Executive Vice President, Chief Financial Officer and Chief Accounting Officer at Lam Research
Excellent. Thanks, Tim. Good afternoon, everyone and thank you for joining our call today. Lam delivered solid results in the September quarter with record levels of performance across multiple metrics, including revenue, operating income, and earnings per share. The September financials reflect our focus on operational excellence and our ability to deliver and meet the needs of our customers in a dynamic industry environment.
Revenue in the September quarter crossed the $5 billion mark for the first time in our history, coming in at approximately $5.1 billion. We continue to ramp output levels, delivering nearly 10% revenue growth over the prior quarter. Supply chain issues have begun to ease somewhat. They have not gone away completely, however. We continue to deal with certain inflationary pressures as well as output constraints.
Deferred revenue was $2.8 billion and grew in the September quarter by approximately $550 million. This growth was primarily due to customer cash and advanced deposits followed by the timing of shipments on outstanding orders. With macro conditions weakening and wafer fab equipment spending declining, I expect deferred revenue and backlog levels will come down as we exit the December quarter. I'll provide more information regarding our December guidance and focus for calendar year 2023 later in my scripted remarks.
Let me now turn to the segment details for the September quarter. Memory represented 52% of systems revenue, which was slightly down from the prior quarter level of 54%. Included in Memory, the NAND segment represented 39% of systems revenue compared to 40% in the prior quarter. We see capacity adds and conversions occurring by NAND customers mainly for 192-layer class devices. The DRAM segment concentration was consistent with the prior quarter coming in at 13% of system revenues, compared to 14% in the June quarter. The DRAM investments were primarily for 1z and 1-alpha node conversions.
Foundry investments were respectable in the September quarter, comprising 34% of our system revenues reaching a record level from a dollar standpoint. The increase in the quarter from the June quarter concentration of 26%, as a result of the continued strength in investments to both the leading and mature node devices across a myriad of customers, these investments are supporting areas such as AI, IoT, cloud, automotive and 5G.
The Logic and other segment contributed 14% of systems revenue in the September quarter compared with 20% in the prior quarter. I'll remind you that we had record results in this segment in the June quarter, and we continue to have positive momentum in the Logic segment. Our customer base here is investing in microprocessors, image sensors as well as advanced packaging solutions.
I'll now turn to the regional composition of our total revenue. The China region came in at 30% of the total, relatively flat with the prior quarter level of 31%. The China September revenue was more concentrated towards the domestic Chinese customer base. And as Tim discussed, we now have additional restrictions for certain domestic Chinese customers and expect the revenue in this region will be significantly lower as we go into next year. The Taiwan region increased to a concentration of 22% in September versus 19% in the June quarter. Korea decreased to 17% of our total revenue from 24% in the prior quarter. I expect these two regions to continue to be strong for us based on the plans of our customers in those regions.
The Customer Support Business Group results were strong in the September quarter. Revenue here reached a record of nearly $1.9 billion, which was up 16% from the June quarter and 37% higher than the September quarter in calendar 2021. All parts of the CSBG business delivered good performance in the quarter. Notably, the Reliant and spares product line revenues were at record levels. Reliant was the biggest contributor to the sequential growth in September.
As we have noted in the past, CSBG revenues will fluctuate on a quarterly basis. While the macro set up creates the likelihood of a decline in trailing edge demand, the strength of our installed base and value-added services provide a platform to offset potentially softer specialty WFE spending. We do believe, nonetheless, that the specialty segment will weather next year relatively better than WFE in total.
Moving to gross margin, the September quarter came in at 46% at the high-end of our guided range and it increased from June's gross margin of 45.2%. We benefited from higher output levels as well as favorable customer and product mix. We do continue to have cost pressures and freight logistics, as well as in certain raw material areas like semiconductors. I see headwinds coming in our December quarter related to customer mix, which I'll talk to when I address our guidance.
Operating expenses for the September quarter were $647 million, up from the prior quarter amount of $635 million. The increase in spending was in R&D, which comprised nearly 68% of our spending, which was a high water concentration level for the company. We're focused on supporting our customers' manufacturing plans for both the short and long-term and investing with those objectives in mind.
We're committed to managing spending next year as we see a decline in calendar year 2023 wafer fab equipment spending, which will obviously negatively impact our revenue levels. The September operating margin was 33.3% and was over the guidance range due to the higher levels of revenue and improved gross margin.
Our non-GAAP tax rate for the quarter was 13.8%, slightly higher than expected due to geographic mix of income, coupled with the impact of the required U.S. R&D capitalization rules. Our estimate for the December 2022 quarter and for 2023 is for the tax rate to be in the low to mid-teens level. Please note, this estimate does not reflect the impact of any potential U.S. and global tax policy changes being considered.
The minimum tax provisions of the Inflation Reduction Act are not effective for us until the second half of calendar year 2023, which is our 2024 fiscal year. We do not expect any meaningful impact to our tax rate related to this policy change, however. And also, as a reminder, as we've discussed in the past, you should expect the tax rate to fluctuate from quarter-to-quarter.
Other income and expense came in for the quarter at $30 million in expense. This was an expected decrease compared with the $87 million of expense in the June quarter. I'll just remind you that we incurred a loss related to market declines in one of venture investments last quarter, we have now liquidated that position.
Other expense in the September quarter was a little bit better than we expected, mainly because of higher interest rates and an increasing cash balance and slightly favorable foreign exchange impacts. The OI&E P&L line item is subject to market-related fluctuations will -- that will cause some level of volatility due to items such as foreign exchange, as well as impacts from the equity markets.
From a capital return perspective, we allocated approximately $105 million to share repurchases during the September quarter. The cash was deployed in open market repurchases. The ASR from the June quarter also continued to execute in the September quarter. We paid $206 million in dividends during the quarter. And just to remind you, we continue to target returning 75% to 100% of free cash flow as our long-term capital return plan.
September quarter diluted earnings per share came in at $10.42, which was above our guided range because of the strong revenue and improved profitability performance that I spoke about. Diluted share count was 137 million shares, which was lower than the June quarter and was in line with September quarter expectations.
Let me now pivot to the balance sheet. Cash and short-term investments, including restricted cash totaled $4.6 billion, which was up from the prior quarter level of $3.9 billion. We generated solid cash from operations in the September quarter of $1.2 billion of which was partially offset by the share repurchases and dividend payments. Inventory turns were consistent with the prior quarter level, coming in at 2.5 times. Days sales outstanding was 82 days, which was a slight decrease from the 85 days in the June quarter. Non-cash expenses for the September quarter included approximately $71 million for equity comp, $64 million for depreciation, and $12 million for amortization.
Capital expenditures for the September quarter were $140 million, a little bit higher than June, which was $126 million. Capital expenditures are supporting growth in manufacturing facilities in the United States and Malaysia. Additionally, we're investing in research and development infrastructure in California and Oregon as well as our new technology centers in Korea and India.
We ended the September quarter with approximately 18,700 regular full-time employees, which is an increase of approximately 1,000 people from the prior quarter. We had headcount growth primarily in the factory and field organizations, and some in R&D to address higher output levels to manage the supply chain constraints, and to support customer deliveries and installations. We've decided to slow down hiring to only critical positions as we assess the business trajectory going into 2023. Overall, we're executing well in the short-term, while we plan to prudently manage the business for a down WFE year in calendar year 2023. I'll remind you that we know how to manage this business during a down cycle. Our operating model has been constructed and tested for many years in different business environments.
With that backdrop, I'll provide our non-GAAP guidance for the December 2022 quarter. We are expecting revenue of $5.1 billion, plus or minus $300 million. This includes our current estimate of the impact of new regulations on our ability to supply products and services to certain customers in China. This revenue guidance would have been decently higher if not for these new regulations.
Gross margin of 44.5%, plus or minus 1 percentage point, this is down from the September quarter, primarily due to customer mix. We have lost more profitable business from the China region. Operating margins of 31.5%, plus or minus 1 percentage point; and finally, earnings per share of $10 even plus or minus $0.75 based on a share count of approximately 136 million shares.
So let me just wrap it up. Throughout 2022, we've demonstrated the ability to deliver record financial performance and profitable growth. It's been a year of volatile supply chain constraints, inflationary pressures and regulatory changes. We're confident, we're prepared for the challenges we see in the industry in calendar 2023, and we've built a solid foundation for continued success evidenced in our technology leadership and robust installed base.
Operator, that concludes my prepared remarks. Tim and I would now like to open up the call for questions.