LRCX. Recovery Stalls As Outlook Remains Stubbornly Muted
despite an improving memory outlook, WFE spending remains anemic
LRCX reported Q423 revenues of $3.76 billion, marginally ahead of the guided midpoint, up 8% QoQ but down 29% YoY. Net income amounted to $954 million, up $67 million from the prior quarter.
For full year 2023, revenues amounted to $14.3 billion, down 25% YoY. Looking ahead, LRCX forecasted Q124 revenues of $3.7 billion, essentially flat sequentially.
In his prepared remarks, CEO Tim Archer noted that 2023 WFE spending ended in the low $80 billion range, somewhat higher than previously anticipated but with the company not particularly benefitting from the boom in sales to China in the second half of the year
Turning to WFE. We estimate that 2023 spending ended in the low $80 billion range. This is up slightly from our prior view, driven by continued strength in domestic China spending predominantly in equipment segments where we do not participate.
He then outlined the extent to which memory-related WFE spending was impacted last year:
Overall, memory WFE was down nearly 40% year-on-year, led by cuts in NAND spending of more than 75%. Non-memory WFE decreased in the mid-single digits range with mature node growth in China, partially offsetting declines in leading-edge node spending in the rest of the world.
While the company declined to provide a full year 2024 forecast for themselves, they did predict that it would be a modest growth year for the broader WFE segment:
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.
More specifically, LRCX is predicting growth in both DRAM and NAND. In the case of the former, that growth would largely be driven by HBM. In the case of the latter, technology upgrades for higher layer stacks would would be the driver.
Growth in DRAM will be driven by capacity additions for high-bandwidth memory as well as node conversions. NAND spending increases will largely come from technology upgrades. We see foundry logic spending growing in 2024 with higher leading-edge investment, offset in part by declines in mature node investment outside of China. Overall, we believe domestic China spending will be stable in 2024.
How should we think about revenue growth for LRCX in 2024? Will the improving memory landscape come to the rescue, perhaps in the second half? Our thoughts on these and more after the paywall. Thanks as always for reading!
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