Lam Research to trim 7% of workforce, increase R&D spending as memory-chip crunch hits outlook

Lam Research Corp. shares declined in the extended session Wednesday after the silicon-foundry equipment supplier said it will cut its workforce by 7%, while increasing the portion it spends on R&D, as a big drop in memory-chip demand sours its outlook.

Lam Research 
shares declined as much as 4% after hours, following a 0.2% decline to close the regular session at $488.40.

The Fremont, Calif., company said it plans to reduce its global workforce by 1,300 employees by the end of March, which does not include a separate 700-person reduction to its “temporary workforce” who were let go at the end of December.

The layoffs come following a big personnel buildup during the COVID-19 pandemic. Lam reported having 17,700 employees this past August, a 65% increase from the 10,700 positions it reported in August 2019.

Layoffs are only one of the cost cuts Lam is making, Chief Financial Officer Doug Bettinger said on the call with analysts. One segment at Lam will not get cut, however, and that’s R&D. Bettinger said the company expects that R&D as a percentage of operating expenses in 2023 will increase compared to 2022.

The cuts come as Lam expects fiscal third-quarter adjusted earnings to come in between $5.75 and $7.25 a share on sales of $3.5 billion to $4.1 billion, while analysts surveyed by FactSet, on average, are projecting earnings of $7.78 a share on revenue of $4.35 billion.

Even with…

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