Lam Research (NASDAQ:LRCX), a prominent supplier of chip manufacturing equipment, announced its second-quarter revenue forecast, which slightly missed Wall Street’s expectations due to sluggish demand for memory chips, despite experiencing significant growth in its Chinese business. As a result of this news, the company’s shares dipped by approximately 5% during after-market trading.
The company, headquartered in Fremont, California, foresees current-quarter revenue at $3.7 billion, with a variation of plus or minus $300 million. This projection falls just short of the average analyst estimate, which stood at $3.65 billion, as per data from the London Stock Exchange Group (LSEG).
During an earnings call, Doug Bettinger, the Chief Financial Officer, highlighted that sales of flash memory-making machines have been the weakest they’ve been in years, aligning with the trend of declining demand for the previous generation of technology.
Several major memory chip manufacturers, including Samsung Electronics, SK Hynix, and Micron Technology, have scaled back their production in response to this waning demand. However, there are emerging indications that prices in this sector may have reached their lowest point.
Bettinger also pointed out that Lam’s sales were impacted by a quarter-over-quarter drop, largely due to the timing of sales for advanced chipmaking systems. TSMC, the world’s leading contract chipmaker, took measures in September to delay the delivery of high-end chipmaking equipment, citing concerns about customer demand.
Lam Research reported first-quarter revenue of $3.48 billion, surpassing market estimates of $3.41 billion. Notably, China accounted for 48% of the company’s first-quarter revenue, marking a significant increase from the previous year’s figure of 30%.
When excluding exceptional items, the company’s profit per share dropped to $6.85, exceeding estimates of $6.12.
Lam Research clarified that it does not foresee any substantial impacts resulting from the updated export restrictions announced by U.S. officials on Tuesday. These restrictions were designed to limit access to high-end artificial intelligence chips for China’s military and focused on blocking chipmaking tools meant for manufacturing advanced AI chips. These rules represent a narrower revision of the restrictions imposed last year, which resulted in approximately $2 billion in lost revenue for Lam.
Executives of Lam Research expressed confidence in the continued strength of their Chinese business in the fiscal second quarter and beyond. Doug Bettinger emphasized that the company views China as a pivotal market that will remain influential, regardless of its future economic dynamics.
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Author Faith Yakubu 
