Lam Research reported the strongest quarter in its history and was punished for its outlook. Revenue for the quarter ended September 27 reached a record 8.22 billion dollars, up 22 percent from 6.72 billion dollars in the June quarter, with diluted earnings per share of 2.19 dollars on a GAAP basis and 2.20 dollars adjusted, and a GAAP operating margin of 40.0 percent. The results came in slightly above analyst expectations.
The shares fell 11.8 percent anyway, closing at 230.15 dollars from 260.81 dollars the day before. The reason was guidance. Lam set the midpoint of its December quarter revenue forecast at 8.60 billion dollars, plus or minus 400 million dollars, and chief financial officer Doug Bettinger told analysts the forecast would have been a little higher were it not for near term supply chain constraints the company is actively managing. Equipment that would have shipped in December will ship in the March quarter instead, and management declined to put a number on the revenue pushed out when an analyst suggested 300 million to 400 million dollars.
Two details sharpen the read. China accounted for 35 percent of September quarter revenue, up from 26 percent in June, and Bettinger said that share will be meaningfully down in December, mostly because Chinese chipmakers are expected to buy less. And chief executive Tim Archer said cleanroom space and component constraints will continue to limit the industry’s ability to meet demand into 2027, even as, in his words, artificial intelligence is driving semiconductor demand higher and increasing device complexity.
Lam’s quarter therefore cuts both ways for the AI trade. Demand is not the problem: revenue grew by more than a fifth in a single quarter. Supply is. When the company that sells the machines that make the chips cannot ship faster for want of parts and cleanrooms, the constraint Nvidia flagged from the substrate side yesterday is confirmed from the equipment side.