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Technology Stocks : Semi Equipment Analysis

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To: Sam who wrote (94050)	3/21/2025 9:49:02 AM
From: Elroy	2 Recommendations Read Replies (1) of 95358

Lotsa questions on the gross margins in the call. They said they're going down next quarter for a variety of reasons. One is because consumer product memory - particularly cell phones, but also PCs - are going up a lot next quarter. There is a high NAND content in consumer products, and it sounds like NAND gross margins are well below DRAM and HBM gross margins, so NAND sales up = gross margins down. They also indicated underutilization of NAND production space is/was an issue. In NAND, we continue to underutilize our fabs, and our wafer output is down mid-teens percentage from prior levels. We plan to reuse a portion of our underutilized NAND equipment to support capital efficient conversions to leading-edge nodes. This strategy results in over 10% structural reduction of NAND wafer capacity exiting fiscal 2025 compared to levels exiting fiscal 2024. We forecast sequentially lower fiscal Q3 gross margin, which includes the effects of higher consumer-oriented volumes. NAND underutilization continues to weigh on gross margins.

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