01—Abstract
Summary
Summary of the 10-K filed August 15, 2017. Cited figures are marked; the original filing is the authoritative source.
Lam Research Corporation's 2017 10-K report showcases a significant year of growth and operational strength, driven by robust demand in the semiconductor industry.
Revenue surged by 36% to $8.01 billiona, indicating strong customer investment in wafer fabrication equipment. This increase was bolstered by technological advancements and capacity expansions, particularly from memory, foundry, and integrated device manufacturers. The company's strategic focus on deposition, etch, and single-wafer clean technologies positions it to capitalize on industry inflections like 3D architectures and multi-patterning.
The company demonstrated improved profitability, with gross margin increasing to 45.0%b due to higher volumes and better factory utilization. Operating expenses grew modestly, reflecting continued investment in R&D to maintain a competitive edge.
Lam Research also actively managed its capital structure, evidenced by significant share repurchases and debt management activities. The company's strong financial position, supported by substantial cash reserves and operating cash flow, allows for continued investment in innovation and shareholder returns.
02—Key points
Key Highlights
- Revenue increased by 36% to $8.01 billion in FY2017, driven by strong customer demand for semiconductor manufacturing equipment.
- Gross margin improved to 45.0% in FY2017, up from 44.5% in FY2016, attributed to higher revenue and improved factory utilization.
- Research and Development (R&D) expenses increased by 13.1% to $1.03 billion, underscoring the company's commitment to innovation in a rapidly evolving industry.
- Backlog orders grew significantly to $2.1 billion by the end of FY2017, up from $1.4 billion in the prior year, signaling strong future revenue potential.
- International sales represented a substantial majority of revenue (92%), with Korea and Taiwan being the largest geographic markets.
- The company repurchased approximately $1.0 billion of its Common Stock during the year, demonstrating a commitment to returning capital to shareholders.
- Lam Research's core competencies in deposition, etch, and single-wafer clean technologies are well-aligned with key industry trends such as 3D architectures and advanced packaging.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Lam Research Corp kept $0.21.
- Revenue$8.01B100.0%
- Cost of revenue−$4.41B55.0%
- Gross profit$3.60B45.0%
- Operating costs−$1.70B21.2%
- Operating income$1.90B23.7%
- Interest, other & tax−$204.4M2.6%
- Net income$1.70B21.2%
Where FY2017 revenue went
$8.01B- Cost of revenue: $4.41B, 55% of revenue
- Net income: $1.70B, 21% of revenue
- R&D: $1.03B, 13% of revenue
- SG&A: $667.5M, 8.3% of revenue
- Interest, other & tax: $204.4M, 2.6% of revenue
Kept 21% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed August 15, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $8.01B$5.89B | +36.1% |
| Cost of Revenue | $4.41B$3.27B | +35.0% |
| Gross Profit | $3.60B$2.62B | +37.6% |
| R&D Expenses | $1.03B$913.71M | +13.1% |
| SG&A Expenses | $667.49M$630.95M | +5.8% |
| Operating Expenses | $1.70B$1.54B | +10.1% |
| Operating Income | $1.90B$1.07B | +77.1% |
| Interest Expense | $117.73M$134.77M | −12.6% |
| Net Income | $1.70B$914.05M | +85.7% |
| EPS (Basic) | $1.05$0.57 | +82.1% |
| EPS (Diluted) | $0.92$0.52 | +77.0% |
| Shares Outstanding (Basic) | 1.62B1.59B | +2.1% |
| Shares Outstanding (Diluted) | 1.84B1.75B | +4.9% |
05—Questions
Frequently Asked Questions
What were the key drivers of Lam Research's revenue growth in FY2017?
Lam Research's revenue growth in FY2017 was primarily driven by increased capacity and technology investments from semiconductor manufacturers, particularly in the memory and foundry sectors. Industry trends like 3D architectures and multi-patterning for advanced device manufacturing also fueled demand for the company's specialized wafer fabrication equipment.
How did the company's profitability change in FY2017?
Lam Research saw improved profitability in FY2017. Gross margin increased to 45.0% from 44.5% in FY2016, mainly due to higher sales volumes leading to better factory utilization. Net income also saw a substantial increase of 85.7% year-over-year, reaching $1.7 billion.
What is the company's strategy regarding R&D investments?
The company views R&D as critical for maintaining its competitive advantage in the fast-changing semiconductor capital equipment market. Lam Research continued to make significant investments in R&D, focusing on deposition, etch, and single-wafer clean technologies to support customer needs and drive innovation in areas like FinFET and advanced packaging.
How is Lam Research addressing customer concentration risk?
The company acknowledges that sales to a limited number of large customers constitute a significant portion of its revenue. To mitigate this, Lam Research focuses on building long-term relationships and aims to increase its strategic relevance with customers by contributing more to their success. While specific customer names are not disclosed in the highlights, the report indicates diversification across key geographic markets like Korea, Taiwan, Japan, and China.
06—Continue