Lam Research announces 1,300 layoffs, 7% of workforce, as outlook looks bleak

Lam Research announces 1,300 layoffs, 7% of workforce, as outlook looks bleak

Shares of Lam Research Corp. fell in extended trading on Wednesday after the silicon foundry equipment provider forecast current-quarter results well below Wall Street consensus, while announcing it would cut its workforce by 7%.

Lam Research LRCX,
+0.18%
shares were down 3% after hours, after falling 0.2% to close the regular session at $488.40.

The Fremont, Calif., company said it plans to cut its workforce by 1,300 employees by the end of March.

It expects adjusted earnings of $5.75 to $7.25 per share for the fiscal third quarter on sales of $3.5 billion to $4.1 billion, while analysts polled by FactSet on average expect a earnings of $7.78 per share on revenue of $4.35 billion.

“Lam closed 2022 with record revenue and earnings per share for the December quarter and calendar year, despite supply chain challenges and inflationary pressures,” said Tim Archer, Lam’s Chief Executive Officer, in a press release. “Given the expected decline in wafer fabrication equipment spending in calendar year 2023, we are taking proactive steps to reduce our cost structure and increase the efficiency of our global footprint, while preserving R&D essential.”

Read: US Google layoffs affect nearly 3,000 employees on both coasts, from data scientists to massage therapists

“With these actions, Lam is focused on accelerating our strategic priorities to capitalize on the semiconductor industry’s long-term growth prospects,” Archer said. Tuesday, Texas Instruments Inc. TXN,
-1.13%
announced it would forge ahead with building its own capacity at a time when many others are scaling back amid a chip downturn.

Read: As Texas Instruments grows during recession, analysts await capital spending details

Lam reported second-quarter net income of $1.47 billion, or $10.77 per share, compared with $1.19 billion, or $8.44 per share, a year ago. Adjusted earnings, which exclude amortization and other items, were $10.71 per share, compared with $8.53 per share in the year-ago quarter.

Lam makes the very complicated machines used by foundries like Taiwan Semiconductor Manufacturing Co. TSM,
-2.27%
to make silicon for chips made by Nvidia Corp. NVDA,
+0.30%
and Apple Inc. AAPL,
-0.47%,
while chipmakers like Intel Corp. INTC,
-0.74%
forge their own silicon.

Revenue reached $5.28 billion, compared to $4.23 billion in the year-ago quarter. Analysts polled by FactSet had forecast adjusted earnings of $10.03 per share on revenue of $5.1 billion, based on Lam’s forecast of $9.25 to $10.75 per share on sales of $4.8 to $5.4 billion.

Lam Research shares have fallen 17% in the past 12 months, against a 13% drop in the PHLX Semiconductor Index SOX,
+0.18%,
an 8% drop in the S&P 500 SPX index,
-0.02%,
and a 16.5% drop in the tech-heavy Nasdaq COMP composite index,
-0.18%.

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