Lam Expects Slower Second Half Of Calendar Year, Maintains Full Year Forecast

Lam Research (LRCX) CEO Steve Newberry said in an interview with Tech Trader Daily Tuesday afternoon that the company’s revenue for the fiscal fourth quarter of $679 million exceeded the upper end of the company’s guidance range. Newberry said shipments in the quarter were $694 million, up 12% sequentially. The company does not provide data on new orders.

Newberry also said that the company finished the quarter with just over $1 billion in cash; he notes that the company bought back $768 million in common stock in the quarter, purchasing 14.5 million shares at an average $52.98 each; that completes the company’s current stock repurchase authorization.

Newberry says he continues to expect that the second half of the calendar year will be slower than the first half, in particular for memory-related equipment. Foundry and logic spending should be up slightly in the second half from the first half, he says. He sees September shipments down 7%-12% sequentially. He repeated previous guidance for calendar year revenue growth of 15%-20%, with shipments up 5%-10%.

Newberry says slowing shipments in the second half will not be as significant as some people had expected - but he stresses that they will in fact be slower. “We said in January that the second half would be worse than the first half; people did not like that message, but now that is the clear consensus,” Newberry says.

Newberry says NAND flash manufacturers began cutting spending early in 2007, and now are beginning to increase capital spending. He says DRAM producers, though, will begin to reduce spending in the second half, a downturn that should play out over 2-3 quarters. He says NAND-related capital spending in 2008 will move in “an upward trending orientation.” The market for DRAM-related equipment, he says, should ramp up by mid year 2008.

Newberry says Lam sees overall IC unit growth this year of 10%-12%; he thinks the total improves to 14% on average over the next three years, with 18% unit growth for the memory sector. That kind of growth will require lots of new fab equipment, he says: he says the chip industry will have to spend $130 billion to $150 billion from now through 2010. Newberry foresees a “good strong economic year in 2008,” with help from the Olympics and the U.S. elections, among other factors; that should mean strong chip demand, a “positive year” for investment in semiconductor foundries.

In after hours trading, Lam was up 90 cents, at $57.90.

Comments

[david.lammers]

I thought it was interesting, and good news for other vendors, that the foundries are bullish for Q1 and the first half.