Is China a problem for lam research business

China's significance to Lam Research's business is complex and multifaceted, with both opportunities and challenges:

1. Revenue Contribution: China has been a significant market for Lam Research, with substantial revenue contributions. In 2023, China comprised 26% of Lam Research's income, down from 31% in 2022. This indicates a diversification away from China, but it also suggests that China remains a substantial market for the company.
2. Diversification Efforts: The company has been evaluating opportunities to diversify its supply chain, including considering investment in Vietnam. This move could help mitigate risks associated with China-related export controls and geopolitical tensions.
3. Impact of Export Controls: Lam Research has warned of a potential $2 billion to $2.5 billion revenue hit due to U.S. curbs on exports of high-end technology shipments to China. These controls have forced the company to cease shipments and support as required, impacting its business.
4. Market Dynamics: Despite the challenges, Lam Research has been able to exceed market estimates in revenue and earnings, with a reported revenue of $3.87 billion for the quarter ending June 2024, surpassing the midpoint of management's guidance range. This suggests that while China may pose risks, the company is navigating other markets effectively.
5. Global Strategy: The company's global strategy, including its international revenue trends and performance in various regions, is crucial for understanding its resilience and prospects. Lam Research's performance in Europe, Korea, and Taiwan accounts for a substantial portion of its revenues, indicating a diversified global footprint.

In conclusion, while China is a notable market for Lam Research, the company's business is not solely dependent on China. The company's efforts to diversify its supply chain and navigate the impact of export controls are indicative of a proactive approach to managing risks associated with the Chinese market.