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Analyst Meeting Highlights Industry Changes and Opportunities

December 5, 2016

From the heart of New York City, Lam’s executives discussed drivers for the semiconductor industry and the opportunities they present during our November 2016 Investor and Analyst Meeting. Read on for some of the highlights from this year’s event.

Significant Industry Change Ahead

President and CEO Martin Anstice framed the discussion by talking about the exciting future for the semiconductor industry: “Likely we will see more change in the semiconductor ecosystem in the next five years than perhaps any other time, except for the formative years. Innovation in the silicon world is the very foundation of creativity for the global tech economy. Without mass storage, advanced computation, and connectivity, the most visionary entrepreneurial appetites risk being unfulfilled.”

Expanding on these thoughts, Martin noted that important infrastructure is already in place: data centers and the cloud now offer an economical means of mass storage and advanced computation capability, while applications for mobile platforms, connectivity, and data transport continue to develop.

Moore’s Law is a topic often discussed in the industry. Martin said that today, we are living in a world of “more than Moore.” What that means, he explained, is that in an industry where growth is driven by diverse connected applications – like virtual reality (VR), augmented reality (AR), artificial intelligence (AI), machine learning, and connected automobiles – innovation is no longer limited to traditional shrinks. Instead, the dialog extends beyond power, density, performance, and cost concerns to include aspects like bandwidth, latency, and productivity across many simultaneous technology nodes. Common across all of these requirements is the need to manage process complexity, manipulate materials at the atomic level, and reduce variability.


Technology Drivers

Building on Martin’s discussion, Dr. Richard Gottscho, executive vice president of Technology and Products, opened his presentation with the bold statement that “unprecedented challenges create unprecedented opportunities.” He then outlined his views on the future of advanced patterning, 3D NAND, and other technology growth areas needed to enable these emerging applications.

As Rick explained, increasing demand for higher power, performance, and density continue to drive feature shrink, and multiple patterning enables that shrink. The use of these advanced patterning techniques is expected to grow since they extend lithography capabilities beyond current resolution limitations – for both current litho and EUV – and address key issues. For instance, self-aligned patterning reduces defectivity and line-edge roughness. However, these strategies are challenged by increasing variability and cost concerns as more steps are added, and solutions are needed to continue advancing. For example in etch, Lam’s Hydra® technology is being used to reduce incoming variation, while new technology is now improving variation at the very edge of the wafer to increase overall yield.

3D NAND is succeeding planar memory structures, and we are now ramping the single largest growth driver of the entire semiconductor industry. However, this technology faces tough challenges that will need to be addressed. These include wafer bowing, layer-to-layer non-uniformity, and low productivity during deposition process steps and incomplete etch, channel hole distortion, and critical dimension (CD) variation during key etch steps. As shown in the diagram below, deposition and etch are critical to forming these complex structures, and Lam’s products play a vital role in enabling 3D NAND production.

Rick also touched on additional growth areas, including next-generation transistors, memory applications, interconnect processes and materials, and process control. For new structures like the latest transistor designs where we’re looking at feature sizes on the order of just tens of atoms, he said, “atomic-scale precision is absolutely required”. To address this need, atomic layer etching (ALE) has proven effective for reducing process complexity and improving results.


Expansion of Customer Support Infrastructure

Tim Archer, executive vice president and chief operating officer, shared perspectives on how we are improving customer support worldwide in a variety of ways. Efforts include further developing our global infrastructure to enable accelerated customer ramps, supporting China’s growth as an emerging semiconductor power, and expanding regional manufacturing. Tim explained that one way that we are adding value for our customers is through our Customer Support Business Group (CSBG), which focuses on four important areas: spares, service, systems, and upgrades.

In the final presentation, Doug Bettinger, executive vice president and chief financial officer, provided an update on Lam’s financial results. We are focused on “creating and returning value,” Doug said. We have achieved a healthy balance sheet, consistently invested in the business, and developed a history of returning capital to shareholders, including dividends and share buybacks. Our revenue and earnings growth continue to outpace the industry, and as Doug shared, we are delivering upside against our financial model.

The day’s discussions provided a good reminder of how far our industry has come – and a glimpse into the exciting technologies yet to be developed. After the meeting, Lam rang the ceremonial Nasdaq Closing Bell at the MarketSite Studios at Times Square in New York City – a fitting way to end the annual Investor and Analyst Meeting event.

To see the full presentation and access the event webcast, please visit our Investors website.

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