Lam Research Corp.

Overview Key strengths Key risks Leading market positions in the etch and deposition product segments of the semiconductor capital equipment industry. Amplified exposure to semiconductor industry volatility due to significant memory industry exposure will lead to significant revenue declines in calendar year 2023. We expect growing capital intensity of leading nodes across logic and memory, combined with significant barriers to entry will support long-term top-line growth through cycles. Increasingly aggressive semiconductor and wafer fabrication equipment (WFE) trade restrictions between the U.S. and China drive uncertainty around future results. Consistent free operating cash flow (FOCF) generation through industry cycles and a strong balance sheet with net cash or near net cash position after shareholder returns. Significant customer concentration to a concentrated

... memory markets, will drive double-digit revenue declines for Lam Research Corp. in fiscal 2024 before recovering in fiscal 2025. Lam reported revenues declined approximately 5% year over year in the March quarter as an extremely painful downturn in the memory market decreased demand for WFE, and the company's segment revenues declined nearly 60%. We expect challenging semiconductor industry conditions to continue over the next 12 months, with revenue declines persisting in memory and expanding to Lam's other end markets as customers cut WFE spending amid high levels of inventory and weaker end-market demand. We currently forecast Lam will report a 20%- 25% revenue decline in fiscal 2024, with memory continuing to underperform other end markets and recurring customer support and trailing-edge revenues holding up better than the corporate average. In spite of these near-term challenges, we believe Lam will return to potentially double- digit...

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