Summary
Lam Research Corporation (LRCX) filed an 8-K on April 30, 2020, to disclose a new risk factor concerning export license requirements affecting sales to China. The company highlighted a new rule published by the U.S. Department of Commerce on April 28, 2020, which expands export license requirements for U.S. companies selling certain items to Chinese companies with operations that could support military end uses, even if for civilian applications. This development is particularly concerning given China's significant contribution to Lam Research's revenue.
Key Highlights
- 1Lam Research is proactively disclosing a new risk factor related to international sales, specifically focusing on China.
- 2A new U.S. Department of Commerce rule, effective April 28, 2020, expands export license requirements for sales to China.
- 3The new rule applies to items sold to Chinese companies with potential military end-use operations, even for civilian applications.
- 4China represented a substantial portion of Lam Research's revenue: 22% for FY2019 and 29% for the nine months ended March 29, 2020.
- 5The company acknowledges uncertainty regarding the implementation and impact of this rule, noting it could adversely affect revenues.
- 6Failure to obtain necessary export licenses on a timely basis or at all could limit Lam Research's ability to sell products in China.