LRCX. Mounting Tailwinds Bode Well For 2025 & Beyond
but China dependency could be an achilles heel
LRCX reported Q124 revenues of $3.79 billion, pretty much flat sequentially both QoQ and YoY, and also marginally better than guidance.
Non-GAAP gross margin was 48.7%, again slightly better than guided. Looking ahead, the company forecasted Q224 revenues $3.8 billion, i.e. flat QoQ.
In his prepared remarks, CEO Tim Archer struck a positive note, indicating that the year is thus far progressing as previously anticipated.
Lam is off to a strong start in calendar 2024, with revenues, profitability, and earnings per share for the March quarter, all exceeding the midpoint of our guidance. These results, as well as our outlook for the June quarter point to Lam's solid execution in an industry environment that is progressing much as we predicted in our January call.
He did however increase his forecast for global WFE spending in 2024 from what he had previously indicated back in January. Here’s what he said back then:
As we enter 2024, the business environment remains muted. However, we expect a modest recovery in memory spending to drive a stronger exit to the year. Our early view of WFE spending for calendar 2024 is in the mid- to high $80 billion range.
This outlook has now been replaced with the following:
Today, we see industry WFE spending for calendar 2024 in the low to mid-$90 billion range, with the modest increase from our prior view, driven mainly by additional lithography shipments in China.
If you take the forecasts at their extremes, there’s a $10 billion difference from the worst case in the old forecast to the best case in the new forecast, roughly 12%. There’s nothing “modest” about that. In any case, this more optimistic forecast is not going to bring additional revenue for LRCX, it’s mainly all headed ASML’s way.
In terms of LRCX’s forecast for their own CY2024 revenue, the company was circumspect. When pressed on the topic, this is what they had to say:
Yeah. I think given the mix we see in some of these technology transitions, it should be incrementally better than it was last year for sure.
The fact that LRCX has still not provided guidance for CY2024 strongly suggests that a high level of uncertainty still exists when it comes to their visibility into H224. That being said, they did strike quite an upbeat note on the earnings call, going into considerable detail on what they see as mounting tailwinds for the company, particularly heading into 2025 and beyond. We discuss these tailwinds, the company’s ongoing China exposure along with key takeaway’s from the earnings call.
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