Lam Research is looking forward to improving supply chains
Shares of the manufacturer of equipment for the semiconductor industry Lam Research Corp. (LRCX), fell sharply after reporting the results of the second quarter of the fiscal year 2022. Revenue and profit indicators were growing but were slightly below forecasts. The reason was the disruption of the supply chain and the resulting additional costs.
Lam Research, which designs, manufactures, sells, repairs, and maintains semiconductor processing equipment and equipment used in the production of integrated circuits, presented the quarter results at the end of January. On the exact day, quotes fell by 7%. Revenue for the second quarter was $4.23 billion, up 22% year-on-year. Adjusted earnings increased 41% to $8.53 per share. In general, the indicators are close to what is on Wall Street.
In particular, management noted that the results were affected by the effects of COVID-19, labor shortages, logistics costs, as well as supply chain constraints. The spread of the omicron strain has also led to delays in production. In addition, the company is facing a severe shortage of components and parts to produce its equipment.
Thus, in the short term, Lam Research expects a decline in profits amid rising costs. At the same time, revenue growth will continue, as the demand for Lam Research equipment for microchips is still high. Thanks to this, the company’s management positively assesses the long-term prospects. In particular, supply chains to improve, which will meet the steady demand from customers and resume growth.
The risk for Lam Research remains its limited capacity, which does not allow it to meet all demand fully. Nevertheless, management notes that consumer demand exceeds supply, which leads to an increase in the company’s order portfolio for five consecutive quarters. At the end of last quarter, the company’s deferred revenue was $1.46 billion, significantly more than $640 million in the same quarter the previous year. Due to supply chain constraints, deferred revenue to grow by another $500 million in the current quarter.
