Lam Research Corporation (NASDAQ:LRCX) Evercore ISI 2nd Annual Technology, Media & Telcom Conference 2022 September 7, 2022 10:15 AM ET
Company Participants
C.J. Muse – Evercore
Conference Call Participants
Doug Bettinger – EVP & CFO
C.J. Muse
It’s time to get started. My name is C.J. Muse with Evercore ISI Semiconductor — Semiconductor Equipment Analyst. Thank you all for coming. Very pleased to have Lam Research; Doug Bettinger, EVP and CFO with us and thank you for coming.
Doug Bettinger
Awesome C.J. Thank you for having me.
C.J. Muse
I was thinking just before this that last time I saw you live in New York, I think I’ve seen you in West Coast, but live in New York was at your Analyst Day back in…
Doug Bettinger
March of 2020.
C.J. Muse
March of 2020 where you got a little nervous at the time of COVID and you wouldn’t shake my hand. It was elbows.
Doug Bettinger
We were like the last event before COVID broke out all over the world and we were debating whether we were going to have the conference. We decided to have it, but then yeah, the whole world fell apart, but it’s great to be back and see everybody face to face.
C.J. Muse
Yeah. So, welcome. And it’s great to — good to have here.
Doug Bettinger
C.J., as we get started, I need to do my safe harbor really quickly and I think we have the slide. If not, please read this. I encourage you to look at the safe harbor language to the extent that I make any forward-looking statements. This guides what I may or may not say. So anyway, I just wanted to flash it up there. You can read it if you want to. You don’t need to,
Question-and-Answer Session
Q – C.J. Muse
I’m not sure with these glasses, I could even see that. So anyways, I think a lot of focus, short-term, long-term, so try to get the short–term questions out of the way. We’re certainly living in interesting times, right? Your lead times are extended. Backlog is tremendous, historical highs. Yet what we’re seeing in the end markets is things kind of slowing down. So I guess, how are you seeing kind of the cycle play out for the semi cap industry into 2023?
Doug Bettinger
Yeah, I guess the first thing I would say C.J. is, it’s not lost in us that some of the consumer-oriented end markets are softening, right? Smartphone units are down, PCs are weakening, perhaps. So it’s like a tale of two cities, frankly, right? The end markets are starting to soften a little bit. But at the same time, the equipment sector is completely sold out and will be for the foreseeable future, right.
All of the supply chain challenges that I’ve been talking about, I know it seems like forever now, but six, nine months, getting a little bit better, but still nowhere near where it needs to be, right. And you saw at the end of the June quarter, our deferred revenue balance grew again. Although the execution of the supply chain did get somewhat better, right.
We beat the revenue guide and guided better, I think, than people expected. So it’s getting somewhat better. But by no means, is it where it needs to be, right and for the next several quarters, I think we’re going to continue to be very constrained from the supply chain. So yeah, that’s what’s going on, right and, we’re getting better at it, C.J. Things are progressing, but still nowhere near where it needs to be and it’s a broad set of things that are constraining our output and we can talk about that if you’d like to.
C.J. Muse
So, from a deferred revenue perspective, is that something where you think that that will just continue to grow exiting the calendar year?
Doug Bettinger
So we’ll see. It’s going to depend on how we progress with the supply chain. So people ask me during the earnings call, I forget who asked this question, Hey, what’s deferred revenue going to do at the end of September? So we guided in improving revenue and then I said, well, based on the revenue that I just guided you to, I think deferred revenue was flat-ish is the way I described it. So getting a little bit better, but still nowhere close to where it needs to be.
C.J. Muse
Got you. Okay. So maybe moving to NAND, right; this is obviously the strongest part of your business. I think your share of wallet is 30% plus. How are you thinking about kind of the current supply-demand dynamic, which clearly is weakened and the impact for your business into next year? Because obviously we have some real positives in the sense that rising capital intensity you’ve got Samsung, which I’m saying this, not you, which has kind of fallen behind on 176 layers, which they’re going to need to spend and you also have YMTC domestic China continuing to spend. So, how are you — how are you seeing the goal post for NAND into 2023 and kind of the positives and maybe the concerns?
Doug Bettinger
Yeah. So too soon for me to give you like real tight guidance for 2023. We’ll do that 90 days from now or when we announce the December quarter is usually when we do it. I think everybody generally feels though that it’ll be a down year for memory investment next year and I think that’s probably going to be the case. But, we’ll, see, right. I’m not going to say it is or it isn’t, but it’s likely that it will be a down memory year, and so I guess in people want me to tell, so what is that going to mean? It’s going to mean that investment fee goes down.
When that happens to the extent that you want to understand how this looks, the best I can guide you to, or encourage you to go look at is ’18 to ’19 this is what happened, right? Memory WFE from ’18 to ’19, went down about 40%. And so what happens in a year when WFE and memory goes down? Largely what you have is investment in constraint tools and upgrades of the equipment that’s there, right? It skews towards what I describe as node conversions and not Greenfield wafer capacity additions, where you still get some big growth. Now we’re near as much, but it’s an economical way to get it.
And so if you think about where we sit, and this is true in both NAND and DRAM, C.J., when things skew to node conversions, the industry will invest less money, but our share of wallet actually goes up because what happens in that environment? And you saw this in 2019. We enable those node conversions, because by and large, we are the constraint tools in memory, right?
And so when node conversions happen, it’s skews to buying etch and deposition equipment or upgrading the existing installed base, which by the way, I’ll remind you is much bigger today than it was in 2018. So don’t sight to that. So that’s the way to think about it and the extent you want to model it or you’re thinking about it, I’m not going to give you numbers yet. We’ll do that in a little while. But go look at ’18 to ’19 as the best indicator of what that likely would look like. Like I said, memory investment, that year was down about 40%. I think our revenue, if I remember it right, was down about 12%.
C.J. Muse
So that’s a great point. I think, one aspect of the way I am scoring that’s not fully appreciated is kind of how agnostic you are in terms of new capacity versus just kind of node enhancements, i.e. shrinks or layer counts where you’re — I think your dollar spent is fairly interchangeable. So that’s one, I think one interest, but the second one though, I’d love to hear your thoughts, as we increase the layer counts on the NAND side, how should we think about rising capital intensity?
Doug Bettinger
The capital intensity goes up? I think it’s intuitive, but if it’s not, let me describe it a little bit. Right? When layer counts go from 128 to 176 to 256 to 300 plus, you’re depositing more films on the wafer, right? That’s our deposition business. That’s what we do. We have very strong market share positions in depositing, those layers. The edges take longer. Or if you think about that most constraining edge, if you’re going through a bigger stack, it just takes longer to get down to the bottom. Even if you’re stacking the structure, it still takes longer.
So in — and we own a lot of that and then depositing the conductive material moving to molybdenum, we own pretty much all of that position in the industry as well. So, if you think about that, we benefit when that happens. And I think that’s intuitive, but I just wanted to talk through it again and remind people of that.
C.J. Muse
Very helpful. On the logic side, I think your business is depending on how mix works in the second half of the calendar year growing, 100% plus or minus and so…
Doug Bettinger
Yeah, this isn’t just a memory story right? We’re doing really well in fun and logic also.
C.J. Muse
So if you think about the drivers there, we would love to hear, how we should be thinking about, I think, for years you’ve been talking about picking up share in logic. I think likewise leading edge foundry, but also image sensors and then I think more recently, Reliant as part of CSPG. So as you look at those four drivers for ’22, how are you thinking about them into ’23? Can you rank order, where you have the most confidence in terms of resiliency and maybe on the bottom side where we’re at least confidence?
Doug Bettinger
Well, rank order for you, but let me describe a little bit about what’s going on foundry and logic. The spending really does skew to the leading edge, although there’s a lot of investment right now in — we call them specialty nodes, but maybe legacy nodes is, and also a way to think about it. The dollar skew to the leading edge because of the capital intensity. So complexity, when you go from 10 to seven, to five, to three and so forth, gets more complicated, right? You went from a planter gate to FinFET, to get all around, and there’s just more steps in the flow. And because of the fact that a lot of this is sort of 3D type structures, it does benefit our business in deposition, because that’s what we do.
And you’ve heard us talking about, our selective edge product offering that’s a new capability that’s going to be needed to get all around, it’s needed in DRAM as well. We’re excited about what’s going on there, but that’s one example of something that’s new in leading edge foundry and so we’re benefiting from that occurring.
On top of that, you were asking about the logic — North American logic customer, you heard Tim, our CEO talk about a doubling of share from one node to the next. That’s been a story that we’ve been talking about for quite a long time. That’s a customer where historically, even though we had the best conductor edge tool, we didn’t have presence there that all of a sudden at 14, we did. 14 to 10, it grew meaningfully in 10 to seven again, it will also grow. We’re excited about that. So that’s a very definitive share situation where independent of what the total investment is, we’re just taking a bigger percentage of it because of what’s going on there.
And then you asked about kind of the specialty stuff. That’s our Reliant product line, which historically has been refurbished equipment sales, refurbished equipment is available right now, frankly, because everything is being utilized. So we’re selling new old equipment, if that makes sense. Call it older model years if you will, but it’s new equipment. That is pretty robust driven by things like IoT and analog and automotive and all of the secular drivers everybody thinks about in that segment. And as a consumer of that C.J., what I would tell you is that is still super constrained. That is still the number one parade when I look at what’s constraining?
Our supply chain, it’s semiconductor availability. I think everybody thinks all of a sudden this is becoming available. It really isn’t at least, not that I see and if it is available, please tell me where it is because we can’t get what we need. So I don’t know if that answered your question. I rambled on there a little bit, but you can redirect me if you want to.
C.J. Muse
No. No, very helpful. I guess maybe to drill a little bit deeper into the lagging edge, I think there’s some concerns around I think in particular 28 nanometre, perhaps 40 nanometre spending in there, the risk there into next year, but based on what you just said, it sounds like your exposure is much more, 200 millimeter and…
Doug Bettinger
No. It’s, across the gamut. It’s absolutely but within Reliant that is only 200 millimeter, correct? You have 300 in there as well.
C.J. Muse
Yeah. There’s 300 millimeter in there as well. Okay. So perhaps you could segment then between sort of the 90 nanometer plus world, which I think we all agree is going to be tight for quite some time and should be another strong year next year. Whereas maybe the more commodity 28-40 is where we could see softness. It could be, is that how you see it or you just don’t have a view yet?
Doug Bettinger
What I can tell you is a consumer devices on all of those nodes. It’s not available right now. That’s the best I can tell you right now and then we can debate, okay, what is next year going to look like broadly, but it’s not available today.
C.J. Muse
Okay. How about for CSBG? I guess the short term long term question. So the short term would be kind of your conviction in terms of your increased installed base and what that can do to deliver growth next year, offset by potential risk to Reliant?
And then bigger picture, I think if we go back to your Analyst Day where you first kind of disclosed what CSBG was as a percentage of revenues, since that time you have completely outgrown, what you guided to then, and, it’s obviously driven by upside to chambers, but also upside to your revenue per chamber. And so I guess maybe you could speak to the longer term vision for that business. Obviously not asking for a growth number, but the sustainability of both units and ASP per unit looking ahead.
Doug Bettinger
Yeah, let me maybe if you’ll let me ramble on a little bit on this one too, because maybe not everybody has heard me talk about the customer support business group; that’s CSBG. It’s the business we have from the installed base in the field. The first thing to understand is our tool run for a really long time, decades. They almost never like go away and so that’s an important thing to understand about CSBG; chamber count grows every single year.
One of the things I was talking with Ram [ph] about as I was getting ready for this conference is, this comparison of 2018 to today is an interesting comparison. At the end of 2018, we had 56,000 chambers in the field. At the end of last year, we had 75,000 chambers in the field and WP is very strong this year. So that’s going to grow quite a bit this year. We always give you the number at the end of the calendar year. So that’ll be up again from that. That defines the opportunity for CSBG in a lot of ways because all of those chambers requires spare parts, need to be serviced, can be upgraded. So those are three of the four components of CSBG; spares, service and upgrades.
And then the fourth one you were asking about is the Reliant product line. It’s the older model equipment as defined by the specialty notes what I describe. So that chamber count is important to understand and I always describe this as a business that should grow every single year because chamber count grows every year and it’s going to grow quite nicely this year. Now let me unpack those components for you just a little bit and then you can ask me clarifying questions if you want C.J.
The biggest individual component of CSBG is spare parts. Our tools need to be maintained frequently, right? They need service, they need spares, replaced; things wear out and to keep yield high and productivity, the tool high throughput high, you need to replace parts with some frequency based on the volume running through the tool. So it’s driven by utilization and it’s driven by the number of chambers that are out there. So that’s an important thing to understand. The spares business is a great business.
A new disclosure I made in the earnings call is because of the strength of Reliant; the second biggest component of CSBG is now the Reliant product line, driven by those specialty notes. So that’s benefited because of the strength and investment there. And then upgrades and in service are number three and number four. So that unpacks that a little bit C.J.
C.J. Muse
That’s great. I guess just maybe one last question, you talked about expecting the business to grow each and every year. I guess, what kind of change in reliant could alter that? Because I would assume that changes to utilization rates would be more modest and therefore spares and upgrades and service would continue and you’ve got rising install base, particularly coming off warranty. That should be a positive driver. So I guess, is there a rule of thumb in terms of kind of…
Doug Bettinger
The reason I gave that incremental disclosure that the Reliant product line is now the second biggest component of CSBG is if people are thinking, hey, those legacy note investments are going to soften a little bit next year, then Reliant will likely soften as well, but the other three components won’t right, spares and service will be up because chamber will be up I believe.
And then an interesting part is in a period like ’19, when memory WFE came down, upgrades actually did really well because that’s the opportunity to enable node conversions. You can upgrade the equipment that’s out there. And so that maybe saying its countercyclical is a too strong a statement, but actually it does well in a period where node conversions are the focus of the customers.
C.J. Muse
Interesting, I guess, moving to gross margins, I think what’s interesting looking out to 2023 is that even in a correction year, it looks like your gross margins should grow, and here really kind of highlighting supply chain constraints move away or improve should…
Doug Bettinger
They should, yes.
C.J. Muse
You also have the ability to build more product out of Malaysia versus Fremont. And the offset obviously would be some sort of scale effect if, things were to slow down next year. So I guess your thoughts on kind of that description. Do you agree, disagree?
Doug Bettinger
Yeah. What you just described is very accurate. If you let me unpack that a little bit too. If you look at the profitability of the business as we sit here today, it’s depressed to a certain extent because of some of the inflationary headwinds we’re dealing with. And I’ve described that as several buckets. Semiconductor is a big piece of it, right? Price of semiconductor is pretty high. When semis supply gets more caught up with demand, that’ll mitigate to a certain extent.
A second big bucket is freight and logistic spending, right? We fly things back and forth between our factories where our suppliers locations are and where the customers are. And that means a lot of stuff is going back and forth across the Pacific Ocean between the United States and Asia. That’s elevated. And when supply and demand gets more in balance there, the cost of logistic spending is going to come back in I believe.
So those are a couple of things that I think get better in a period where supply and demand gets more imbalanced. And then there’s a whole variety of other things that’s other materials that go into our equipment that also has an elevated cost right now that I think gets somewhat better.
So anyway I’ve suggested that’s a couple hundred basis points of headwind right now, and that one would think it gets better into next year, offset by the fact that if you think it’s a down WFE year, next year, then there is some scale effect of revenue coming down. And the fact that we do have some fixed costs, that will depress margins a little bit.
And then the other thing that you mentioned that’s very accurate is we are actively today ramping a new factory location in Malaysia, which will have a benefit to the cost structure over time, because labor is more affordable there. But maybe more importantly, proximity — it’s closer to our customers, right? So the distance we’re going to be flying things back and forth is shorter. And so that elevated logistic spending is going to get better in addition to the rate, getting better, the print rates right now, right and that’ll be a benefit over time as we ramp. And maybe even more importantly, as we bring our supply chain along with us to Southeast Asia that will be a benefit to gross margin over time.
C.J. Muse
I promise you, I wouldn’t focus on just the short term here, so highlighting the long term 48% target. I know that you have reiterated that, that is the number, any additional color you want to share with your investor base?
Doug Bettinger
I guess the other thing I would say is you asked about that Investor Day, I gave you a profitability model back then that was both volume and time dependent. The time dependent piece had a lot to do with ramping Malaysia and moving the supply chain. And the implied profitability that we had in those models is still the right way to think about the profitability of the business. We’ll get through this inflationary stuff. We’ll work on getting paid from a pricing standpoint for the permanent inflation. That’s an active thing that’s going on as we speak today has already been going on, but we’ll continue to be. But, I’ll just remind you there was a time component in there that is still very relevant,
C.J. Muse
Very helpful, but before moving to your product portfolio, I guess, wanted to hit on two other themes I guess US China relations and the Chips Act and I guess, how are you thinking about your exposure to domestic China and all of China for that matter, depending on how the US Government Department of Commerce, proceeds. Any comments there?
Doug Bettinger
It’s hard to predict what you don’t know. Maybe let me describe the China business a little bit, and then describe what I know and you can ask other clarifying questions. 30%-odd of our revenue is in China. Over the last several years, that’s been split fairly evenly between the global multinational customer base with fabs in China and local Chinese customers. Maybe more recently, actually the last quarter, it skewed a little bit more to the local China customer base.
So anyway that’s how to kind of interpret the 30%-ish 31%, 32%. So as we sit today, that was funny. We got a letter from the Department of Commerce the day before earnings basically saying anything sub 14 nanometer can no longer be shipped without a license. And so that was something we had to go sort through and frankly it didn’t have that big of impact because there’s not a whole lot of business that fits that criteria today.
And so the guidance we provided as well as the outlook for WFE of low-to-mid nineties, contemplated that impact right and that’s as much as I can tell you today. That’s what I know today. Sub 14, you need a license to ship to China really impacted one customer and I think most people know who that was, but that, I think inherently what you’re asking C.J. is could something incremental occur. It, could, and I would have no way of knowing what that might be.
C.J. Muse
I guess maybe a bigger picture question and you can answer any way you want or say you don’t know. But, we got the news from AI chips being embargoed and Vidia and AMD impacted and, they had very strict kind of views on Compute and IO, which was nice to actually see that they spent some time on it. And I guess on the equipment side, it’s much more ambiguous in terms of, is it a broad focus or a narrow focus in terms of the desires i.e. an EUV embargo makes a lot of sense, right.
Saying any tool that goes sub 14, well, there’s lots of tools that you sell that sub 14, but also does 28. And so I guess, have you had any kind of dialogue with Department of Commerce or other parts of the Department of Commerce? Absolutely. Expensive, where you have an understanding of how they’re approaching this from maybe a holistic equipment perspective?
Doug Bettinger
It feels to me like it’s a technology focus, right? What are you enabling? And, I would tell you, what we’ve invested in a government affairs function in a much more substantial way. Five years ago, it was very nascent at Lamb. Now it’s a big focus. Our objective is education, right? Who’s Lamb, what do we do? Where do we do it and so forth. And so that’s a big part of what we’ve been doing is having those conversations about what tool does, what, and what enables which kind of thing. It’s a very technical kind of conversation and it’s a very technical assessment that we make in partnership with our customer base about, okay, what category of tool is this? Does this sit in, I guess, is what I would tell you.
C.J. Muse
Got you. I’d be remiss if I didn’t touch on capital returns, been very aggressive of late and you do have that 85% to 100% kind of target 75% to 100%, sorry.
Doug Bettinger
75% to a 100%.
C.J. Muse
Guess I need new glasses.
Doug Bettinger
Maybe you want us to be 85%, but…
C.J. Muse
Yeah. Type of need new glasses. So, I guess should we assume that even in the worst of times, if really WFE is bad, not necessarily your view, but if it were that you would still be quite aggressive?
Doug Bettinger
Listen, a 100% of free cash flow is kind of a limit on what you can do over period of time here. Now, I would point out to you over the last several years, we’ve done more than a 100%, but that was after the 2017 tax reforms, it got easier to access the cash globally and so we brought the cash balance down. It’s kind of where I want it to be right now, roughly.
So the way to think about it is free cash flow is free cash flow. What we’ve described as returning 75% to a 100% and that is still the intention of the company over a period of time. And it doesn’t mean we do exactly that every single period. We don’t, or opportunistic in terms of thinking about when and how to do it, but a 100% C.J. is probably the limit that we can.
C.J. Muse
Great. So how about product portfolio three years, five years? What gets you excited?
Doug Bettinger
I’m super excited about our new Edge platform that you’ve been hearing us talk about. I think we introduced it at, no, no. This is, Sense.i…
C.J. Muse
The Vantex.
Doug Bettinger
Vantex is a chamber on the Sense.i platform and so just remind you, right. We are the leader in etch technology in the industry. We embarked on a complete — first complete redesign that we’ve done of our etch architecture in over 20 years. And we call it Sense.i and then we will give you names of the chambers as they evolve. Vantex is the dialectic chamber.
But we’re super excited about this and the reason we’re super excited about it is there’s things we’ve had ideas about doing to make the etch capability better, that once you have an architecture, you’re kind of constrained. You can’t change some things. And so this was a complete whiteboard let’s redesign things from bottoms up, create the architecture that’s going to enable the next 20 years of evolution of our edge capability. Customers are very excited about this and the poll we’re seeing for this this tool is very strong.
Why is that? Several reasons. First, it’s the first redesign of the chamber itself, like I said, in 20 years. So it’s going to enable the technology that’s needed in terms of some of this high aspect ratio etching for the next 20 years. So its technology, it’s capability of doing things.
Second; it’s a very — we’re putting a lot of equipment intelligence into this tool. The tool in some ways will be somewhat self-aware of what’s going on inside the chambers and inside the tool itself, such that it can maintain itself in certain aspects. And it’s a very self-aware tool and the data coming off the tool, will enable some of our advanced service offering. So we’re excited about that. And then the third thing, if you look at it, it’s the most productive etch platform that we’ve ever delivered in terms of density per square meter of fab space.
And so from that extent, cost of ownership will be very attractive and so this we believe over time will enable us to go after applications that aren’t just technology oriented, but are also cost oriented. And we believe that’s a key part C.J. of how we’re going to gain the 48 points of etch share that we talked about. It’s because we’re bringing a brand new capability on this architecture.
Very excited about that. I’m excited about some of our new selective etch products that we announced I guess maybe a year ago, [indiscernible] and so forth. Increasingly, a selective etch capability is going to be needed in DRAM for sure, for gate all around, things like that. So I’m excited about that. I’m excited about the new advanced ALD capability we’re bringing out. So there’s a whole variety of things.
I think it it’s important to understand a company like lamb, you got to be bringing out new capability every single year. Some of it is big changes. Some of it is incremental changes to enable the technology road up. So the whole portfolio gets refreshed every year, but some of the stuff I just described to some of the bigger new things that we’ve got coming out C.J.
C.J. Muse
Very interesting, and maybe an update on the dry resist side of things. You’ve announced partnerships with INTEGRIS, Gelest recent ASML yep. I think IMEC maybe
Doug Bettinger
At IMEC, that’s absolutely correct.
C.J. Muse
And I think you talked about a $1.5 billion opportunity over a five-year period.
Doug Bettinger
Over five years. Yep.
C.J. Muse
But [indiscernible] is coming along and very close and it sounds, it is.
Doug Bettinger
And we’re excited about this opportunity and it’s basically what it is. It’s dry resist capability that in partnership with ASML we’ve been developing and it’s a brand new opportunity for us. It’s business we don’t do today. It’s all incremental and you heard us announce DTOR selection with one of our big memory customers SK Hynix, who actually selected the tool.
So that is a big kind of milestone in the evolution of this is someone going to select the tool that they intend to use in production. I guess what I describe, it’s still a $1.5 billion C.J. over five years. Everybody that uses a UV has hardware in the lab, evaluating the capability, understanding what we can do, helping us evolve, what this looks like. I’m excited about it because it’s a new business opportunity for us. And I’m excited about it.
When you see the customers putting hardware in the lab, that takes a very valuable floor space. And so, you know, you have something that’s valuable to them when they actually allocate floor space to it and that’s what I see everywhere right now. So stay tuned on this. We’ll have more to tell you is kind of time evolves, but everybody that uses a UV is evaluating the hardware. Right.
C.J. Muse
It’s interesting that it’s a DRAM player that is first D2R at least that you’ve announced. So is there something particular to the material science that it is more favorable for DRAM over Logic?
Doug Bettinger
No, not necessarily. It’s just the timing of when decisions are made more than anything else.
C.J. Muse
Got you. Doug, we got one minute left. Maybe, I’ll turn it to you in terms of, what do we not discuss? What is top of mind for you in terms of kind of near term, how you see the world and long term, the positioning for lamb?
Doug Bettinger
Yeah. Let me maybe flip it a little bit and answer the questions everybody’s been asking me, right. Everybody’s worried about, is it going to be a down WFE next year? It might be, but guess what? This industry’s always had cycles. We know how to manage the company in a down WFE. We’ve been doing it for 40-plus years. There’s a playbook. And actually, if you look at the last time, WFE came down a little bit. Our relative performance was very good and so understand that.
Whatever the environment is next year, we’ll run the company in the way we know how to do it. We’ve got a playbook and we will execute the playbook, but don’t lose sight of the long term opportunity here, right? I think everybody gets excited about the trillion dollar semiconductor industry. Certainly I do and I know that’s going to happen at some point in the future. End of the decade, we can debate when.
The secular demand for what this industry supplies to society is amazingly strong. I’ve never been more excited about what the industry is enabling than I am today and I’ve been around for a while. And to the extent that a trillion dollar semi industry is out there, you need more equipment to manufacture all of those wafers. And when I look at that compounded by the fact that these 3D device architectures are continuing to evolve, that means etch and depositions share of the spend grows.
I love where we are. I love what this industry is doing and I love what Lamb Research is doing. So whatever the cycle is, the future is extremely bright. So don’t lose sight of that, right? You got to worry about the near term, but don’t lose sight of the long term. Please.
C.J. Muse
Couldn’t have said it better. Great. Thank you, Doug. Appreciate it.
Doug Bettinger
Thank you, C.J.
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