Q2 2025 Earnings Summary
- Strong growth in advanced packaging and high-bandwidth memory (HBM) opportunities: Lam Research's advanced packaging revenue exceeded $1 billion in 2024 and is expected to grow again in 2025, driven by increasing demand for HBM technologies like HBM3 moving to 3D and stacking from 8-high to 12-high die configurations. Lam's expertise in through silicon via (TSV) processes positions them well for this growth.
- Significant upside from NAND market recovery: Lam anticipates NAND spending to increase in 2025, driven by technology transitions to higher layer counts, such as moving to 256 layers and beyond. This growth boosts both upgrade and new tool shipments due to the complexity of the transitions, including the adoption of multi-tier stacking requiring new carbon gap fill tools and molybdenum processes where Lam holds strong positions.
- Breakthrough in dry resist technology opening new revenue streams: Lam's innovative dry resist solution has achieved a major milestone by being selected as the production tool of record for high-bandwidth DRAM at a leading memory customer. With hardware already in all customers' R&D facilities, this positions Lam to capitalize on new revenue opportunities as adoption of this technology grows.
- Lam Research expects gross margin headwinds due to customer concentration, which may lead to a slight decrease in gross margins as the year progresses. Doug Bettinger stated: “you're going to continue to see some headwinds from customer concentration. I think there's more headwind as we go through the year...” , and “we have that customer concentration headwind that we got to deal with here.”
- New export controls on certain Chinese customers are expected to impact revenue by approximately $700 million in calendar 2025, particularly in the second half of the year. Doug Bettinger mentioned: “the forecast we had from that group of customers was probably... $700 million or so that obviously we won't be able to ship to those customers... that revenue footprint... would have been a little bit second half weighted in 2025.”
- Increasing operating expenses due to investments in R&D and digital transformation may limit margin expansion. Doug Bettinger indicated they will continue growing R&D and investing in digital transformation projects: “we will be growing R&D and continuing to grow investment in a digital transformation project...”. When asked about OpEx growth, he responded: “You'll get a little bit of leverage from us this year. So that's as much as I'm going to give you right now.”
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q4 2024 | $4.3 billion, ± $300 million | no current guidance | no current guidance |
Gross Margin | Q4 2024 | 47%, ±1 percentage point | no current guidance | no current guidance |
Operating Margin | Q4 2024 | 30%, ±1 percentage point | no current guidance | no current guidance |
EPS | Q4 2024 | $0.87, ± $0.10 | no current guidance | no current guidance |
Revenue | Q3 2025 | no prior guidance | $4.65 billion, ± $300 million | no prior guidance |
Gross Margin | Q3 2025 | no prior guidance | 48%, ±1 percentage point | no prior guidance |
Operating Margin | Q3 2025 | no prior guidance | 32%, ±1 percentage point | no prior guidance |
EPS | Q3 2025 | no prior guidance | $1.00, ± $0.10 | no prior guidance |
Tax Rate | Q3 2025 | no prior guidance | low to mid-teens | no prior guidance |
Customer Concentration | Q3 2025 | no prior guidance | remain consistent | no prior guidance |
Operating Expenses | Q3 2025 | no prior guidance | normal seasonal increase | no prior guidance |
OI&E | Q3 2025 | no prior guidance | slight negative bias | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
NAND Market Recovery & Transitions | Consistently discussed in Q1 2025, Q4 2024, Q3 2024 with emphasis on upgrades and layer transitions. | Recovery progressing (upgrades, >200-layer push, multi-tier stacking) but not at peak spend. | Continues to be bullish, with a steady focus on technology shifts that drive growth. |
Advanced Packaging (HBM, TSV, etc.) | Repeated across Q1 2025, Q4 2024, Q3 2024; cited as a key growth driver for AI and high-performance computing. | Strong growth in HBM and copper plating; >$1B revenue in 2024, higher expected in 2025. | Remains bullish, consistently highlighted as a long-term revenue driver. |
Dry Resist Technology | Introduced in Q1 2025 (Korean memory maker adoption) ; minimal detail in Q4 2024; no mention Q3 2024. | Major milestone with Aether dry resist for high-bandwidth DRAM; future revenue impact. | Gaining traction; newer technology poised to grow in importance. |
Gross Margin Headwinds | Cited in Q1 2025, Q4 2024, Q3 2024 as an ongoing margin challenge due to mix shifts. | Customer concentration still a headwind but partially offset by lower-cost manufacturing. | Consistently negative, though operational moves provide some offset. |
Export Controls to China | Q1–Q3 2024 calls flagged reliance on assumptions about trade policy; impacts remain material. |
| Continues to be a bearish factor, reducing Chinese revenue and creating uncertainty. |
R&D & Digital Transformation | Regularly mentioned in Q1 2025, Q4 2024, Q3 2024 as core elements for innovation and process upgrades. | R&D at 67% of OpEx, ongoing digital initiatives to drive future benefits. | Remains fundamental for product leadership; sentiment stays positive. |
Declining China Revenue Exposure | Previously noted in Q1 2025, Q4 2024, Q3 2024 as an ongoing drop in China mix. | China rev share down to 31%, expected to decline further in 2025. | Consistent decline, driven by export controls and shifting mix. |
CHIPS Act / Government Subsidies | Briefly noted in Q3 2024 as potentially significant post-2025. | No mention in Q2 2025. | Not currently discussed; future potential but no update this period. |
Weak Mature Node Demand | Cited in Q4 2024 and Q3 2024 as soft due to inventory overhang and moderate utilization. | Seen in analog, industrial, automotive; minimal spending outside China. | Remains weak, persisting as a bearish segment. |
Cryo 3.0 for NAND | Cited since Q4 2024 with improved etch rates and verticality for NAND scaling. | Key to high-aspect-ratio etch, deployable as upgrades and new tools. | Ongoing positive for NAND scaling; strong alignment with technology transitions. |
CSBG Growth | Historically grew in Q1 2025, Q4 2024, Q3 2024. Reliant spikes in China previously aided revenue. | Projected flat year-over-year; upgrades offset by Reliant decline. | Shifting to balanced outlook; upgrades remain a bright spot. |
Malaysia Facility Expansion | Q4 2024 noted shipping 5,000+ chambers; Q3 2024 flagged low-cost geography benefit. | Cited as a tailwind for gross margins after ramp; location provides cost advantages. | A positive contributor to margin; fully ramping and generating efficiency gains. |
-
Impact of China Export Controls
Q: What's the impact of recent China export controls?
A: The new regulations restrict us from shipping to certain Chinese customers, resulting in an estimated loss of $700 million in revenue for calendar '25, which would have been second-half weighted. This aligns with what peers are experiencing. -
NAND Spending and Upgrades
Q: How significant is NAND spending growth this year?
A: NAND is starting to come back and will be our largest year-on-year growth driver. Upgrades are key, as about two-thirds of bits are still produced on nodes below 200 layers, requiring upgrades and new tools like carbon gap fill and molybdenum deposition. -
CSBG Outlook and Reliant
Q: Why will CSBG revenue be flat this year?
A: Reliant revenue is expected to decline due to reduced spending in mature nodes and lost Chinese customers, offset by strong upgrades in NAND. Overall, CSBG should be flattish year-over-year. , , -
Gross Margin Outlook
Q: How will gross margins trend with Malaysia operations?
A: We've delivered over 100 basis points improvement from our Malaysia strategy, with more to come. However, customer mix headwinds may offset some gains. We're pleased with our proactive approach to improving margins. -
Advanced Packaging Growth
Q: What's the outlook for advanced packaging revenue?
A: We finished 2024 with advanced packaging revenue above $1 billion and expect growth again in 2025, driven by demand for HBM3, through-silicon vias (TSV), and moves from 8-high to 12-high stacks. -
Customer Concentration and China Sales
Q: Will China sales decline due to customer concentration?
A: Yes, China revenue percentage will be down in '25 versus '24 due to customer headwinds increasing throughout the year. -
Operating Expenses and Investments
Q: How will operating expenses change in 2025?
A: We'll increase spending, particularly in R&D and digital transformation projects, but revenue should grow faster than OpEx, resulting in some leverage. -
WFE Market and Outperformance
Q: Is outperformance due to dep and etch growth or share gains?
A: It's both. Etch and deposition are becoming more important, and we're gaining share through new applications like carbon gap fill and entering new markets with technologies like Aether. -
Reliant Business Decline
Q: How much is Reliant impacted by lost China customers?
A: We forecasted $700 million in revenue from restricted Chinese customers in '25, much of which would have been Reliant. Now, that revenue is gone, leading to a significant drop in Reliant sales. -
NAND Strength Amid Soft Demand
Q: Why is NAND strong despite softening demand?
A: NAND spending is driven by technology migration to reduce bit costs and improve performance. Upgrades are efficient for advancing technology, and our high capture rate in upgrades benefits us amid the spending. -
Molybdenum (Moly) Adoption
Q: Is the transition to moly broad-based and sustainable?
A: The transition to moly is a multi-year process. As customers move to higher layer counts in NAND (above 200 layers), moly adoption increases. While not a broad upgrade move yet, we expect moly to contribute more over the next several years. -
Revenue Expectations and Guidance
Q: Should we expect revenues to be lower in the second half?
A: We guide one quarter at a time but note that WFE will grow slightly, and we expect to outperform WFE. Loss of revenue from restricted China customers, which was second-half weighted, should be considered in models. -
OpEx Growth Details
Q: Will OpEx grow mid-teens again due to investments?
A: We'll guide one quarter at a time. There will be some leverage, with revenue growing faster than OpEx, but we're not providing specific OpEx growth rates now. -
Advanced Packaging and HBM Demand
Q: How will advanced packaging and HBM grow this year?
A: We expect growth in advanced packaging revenue again in 2025, driven by HBM demand growing 50–70% per year and transitions from 8-high to 12-high and 3D SOIC. -
Foundry Logic Spending and Market Share
Q: How does leading-edge foundry logic spending impact you?
A: We're gaining share in leading-edge foundry logic through tools for gate-all-around nodes and strengths in advanced packaging. Foundry logic spending represents share gain opportunities for us. -
Cryo 3.0 Technology for QLC NAND
Q: How is Cryo 3.0 impacting your QLC NAND opportunity?
A: Our Cryo 3.0 technology is a breakthrough for etching deep, vertical holes in NAND flash memory, including QLC NAND, and can be used to upgrade existing systems, benefiting customers financially. -
Customer and Regional Concentration
Q: Will customer and regional concentration remain similar?
A: Customer concentration is tied to geographic concentration. Expect similar concentration from December to March, but China concentration will be down year-over-year in '25 versus '24. -
WFE Market Size Clarification
Q: Is the $100 billion WFE estimate unrestricted?
A: Yes, it's an all-in estimate, including restricted customers. We're describing it to the best of our ability, considering all factors. -
CSBG Revenue Flat Despite Upgrades
Q: Why is CSBG flat despite strong NAND upgrades?
A: Reliant revenue is declining significantly due to loss of Chinese customers, offsetting gains from NAND upgrades. Overall, CSBG is expected to be flat. -
NAND Capacity Transition
Q: How will NAND capacity mix change this year?
A: Over time, more installed base will be upgraded to nodes above 200 layers. The rate depends on NAND market conditions and device requirements, but we can't provide specific details now. -
Lam's Capture Rate in NAND Spending
Q: How does wafer bonding affect your NAND capture rate?
A: Wafer bonding has minimal impact on our capture rate. Our focus is on tools related to the stack, like carbon gap fill and high-aspect-ratio etches. Device complexity opens opportunities for us. -
DRAM Resist Deposition Opportunity
Q: What's the revenue potential for DRAM resist deposition?
A: We've secured a production tool of record decision in DRAM resist deposition, which will ramp and generate revenue. While not huge dollars this year, it's an important milestone with hardware in all customers' R&D facilities. -
NAND Revenue and China Customers
Q: Was recent NAND strength from restricted Chinese customers?
A: No, there was nothing from indigenous Chinese NAND customers. The strength came from core NAND customer upgrades. -
Cryo Technology for Other Devices
Q: Can Cryo 3.0 be used beyond NAND?
A: Yes, Cryo 3.0 technology can also be used for devices like DRAM that require high-aspect-ratio dielectric etch, providing broader applications and upgrade opportunities. -
CSBG Outlook Clarification
Q: Is the flattish CSBG outlook for calendar '25?
A: Yes, we're referring to calendar '25 being flattish year-over-year for CSBG revenue. -
Lead Times and China Visibility
Q: How are lead times and visibility in China?
A: Lead times haven't changed much and are similar globally. New regulations restrict shipments to certain Chinese customers, impacting us by about $700 million, which was second-half weighted in '25. -
Utilization Cuts vs. NAND Spending
Q: Why is NAND spending up despite utilization cuts?
A: NAND spending is focused on technology migration to reduce bit costs and improve performance. Upgrades drive spending even amid soft demand, and our high capture rate in upgrades supports our growth.