Douglas R. Bettinger
Executive Vice President and Chief Financial Officer at Lam Research
Excellent. Thank you, Tim. Good afternoon, everyone, and thank you for joining us on our call today during what I know is a busy earnings season. In the March 2022 quarter, we delivered results within the guidance ranges for all our financial metrics. However, we missed the midpoint for all numbers. As Tim discussed, we experienced broadening supply chain issues that negatively impacted our revenue as well as our profitability. Delays in securing critical parts needed for shipments of our tools hindered our ability to meet our revenue objective and led to increased spending as we focused on initiatives to mitigate these constraints. Deferred revenue grew by over $600 million.
The magnitude of the increase reflects the heightened degree of parts shortages that we're experiencing, which impacts our ability to recognize revenue on tools that we've actually shipped. Our inventory balance also increased as we're procuring the parts that we can in building to meet the growing unmet demand that we see. On the margin side, we had headwinds from adding resources to address the supply chain challenges as well as to be prepared for the higher volumes we see in the second half. Additionally, we have ongoing supply-related inflationary pressures. We were able to partially offset the gross margin headwinds through operating expense management during the quarter. As a result, March operating income and earnings per share came in closer to the midpoint of our guidance. We see ongoing costs and supply constraint challenges continuing to impact our guidance for the June quarter.
Let me now turn to the details of our revenue for the March quarter. Revenue came in at $4.06 billion, a decrease from the December quarter. The memory segment was sequentially stronger in the March quarter with concentration of 66% of systems revenues. This was up from the prior quarter level of 58%. The strength in memory during the quarter was led by the DRAM segment where we had a record level of revenue for the company and a percent concentration at 27% of systems revenues. This compares with 23% that we saw in the December quarter.
The DRAM investments were primarily for 1z and 1-alpha nodes additions as well as conversions. The NAND segment was 39% of our systems revenue, higher than the 35% in the prior quarter. Our NAND customers are investing in tools for 128-layer through 192-layer devices. In foundry, March quarter revenue comprised 21% of our systems revenue versus 31% that we saw in December. The decrease quarter-to-quarter is related to the timing of customer investments. There continues to be solid investments in this segment to address end demand drivers such as AI, IoT cloud, high-performance computing, and 5G. I would expect to see increases in this segment as we progressed through the year related to both leading as well as matured node device investments.
We see continued progress in the logic and other segment, which contributed 13% of systems revenue in the March quarter and is a record in terms of revenue dollars. We're seeing good traction here, notably in etch, as we expect continued growth in the segment during calendar year 2022 as our customers invest to meet the demand requirements in the market for microprocessors, image sensors, and advanced packaging solutions.
I'll now turn to the regional composition of our total revenue. The China region came in at 31% of total revenue. The split of the China revenues was fairly balanced between the domestic and multinational customers that have fab locations in China. There was also strong concentration of investments by our customers in the Korea and Taiwan regions, which comprise 24% and 16% of our total revenues, respectively, in the March quarter. The Customer Support Business Group revenue was approximately $1.4 billion, which was down 5% from the prior quarter. CSBG was 8% higher than the March quarter of calendar 2021. Our Reliant and upgrade product line revenues were negatively impacted in the March quarter by the ongoing supply chain constraints. Nonetheless, there continues to be healthy demand in the specialty market across numerous customers as well as investments by our customers for upgrades across their installed fleet of tools. Our spares business remains strong given the high utilization levels in the industry, and we're also seeing solid customer pull for services for the same reason. As we've noted in the past, CSBG can fluctuate on a quarterly basis, but our expectations continue to be that this business will grow annually.
Let me now shift to our gross margin performance. The March quarter came in at 44.7%. We are experiencing a multitude of cost pressures with increases in freight and logistics rates, raw materials cost driven by commodities such as nickel and aluminum, as well as increased integrated circuit costs. Our June quarter guidance reflects our expectations for a sustained level of cost headwinds as we manage through and adapt to this inflationary environment. Operating expenses for March were $621 million, down from the prior quarter level of $627 million. We managed our overall spending levels during the quarter while continuing our focus on supporting our emerging customers' technology roadmaps. We're also deploying incremental R&D resources towards qualifying new supply sources to help improve our supply chain challenges.
Incentive compensation expenses that, as you know, are tied to the company's profitability, were also lower in the quarter. The March quarter operating margin was 29.4%. Our non-GAAP tax rate for the quarter was approximately 10%. And as I've shared with you in the past, the tax rate will have some fluctuations from quarter to quarter. Looking into calendar year 2022, we expect the ongoing tax rate to be in the low teens level. And I just mentioned that we continue to monitor potential tax changes in the United States that are under discussion, but given the uncertainty there, we've not yet reflected the impact of any changes in our modeling.
Other income and expense came in for the quarter at approximately $44 million in expense. And I'll just remind you, in the December quarter we had income for this line item due to a gain in one of our venture investments that had raised capital in a public offering. We also had favorable results from our venture investments since the time we set guidance that contributed positively in the March quarter by approximately $0.11 in earnings per share. OI&E is subject to market-related fluctuations that will cause some level of volatility in this P&L line item. We're forecasting a more negative OI&E impact in June's guidance based on what we currently see in the equity markets. We were active in our buybacks during the March quarter, allocating over $1.2 billion towards share repurchases. The cash was deployed in a combination of open market repurchases as well as an accelerated share repurchase program. The ASR will continue to execute during the June quarter. We paid $211 million in dividends during the March quarter as well. March quarter diluted earnings per share was $7.40. Diluted share count was 140 million shares, which was lower than the December quarter and less than our March quarter expectation due to the increased share repurchase activity.
Let me shift to the balance sheet. Cash and short-term investments, including restricted cash, ended at $4.6 billion, which was down from the prior quarter level of $5.6 billion. The decrease was primarily driven by the capital return activities that I just spoke about. Additionally, operating cash was at a somewhat lower level this quarter due in parts to the investments we're making in inventory to help mitigate some of the supply challenges. Inventory turns were down from the prior quarter level coming in at 2.6 times. Also, due to the timing of customer shipments occurring later in the quarter, our days sales outstanding came in at 83 days, which was an increase from 73 days that we saw in the December quarter.
Noncash expenses for the March quarter included approximately $69 million in equity compensation, $64 million in depreciation, and $20 million for amortization. Capital expenditures in the March quarter were approximately $145 million, which was fairly flat with the December level. Capital expenditures were mainly focused for growth activities such as our silicon spare parts facility in Ohio, the Malaysia factory expansion, and the new Korea technology center. We had approximately 16,900 regular full-time employees as of the end of the March quarter, which is an increase of approximately 600 people from the prior quarter. We had headcount growth primarily in the factory and field organizations to address supply chain constraints while supporting customer deliveries and installations.
Let me now shift and look at our non-GAAP guidance for the June 2022 quarter. We're expecting revenue of $4.2 billion, plus or minus $300 million. While customer demand continues to be strong, we see ongoing supply chain constraints. Gross margin of 44.5%, plus or minus one percentage point. Our guidance reflects expectations of an inflationary cost environment and the continuing need to very tactically manage the execution in the supply chain. Operating margins of 29.5%, plus or minus one percentage point. And finally, earnings per share of $7.25, plus or minus $0.75, based on a share count of approximately 139 million shares.
So then let me wrap things up. Our execution in the March quarter came out a little short of our expectations. While we work through incremental challenges with our supply chain that is continuing to limit our output, demand remains robust. Exiting the March quarter, we had our sixth consecutive quarter of growing backlog. Visibility to end demand is high. We have a solid foundation in our share position with strong traction to date and new opportunities going forward in all market segments.
Operator, that concludes our prepared remarks. Tim and I would now like to open up the call for questions.