Key points
- Lam falls nearly 12% despite record sales
- Supply shortages push some shipments into March
- Lam expects Chinese chipmakers to buy less
- Chip index has its worst day since June
Lam Research (LRCX) shares fell 11.8% on October 22 after the chip-equipment maker reported record quarterly sales but said supply shortages would push some planned December shipments into the March quarter. The PHLX Semiconductor Index fell 6.7%, its worst day since June 23.
Lam's revenue rose 22% from the previous quarter to a record $8.22 billion in the quarter ended September 27. The company forecast $8.60 billion, plus or minus $400 million, for the December quarter. Chief financial officer Doug Bettinger said on the earnings call that the forecast "would have been a bit higher if not for some near-term supply chain constraints that we are actively managing."
Lam says delayed shipments will move into March
An analyst asked Bettinger on the call whether the constraints were costing Lam $300 million to $400 million in December revenue. Bettinger said he wouldn't put a number on it. Equipment Lam would have shipped in December will ship in the March quarter instead, he said.
Asked about the bottlenecks, Bettinger said, "given how strong things have been, we're seeing a little bit of tightness." He didn't say which parts were in short supply.
China's share of Lam's sales is expected to fall
China made up 35% of Lam's revenue in the September quarter, up from 26% in the June quarter. Bettinger said that share will be "meaningfully down" in the December quarter, mostly because Chinese chipmakers are expected to buy less. He expects spending by the global chipmakers operating in China to remain "reasonably strong."
Equipment makers led the chip selloff
Other chip-equipment makers fell with Lam. KLA (KLAC) dropped 9.5%, and Applied Materials (AMAT) lost 8.2%. The losses spread to chipmakers.
| Stock or index | October 22 close | Change |
|---|---|---|
| Lam Research (LRCX) | $230.15 | -11.8% |
| KLA (KLAC) | $147.83 | -9.5% |
| Marvell (MRVL) | $223.47 | -8.7% |
| Applied Materials (AMAT) | $375.58 | -8.2% |
| Intel (INTC) | $85.49 | -8.0% |
| ASML (ASML) | $1,560.54 | -6.9% |
| Micron (MU) | $856.49 | -6.3% |
| Nvidia (NVDA) | $212.21 | -4.4% |
| PHLX Semiconductor Index | 10,731.98 | -6.7% |
| Nasdaq Composite | 26,008.86 | -2.6% |
The Nasdaq fell 2.6%, and the S&P 500 lost 1.2%. Meta Platforms (META) fell 7.0% the day after its third-quarter report, which raised its expense forecast. Chip stocks had already fallen for eight straight sessions through October 16, the index's longest losing streak since 2008.
Lam still expects equipment spending to grow in 2027
Lam expects global spending on wafer fabrication equipment, the machines that make chips, in the mid-$150 billion range this year. Its preliminary outlook for 2027 is more than $200 billion. Chief executive Tim Archer said on the call that "clean room space availability and supply chain constraints for certain components" will keep limiting how fast chipmakers and equipment companies can meet demand next year.
Our guide to semiconductor equipment stocks compares Lam with Applied Materials, KLA, and ASML.
