking my question and allowing me to ask two of them to Doug. I just want to clarify one thing on China's sales. If I heard you right, you said the multinationals grew relatively more in June versus March. If true, do you think it was because of potential restrictions on tools for MNCs in China, or do you think something else is going on?

Douglas Bettinger: No, of course. Again, it's hard to isolate, hey, spending was a little stronger. What was the reason? I don't know that I would specifically identify it to that. But yes, you picked up on the commentary exactly right. The global multinationals in China grew by more than 90% quarter over quarter. So there was a big increase in spending from that, and that contributed to part of the uptick you saw in the China regional spending.

Krish Sankar: Got it. Got it. Very helpful. And then a follow-up for Tim. Tim, on the two nanometer gate all around, especially at the leading Taiwan foundries, are all the tool decisions already made, or do you think there are still some PTORs that are still in flux?

Uptick you saw in the in the China Regional spending.

Got it, got to be helpful and then uh follow up for 10, 10 on the 2, nanometer gate all around, especially the leading Taiwan foundr.

Are all the tool decisions already made or do you think there are still some ptos that are still in flux?

Timothy Archer: Oh, well, Chris, I don't want to speak to any one specific customer where they are in timing. But you know, I would say that, look, I mean, when we're not the guy in position, we're fighting right to the end until production fabs are built. But I would say that, you know, from the big drivers of SAM expansion and share gains, you know, we've been looking forward past two nanometers for quite some time. And a number of the things I talked about in terms of inflections are beyond two nanometers. I just highlighted, you know, MOLE adoption and foundry logic, you know, dry resist. You know, there's a lot coming beyond, and we're already well engaged with those more advanced applications. So probably the best I can say without talking too much about one customer.

Oh, well, I want to see if there are any specific customers where they are in timing. But, you know, I would say that, look, I mean, when we're not the guy in position, we're fighting right to the end until production fabs are built. But I would say that, you know, from the big drivers of SAM expansion and share gains.

You know, we we've been looking forward past 2 nanometers for quite some time and a number of things I talked about in terms of inflections. Um you know are beyond beyond 2 nanometers. I just highlighted your Molly adoption and Foundry logic, um, you know, dry resist. Um you know there there's a there's a lot coming Beyond and and we're already well engaged with those more advanced applications. So um

Krish Sankar: Got it. Thanks a lot, Tim. Thanks, Doug.

Probably the best I can say without talking, too much about 1 customer.

Douglas Bettinger: Thanks, Chris.

Got it. Thanks a lot team. Thanks guys.

Patrick.

Operator: And our next question will come from Stacy Razgon with Bernstein Research. Please go ahead.

Stacy Rasgon: Hi, guys. Thanks for taking my questions. First, I wanted to zero in again on China. So the multinational is clearly the source of the upside in the quarter. Is it the local spend that's the upside in the September quarter and the multinational you see sustaining? And I guess given all of that, given the decline you're guiding for for December quarter, is that pretty much just China normalizing into December? Is there something else going on there?

And our next question will come from Stacy rasgon with Bernstein research. Please go ahead.

Hi guys. Uh, thanks for taking my questions. Um, first I wanted to zero in again on China. So the multinational is close to the source of the upside.

In the quarter, is it the local spend? That's the upside.

Into September quarter in the multinational. You see sustaining

And I guess given all of that, um, given the decline you're guiding for for the December quarter, is that pretty much just trying to normalize in the December? Is there something else going on there?

Douglas Bettinger: Stacy, I'm not going to break down the specificity of the regional composition for the guide, but China is up in the quarter. And yeah, you've got December. You're thinking about December in the right way.

Stacy Rasgon: Got it. Got it. So there's nothing else going on unusual in December. It's mostly just the China normalization? I mean, the gross margin guidance seems to indicate that as well.

Uh Stacey I'm not going to break down the spec specificity of the regional composition for the for the guide, but China is up uh in the quarter and um, yeah you you got December. You're thinking about December in the right way.

Got it. So there's nothing else. Um, nothing else going on unusual in December. It's mostly just the trend of normalization.

Douglas Bettinger: Yeah, revenue is going to be a little bit softer in December. Just normal profile mix is a little bit softer in December. You know, we're kind of back to a little bit of a run rate. And frankly, Stacy, you should also be thinking about tariffs, right? Tariffs are a little bit higher in the December quarter than they are in September. So there's a lot of moving pieces, I guess, is why I'm rambling on here a little bit.

I mean, the gross margin guidance seems to implicate that as well.

Yeah, it's, you know, revenue is going to be a little bit softer in December. Just a normal profile; mix is a little bit softer in December. You know, we're kind of back to a little bit of a run rate, and, frankly, Stacy, you should also be thinking about tariffs.

Stacy Rasgon: Yeah. Yeah, no, I hear you. And for my follow-up, I just want to ask about Taiwan. I thought you said foundry was at a record level, but Taiwan was actually down sequential. I guess I'm just having a little bit of trouble squaring that. What am I missing?

My tariffs are a little bit higher in the December quarter than they are in September. So there's a lot of moving pieces, I guess is why I'm rambling on here a little bit. Yeah.

Yeah, no. I I hear you and uh, for my follow-up. I just want to ask about Taiwan. I I thought you said boundary, was it a record level? But but Taiwan was actually down sequential. I guess I'm, I'm just having a little bit of trouble squaring that

Douglas Bettinger: Well, Taiwan last quarter was 24% of revenue. This quarter, it was 19%. Revenue was up. So on a like-for-like basis, Taiwan was down a little bit. But understand, Taiwan's not the only geographic location where there's foundries in the world, right? There's foundries all over the globe.

What, where am I? What am I missing?

Well Taiwan last quarter was 24% Revenue this quarter. It was 19%. Um, Revenue was up so on a like for like basis time when it was done a little bit but understand taiwan's not the only geographic location where there's boundaries in the world, right? There's families all over all over the globe.

Stacy Rasgon: Where are you seeing the foundry spending picking up then?

Douglas Bettinger: I'm not going to break down the geographic distribution, but you know, there's a leading-edge foundry investing in Japan. There's trailing-edge foundry spending in China as well as globally. So it's a little bit all over, Stacy. Japan, I would point out to you, I mentioned this, record revenue in the Japan region. So I think you probably know there's a large new foundry in Japan.

Where, where are you seeing The Foundry spending picking up then?

I'm not going to break down the geographic distribution, but you know there's a Leading Edge Foundry investing in Japan. Um, there's a Trailing Edge Foundry spending in China, as well as globally. So, it's a little bit all over. Stacy.

Stacy Rasgon: Yeah. Yeah. No, that's what I'm trying to trying to tie out. Thank you very much. Helpful.

Douglas Bettinger: Yeah, you're welcome.

Japan I wouldn't point out to you. Um, I mentioned this record Revenue uh, in the Japan region, so I think you probably know there's a large new Foundry in Japan. Yeah. Yeah. That's what I'm trying to trying to tie out. Thank you very much helpful.

Yep, you're welcome.

Operator: And our next question will come from Jim Schneider with Goldman Sachs. Please go ahead.

And our next question will come from Jim Schneider with Goldman Sachs. Please go ahead.

Timothy Archer: Good afternoon. Thanks for taking my question. You know, relative to your outlook on 2026, realize it's very early and you don't want to give a view there. But I mean, do you have confidence that Lam's business can actually grow in 2026, even if CapEx is not up for the broader industry?

Douglas Bettinger: Jim, we're not going to give you a number for next year. The important thing, and I think Tim described this well, listen, etch and depth is a percent of total WFE we see growing. And we feel extraordinarily good about the strength of the product portfolio right now, such that we reiterated, Tim reiterated today, that of this expanding SAM, we're going to gain 50% of it is our view of things. At the end of the day, we're only halfway through '25, so we're not going to quite, you know, stick our neck out about '26 yet. It'll be what it'll be, but we feel great about our relative outperformance into the next several years. That was the important message that we try to deliver.

Good afternoon. Thanks for taking my question. Um, you know, relative to your outlook on 2026 realize, it's very early and you don't want to give a give you there. But I mean, do you have confidence that Lamb's business can actually grow in 2026? Even if capex is not up for the broader industry,

We're not going to give you a number for next year. The important thing and I think Tim described this. Well listen ET in depth as a percent of total WP. We see growing and we feel extraordinarily good about the strength of the product portfolio right now. Such that we reiterate Tim reiterated today that of this expanding Sam. We're going to gain 50% of it as our view of things.

Timothy Archer: Understandable. I had to give it the rookie try. I just, just the second question as a follow-up. Just wondering, you know, obviously NAND was a pretty good step up in the quarter. Do you see that strength sustaining through the end of the year or the next couple of quarters from where you stand today, or is it sort of like a pop-up and pop-down potentially? Thank you.

At the end of the day, we weren't if we're only halfway through 25. So we're not going to quite, you know, stick our neck out about 26 yet. Um it'll be what it'll be but we feel great about our relative outperformance into the next several years, that was the important message and that we try to deliver.

Douglas Bettinger: Listen, Jim, I'm also not going to get into the quarterly breakdown of NAND spending. The important thing though, and we reiterated this and we said it back at the Investor Day, is you should think about NAND over the next several years needing to spend roughly $40 billion to work through technology conversions, upgrades, if you will. Our view of that hasn't changed. That's the most important thing to think about. The spending profile over the next several years, we see continuing.

Pretty good. Step up in the corner. Do you see that strength sustaining through the end of the year or the next couple of quarters from where you stand today? Or is it sort of like a pop-up and pop-down potentially? Thank you.

Timothy Archer: Yeah. No, no, the only thing I would add as well is, I mean, while there's this focus on upgrades, I mean, we're also significantly advancing the technologies. And so I mentioned a couple of the items. I mean, the demands of AI for both storage and speed and density is driving things like the MOLE adoption that I talked about. It's driving the CBA that I talked about. It's also driving QLC to get density. And QLC, I talked about a win we had for cryo-etching. You know, cryo produces a much more vertical high aspect ratio dielectric memory hole. That's a critical capability that helps enable QLC. And so, you know, you're looking at multiple technology drivers.

Listen Jim, I'm also not going to get into the quarterly breakdown of Nan spending. The the important thing though and we reiterated this and we set it back at the investor days. You should think about man over the next several years needing to spend roughly billion dollars to work through technology. Conversions upgrades uh if you will um our view of that hasn't changed. That's the most important thing to think about the the spending profile over the next several years. We we see continuing. Yeah, no no no. The only thing I would add as well is I mean while there's this this focus on on upgrades, I mean we're also significantly advancing the, the Technologies. And so I mentioned a couple of the items. I mean the demands of AI for both storage and uh, speed and density is driving things like the Molly adoption that I talked about it's driving the CBA that I talked about it's also driving qlc to get density and qlc I talked about a win we had for cryo etching. You know cryo produces a much more vertical uh High aspect ratio.

Dielectric, memory hole.

Timothy Archer: And then if you just look at layer count itself, you know, over the last couple of years, we've been talking about all the other drivers, whether it's backside deposition for stress management, it's our carbon gap fill for tier stacking. And eventually, back to advanced packaging and the question we had there, you start stacking cells on top of cells to go to very high layer counts. And so, you know, from an etch and deposition perspective, we're going to get a lot of upgrades to the install base, but you're also going to see a lot of new tools get pulled in in the future to help enable these technology advancements that are needed both for performance and cost scaling. Thank you.

That's a critical capability that enables helps enable qlc. Um, and so you know, you're you're looking at at multiple technology drivers and then if you just look at layer count itself, you know. Um over the you know, the last couple years we've been talking about all the other drivers whether its backside deposition for Stress Management. It's our carbon Gap. Fill for tier stacking and eventually back to Advanced packaging and the question we had their you start stacking cells on top of cells to go to very high layer counts. And so you know, from an Etch in deposition perspective,

We're going to get a lot of upgrades to the installed base but you're also going to see a lot of new tools get pulled in in the future to help enable these these technology advancements that are needed both for performance and cost scaling.

Douglas Bettinger: Yep. Thanks, Jim. Welcome on board.

Thank you.

Yep. Thanks Jim. Welcome on board.

Operator: And our next question will come from Atif Malik with CITI. Please go ahead.

And our next question will come from Atif Malik with City. Please go ahead.

Krish Sankar: Hi. Thank you for taking my question. Now, Doug, you talked about modest growth in CSBG this year. I understand you don't want to talk about WFE next year, but is it fair to assume that the CSBG business snaps back next year in a more meaningful way, given the restrictions and all that that has happened in China over the years and normalizes?

Hi, thank you for being my question. Now, Doug, you talked about modest growth in csbg this year. Um, understand you don't want to talk about WFC next year. But um is it fair to assume that the csbg business, uh, snaps back? Uh, you know, next year in a more meaningful way? Given you know, the restrictions and all that that has happened in China over the years and normalizes

Douglas Bettinger: You guys all let us think of you next year, and I'm just not going to do it, Atif. Listen, the way to think about CSBG, though, is consistent with how you should be thinking about it over the last several years, right? Chamber count grows every year, so that creates incremental opportunity for us to kind of grow spares, upgrade servers, and so forth. You know, we're really excited about the advanced servicing. Tim talked about the equipment intelligence and cobots. That's cool stuff. We're super jazzed about that. I'm not sure exactly how reliance is going to play out next year. It is down a good amount this year. I'm hopeful that it does better next year, but I'm just not ready to kind of give you specificity. But the tailwinds you've always seen in CSBG continue to be there.

You guys all let us to give you next year, and I'm just not going to do it. I listen, um, the way to think about CSBG, though, is consistent with how you should be thinking about it over the last several years, right? Chamber count grows every year, so that creates incremental opportunity for us to.

Kind of grow spares, upgrade service, and so forth. You know, we're really excited about the advanced servicing. Tim talked about equipment intelligence and Cobalt; that's cool stuff. We're super jazzed about that. Um, I'm not sure exactly how Reliance is going to play out next year. Um, it is down to a good amount this year. I'm hopeful that it does better next year, but I'm just not ready to kind of give you a specificity. But the tailwind you've always seen in CSPG continues to be there.

Timothy Archer: Yeah. And I want to, I mean, basically, basically just to add on, you know, the strong performance in CSBG can show up in ways that aren't just CSBG revenue. And I think that's, you know, we talk about advanced services, and I mentioned all the benefits that we see coming with equipment intelligence and our dextro cobots, things like better machine availability, you know, more repeatability, maintenance cycle, the maintenance cycle. These things ultimately have an impact on how the customer feels about our tool as the most production-worthy system for not only this current generation of manufacturing, but all future. And so, you know, I think that we look, you know, at these two businesses, the CSBG business and our systems business, is very synergistic.

yeah, and I want to, I mean basically basically just to to add on, you know the uh,

Strong performance in cspg can show up in ways that, that aren't just cspg revenue. And I think that's, you know, we talk about Advanced Services. And, and I mentioned all the benefits that that we see coming with the equipment intelligence and, and our dextro cobots things like better machine availability. Um, you know, more repeatability, uh, maintenance cycle, to maintenance cycle, these things ultimately have an impact on how the customer feels about our tool as the most production worthy system. For not only this current generation of manufacturing, but all future. And so, you know, I think that we look, you know, at these 2 businesses, the csbg business, and our systems business.

Timothy Archer: And, you know, the better we do in advanced services, the better we're going to do in terms of gaining share on the system side. And so, you know, I think we're investing in advanced services with that in mind, not just for its own revenue-generating purposes.

Is very synergistic and you know the better we do in in Advanced Services, the better we're going to do in terms of gaining share on the the system side. And so you know I I think we're we're investing in Advanced Services with that in mind not just for its own Revenue generating purposes.

Douglas Bettinger: Thank you.

Stacy Rasgon: Thanks, Adam.

Thank you.

Thanks Adam.

Operator: Our next question will come from Blaine Curtis with Jeffries. Please go ahead.

Blayne Curtis: Hey, guys. Thanks for taking my questions. I want to ask on DRAM. Obviously, AI is super strong. I think there's a lot of concerns about maybe some inventory on the HBM side. Obviously, smaller business is free and lumpy, but just kind of curious what you're seeing in DRAM and kind of any perspective for the rest of the year.

Our next question will come from Blaine Curtis with Jeffries. Please go ahead. Hey guys, thanks for taking my questions. I want to ask on DRAM. Obviously, AI is super strong. I think there are a lot of concerns about maybe some inventory in the HBM side. Obviously, it’s a smaller business for you and lumpy, but just kind of curious what you're seeing in DRAM and any perspective for the rest of the year.

Timothy Archer: Yeah, I mean, I think that if we look kind of to the second half of the year, I mean, maybe the only comment I'd let Doug add is, you know, we have seen some HBM-related strength. I mean, HBM is definitely the hot thing in DRAM right now. But you know, when we look at it, I mean, while it's been hot, I mean, we view there being a long road ahead. I mean, some of the data we looked at, the only something like 7% of total DRAM bits will actually be HBM in 2025. You know, we don't know where that goes, but it looks like a long tailwind of build-out in HBM.

Timothy Archer: I talked about the impact of, you know, the changes from HBM3E to HBM4E and whatever comes beyond that and how it's impacting the number of wafers required to produce the same number of bits. And you know, those are things that expand WFE overall. But within that, etch is becoming more critical as well, as you know, you have to execute more precision to build these more advanced DRAMs. And so I think it shouldn't be overlooked the importance of the new Aqara wins that I talked about within DRAM. As you mentioned, it hasn't been a big business for us, but we're gaining share in DRAM. And I think that as you gain share in an expanding market, that's a great twofer. So we're really pretty positive about DRAM momentum right now.

Think that if we uh we look kind of to the second half of the year, I mean maybe the only comment and I let Doug add is you know we have seen some hbm related strengths. I mean hbm is is the is definitely the hot thing in in dram right now. But you know, when we look at it I mean while it's been hot, I mean, we we view their being a long road ahead. I mean, some of some, of the data we looked at, uh, it's only something like 7% of total DM bits will actually be hbm in 2025. Um, you know, we don't know where that goes, but it looks like a long Tailwind of, of, of buildout in hbm. I talked about the, the impact of, you know, the the changes from hbm3 to hbm 4E and whatever comes beyond that and how it's impacting, the number of Wafers required, uh, um, to produce the same number of bits. And, you know, those are things that expand wfd overall, but within that, um, etch is becoming more critical as well as as, as you know, you have to execute, uh, more Precision to build these more advanced, uh,

Dramas. And so I think you shouldn't be overlooked the, the importance of the new aara wins that I talked about, we can be ramped, as you mentioned we have it hasn't been a big business for us but we're, we're gaining share in dram and I think that as uh, a game share in an expanding Market,

That's a great twofer. We're really pretty positive about the RAM momentum right now.

Blayne Curtis: Thanks. And then just wanted to ask Doug on gross margin for December. Is there anything more than the geographic mix? I thought you said product mix, but then it would seem like kind of falling off the headwind as well. But maybe you just clarify what you meant when you said product.

Douglas Bettinger: Yeah, there's customer mix. There's a little bit of product mix. And frankly, there's a little bit of tariff showing up incrementally in December. Those are the things to be thinking about, Blaine. And frankly, overall revenue levels too. I think, you know, I told you December's going to be down a little bit. So there's a lot of moving pieces in gross margin. All of that contributes some portion to it.

Thanks. I just wanted to ask Doug about the gross margin for December. Is there anything more than the geographic names? Because I thought you said product mix, but then it would seem like it's kind of falling off the head 1 as well. But maybe you could just clarify what you meant with the product.

Blayne Curtis: Gotcha. So when you say customer, it's related to the geographic mix.

Yeah, there's customer mix. There's a little bit of product mix. And frankly, there's a little bit of tarot showing up incrementally in December. Those are the things to be thinking about, bling, and frankly, overall revenue levels, too. I think, you know, I told you December is going to be down a little bit. So there's a lot of moving pieces in gross margin; all of that contributes some portion to it.

Got you. So when you say customer, it's related to the geographic mix.

Douglas Bettinger: There's some smaller customers in China, and that tends to be what I'm describing when I say customer mix. It's not specific to any one region. It's just there's smaller customers.

Blayne Curtis: Thanks for that.

Um, there are some smaller customers in China, and those tend to be what I'm describing when I say customer mix. It's not specific to any one region; it's just that there are smaller customers.

Douglas Bettinger: Yeah. Thanks, Blaine.

Thanks for that.

Yep. Thanks Brian.

Operator: Our next question will come from Vijay Rakesh with Jeffries. Oh, pardon me, from Mizuho. Please go ahead.

Krish Sankar: Yeah, hey, thanks a lot. Just wondering, on the WFE side, I think you have the ITC, the investment tax rate going to 35%. Do you see that driving, you know, a tailwind to WFE as you look at next year? And I follow up.

Our next question will come from the J. Reesh with Jeffrey's. Oh, pardon me from mizuho, please go ahead.

Yeah, thanks a lot. Just, um, just wondering, um, on the WFP side. I think you have the ITC, the Investment Tax Credit going to 35%. Do you see that driving, you know, a tailwind to WFPs to look at next year? And a follow-up.

Douglas Bettinger: Vijay, not that I can specifically correlate. Might there be? There might be, but I've not deeply sat down and thought about this or tried to correlate. It's probably something I need to do.

Krish Sankar: Got it. And then on the China side, obviously, good to see the pickup there. As you look out, do you expect, you know, that that mix to kind of normalize, you know, kind of mean revert to where you guys were might be early in the year or last year? Thanks.

Um, did you not that? I can specifically correlate. Um, might there be there might be but I I I've not deeply sat down and thought about this or or tried to correlate. It's probably something I need to do.

Got it. And then on the China side, obviously um good to see the pick up there, as you look out, do you expect um, you know, that that mix to kind of normalize? You know, kind of mean reward to where you guys were might be early in the year or last year

Thanks.

Douglas Bettinger: Yeah, Vijay, it's a good question. I told you, I think September's up in China. I think December's probably going to lighten up a little bit. You know, previously, we described the view that last year to this year, China's percent of total mix was going to be down. I think it's probably going to be flat to maybe slightly down. It got a little bit stronger, and that was part of why Tim described an uptick in WFE.

Uh, yeah, we just have a good question. Uh, I told you I think September's up in China. I think December is probably going to lighten up a little bit.

Krish Sankar: Got it. Thank you.

Um, you know, previously we described the view that last year to this year, China as a percent of total mix was going to be down. I think it's probably going to be flat to maybe slightly down. Um, it got a little bit stronger, and that was part of why Tim described an uptick in WFD.

Douglas Bettinger: Thanks, Vijay.

Good. Thank you.

Thanks BJ.

Operator: And our next question will come from Edward Yang with Oppenheimer. Please go ahead.

Edward Yang: Hi, Tim. Doug, thanks for the time. And congrats on the strong quarter. This is, you know, the third consecutive quarter where you've not only beat numbers, but the guidance has also exceeded consensus by double digits. So I guess taking that into context, I mean, if you look at that record, I mean, is it just more conservatism in your planning, or you know, what has kind of surprised you by this magnitude?

And our next question will come from Edward Yang with Oppenheimer. Please go ahead.

Uh, hi. Tim, Doug, uh, thanks for the time. Uh, and congrats on the strong quarter. This is, you know, the third consecutive quarter where you've not only beat numbers, but the guidance has also exceeded consensus by, uh, double digits. Uh, so I guess taking that into context, I mean, if you look at that record, I mean, is it just more conservative in your planning or, you know, what has kind of surprised you by this magnitude?

Douglas Bettinger: I guess if you unpack it, you know, revenue came in a little bit better. Gross margin came in a little bit better. And frankly, that tax rate came in a little bit lower. And I don't know that I would describe a conservative bias, but that's just kind of how the quarter unfolded. Now, you might point out that, hey, that happens at Lam more often than not. Yeah, maybe. But that tax rate was lower than we expected for sure. It's just a little bit of all of it.

Maybe.

Timothy Archer: Yeah, I think that also, not to say much about the conservatism piece, but I think that in general, we're also in an environment where a lot of the markets we're selling to, I mean, look at the number, I hate to say it, the number of times I had to mention AI, but the reality is you've seen AI and demand kind of, you know, generally exceeding expectations here, and it's driving demand for chips. And because so much of the more advanced requirements are for etch and deposition, we're outperforming that. And so I think, you know, maybe it's just us like wanting to see it before we really commit to it.

Um, but that tax rate was was lower than we expected for sure. Um, it's just a, it's a little bit of all of it.

Timothy Archer: But I think we're getting a better and better view of how these technology transitions are occurring, and I think that's what's giving us confidence that we, I think, well telegraphed at our Investor Day earlier this year when we talked about pretty aggressive $2028 trillion semiconductor industry goals for the company.

Edward Yang: Yeah, and thanks for that perspective, Tim. And my next question is just on mobile and your thoughts on that end market. The carriers have been reporting really strong handset sales lately. You know, Verizon, AT&T, their upgrades were up 20%. And this is after a long stretch of flat. So, you know, hard to know what's behind it. I think one of the carriers called it terrapullins; the other denied it. But it feels like maybe we're starting a meaningful shift there. And if we are in the early stages of a broader handset refresh cycle, you know, how would that affect Lam across logic, DRAM, and NAND? And can you size your exposure, and are your ASPs in that segment above or below your corporate average?

1 of the carriers called the Terra Poland, the other denied it, uh, but it feels like maybe we're starting a meaningful shift, uh, there. And if we are in the early stages of a broader, handset refresh cycle. You know, how, how would that affect lamb, uh, across logic dram and Nan? And can you size your exposure and are your asps in that segment above or below your corporate average?

Douglas Bettinger: Yeah, you know, it's a great question. We're one step removed from kind of smartphones and PC sales. The way it shows up for us, though, at the end of the day, yeah, I do see a little bit of growth in mobile. I see a little bit of growth in client, PC client. But frankly, content is growing, right? When you look at the new phones coming out this year, there's more DRAM, there's more NAND, there's bigger base band chips as AI becomes a thing. And that happens in PCs as well, right? There's not a huge unit story in PCs, although they're up, I don't know, low single digits this year. There's a content story there with, you know, terabyte. In fact, I'm starting to see two terabyte PCs. That's what shows up for us.

Yeah, you know, it's it's a great question. We're 1 Step removed from kind of smartphones and, and PC sales, but the way it shows up for us though, at the end of the day, um, yeah, I I do see a little bit of growth in, in Mobile, I see a little bit of growth in clients, uh, PC client. But frankly, content is growing right. When you, when you look at the, the new phones coming out this year, there's more DM this morning and there's bigger baseband chips as AI becomes a thing and that happens in PCS as well. Right. There's not a huge unit story in PCS, although they're up, I don't know, little single digits this year. There's a Content story there with, uh, you know terabytes. And in fact, I'm starting to see 2 terabytes PCS.

Douglas Bettinger: And it'll show up with our large foundry customers at the leading edge and the DRAM customers that are selling HBM and frankly, the NAND customers that are selling SSDs. That's how it shows up in our business.

Timothy Archer: Thank you.

Douglas Bettinger: You're welcome. Thank you.

Um that's what shows up for us and it'll show up with our large Foundry customers at the Leading Edge, and the DM customers that are selling hbm and frankly, the nand customers that are selling ssds that that's how it shows up in our business. Thank you.

You're welcome. Thank you.

Operator: And our next question will come from Dianne Chin with Steeple. Please go ahead.

And our next question will come from Diane Chin with Steeple. Please go ahead.

Blayne Curtis: Hi. Good afternoon. Thanks for letting us ask a few questions. Maybe first, is the VanTech's oxide etch when you reference, is that for a 400 layer application?

Hi, good afternoon. Thanks for, uh, Lancaster. A few questions. Um, maybe first, is the Vantex oxide S, when you reference, is that for a 400-layer application?

Timothy Archer: I'm not going to comment on exactly which technology note it is, but it's a, what I said, multi-generational. You can interpret that as being everything from current generation through the next couple of generations. It's an important win because, again, customers tend to pick a new type of tool with the idea that they'll reuse that tool. They'll upgrade that tool for multiple technology nodes. So, yeah, it's a significant win for us.

I'm not going to exactly which technology noted is. But it's, um, when I said multi-generational, you can interpret that as being, uh, everything from.

Current generation through the next couple Generations. It's an important win because again, customers tend to pick pick a, a new type of tool with the idea that they'll reuse. That tool, they'll upgrade that tool for multiple technology notes. So, um,

Blayne Curtis: And maybe just a quick follow-up on that, though, Tim. Do you think that the selection, if it's to be implemented at more recent nodes, suggests maybe like a faster ramp upward in terms of vertical scaling?

Yeah, it's it's uh it's a it's a significant win for us.

Maybe just a quick follow up on that. So again, do you think that the selection, if it's to be implemented at, you know, more more recent

Timothy Archer: Well, I mean, VanTech has been in the marketplace for quite a while. I think, as you know, there's been a lot of talk over the last couple of years about leadership within the dielectric high aspect ratio etch space, particularly in NAND. And so, you know, I think that you've seen a tremendous amount of innovation from Lam. And you know, what I would just say is that we can't, you know, our performance doesn't necessarily drive whether the customer scales faster or doesn't scale faster. That's driven by their own end market needs. But what I would point out is, you know, what the key markets within NAND right now, one of them, of course, is QLC. And if you have a very good cryo-etch process that produces a very vertical high aspect ratio memory hole, you're more likely to be successful creating a QLC device.

Uh, nodes suggests maybe like a faster ramp uh upward in terms of uh vertical scaling.

Well, I mean vent ventex has been in the marketplace for for quite quite a while. I think, as you know, there there has been, there's been a lot of talk over the last couple years about, um, leadership within the dielectric, High aspect ratio Edge space, particularly in nand. And so, you know, I think that you've seen a tremendous amount of innovation from lamb. And you know what, I would just say is that we can't, you know, our performance doesn't necessarily Drive whether the customers scales faster or doesn't scale faster that's driven by their own End Market needs. But what I would point out is, you know what, they're the key markets within land, right now, 1 of them, of course, is qlc.

Timothy Archer: And so I think what Lam does with our customers, and we're engaged so closely with them, is we try to create the technologies that allow them to create the devices that make them successful. And when they're successful, then they move quickly. And I think that that's what we're seeing, not just in VanTech, but in many of the other items, like I talked about faster read/write speed and the relatively quick adoption we're seeing now of MOLE in NAND. So a very similar kind of thing, enabling technology.

Blayne Curtis: Yeah. No, great. So maybe like SSD, very worthy. Maybe a quick follow-up question. On CSBG, just to slightly decompose it, you know, upgrades likely up Q1Q. Business overall up a little Q1Q. Do you think that off the June quarter that reliance has maybe largely bottomed out or stabilized here, even if you're not necessarily wanting to signal for some recovery in that part of the business?

Um, creating a qlc device. And so I think what lamb does with our customers and we're engaged. So closely with them, is we try to create the technologies that allow them to create the devices that make them successful and when they're successful, then they move they move quickly. And I think that that's uh that's what we're seeing. Not just in ventex, but in in many of the other um uh items. Like I talked about faster. Read write speed and the the relatively quick adoption we're seeing now of Molly in man. So a very similar kind of thing and enabling technology.

Okay, great. No, great. So maybe like SSD. Um, uh, very worthy. Uh, maybe it's all quick. Follow-up question.

Uh, on CSBG, uh, just slightly decomposed it, you know, upgrades likely up Q and Q. This is overall up a little Q on Q. Do you think that off the June quarter, Reliance has maybe largely bombed out or stabilized here?

Douglas Bettinger: Yeah, Brian, I'm not going to get in the habit of decomposing a forward-looking statement on CSBG. It is stronger than we previously thought, though, in total, right? Previously, we've been describing we thought it was going to be flattish. I know we said it would, we think it'd be modestly up. So that's good. Upgrades are extremely strong. Service and spares are doing well, and reliance is down right now. That's kind of how to think about it.

even if you're not necessarily wanting to signal, for some recovery, in that part of the business,

Yeah, Brian. I'm not going to get in the habit of decomposing a forward-looking statement on on csbg. Um,

They're just stronger than we previously thought, the phone in total, right? Previously, we've been describing—we thought it was going to be flat, or should I know? We said it would—we think it would be modestly up, so that's good. Upgrades are extremely strong, services and Spurs are doing well, and Reliance is down right now. That's kind of how to think about it.

Blayne Curtis: Okay. Thanks.

Douglas Bettinger: Thanks, Brian.

Okay, thanks.

Thanks, bro.

Operator: And our next question will come from Tom O'Malley with Barclays. Please go ahead.

Timothy Archer: Hey, guys. Thanks for taking my question. Doug, you mentioned the tariff environment is very different in the December quarter versus the September quarter. I was curious if you could unpack that a little. Are you referring specifically to 232, any of the country-specific tariffs? You know, what are you seeing as the most impactful quarter over quarter, September, December?

And our next question will come from Tom Ali with Barclays. Please go ahead.

Douglas Bettinger: I didn't really say it was, I forget what word you used. There are more tariff headwinds in December than there are in September. That's all we communicated. That's all I was trying to communicate.

Hey guys! Thanks for taking my question. Uh, Doug, you mentioned the Tariff environment is very different in the December quarter versus the September quarter. I was curious. If you could unpack that a little, are you referring specifically to 232 any of the country specific tariffs? You know, what are you seeing as the most impactful uh quarter over quarter September?

Timothy Archer: Gotcha. And then on the customers in China, I think Stacy went through it with you guys, but more specifically, like going into September, you obviously felt like there would be a fall-off, and in a very short window, those customers came back. Is December really a view of conservatism as you expect, you know, this as a one-time kind of comeback from the China customers? Or in Q4, you know, is this more of a conservative outlook, or do you think that you could see customers stepping back in? Because obviously, the lead time here seems like it's relatively short to service these guys. Thank you.

Um, I didn't really say it was— I forget what word to use. There are more tariff headwinds in December than in September. That's all we communicated. That's all I was trying to communicate.

Douglas Bettinger: Tom, when we describe the business, we don't try to be conservative or aggressive. We call it like we see it, and that's exactly what we're doing right now.

Gotcha. And then on the on the customers in China, I think Stacy went through it with you guys but more specifically like going into September. You, you obviously felt like there would be a fall-off and in a very a very short window. Those customers came back is December, really a view of conservatism as you expect, you know, this as a 1-time kind of comeback from the China customers or in Q4, you know, is this more of a conservative Outlook, or do you think that you could see customers stepping back in? Because obviously the lead time here seems like it's it's relatively short to service these guys. Thank you.

Um, when we describe the business, we don't try to be conservative or aggressive; we call it like we see it, and that's exactly what we're doing right now.

Operator: Our next question will come from Charles Shee with Needham. Please go ahead.

Harlan Sur: Hi, yeah. Thanks for taking my question. I want to double-click on some of your China guidance numbers there. So maybe this is for Doug. I think based on your guidance for the next two quarters, it looks like your China, I know we have to back out some of the multinational numbers from your China revenue. It looks like domestic China revenue looks like it's tracking flattish year over year. And is that right? And I think the, I mean, the prevailing view for China WFE, this is still a down year. So is it really about outperformance, company idiosyncratic factors, or is that because, you know, you did add a $5 billion to WFE number forecast for this year? Maybe your view on China WFE is kind of shifting towards maybe this is not really a down year for China WFE. Thanks.

Our next question will come from Charles sheet with needam. Please go ahead. Hi. Yeah, thanks for taking my question. I want to double click on some of your uh China guidance numbers there. Um, so maybe this is for dog. Um, I think based on your guidance for the next. Uh 2 quarters. It looks like you're China. I know we have to back out some of the multinational numbers from your China. Revenue looks like domestic China Revenue. Looks like it's tracking flattish year-over-year and uh is that right? And I think uh uh the the old I mean the prevailing view for China wfd. This is still a down year so is it really about outperformance company deals in cratic factors? Or is that because, you know, uh, you did add 5 billion to WFC number forecast for this year? Uh, maybe your view on China wfd is kind of Shifting towards maybe. This is not really a down year for China wfe. Thanks.

Douglas Bettinger: Yeah, boy, you put a lot in there, Charles. Listen, I'm not going to get into global multinationals year over year, blah, blah, blah. It was up decently in the current quarter. We upsided China WFE in total a little bit and then described the view that, you know, it's flat to maybe slightly down in the composition of what we're seeing. That's the color we provided.

Uh yeah. Boy, you put a lot in there, Charles. Listen, I'm not going to get into global multinationals year-over-year, blah, blah, blah. It was up decently in the current quarter. We upsized China WFP in total a little bit and then described the view that, you know, it's flat to maybe slightly down in the composition of what we're seeing.

That that's the color we provided.

Harlan Sur: Thanks.

Operator: Yep. Operator, we'll do one more question. Of course. Our last question here will come from Tim Schultz-Mellander with Rothschild. Please go ahead.

Thanks.

Yeah, operator. We'll do one more question.

Timothy Archer: Yeah, hi there. Thanks for taking my questions. I think maybe they're questions for Tim. So the first one was on MOLE. Impressive that you already have positions in production. Just wanted to ask for some color. Maybe how should we think about your share, or how do you think about your share in MOLE? Kind of what is that going to look like on a maybe a one to three-year view? And then the second one was on advanced packaging. And it was really just to ask about how do you think about the size and the profitability of that opportunity for Lam when you compare hybrid bonding with other 3D packaging technologies? Thank you. Okay. Great. Well, I'll take the MOLE one first.

Of course, our last question here will come from Tim Schultz Meander with Rothschild. Please go ahead.

Second, I was on Advanced Packaging, and it was really just to ask about how you think about the size and the profitability of that opportunity for Lam when you compare hybrid bonding with other 3D packaging technologies. Thank you.

Timothy Archer: I guess, you know, we haven't put out a share projection for MOLE, but I guess if you look at where we are right now and where we've been, I mean, we've been the leader in ALD metalization, like in the tungsten space for many, many, many years. In many cases, it's tungsten that is transitioning to MOLE, so we would expect to lead in that as well. We're the only company with ALD MOLE in production in foundry logic. I mentioned a number of places where we're already running in NAND. Those are the two markets that are adopting MOLE at this point. So I think that from a share perspective, at this point, we're doing quite well, and we would expect to continue to do so as we gain more experience. There's a first-mover benefit in any of these markets.

Okay, great. Well I'll take the Molly 1 first, I guess, uh, you know, we haven't we haven't put out a a share projection for Molly, but I guess if you look at where we are right now and where we've been, I mean we are we've been the leader in uh, in ald metallization uh like in the tungsten space for for many many, many, many years. Um, in many cases, it's tungsten that is transitioning to Molly. So we would expect to to lead in that as well.

Timothy Archer: You get experience, you build that in, your next applications and tools are better, and you just kind of keep building on that. So it's been our recipe for many, many years. On advanced packaging, you know, what I would say is the only thing we've sized up in the past, we said a billion dollars last year. We said bigger this year. We didn't put out a specific advanced packaging number other than to lump it with Gate All Around at $3 billion, more than $3 billion total. But you know, we're doing well. I mean, you think about our position. We have a very strong position in key applications like copper plating, many of the dielectric deposition processes. And so almost regardless of the advanced packaging scheme, the more complex it is, the bigger our SAM gets. And I think you asked about gross margin.

We're the only company with, uh, ald Molly in production and Foundry logic. I mentioned a number of places, uh, where we're already running in in Nan. Those are the 2 markets that are are adopting Molly at this point. So, I think that from a shared perspective, at this point, we're doing quite well, and we would expect to continue to do. So, as we gain more experience, there's a first mover, uh, benefit in any of these markets, you get experience, you build that in your next, uh, applications and tools are better, and you just kind of keep building on that. So it's been our recipe for, for many, many years, um, on Advanced packaging. You know what I would say is the only thing we've sized up in the past, we said a billion dollars. Uh, last year, we said, uh, uh, bigger this year. Um uh we didn't put out a specific Advanced packaging number other than the lump it with gate all around at 3 billion dollars more than 3 billion dollars.

Total. But you know, we're doing well. I mean, you think about our position; we have a very strong position in key applications like copper plating and many of the dielectric deposition processes. And so, almost regardless of the advanced packaging scheme, the more complex it is, the better Sam gets.

Timothy Archer: You know, we aim for it to be similar gross margins to all of our technology-enabling applications.

I think you asked about gross margin, you know, we aim for for it to be similar gross, margins to all of our technology enabling applications

Operator: Great. That's very helpful. Thanks very much, Tim.

Timothy Archer: Thank you.

Great. That's very helpful. Thanks very much, Tim.

Douglas Bettinger: Yep. Thanks for the question. Operator, that concludes our prepare or our Q&A. Thank you, everyone, for joining the call today. We'll see you later in the quarter, I'm sure.

Thank you. Thanks for the question. Operator, that concludes our prepared, or, uh, our Q&A. Thank you, everyone, for joining the call today. We'll see you later in the quarter, I'm sure.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

The conference has now concluded, thank you for attending today's presentation. You may now disconnect your lines.