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Founded in 1980, Lam Research is a top seller of equipment to semiconductor manufacturers. Its machines are used to produce components critical to the tech industry, including the silicon wafers and the chips that power a variety of electronics. Over time, to keep up with industry innovation, Lam has adapted its equipment to handle increasingly tiny chip designs and ramped up production to meet the growing demand for chips in the AI era.

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Lam Research (LRCX): Company Profile, Stock Price, News, Rankings

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Lam Research

lam research

Good afternoon, and welcome to the Lam Research December 2024 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Ram Ganesh, Vice President of Investor Relations.

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 Bittinger, 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 December 2024 quarter and our outlook for the March 2025 quarter. The press release detailing our financial results was distributed a little after 1 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 and 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.

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 P. M. 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.

Thank you, Ram, and thank you all for joining the call today. Lam closed out 2024 with another solid performance. December quarter revenue, gross margin, operating margin and EPS were all above our guidance midpoints, reflecting strong and consistent operational execution. Wafer fabrication equipment spending for 2024 finished in line with the mid $90,000,000,000 range we guided earlier in the year. Overall, 2024 was a good year for Lam even as NAND spending remained at muted levels.

System revenues in both DRAM and foundry logic grew to record highs and the size of our installed base increased to approximately 96,000 chambers. Our results show that we are making good progress on our strategy of broadening Lam's exposure across end market device segments. It also demonstrates the increasing strength of our product portfolio as semiconductors move into the AI era. For example, gate all around and advanced packaging technologies are critical enablers for AI device manufacturing, including GPUs and high bandwidth memory. They are also highly deposition and etch intensive.

And as a result, we saw Lam's shipments for gate all around nodes and advanced packaging each grow to exceed $1,000,000,000 in 2024. In calendar 2025, we see WFE spending rising slightly to approximately $100,000,000,000 Again, we expect technology inflections to lead to faster growth for Lam as AI applications demand greater device and package level performance. In 2025, LAM shipments to gate all around nodes and advanced packaging combined should be well over $3,000,000,000 Customer migration towards backside power distribution and dry resist processing technologies will add further opportunity in the coming year. As we look forward, we view the increasing importance of deposition and etch technology as a differentiator for Lam and an opportunity to outperform. With this in mind, we have made strategic investments over the past few years to expand our R and D infrastructure, scale our organization and transform our innovation process for greater speed.

We are now seeing these investments yield important product advances. Our recently introduced cryo 3.0 technology is winning at the leading edge, delivering best in class results for high aspect ratio dielectric etch applications on our latest Vantek CX Plus product and also helping extend the capabilities of our large flex installed base through cryo upgrades. Our breakthrough drive resist capability for EUV is enabling patterning of extremely fine devices, vice features with greater precision, reduced defectivity, higher productivity and reduced environmental impact. You may have seen that earlier today, we announced that our ether dry resist solution has achieved a major milestone, having just been selected as the production tool of record for high bandwidth DRAM at a leading memory customer. Technology inflections in DRAM and foundry logic combined with an upgrade focused NAND environment create what we believe is a unique setup for Lam to outgrow WFE spending and strengthen our bottom line in calendar 2025.

In NAND, the industry is looking to transition the current installed capacity to higher layer counts to achieve better device performance at lower bit cost. Here, several trends play to our favor. One is the transition to molybdenum or Moly. Lam's patented multi station sequential deposition technology allows us to employ a differentiated liner and fill process sequence that is proving to be a winner with customers. The momentum for our new Moly product is strong.

A second trend is the adoption of carbon gap fill to enable higher bit density and lower cost through multi tier stacking. Our innovative pCVD based pure carbon gap fill process provides high etch selectivity, superior mechanical properties and simplified dry process removability. While we are in the early innings of these transitions and early in the industry upgrade cycle overall, we expect adoption of moly and carbon gap fill to drive several $100,000,000 in NAND shipments for Lam in calendar 2025. Lam's opportunity will grow even further in future years as more of the 1,000,000 plus wafer starts per month installed capacity converts to higher layer counts. The differentiation we are delivering for customers runs deeper than the process technology itself.

Our semi burst solutions capabilities apply advanced modeling, simulation, data science, analytics, machine learning and artificial intelligence to further enhance our equipment performance and reduce the time needed for process optimization. This is strengthening our competitiveness and most recently we used our semi burst solutions capabilities to successfully defend the key dielectric etch application at a major memory manufacturer. Furthermore, we are leveraging these capabilities to help address the semiconductor industry's global workforce shortage. Through collaborations with universities in the United States, India and Korea, SemiVerse solution software is already being used to educate the next generation of semiconductor industry innovators. And our goal is to provide access to Lam's semiconductor simulation technology to tens of thousands of aspiring engineering students through the rest of the decade.

In CSBG, our equipment intelligence and in fab service automation solutions are seeing significant traction with customers. Last month, we announced the industry's first collaborative maintenance robot. Since then, we have shipped our DEXTRA cobot to a 3rd major memory manufacturer and it is being installed in their fab as part of a multi year services agreement. Over the next decade, semiconductor industry is expected to witness a strong expansion of fab capacity globally and our cobot technology offers an important and cost effective solution to enable precise and repeatable maintenance beyond what human workers alone can achieve. Lastly, our strategic investments in scaling our operations are paying off.

Our Asia operations continue to ramp very efficiently and in 2024 help drive meaningful improvement in both our responsiveness to rising customer demand and our gross margin. Doug will provide some additional detail in his prepared remarks, but as a headline, I am pleased we delivered in calendar 2024 approximately 160 basis points of operating margin expansion even as we invested heavily in new products and infrastructure to fuel future growth. So to wrap up, Lam is in a strong position as we enter the New Year. Deposition and etch are becoming increasingly vital to semiconductor manufacturing and we have made key investments to strengthen Lam's product portfolio. I look forward to sharing more on this at our upcoming Investor Day.

Thank you, and I'll now pass it on to Doug.

Great. Thank you, Tim. Good afternoon, everyone, and thank you for joining our call today during what I know is a very busy earnings season. We delivered strong financial results in calendar year 2024 with revenue of $16,200,000,000 in diluted earnings per share of $3.36 We're obviously pleased with the company's continued strong execution. For calendar year 2024, CSBG revenue increased 11% to

exceeding our expectations. Gross margin came in at 48.2%, which was the highest annual result since Lam merged with Novelis in 2013. Let's look at the details of our December quarter financial results. Our revenue gross margin, operating margin and earnings per share were all above the mid point of our guided range. Revenue for the December quarter was $4,380,000,000 which was an increase of 5% from the prior quarter.

Our deferred revenue balance at quarter end was $2,000,000,000 essentially flat with the September quarter. I do believe our deferred revenue balance will trend lower into calendar year 2025, but will likely fluctuate from quarter to quarter. From a market segment perspective, December quarter systems revenue in memory was 50%, up from 35% in the prior quarter. Within memory, nonvolatile memory increased coming in at 24% of our systems revenue, up from 11% in the prior quarter. This market segment has reached the high point since the end of 2022, driven by NAND spending on tech conversions from 1XX layer class devices to 256 layer.

We expect these conversions to continue in calendar year 2025. DRAM represented 26% of systems revenue compared with 24% in the September quarter. DRAM spending was focused on tech upgrades to the 1 alpha, 1 beta and some initial ramp of 1 gamma nodes to enable DDR5 and high bandwidth memory. HBM and high bandwidth memory. HBM investments in our tools enabling through silicon via capability continues to be strong.

Foundry represented 35% of our systems revenue, a decrease from the percentage concentration in the September quarter of 41%. Growth for gate all around node spending partially offset the decline in mature node spending. The Lutzky and Other Market segment was 15% of our systems revenue in the December quarter, down from the prior quarter level of 24%. The decrease was driven by reduced spending in both leading edge as well as specialty technology nodes. Now I'll discuss the regional composition of our total revenue.

The China region accounted for 31%, which was down from 37% in the prior quarter. Most of our China revenue continued to come from domestic Chinese customers. The next largest geographic concentration was Korea at 25 percent of revenue in the December quarter, an increase compared with September quarter level of 18%. And finally, Taiwan and the United States rounded out the remainder of the top four regions. The customer support business group generated almost $1,800,000,000 in revenue for the December quarter, consistent with the September quarter and 20% higher than the same period in 2023.

Sequentially, growth in upgrade revenue largely offset the decline that we saw in Reliant Systems. While

the Reliant product line continue to be the 2 largest components CSBG revenue generation, we achieved record upgrade revenue demonstrating the strength of that growing installed base. Turning to gross margin performance. The December quarter came in at 47.5%, which was above the midpoint of our guided range, but was down from the September quarter level of 48.2%. This was primarily a result of unfavorable customer mix, which we foreshadowed in the last earnings call. We've improved elements of our cost structure during the past 2 years and expanded the gross margin contribution from our Asia operation strategies by a little more than 100 basis points as we exited calendar year 2024.

We expect incremental benefit to gross margins as we continue to scale production on a go forward basis from this strategy. Operating expenses for December were in line with our expectations at $735,000,000 up from the prior quarter amount of $722,000,000 The increase was primarily due to higher incentive compensation tied to the company's increased profitability. R and D accounted for 67% of total operating expenses. Operating margin in the current quarter was 30.7%, a little bit below the September quarter level of 30.9% and near the high end of our guidance range primarily because of that higher revenue and the stronger gross margin performance. And I just reiterate what Tim mentioned that we delivered 160 basis point improvement in operating margin for calendar year 2024.

Non GAAP tax rate for the quarter was 13.2%, within range of our expectations. Our estimate for the March 2025 quarter is for the tax rate to be in the lowtomidteens range. Other income and expense for the December quarter came in at $11,000,000 in income compared with $13,000,000 in income in September quarter. The slight fluctuation in OI and E was due to lower interest income, which was somewhat offset by lower foreign exchange losses and a little bit of gain in equity investments. OI and E will continue to be subject to market related fluctuations that will cause some level of volatility quarter to quarter.

And as we sit here today, I do believe OI and E will have a slight negative bias in the March quarter. On the capital return side of things, we allocated approximately $650,000,000 to open market share repurchases and we paid $298,000,000 in dividends in the December quarter. For the 2024 calendar year, we returned 98% of free cash flow, totaling $4,000,000,000 which was at the high end of our long term capital return plans of 75% to 100% of free cash flow. For the December quarter, diluted earnings per share came in at $0.91 The diluted share count was roughly 1,290,000,000 shares, which was a reduction from the September quarter. During 2024, we repurchased nearly 34,000,000 shares through our share buyback program and we have $9,200,000,000 remaining on our board authorized share repurchase plan.

Let me pivot to the balance sheet. Our cash and short term investments totaled $5,700,000,000 at the end of the December quarter, down from $6,100,000,000 at the end of the September quarter. The main driver of the cash decrease was obviously our capital return activity. Day sales outstanding was 69 days in the December quarter, an increase from 64 days in the September quarter. Inventory at the December quarter end totaled $4,400,000,000 a slight increase from the September quarter as we prepare for higher revenues in the March 2025 quarter.

Inventory turns were 2.1 times flat from the prior quarter level. We will continue to manage inventory levels to the best of our ability to align with customer demand. We're pleased to announce that we upsized our revolving credit facility from $1,500,000,000 to $2,000,000,000 Additionally, I just mentioned that we have $500,000,000 of unsecured notes maturing in March this year, which we intend to simply pay off using cash on the balance sheet. We may choose to refinance this notional amount in the future as we continue to monitor the interest rate environment. By bolstering our liquidity with the credit facility, we've created some optionality and flexibility here.

Non cash expenses for the December quarter included approximately $82,000,000 for equity compensation, dollars 83,000,000 in depreciation and $13,000,000 in amortization. Capital expenditures in the December quarter were $188,000,000 up $78,000,000 from the September quarter. Spending was mainly centered on lab related investments in the United States and Asia and manufacturing facilities, supporting our global strategy to be close to customers' development and manufacturing locations. We ended the December quarter with approximately 18,300 regular full time employees, which is an increase of approximately 600 people from the prior quarter. Growth was predominantly in field and factory roles to support increased tool installation as well as growing manufacturing activities.

Now let's turn to our non GAAP guidance for the March 2025 quarter. We're expecting revenue of $4,650,000,000 plus or minus $300,000,000 gross margin up 48% plus or minus 1 percentage point. We anticipate roughly consistent levels of customer concentration. Operating margin of 32% plus or minus 1 percentage point. This guidance accounts for the normal seasonal increase in operating expenses that we always see at the beginning of the calendar year.

And finally, earnings per share of $1 plus or minus $0.10 based on a share count of approximately 1,290,000,000 shares. I would mention that as we look into 2025, we plan to continue to deliver incremental leverage to the bottom line. At the same time, we will be growing R and D and continuing to grow investment in a digital transformation project that we initially launched in 2023. Each of these investments is expected to enable future financial benefits to the P and L that we plan to show you in February. So let me wrap up.

We executed well in calendar year 2024. We delivered 11% growth in CSPG and 160 basis point improvement in operating margin, both of which exceeded our expectations from the beginning of last year. We've made key investments in our product portfolio to drive served available market and share opportunity and we've grown the global infrastructure to collaborate and deliver innovative solutions for our customers. We also grew spending in that digital transformation program. We look forward to sharing more details on the strength of our product portfolio as well as an updated long term financial model at our Investor Day in New York City on February 19th.

We hope to see you there. Operator, that concludes our prepared remarks. Jim and I would now like to open up the call for questions.

We will now begin the question and answer Our first question today is from Tim Arcuri with UBS. Please go ahead.

Thanks a lot. Doug, can you speak about the gross margin? The guidance is pretty good. And you talked about Malaysia now is turning to a tailwind. And I know that China mix has basically reset.

So how to think about the puts and takes for gross margin as you move March and through the rest of the year?

Yes, Tim, I think we're going to be a pretty tight range kind of where we've been in the last quarter, plus or minus a little bit. And the puts and takes, as you know, because we've talked about this in the past, you're going to continue to see some headwinds from customer concentration. I think there's more headwind as we go through the year most likely offset to a certain extent by that Asia operation strategy. So those are the things to think about. I wouldn't run away from where we are right now though.

In fact, maybe trim it just a little tiny bit as we go through the year.

Got it. And then can you give any color, I know you're saying that WFE is going to be up maybe $3,000,000,000 $4,000,000,000 $5,000,000,000 year over year. But can you provide any color by end market? I know and I've asked you this before, but one of your peers is talking about NAND basically doubling this year. So can you give any color there?

And do you think that it is possible that it doubles this year? Thanks.

Yes, Tim, maybe I'll unpack it just a little bit of color. We're not going to give specific details, but NAND will be up this year. I don't know that it's going to double necessarily. Understand also though that NAND spending, there will be a little bit of NAND spending that will occur in China with a customer we can't sell to. So that may be a little different from the peer you're asking about.

I think leading edge foundry is going to be pretty strong this year. I think that's pretty well understood. And DRAM will be plus or minus coming off a very strong year last year. I think it will continue to be pretty strong this year.

The next question is from Krish Sankar with Cowen and Company. Please go ahead.

Yes. Hi. Thanks for taking my question. First one Doug,

A, on China, what is kind of your visibility in terms of lead times? And also can you help us quantify the impact of these recent China export controls for Lam in calendar 2020 5? And then I had a follow-up.

Yes, Krish, our lead times really haven't changed too much. And I don't know if you're asking specific to China, but China is no different than the rest of the world. Geographically, lead times are pretty much the same. And yes, obviously, in early December, there were some new regulations that came out restricting a handful of customers. That certainly impacted us.

The forecast we had from that group of customers was probably, I don't know, dollars 700,000,000 or so, that obviously we won't be able to ship to those customers. And that revenue footprint when we were looking at the forecast originally would have been a little bit second half weighted in 2025. So that's the way to think about it. I don't know that that's all that different than what you've heard from our peers, Krish.

Got it. That's very helpful for quantifying that, Doug. And then just a quick follow-up, you spoke about your WFE growing maybe 4%, 5% this year on a year over year basis. How to think about the split between systems and CSBG in March and how that evolves through the rest of the year?

I'm not going to get into the detail of kind of how much is CSPG and how much is systems. I would tell you that there's some headwinds in CSPG related to the Reliant grouping, right? I think that's pretty well understood. There's not a huge amount of spending in mature node outside of China. And then within China, we've got a handful of customers that, like I said, are now restricted.

Offset though, it's going to be a strong year for upgrades. And we've been talking about that, right? We believe NAND spending is going to be largely upgrade related and that's going to benefit the upgrade product line within CSPG.

The next question is from C. J. Muse with Cantor Fitzgerald. Please go ahead. J.

the question. I guess to maybe piggyback on that question, could you speak to if you had to rank order by product or upgrade or whatnot, how we should be thinking about what are the biggest kind of incremental drivers for you? I think you talked about gate all around and advanced packaging growing an incremental $1,000,000,000 in calendar 2025. Could you kind of add to that in terms of NAND upgrades, Moly, anything else that is relevant that we should be thinking about in 2025?

Yes. C. J, let me start with that one. I think that from perspective of kind of the most impactful change year on year, I think for us, it's NAND. It's NAND starting to come back and again the very strong position we have within every dollar spent on a NAND upgrade.

And that's kind of across the board that the edge tools and such that need to be upgraded. But at the same time, on the last call, I mentioned this point that about 2 thirds of the bits are still being manufactured on nodes below 200 layers. What happens as you move above 200 layers is not only do you have to upgrade the existing tools, but you have to start adding additional tools to deal with the complexity of that transition. And so that's what we talk about like the new carbon gap fill tool, which is key to multi tier stacking, which you start to see in the 200, 300 layer generations. And as you get to 300 layers and beyond, you start seeing new tools get added like Moly, that transition.

So it depends on which customer and exactly which transitions they're switching to. But NAND from both an upgrade and new tool shipment is probably our largest year on year difference. But there's no doubt that our strong position in advanced packaging and the strength that Doug alluded to within leading edge foundry and what that means for advanced packaging continues to show growth there. And so I feel like, as I said, there's a nice setup here where many of the areas we've been investing in really are starting to come together this year.

It's very helpful. I guess as a follow-up, and Doug, I'm not sure you're going to want to answer this, but if I were to annualize implied shipments for March, that would suggest pretty meaningful top line growth year on year relative to the WFE growth that you outlined. So should we be thinking about revenues lower in the second half? Or are you really highlighting tremendous outperformance in 2025?

Yes. I don't know, C. J. I'm not going to answer that question. So you kind of answered your own question.

I'm not going to get into giving you a quarter by quarter guidance. Listen, WFE is going to grow a little bit. We're going to outperform WFE. We're confident about making those statements. We've been making it for a little bit of time now.

The rest of it will depend on profile of spending and so forth. I don't know if you just annualize March, if that's the right way to look at it. Like I said, we're going to guide 1 quarter at a time. I don't know. You got to do a little of your own pencil work.

Don't lose sight of what I did say though about the second half weighting of some of that China customer that all of a sudden we can't ship to any longer. That would have been a little bit second half weighted. So comprehend that as you build your model for the year.

The next question is from Harlan Sur with JPMorgan. Please go ahead.

Good afternoon. Thanks for taking my question. On advanced packaging and high bandwidth memory, I know you guys started last year with a view that your advanced packaging business would do about $700,000,000 $800,000,000 in revenues on the April earnings call. You upped that to $1,000,000,000 and then that number was further upped to over $1,000,000,000 Can you guys just true us up, what was the actual revenue you drove in calendar 2024 on advanced packaging? And then with bit demand growth for HBM targeted to grow 50%, 70% per year over the next couple of years, the move from 8 high to 12 high, you've got the move in advanced packaging from 2.5 gs to 3 d SOIC, like how should we think about your advanced packagingHBM growth profile for this year?

And in general, over the next few years, sort of, how do we think about the mid to longer term growth profile?

Yes, Harlan, maybe I'll turn in and then let Tim add on. Yes, I mean, I'm not going to give you a precise number, but in 2024, we finished above $1,000,000,000 I don't think that surprises you. And I'm not going to give you a precise number for this year, but it is certainly going to grow again in 2025. And it's being driven by all those things you talked about, right? HPM 3 going to 3e to potentially going to 4 at the end of the year, 8 going to 12 going to 16 die.

We do all that TSV. So we're set up to do really well. We're pretty excited about it. I don't know, Tim, do you want to?

Yes. No, I think, Carlin, the only thing I'd add is that, we've been saying for a while that and I think you've been hearing it in the marketplace, advanced packaging and getting the yield and productivity right on these processes isn't easy. And so this is where Lam has a critical process supplier with expertise in things like copper plating and etching. We're delivering value there. So we feel very good about our positions.

And we're going to continue to grow with that market and then do very well. So we can't put an exact number on it. But again, we did indicate we will grow again this year. And I think that's about all I can say.

That's helpful. And then for Doug, this is the 3rd, 4th consecutive quarter where your gross margins are coming in better than expected, continued strength on the guidance for the March quarter, right? The overall sustainability and growth of your gross margins has been very, very solid. I've actually been surprised at how rapidly you've ramped your Malaysia manufacturing facility, low cost geography, you've got strategically aligned supplier base in this region. At the same time, you guys have also, I think, consolidated a significant part of the higher cost manufacturing base.

So is it fair to assume that on incremental revenue growth going forward, most of this is flowing through Malaysia and so better incremental gross margin flow through and maybe any way to help us kind of quantify that?

Yes. I'm not going to quantify it. I mean, I just gave you a number right that we've delivered over 100 basis points from the strategy already. There's a little bit more to go for sure. Don't lose sight of the fact though that we're going to have the headwind from customer mix that we've been talking about for a while.

So I'm trying to telegraph that to you as well. I guess, yes, listen, we're pretty pleased with our performance on gross margin. Frankly, this was all done by us, right? This was a proactive strategy. Things turned down in early 'twenty three.

We jumped on the horse and started riding down the trail. And frankly, the guys and gals in our global operations organization have done a phenomenal job here, right? So super happy with what's going on. We're going to keep driving this. But don't run away with it too much right now because like I said, we've got that customer concentration headwind that we got to deal with here.

only thing I would add is that I think that you should take away from this that Lam is committed to make investments to see a sustainable step up in performance. And that's what we did. Doug, for many quarters, was talking about how Malaysia was a headwind. That investment we're making as we ramped it, it wasn't yet up and going. And now you're seeing a little bit of the same thing with the investment we keep talking about with digital transformation.

There's going to be a period here where we're investing. But long term, we have a view that this company and the semiconductor industry in general are

And we want to have fundamental improvements in our operations and in our cost structure. And so I think Malaysia is a great sign of what we've done and I think the digital transformation is something that's still yet to come And it just shows that we have a very long term commitment to improving the financials of this company.

The next question is from Toshiya Hari with Goldman Sachs. Please go ahead.

Hi, good afternoon. Thank you so much for taking the question. I had 2 as well. The first one, the outperformance relative to WFE you guys expect to deliver this year. Is that mostly a function of dep and etch growing as a percentage of the overall WFE market?

Or is it that plus you guys winning share in within dep and etch? And if it's both, on the latter, which applications do you guys have the highest expectations from a market share gains perspective?

Well, it is both. But as we've described in the past that often the way we look at market share gains is the wins of new applications, some of which didn't exist before. And so it's not always a head to head fight that results in one winner for an application. I gave an example of that with the carbon gas field, new application that gets created simply because of the growing complexity of tier stacking in NAND. Ultimately, that results in share gain as measured by our share of our SAM and also our share of the market itself.

So there are a number of those. I think there are pure market share wins. We talked about obviously our ETHER announcement today where that win is created through SAM expansion where we move into markets where we previously haven't competed before and do become the pool of record based on superior technology and product performance. And so it's hard. It really is a makeup of many different things as to why we think we outperform, but it's really driven by what you said at the beginning.

Etch and deposition are becoming incredibly more important to the building of these complex structures, whether it's gate all around, it's the advanced packaging three d structures, it's the new architectures in DRAM, it's the multi tier stacking and NAND. All of those are accomplished through new very complex etching-depth processes that Lam is leading in.

Got it. That's great. Thank you. And then for CSPG, maybe for Doug, I know you're not going to guide the full year. The spares part of the business, upgrade part of the business, historically, it's been obviously correlated with your chamber account, which continues to grow.

Is there a way to think about Reliance in 2025 on a year over year basis?

Yes, Reliant is probably going to be down year over year, Toshiya, as I think about puts and takes. And that's I don't think that's surprising, right? If you look at what's going on in specialty note investment, mature note investment in areas like analog, microcontrollers, there's not a lot of spending occurring outside of China. And then I think China WFE is going to be softer year over year, 24% to 25%, and we lost a handful of customers as well. So that will contribute to all of that there relative to Reliant.

Lam Research Q2 2025 Earnings Call Transcript | Fortune

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Lam Research (LRCX) Q2 2025 Earnings Call Transcript

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