Lam Research Corporation (NASDAQ:LRCX), a prominent player in the Semiconductors & Semiconductor Equipment industry according to InvestingPro Tips, reported robust financial results for Q3 2023, surpassing revenue guidance and delivering strong gross and operating margins as well as earnings per share. The semiconductor company also forecasted further improvement in revenue and earnings per share for Q4 2023.
Key highlights from the earnings call include:
- The company reported Q3 2023 revenue of $3.48 billion, up 9% from Q2 2023 but down over 30% from the same period last year. This aligns with InvestingPro's real-time metrics indicating a quarterly revenue growth of -30.81% for FY2023.Q4.
- Gross margin for the quarter was 47.9%, exceeding expectations and aligning closely with the reported gross profit margin of 45.07% according to InvestingPro Data.
- Operating expenses were $622 million, with R&D accounting for over 68% of total spending.
- The company allocated $830 million to share repurchases and paid $230 million in dividends in Q3 2023, aligning with the InvestingPro Tip that the company has consistently raised its dividend for nine consecutive years.
- Cash and short-term investments totaled $5.2 billion at the end of the quarter.
- Lam Research anticipates spending for wafer fabrication equipment (WFE) in 2023 to be around $80 billion, up from the previous estimate of mid-$70 billion.
- The company provided guidance for Q4 2023, expecting revenue of $3.7 billion, gross margin of 47%, operating margin of 29.5%, and earnings per share of $7.
Lam Research CEO, Tim Archer, discussed the stabilization of the memory business and anticipated improvement in bit demand. He highlighted the strong position of Lam Research in the advanced packaging segment, particularly in high-bandwidth memory (HBM), which is experiencing strong demand and supply shortage. Archer projected strong growth for the HBM/advanced packaging business in the next year.
Despite the continued NAND weakness, Archer stated that supply actions are starting to have a positive impact. He also discussed the company's non-China trailing etch market and the factors driving its near-term weakness. He emphasized that these investments are long-term and not solely influenced by near-term market conditions.
CFO Doug Bettinger mentioned the company's plans to increase R&D spending in 2024 to capture opportunities in technology inflections, such as backside power and high bandwidth. Bettinger highlighted that the recent clarification of rules has provided better visibility, and the demand is expected to be sustainable as Chinese customers have communicated multiyear roadmaps.
The company also stated its commitment to making strategic investments to position itself for long-term growth and outperformance in the semiconductor industry. It sees opportunities for growth in various areas and is optimistic about the future. The company emphasized that its long-term profit objectives remain unchanged.
It's worth noting that Lam Research, with its market cap of $84.92 billion and P/E Ratio of 19.11 as per InvestingPro Data, is trading at a high P/E ratio relative to near-term earnings growth, as indicated by InvestingPro Tips. For more insights like these, readers can visit InvestingPro which provides 21 additional tips for LRCX.
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