LRCX - Lam Research Corporation (LRCX) Presents at 51st Annual J.P. Morgan Global Technology Media and Communications Conference (Transcript)
2023-05-22 12:46:05 ET
Lam Research Corporation (LRCX)
51st Annual J.P. Morgan Global Technology, Media and Communications Conference
May 22, 2023 10:00 a.m. ET
Company Participants
Doug Bettinger - Chief Financial Officer
Conference Call Participants
Harlan Sur - J.P. Morgan
Presentation
Harlan Sur
Good morning and welcome to J.P. Morgan's 51st Annual Technology, Media & Communications Conference. My name is Harlan Sur, semiconductor and semiconductor capital equipment analyst for the firm. Very pleased to have Doug Bettinger, Chief Financial Officer of Lam Research here with us today. Lam is the third largest semiconductor capital equipment company in the world. Strong leadership in edge, their position with fast-growing and emerging businesses like next-generation transistor and memory cell architectures, resist processing, and advanced packaging.
So, Doug, thank you very much for joining us today. And I think you have something to read.
Doug Bettinger
Okay, let me hit the safe harbor real quick so my attorneys are happy about that.
Today's discussion may include forward-looking statements that are subject to risk and uncertainties, and actual results may differ materially. Additional information concerning factors that could cause actual results to differ materially from those forward-looking statements can be found in the risk factors disclosed in our public filings with the SEC, including our 10-K and 10-Q.
I'm done with that.
Harlan Sur
Perfect. Well, again, thanks for joining us today, appreciate it.
Doug Bettinger
Thanks for having me, Harlan. It's good to be here.
Harlan Sur
The Lam team supplies into all of the global semiconductor manufacturers, right? So, you have great visibility on supply dynamics of the industry. And I know that you have a team who actually does a great job at looking at semiconductor industry demand trends as well.
Question-and-Answer Session
Q - Harlan Sur
So, I think a good way to start off is, overlaying the two dynamics, supply-demand, what's Lam's view on the global semiconductor supply demand dynamics. And are all of your global customers acting in a disciplined fashion?
Doug Bettinger
Yes, that's a great setup for me to tell you how we view the market right now. Frankly, big picture, I think of the semiconductor market as a growth-cyclical industry, an emphasis, and an emphasis on the cyclical piece of it. And we're in the middle of the cyclical downtick at least from a memory standpoint for sure, relative to where I see investment this year. But let me maybe paint big picture, sort of how we see the market this year. We came into the year suggesting that wafer fab equipment investment would be in the mid-70 range, Harlan. And when we began the year we thought it was going to be a little bit first-half weighting.
Fast-forward to our recent earnings call, and market got a little bit weaker. We are now describing an outlook that it's low mid-70s, so a little bit softer, softness primarily coming from memory. A little bit of a downtick maybe in foundry as well. But low mid-70s is how we see it now. And it pivoted a little bit to a little bit second-half weighted relative to how we see spending coming in. And I know you'll ask me, Harlan, as we go through about, "Hey, what's going on in China?" It's very topical. We actually ended up with a little bit more spending in China, I think, than we previously had thought as we got some clarification on a specific process node from a specific customer. So, that contributed to the little bit second-half weighting outlook that we have right now.
Harlan Sur
Perfect. I actually want to rewind back a little bit before we jump into the current near-midterm dynamics of the industry because the Gartner calendar '22 market share numbers were published just very recently, right? And not surprisingly, the Lam team gained share as you grew your total systems business about 600 basis points faster than WFE last year, you grew your [dry etch] (ph) business 400 basis points faster than the market, you grew your deposition business 1,300 basis points faster than the market. What areas, critical layers, technology differentiation drove the strong growth and strong share dynamics for the Lam team?
Doug Bettinger
Yes. No, it's a great question. I never pay that much attention to the Gartner numbers, but obviously we are gaining share, and we intend to continue to do so. And I think we've been extraordinarily successful over the last several years in delivering that performance. And so, to understand it you've got to parse it a little bit. And maybe I'll go through Foundry Logic, NAND, and DRAM as well.
We're making excellent progress, I believe, in each segment of our business, frankly. And maybe let me unpack it, Harlan, just a little bit. In NAND, it was a very strong year for us, last year. And frankly, we own all of the critical applications in NAND manufacturing in terms of building up the stack, that very high aspect ratio enabling edge down through the structure, and the metallization. And so, if you think about it from that standpoint, as that stack get taller and the etch gets more difficult to do, we just benefit from that by the simple fact that we own all of those applications. So, that's one aspect of it.
If you unpack Foundry and Logic, you've got to parse it between leading edge and a little bit of the trailing note. From a leading edge standpoint, there's multiple things going on there that have driven our performance. One of the things we've been talking about for the last several years, it feels like, is strong share gains in conductor etch at a leading logic customers. You can read into that whomever you think that might be. I talk in code about this a little bit. But Tim, our CEO, recently described a double hanging market share in node over node as a result of that progress. And so, that is really showing up now as that specific customer is investing. So, that's a key component of that.
Also in that Logic segment, I think about things like advanced packaging growing, even though it's a relatively small level of investment, the growth from our Syndion product line and our SABRE 3D product line in enabling advanced packaging is driving nice share uptick. And then, if you think about leading-edge foundry, we continue to make really good progress there as well. And frankly, some of the stuff, Harlan, we've been talking about are still sort of on the come-line a little bit, we're super excited right now about progress we see ourselves making around the gate-all-around structure as FinFET and [flex] (ph) the gate-all-around. That is a meaningful uptick and is going to contribute in a big way to share gains you're going to see from us as we go forward. And I can talk more about that as you go through the rest of your questions, Harlan. But I think overall, very pleased with the progress the company has made. Our execution is extremely strong, and our technology roadmap has never been stronger.
Harlan Sur
Tim alluded on the call given the unprecedented excess inventory situation your memory customers are taking drastic actions, right, to rein in supply, even delaying or pushing out their technology migration roadmaps. We had the Micron team earlier today, and that was clearly something that they talked about and continue to focus on to try to rein in industry supply here. Typically, on downturns, we wouldn't see your customers pulling back on technology migration, right? Capacity add, yes; technology migration, not so much. So, is the tech migration pullback and associated higher capital intensity a big contributor to the WFE pullback this year in memory?
And just as importantly though, does this mean the potential for our shoppers spending recovery as memory fundamentals start to normalize?
Doug Bettinger
Yes, I'm going to leave that last part of the question alone, Harlan, I'm not going to put a timeframe on anything. But if I unpack the comments I made on WFE, the biggest contributor to the reduction in WFE this year is memory. Memory is down in a meaningful fashion, call it 40%-50% year-over-year, from last year to this year. And, in fact, when you look across totality the industry utilization is as low as I can ever remember seeing it on the memory side of the house. You normally see memory fabs run even in downturns. And in this case, utilization is dialed back, and perhaps slowing some of the tech migrations down, Harlan.
And when I look at the individual components within memory, NAND is down even more. So, that's our strongest business. Spending is meaningfully down. Utilization is down. With hindsight, I can sit here and look back over the last year and explain to you how we ended up where we are. But regardless, this is where we are. As I think about the cadence of things improving, I'm not going to put a timeframe on it. I can't remember actually seeing as much inventory as is out there right now, having been out there before. So, it's probably going to take a little bit longer. And when I think about what's going to show up in our business when things do begin to solidify.
I think the first thing you're going to see, Harlan, is utilizations will come back up a little bit. For Lam, that will show up in our customer support business group, the installed base business, in the spares and service component of it. As the tools begin to be more highly utilized, the consumption of spares and service will come back up a little bit. So, that'll be the first indication, to me anyway, in our business when things begin to come back around.
The next thing, and you know this Harlan but I'll remind everybody in the room, you'll start to see node conversions occurring again, right? And generally, when that happens, the constraint tools and the fab needs to get upgraded or moved forward. Generally speaking, that is a really good thing for Lam Research because we tend to be the constraint tools in our memory fab, right? If you think about that 3D NAND stuff, the stack, the memory, whole edge and so forth down through that stuff, that's the stuff that'll need to get upgraded. And so, the customer, when that begins to occur, we get a very large share of wallet in that situation because we tend to be the stuff that gets upgraded.
And then eventually the industry would get back to putting incremental wafer capacity in place. So, that's kind of the cadence I'm looking for whenever it begins to show up. That's how it'll show up in our P&L.
Harlan Sur
Any questions from the audience? If you do, raise your hand and wait for a microphone. We have one --
Doug Bettinger
I see one up front here, in the row forward. We have a mic in the room?
Harlan Sur
Yes, we have a mic.
Unidentified Analyst
Yes, if you can talk about share gains as we transition to gate-all-around, both from your own perspective against competitors' in etch and depo, but also from other areas within WFE, for example lithography getting to really high levels, wonder if that would be a headwind for etch and deposition as we transition to new architectures?
Doug Bettinger
Yes, let me talk specifically about gate-all-around, and then I'll generalize it relative to architectural innovation that we see happening. I think we gave some incremental disclosure in our last earnings call about the gate-all-around opportunity that we see in front of us. And what our CEO talked about was when we look at the structure and how it's going to be created, it's relative etch-intensive from a selective etch standpoint. Those are new tools that we brought to market that have actually done extraordinarily well. It's our Selis, Prevos, and Argos tools, if you want to go have a look at the Web site to see what I'm talking about.
There's also a good amount of new film deposition, some steady stuff in there, some ALD applications. So, when we look at this opportunity for our company, we see an incremental $1 billion of revenue opportunity for every 100,000 wafer starts of capacity that the industry puts in place. So, we're excited about this. When we look at tool of record decisions that have already been made, our momentum is extremely good here. So, this is going to be an exciting opportunity as the industry pivots from FinFET to gate-all-around. It is fairly etch and deposition-intensive. So, anyway, that's how we see that.
And then if was going to step back and generalize relative to the business that we do etch and deposition, you see these 3D architectures evolving all over the place in the industry. I think planar to 3G NAND is pretty well understood. We did extraordinarily well on that transition. For similar reasons, we are very excited about what we see with gate-all-around, right? It's a true 3D structure in foundry and logic. And at some point, the industry is beginning to look at how the DRAM architecture is going to evolve. And potentially that inflection into 3D structure at some point as well. When you think about all of these changes architecturally, we are in the sweet spot of all of these changes, so, very excited about the evolution of 3D device architectures. Advanced packaging is another example of a 3D structure when I think about it. And again, we are extremely well-positioned for that. So, I'll pause there and see if there is anything else.
Harlan Sur
Any other questions? We have one right up here.
Doug Bettinger
We've got one up in the second row.
Q – Unidentified Analyst
Hi. So, you are going through the different segments. And, you didn't touch on what's happening with trailing logic.
Doug Bettinger
Trailing logic?
Unidentified Analyst
Yes. And then, if you could just go into what you think about on leading edge, right, you mentioned there have been high inventory for memory. But you look at how much leading logic went through the pandemic, right, I mean there inventory building up there? And what's your thoughts there?
Doug Bettinger
Maybe I'll talk about the mature node. And then, make sure I understood the leading edge question. But, when you look at the totality what's going on in WFE this year, one of the most resilience areas of spending is actually the mature node foundry logic space. And if you think about just demand driver -- secular demand drivers in there and think about things in the industrial, automotive, power, analog side of the industry, that's what really is driving the investment profiles there.
And it's actually quite resilient, quite strong, and fairly broad based. Obviously when I look at the number of companies making investments in capacity there, it's not one or two. It's a broad swath of the industry, honestly. With a little bit of a footprint in the U.S., Europe, some in Japan, and some in China, so it's very broad based I guess is what I would describe driven by what I see a secular demand drivers in the industrial automotive side of the house.
And then, I am not sure I completely got the leading edge question. Can we bring the mic back up?
Unidentified Analyst
So, when you pars semiconductor revenue into let's say memory, logic, and leading logic and trialing, you saw the memory optic and you realize that this was way above trend. And you know what was going to come. And when you look at the leading logic specific gravity, you look at SIA data of this all. You try to break it out. We saw the same way above trend growth in logic, right? Leading logic? And people say it's AI and it's other factors, right? But, is there a point that we may face same thing that we see in memory from an inventory perspective?
Doug Bettinger
Yes. Listen, I do see inventory cross the totality of the industry, but nowhere near like I see in the memory side. There is an ebb and a flow to business, right? Nothing grows every single year here. And there is inventory out in the channel. But, there is also rising capital intensity if you think about the cost to put a leading edge away from players, it gets progressively more and more expensive. So, there is an aspect of the investment in the leading edge that is driven by that in addition to just overall demand drivers like generative AI and AI servers and autonomous driving and things like that that we all get excited about.
Harlan Sur
Any other questions? Talk a little bit more about your some of the new products that you are bringing to bear on the EUV process flow. I think as we move to high-NA EUV in 2025, there is a lot of sensitivities, a lot of more optimization that has to be done. I think you guys are bringing to market some dynamics around the EUV process so that could actually help improve a lot of these dynamics.
Doug Bettinger
Yes, let me talk a little bit about our drivers in this product offering. I think we first, Harlan, started talking about this just before the pandemic actually. And it's a new tool type for us. Something that historically we haven't had tools in this space. But, what we are collaborating with ASML to do is to bring out the drivers that drive photoresist, which actually helps enable the productivity of the EUV tool.
It's a depth of field thing in terms of what we are able to do with depositing a dry resist on the wafer as compared to wet photoresist which is historically what the industry has done. So, when we look at this opportunity actually, you will see from a timing standpoint paired with high-NA in some aspect of things in what I would describe to you as it's new business for us, incremental opportunity. Everybody that -- every customer in the industry that uses EUV has some of our hardware in their lab evaluating what this is capable of doing. And one of things we are excited about and again we announced in the last earnings call is an announcement of a second memory customer in DRAM. And our first large foundry and logic customer has selected our hardware as dtor for this capability.
So, like I said, new business for us, it's a meaningful opportunity. When we look at how big the opportunity is cumulatively over five-year horizon, we believe this is a $1.5 billion of incremental revenue for us. Back half weighted in that five-year timeframe and growing beyond that frankly, Harlan, as high-NA becomes bigger and bigger portion of the process flow. So, I am very excited about this. Our engineering team has executed extremely well on this. And, I think the customer poll has done a great demonstration of that.
Harlan Sur
And if we roll up a lot of these complexity challenges that we've just talked about over the past few minutes, I think another way too look at it at a high level is that over the past 10 years including this year -- down year, wafer equipment spending has grown about 11% per year over the past 10 years versus the semiconductor industry that has only grown 6%. Lam team has grown its business at 14% CAGR over that same period of time, so, strong op performance. Given the complexity challenges much of what we talked here, the need for more installed capacity, do you anticipate, WFE to continue to outgrow industry revenues? And, do you anticipate Lam to continue to outgrow that trend?
Doug Bettinger
Listen, it's hard for me to put a number on this percent CAGR versus that percent CAGR. What I do firmly believe is the semiconductor industry is an amazing industry quite honestly and enabling so much in terms of what we are doing in society today. The opportunity for this industry to be a trillion dollar industry in the future is absolutely going to happen. I don't know exactly what year. Maybe, it doesn't really matter that much. And, I don't know, Harlan, exactly what the capital intensity in terms of WFE per revenue dollar is going to be in the future. But I do know capital intensity in terms of the cost per leading edge wafer is going up. It's getting more challenging, more difficult to manufacture these new structures like gate-all-around in an increasing layer count in 3D NAND.
It's getting hard to do this stuff. And I see the opportunity specifically for what Lam has done over the last several years to continue into the future as this 3D architecture is going to be a bigger and bigger part of how the industry does what it does. So, we are enabling in that regard. I absolutely see that continuing. I am going to decline to put a specific number of it, Harlan.
Harlan Sur
Right.
Doug Bettinger
But, I think the opportunity for our company at Lam is really, really good. I am very excited about what we are doing. What our roadmap looks like and what we are going to continue to do to enable the industry.
Harlan Sur
And the team clearly does have a strong leadership position in the 3D architecture, right? The next significant inflection is to 3D DRAM, right? Now, it's more towards the second half of this decade. But, your customers are already working on these new novel architectures. And I have actually spent some time reviewing these next generation 3D DRAM memory cell architectures. And they looked almost exactly like a 3D NAND cell architectures with some enhancements. Would you agree with that? And, what is the Lam team doing to sort of leverage your dominance in 3D NAND to get more presence in the DRAM market space when this transition does happen?
Doug Bettinger
Guess what I would tell you, Harlan, is it's still kind of early days to know exactly what architecture looks like in 3D DRAM. It's being worked on by everybody though. And, when you look at what we are all trying to do collaboratively as an industry, you know when there is much momentum behind it at some point something is going to come out. It is true 3D structure at least what's being contemplated right now. I don't know for us if it will be as great the transition from planar to 3D NAND was. But it's going to be good because it is as you point out a true 3D structure, but it's still fairly far away, Harlan, late in the decade, I think from a time frame standpoint.
Harlan Sur
Advanced packaging, the move to heterogeneous integration, multi-die, stack die architectures, very, very strong trend, right? We're seeing it especially focus on a lot of these accelerated compute, or AI-based silicon capabilities, right integrating CPU, GPU, IO, memory all into one package.
Doug Bettinger
Yes, all the chiplet stuff.
Harlan Sur
You mentioned a little bit about this, but how is the team -- where is the team competing in this market? And roughly what percent of your business is it today? And how do you see that growth trajectory over the next few years?
Doug Bettinger
Yes, thanks for asking about that. Listen, this is an evolution that obviously we're extremely excited about. And when you look at it, it's not super big right now, but it's growing very, very quickly, very rapidly. And if you just listen to people in the industry talk about heterogeneous integration and chiplets architecture, that's what's driving this. And if you decompose it a little bit relative to where Lam wins in this space, we have always had very strong product offering in silicon etch, deep silicon etch. It's our Syndion product line, which is extremely well positioned in this space. In fact, you've seen it in TSV and image sensors for many, many years from the company. It's a very strong product line for us and very well adopted in the advanced packaging space.
Also, a lot of the interconnect is deposited using an electroplating approach, which we're also a leader in. From an industry standpoint, that's our SABRE 3D product line. And so, as this segment of the market inflects and grows, by the way, we sell other things in there too. There's Wet Clean in there, there's some PECVD in there, but the really strong product offerings that we have are Syndion and SABRE. We benefit extensively from this transition and we're doing everything we can to help enable it.
I guess the other thing I would mention, Harlan, there's not a lot of M&A left in this industry, but we did just do a small acquisition in this space targeted more at a panel packaging form factor, which we think eventually becomes part of the story here. So, that will be more and more of what you're seeing from us as well.
Harlan Sur
Perfect. Any questions from the audience? Let's talk about your mature technology equipment portfolio, right, analog microcontroller IDMs holding up relatively better this downturn, given the better sustainability of industrial and automotive demand trends, but also some underinvestment in mature and specialty capacity over the past few years as well. Your Reliance business has been holding up relatively better. Is Reliant actually growing this year for the Lam team?
Doug Bettinger
Maybe, if you'll permit me, let me put it in the context of the P&L at Lam is the customer support business group and I'll get into the Reliant piece of it. So, within CSBG, there's four things, spare, service upgrades and then the Reliant product line. What I've described about CSBG in total, Harlan, is it's down a little bit this year, Reliant is a component of that. I haven't specifically said what Reliant is doing this year, but it is part of CSBG. Now, when I look at the overall broad market and you asked about the demand drivers of this appropriately, there's secular growth here, right. I mean, this is analog, microcontrollers, image sensors drive some of this as well. So, when you look at the totality of that, it is holding up better, I would say than the overall investment in WFE this year.
Harlan Sur
And then on the topic of your CSBG or services business, right, just a very, very strong backbone for the business in good times and in bad, right, 33%, 35% of your overall business annuity like, this year is a bit different, right. Typically, it does grow during downturns this year, obviously a little bit different. You have big drops in utilization by your customer base, and then on top of that, you're a bit impacted by last year's equipment restrictions in China.
Doug Bettinger
Yes, that's right.
Harlan Sur
But it's outperforming your systems business, once we get back to sort of a normalized environment, given the installed base growth, given the continued focus on mature and your Reliant business, and given the higher mix of subscription like business as you move forward in time, how do we think about the growth of CSBG over the next few years?
Doug Bettinger
Yes, let me unpack CSBG because oftentimes I'll sit through meetings like I'm having today, and it'll be the last thing anybody asks about or I'll have to remind people hey don't forget about the Customer Support Business Group, by the way last quarter it was north of 40% of the revenue of the company. So, again, I'll remind you, spare parts, service, equipment upgrades, and then that Reliant product line. We've already talked about the Reliant product line. So, you usually describe this as a business that should grow every year, but I'm acknowledging this year, actually, it's down a little bit because of the reduction in utilization.
This significant reduction in utilization from the memory standpoint, in addition to the fact that we lost some of the installed base business in China, which you alluded to, but this is great business. It is very cash generative, it's very profitable in terms of just the level of investment required, isn't anywhere near what designing a new piece of equipment requires. So, the investment footprint is a little bit more modest. And like I said, I think people sometimes forget that our tools actually were run for decades. And if you look at an average tool that Lam sells over the life of the tool on average, we generate more revenue after we sell the equipment than when we initially sell the equipment.
That surprises people when I point that out to them because I think sometimes people under appreciate the longevity of how long our equipment runs. It runs for a very long time and it consumes spares, it has an upgrade path to it, service comes along with the equipment running and then we do have a part of the Reliant product line, at least we used to although there's not a lot of used equipment coming back but where we sometimes will buy equipment back, refurbish it and resell it. So, the longevity of how long we generate profit from the equipment, I think people don't really understand the duration of it. It's a great part of the business model.
Harlan Sur
Is it at the operating margin level? Is it accretive to the overall corporate average operating margin?
Doug Bettinger
It is somewhat accretive, again, because it requires a fairly modest level of investment at least as compared to designing a new etch to like Sense.i.
Harlan Sur
Perfect. I'm going to switch topics a little bit here. So, given the geopolitical dynamics between U.S. and China, there have been moves to restrict equipment to China domestic manufacturers. Most recent was October of last year then we had some entity list additions in December of last year. I would assume that this is motivating China to focus on trying to develop its own domestic suppliers of equipment. It is interesting that two of the larger China domestic equipment companies saw their businesses grow almost 50% last year when total WFE spend only grew 9% granted it was off of a pretty low base, but it does raise investor concern on the threat to Lam from China domestic suppliers. How do you guys view this threat?
Doug Bettinger
I think, Harlan, what you need to understand is we get better every year and what the customer wants from us, two nodes from now, we don't know how to do today. It's very difficult to do the things that this industry requires from a result on a wafer standpoint. We're doing things in the lab at Lam Research in Fremont, California that have never been done in the world before. And so, I don't want to underestimate emerging set of competitors in China, but frankly, the way we win, we just keep getting better at what we do. We've been doing what we do for 43 years. We're the best in the world at what we do, and that's how we deal with any competitive threat, Harlan, frankly, whether it's in China or anywhere else.
Harlan Sur
On the financial profile, team has a target to drive 100 basis points of gross margin improvement to around 45% exiting this year. You've previously gotten as high as 47%, 48% gross margins. You've done some restructuring, optimization of the manufacturing operations. You'll be benefiting from your new Malaysia factory as volumes ramp as the business environment normalizes. So, how do we think about the upper bounds of the gross margin range, your operating margins relative to the targets that you put out at your last Analyst Day?
Doug Bettinger
Yes, Harlan, the company is extraordinarily committed to the financial model that we put out in early 2020. No change to that. The way we're going to get there is exactly the things that you're mentioning here. It's a difficult year for the industry right now, businesses down in a meaningful way. And so, what we are doing at Lam Research is taking this opportunity to make the company better. At the end of the day, the customers will spend whatever the customers are going to spend, there's very little in the near-term that I'm going to do or anybody at Lam is going to do about that. But what we are focusing on is making the company better this year. And so, part of what that is, is restructuring the footprint of the company. We have made significant investments close to customers, which tends to be in the Asia region of the world, in the Malaysia manufacturing facility, the Korea Technology Center and the engineering capability that we've put in India. Increasingly, as business improves and I don't know when that's going to happen, but I do know it will happen. We are doing everything that we can to set the company up to be better, when business gets better is how I've been kind of describing it. And so, the growth, when it comes back we will be in a significant fashion supported from that Malaysia factory. The benefit from that, from a cost standpoint is proximity to customer. A large amount of what we spend money on is air freight.
Moving our equipment around, that factory is closer to the customer base in Asia. So, we'll benefit from that. We are working with our supply chain partners to transition their capability along with us to Malaysia. That'll be a benefit from an efficiency standpoint. And so, that's very much what we're focused on right now. In addition to, we're also this year embarking on a digital transformation activity that essentially is working to reengineer all of the business processes at the company and again with an eye towards over the next several years, making this company more efficient and delivering best-in-class profitability. So, I'm excited about what we're trying to do here relative to just efficiency of the company and working to make ourselves better.
Harlan Sur
No. And as a quick segue to that, for the things that you guys have control over. As you mentioned, you guys have just executed extremely well, but give us a little bit more visibility on what internal processes or programs that you've put in place to mitigate or prevent the type of supply chain disruptions that you and the industry have seen 2020, 2021, 2022?
Doug Bettinger
Yes, I know it's a great question. As we came through all of the supply chain challenges we had over the last 18 months, we did a variety of things like multi-sourcing different components so that we're not just procuring things from one supplier. We're also working on an inventory strategy. We're probably over time, Harlan going to hold a little bit more inventory on the balance sheet to mitigate some of the challenges that we just came through. So, yes, as part of the business process reengineering, we're also going to be thinking holistically about, okay, when we get back to the growth aspect of the business, how are we going to make sure the supply chain challenges we just came through? We learn from that and that's very much a part of what we're doing.
Harlan Sur
Perfect. Well, Doug, thank you very much for your insights.
Doug Bettinger
Thanks, Harlan.
Harlan Sur
I appreciate your participation today.
Doug Bettinger
You bet. Thanks for having us.
Harlan Sur
Yes. Thank you.
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Lam Research Corporation (LRCX) Presents at 51st Annual J.P. Morgan Global Technology, Media and Communications Conference (Transcript)