We basically said that we think that this could be a market in which our revenues actually exceeded $1 billion over the next — sometime in the next fiscal years. So it is a rapidly growing part of our business. And 1 in which we have quite high share.
Doug Bettinger: Thanks, Harlan.
Harlan Sur: Thank you.
Operator: Thank you. And our next question today comes from Atif Malik with Citi. Please go ahead.
Atif Malik: Hi. Thank you for taking my question. Tim, my first question is on equipment spending. I know you guys don’t guide WFE until January, but your lithography peer was talking about maybe a softer first half and then things sticking up into 2025. And curious, if you’re seeing a similar profile where first half is more in like a lamb and out like a lion.
Tim Archer: In like a lamb, out like a lion. You know, I think that it’s — what we would say and without getting 2024 at this point, I think it is reasonable to my prior comments that I think spending will come back cautiously. And so, even though we may be seeing some of the leading indicators in some of our markets, I think people are going to want to see sustainability of that condition before we start to see significant spending. So if we were to think, and I believe that the general feeling is that 2025 is probably — a lot of fabs opening, a lot of perhaps demand out in that timeframe. It’s not unreasonable to think that you would ramp towards that as you move through 2024.
Atif Malik: Thanks. And Doug, on the gross margins, you’re still guiding to year-over-year growth but down sequentially because of the mix that you talked about. Can you walk us through which innings are we in terms of the structural gross margin improvement that you guys have been talking about this year?
Doug Bettinger: Yeah, if you take yourself back to when we were talking about this in the March call, you know, we’re at roughly 44% gross margin and we articulated a view that we would be able to drive 100 basis point improvement in that from the operational efficiencies that we were undertaking during the year. And I’m super confident that that’s absolutely already happened, frankly, and we will continue to be in a good spot as we exit the year.
Atif Malik: Thanks.
Operator: Thank you very much. Our next question today comes from Krish Sankar with TD Cowen. Please go ahead.
Krish Sankar: Hi, thanks for taking my question. I have two of them. First one, either Doug or Tim, I don’t know if you guys quantified. In the past you said like, the export restrictions with the $2 billion impact on your revenue. Is there a way to quantify with the new export restrictions? And I noticed that ALE was added to it, a way to quantify the impact in calendar 2024 or incremental dollar value? And then I have a follow-up.
Doug Bettinger: Krish, there really was nothing material incrementally in what was clarified. I guess it was yesterday, right? So you’re right. When we came into the year we said $2 billion to $2.5 billion. Now we’ve got clarification. We could ship a little bit. We took it on to $2 billion. That’s still kind of what we see this year. And nothing incremental really came out yesterday.
Tim Archer: And the reason for that, Krish, is that, in many of those cases, while specific tools might have been now, or technologies now, called out, they were already the types of tools that were used to produce the technologies that were below the limits that were already allowed. So we had already recognized that in our initial statement.
Krish Sankar: Got it, got it. That’s very helpful. And then now just to follow-up and to my — I asked this question last time too, kind of like with respect to the whole cryo etch, the [indiscernible] etch versus [Tel] (ph), announcing a similar product, can you give us like an update on where you are market share wise on the [indiscernible] side? And is the cryo etch having any impact? Because my understanding is cryo etch does help the throughput, but it’s probably a negative from selling number of tools for [indiscernible] etch NAND applications. I’m just trying to figure out how to handicap that.
Tim Archer: Yeah, I mean, there’s no change from what we’ve said before. I mean, Lam is a leader in high aspect ratio etch without a doubt. And I think that also on the last call I did point out the fact that while a lot has been made of cryo or these very cold etching conditions. This is already standard Lam condition. And so to a certain extent, many of these when we talk about our business and any impact that you talk about with throughput, those are already factored into our commentary. So it’s not something that’s new to us. And I think that in general, our focus in NAND has been and always will be, and memory in general, driving productivity at every technology node. That goes into our projected growth outlook that we always talk about.
Operator: Thank you. And our next question today comes from Joe Moore at Morgan Stanley. Please go ahead.
Joe Moore: Great. Thank you. I wonder if you could talk about the DRAM uptick that you saw in the quarter. Can you kind of help us just understand qualitatively how much of that is coming from China? How much of that is from advanced packaging? Are you seeing kind of a resumption of technology spending? Just that kind of thing. What are you seeing that’s driving that improvement?
Doug Bettinger: I guess, Joe, one I would point to, and I’ll let Tim add. Yes, China was a part of it, but it’s not all of it. There was an earlier question about, hey, where we are with bandwidth memory? Yes, it’s getting pulled in. I mean customers want it sooner, we can ship. You’ve got a transition from DDR4 to DDR5 with these new CPUs that are out there. So that also is a little bit of a bright spot. So I guess I’d point to both of those things as part of what we saw in DRAM.
Tim Archer: Yes. No, I think that’s pretty much it. I mean, as we’ve said before, you also have this transition to higher buy sizes, which ultimately will be a driver of wafer outs and therefore, equipment demand and probably starting to see some of the initial phases of that right now as well.
Joe Moore: Great. Thank you. And then in your upfront remarks, Tim, I think you had talked about trailing etch, mature node somewhat weaker outside of China. Can you — is there something there that could be a trend? Or is that just kind of more of a one quarter phenomenon?
