10-QPeriod: Q3 FY2023

LAM RESEARCH CORP Quarterly Report for Q3 Ended Mar 26, 2023

Filed April 24, 2023For Securities:LRCX

Summary

Lam Research Corporation reported its financial results for the quarter ending March 25, 2023. The company experienced a significant revenue decline of 27% compared to the prior quarter, primarily due to a softening in wafer fabrication equipment spending, particularly in the memory market, and regulatory trade restrictions impacting shipments to China. Despite the revenue drop, the company continues to see improvements in supply chain constraints. To align its cost structure with the current outlook and expected reduced business levels, Lam Research initiated a restructuring plan in the March quarter, incurring approximately $98.5 million in related charges. The company maintained a strong cash position, with cash and equivalents, investments, and restricted cash totaling $5.6 billion. While facing near-term headwinds, Lam Research remains optimistic about the long-term demand for semiconductors driven by technological inflections.

Financial Highlights

53 data points
Beta

Revenue

$3.87B

41.5% Gross Margin

Net Income

$814.01M

21.0% Net Margin

EPS (Diluted)

$0.60

Total Assets

$19.24B

Cash & Equivalents

$5.31B

Free Cash Flow

$1.73B

Financial Statements
Beta
Revenue$3.87B
Cost of Revenue$2.26B
Gross Profit$1.61B
R&D Expenses$429.45M
SG&A Expenses$193.50M
Operating Expenses$663.36M
Operating Income$942.25M
Interest Expense$47.22M
Net Income$814.01M
EPS (Basic)$0.60
EPS (Diluted)$0.60
Shares Outstanding (Basic)1.35B
Shares Outstanding (Diluted)1.35B

Key Highlights

  • 1Revenue for the quarter was $3.87 billion, a decrease of 27% from the prior quarter ($5.28 billion) and a decrease of 4.7% year-over-year ($4.06 billion).
  • 2Gross margin decreased to 41.5% from 45.0% in the previous quarter, largely due to restructuring charges and unfavorable product mix.
  • 3Net income for the quarter was $814 million, or $6.01 per diluted share, down from $1.47 billion, or $10.77 per diluted share, in the preceding quarter.
  • 4The company initiated a restructuring plan in the March quarter, resulting in approximately $98.5 million in charges related to workforce reductions and other costs.
  • 5Inventories increased significantly to $4.88 billion from $3.97 billion in the prior fiscal year-end, indicating a build-up potentially ahead of anticipated demand.
  • 6The company's cash and cash equivalents, investments, and restricted cash increased to $5.6 billion, providing ample liquidity.
  • 7Customer support-related revenue showed resilience, increasing year-over-year to $1.61 billion from $1.41 billion, while system revenue declined.

Frequently Asked Questions

The sequential revenue decline of 27% was primarily driven by a general weakening in wafer fabrication equipment spending, influenced by reduced demand in the memory market, and compounded by regulatory trade restrictions imposed on shipments to certain customers in China.

The restructuring plan, initiated to align costs with the outlook, resulted in approximately $98.5 million in charges for the March quarter, impacting the cost of goods sold and operating expenses. The company expects ongoing expenditures related to business process improvements throughout calendar year 2023.

Lam Research maintains a strong liquidity position, with total gross cash, cash equivalents, investments, and restricted cash standing at $5.6 billion as of March 26, 2023. This is expected to be sufficient to support anticipated operations, investments, and capital expenditures for at least the next twelve months.

While acknowledging near-term weakness due to economic conditions and trade policies, Lam Research believes long-term semiconductor demand will be driven by technological inflections like 3D device scaling and advanced packaging. The company sees itself as well-positioned with its expertise in deposition, etch, and clean to capitalize on these trends.