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Founded in 1980, Lam Research is a top seller of equipment to semiconductor manufacturers. Its machines are used to produce components critical to the tech industry, including the silicon wafers and the chips that power a variety of electronics. Over time, to keep up with industry innovation, Lam has adapted its equipment to handle increasingly tiny chip designs and ramped up production to meet the growing demand for chips in the AI era.

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Lam Research (LRCX): Company Profile, Stock Price, News, Rankings

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Lam Research

lam research

Good day, and welcome to the Lam Research Corporation December 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please limit yourselves to one question and one follow-up. Please note that this event is being recorded. I would now like to turn the conference over to Ram Ganesh, Vice President of Investor Relations. Please go ahead. 

Thank you, and good afternoon, everyone. Welcome to the Lam Research Quarterly Earnings Conference Call. With me today are Tim Archer, President and Chief Executive Officer, and Doug Bettinger, Executive Vice President and Chief Financial Officer. During today's call, we will share our overview on the business environment, and we'll review our financial results for the December 2025 quarter and our outlook for the March 2026 quarter. The press release detailing our financial results was distributed a little after 1:00 P.M. Pacific Time. The release can also be found on the Investor Relations section of the company's website, along with the presentation slide that accompany today's call. Today's presentation and Q&A include forward-looking statements that are subject to risks and uncertainties reflected in the risk factors disclosed in our SEC public filings. Please see accompanying slides in the presentation for additional information. 

Today's discussion of our financial results will be presented on a non-GAAP financial basis, unless otherwise specified. A detailed reconciliation between GAAP and non-GAAP results can be found in the accompanying slides in the presentation. This call is scheduled to last until 3:00 P.M. Pacific Time. A replay of this call will be made available later this afternoon on our website. With that, I'll hand the call over to Tim.

Thank you, Ram, and good afternoon, everyone. We ended calendar year 2025 on a strong note, delivering December quarter revenues ahead of the midpoint of our guidance. Gross margins, operating margins, and EPS all exceeded the high end of the range. Our performance demonstrates continued strong execution in an accelerating semiconductor demand environment. At our Investor Day event last year, we outlined our tremendous opportunity to expand our market and gain share at every successive technology node. Vertical scaling of device and packaging architectures is driving higher deposition and etch intensity and moving the market to our strengths. The vision we shared was to more than double Lam's revenue and profit over the next five years. Today, we are well on our way.

With the industry ramping capacity and adopting new technologies to meet the demands of the AI transformation, Lam's deposition and etch capabilities are proving to be key enablers in the transition to gate-all-around transistors, backside power deposition, high-performance materials, and 3D advanced packaging. We prepared for this moment, launching an array of new products and advanced services targeted at broadening our exposure across DRAM, leading-edge foundry logic, and NAND. We've also invested in expanding our manufacturing and R&D footprint to increase operational velocity in response to strong customer demand. In 2025, we achieved record revenues of more than $20 billion and expanded our served available market, or SAM, share of WFE into the mid-30s% range. This marks solid progress toward our multiyear goal of being in the high 30s.

Our ship share of WFE grew by well over 1 percentage point year-on-year, and our CSBG business hit key milestones, with the size of our installed base topping 100,000 chambers and revenue growing faster than the increase in installed base units. We are proud of these accomplishments, but there's even more to come. The AI transformation is driving industry spending higher. In 2025, WFE came in close to $110 billion. Our initial 2026 view is for WFE to be in the $135 billion range, with the growth in spending remaining constrained by a shortage of available clean room space. Chipmakers have been public about their efforts to alleviate constraints, but they've also commented on sold-out conditions persisting, indicating the magnitude of the challenge.

We expect WFE this year to be weighted to the second half, with robust growth in investments across all three device segments, led by DRAM and leading-edge foundry logic. All indications are that we are still in the early stages of the AI build-out. End markets are signaling a strong appetite for greater compute and storage capability at both the device and package level. In foundry logic, customers are accelerating migration to nodes employing gate-all-around transistors. If you recall, we previously said that the transition to gate-all-around equates to roughly $1 billion in incremental Lam SAM for every 100,000 wafer starts per month of capacity. Given the 3D nature of gate-all-around structures, we are well positioned with our deposition and etch portfolio to gain share within this segment. In addition, customers are integrating more functionalities with advanced packaging.

We previously estimated advanced packaging would make up a mid-single-digit % of overall foundry logic equipment spend. As additional devices, including those for mobile applications, adopt more complex packaging schemes, we see this number moving higher. In high bandwidth memory, or HBM, advanced packaging is critical for the transition to HBM4 and 4E, and stacking of up to 16 layers. Lam is in an excellent position, given our market leadership in electroplating and TSV etch. We expect our overall advanced packaging business to grow more than 40% in 2026, outperforming our view of WFE growth in this space. Finally, in NAND, demand is growing faster than previously expected, as new use cases for high-capacity SSDs emerge. Non-volatile context memory layers that enable large-scale AI inference have the potential to add incremental growth in NAND bit demand. 

For every 2-3 million accelerators sold, we estimate an incremental 1-point increase in overall NAND bit demand growth. Lam has the industry's largest installed base of NAND systems and is well positioned to outperform as the NAND market inflects higher. Against this backdrop of strong semiconductor demand and accelerated technology transitions, we are seeing increased momentum for our newly launched products. Akara, our latest generation conductor etch system, has doubled its installed base over the past year, with production tool-of-record wins for EUV and high aspect ratio etch applications in advanced DRAM and foundry logic. Critical dimensions in foundry logic are shrinking by roughly 10%-20% node to node. Similarly, in DRAM, aspect ratios are increasing with each node, and process complexity is set to grow even more with future moves to 4F² and 3D DRAM.

Consequently, multiple customers have chosen Akara for its unmatched ability to etch the smallest dimensions at very high aspect ratios while maintaining profile control and reducing variability across the wafer. This is achieved through new innovations, including our DirectDrive, solid-state power delivery hardware, and Tempo plasma pulsing. In next-generation gate-all-around devices, we expect the number of applications using Akara to grow by roughly two times, including wins for critical front-end silicon etch applications. In DRAM, we already have wins with Akara for the 1C node that are set to ramp this year, and expect growing momentum as the applications using Akara expand nearly three times in the subsequent 1D node. As we look out over a multiyear period, the unprecedented AI ramp demands greater speed and agility across the ecosystem.

Our customers are moving faster at every stage of process development and manufacturing, so we have increased the velocity of our execution across the board. We are strengthening our supply base, automating logistics, and ramping high-volume manufacturing. Over the last 4 years, we have nearly doubled our overall manufacturing capacity, and in 2025, we launched state-of-the-art automated warehouses that enable greater production efficiency. These investments have proved critical in a fast-ramping market environment, and we're set to expand our footprint further to meet the demand we see over the next several years. Our product sales and support teams are also executing to the accelerated pace of customer demand. Over the course of 2025, Lam was recognized with nearly 40 supplier awards, highlighting, in many cases, our fast tool installations and outstanding production ramp support.

Looking forward, we see Lam's equipment intelligence solutions and Dextro cobots leading the way to the autonomous fab, with predictive and automated maintenance and precise global fleet matching. Dextro continued to gain momentum in 2025, expanding to cover six different Lam tool types. Finally, in an environment where inflections are more complex and innovation timelines are compressing, we have transformed our R&D capabilities to help us stay ahead. We are utilizing velocity labs located close to our customers to screen new materials, new hardware, and new process regimes at a rate not previously possible. We are also leveraging Lam's digital twinning capabilities to shorten product development cycles and converge on next-generation tool and process solutions with greater efficiency. Wrapping up, the growth we envisioned for Lam at our investor event one year ago is materializing faster than we anticipated.

We are making progress against our SAM expansion, share gain, and profitability objectives. With the demand environment continuing to accelerate, we are elevating our focus on scaling the company, delivering for customers, and outperforming in the AI era. Thank you, and here's Doug.

Great. Thank you, Tim. Good afternoon, everyone. Thank you for joining our call today during what I know is a super busy earnings season. Before I get into the details, I'd like to say that we were quite pleased with the strong execution across the company in calendar year 2025, which translated into record top and bottom-line financial performance. In calendar year 2025, revenue was a record, coming in at $20.6 billion, which was up 27% year-over-year. CSBG revenue also reached a record of $7.2 billion. Gross margin was 49.9%, the highest result as a combined company for the full year since the Novellus merger back in 2012. Gross profit increased 31% year-over-year to $10.3 billion.

We also had record operating margin of 34.1% and operating profit dollars of $7 billion, which was up 41% year-over-year. Diluted earnings per share were $4.89, which was up 49% year-over-year. Looking at it, we delivered leverage from the top to the bottom of the P&L in 2025. Let me turn to the December quarter results. Our revenue was above the midpoint of guidance, while gross margin, operating margin, and earnings per share all exceeded the high end of our guided range. Revenue for the December quarter was a record, coming in at $5.34 billion. This marked our 10th consecutive quarter of revenue growth.

The deferred revenue balance at quarter end came in at $2.25 billion, down sequentially due to an approximately $500 million reduction in those customer advance down payments. From a market segment perspective, Foundry accounted for 59% of our systems revenue in the December quarter, slightly down sequentially, but up from 35% in the December 2024 period. This underscores the success of our strategic focus and execution in Foundry. Foundry strength came from investments at the leading edge in addition to mature node spending that we saw in China. Memory was 34% of systems revenue, in line with prior quarter. Within memory, we generated record DRAM revenue, accounting for 23% of systems revenue, which was up from 16% in the September quarter.

Investments in high bandwidth memory continued to remain strong, driven by movement to HBM3E and 4. We also saw traditional node migrations to the 1B and 1C nodes, enabling the transition to DDR5. Non-volatile memory contributed 11% of our systems revenue, down from 18% in September quarter. This trajectory was in line with our expectations for customer plans coming into the year. Despite the quarterly decline, NAND revenues grew strongly for Lam in what was a first half weighted calendar year, 2025. As we enter 2026, we see solid end market demand as customers prepare for the next stage of AI-driven growth in NAND. And finally, the logic and other segment came in at 7% of systems revenue in the December quarter, slightly up sequentially. Let's turn to the regional breakdown of our total revenue.

China came in at 35%, which was a decrease from the prior quarter level of 43%, but slightly higher than our original expectations. This was due to updates in the affiliate rule and the resulting timing of shipments from that. The next largest geographic concentrations were Taiwan, coming in at 20%, up sequentially from 19%, and Korea at 20%, up sequentially from 15%. Customer Support Business Group generated approximately $2 billion in revenue for the December quarter, up 12% sequentially on an increase in Reliant systems. We were 14% higher than the same period in 2024, primarily on growth in spares. CSBG obviously remains a key part of our growth strategy with our expanding installed base and innovation in advanced services. NAND spending enabled record upgrade revenue in 2025, up more than 90% year-over-year.

In the 13 years since we brought Lam and Novellus together, I'd like to remind everybody that CSBG has grown every year except for once. Let's look at profitability. Gross margin in the December quarter was 49.7%, which exceeded the high end of our guided range on better-than-expected customer mix. Sequentially, gross margin was about a percentage point lower, reflecting a customer mix that was less favorable than what we saw in September. Operating expenses for December came in at $827 million, which was roughly flat sequentially. R&D accounted for 68% of the total operating expenses. We continue investing to maintain our leadership with a differentiated product portfolio for our customers, with innovations like Vantex, Akara, Halo, and Dextro. The December quarter operating margin was 34.3%, exceeding the high end of our guidance.

The non-GAAP tax rate for the quarter came in at 13.2%, generally in line with our expectations. We continue to see the tax rate in the low to mid-teens for calendar 2026. Other income and expense for the December quarter was approximately $10 million in income, compared with $8 million in income in the September quarter. Slight fluctuation in OI&E was primarily the result of gains in our venture portfolio, partly offset by lower interest income. As we've talked about in the past, you should expect to see variability in OI&E quarter-to-quarter. The capital return in the December quarter, we allocated approximately $1.4 billion towards share buybacks through open market share repurchases. Our average buyback price in the quarter was approximately $154 per share. 

In calendar year 2025, we repurchased approximately 39 million shares at an average price of $104 per share. We also paid $328 million in dividends in the quarter. In calendar year 2025, we returned 85% of our free cash flow. Our plans remain to return at least 85% of free cash flow to our shareholders over time. The December quarter diluted earnings per share were $1.27, which came in above the guidance range. The diluted share count was 1.26 billion shares, which was a reduction from the September quarter and consistent with our guidance. We have $5.1 billion remaining on our board-authorized share repurchase plan. Let me pivot to the balance sheet.

Cash and cash equivalents totaled $6.2 billion at the end of the December quarter, a decrease from $6.7 billion at the end of the September quarter. The reduction of cash is attributed to capital return as well as CapEx spending. As we look ahead, our strong cash position and continued free cash flow enable us flexibility to potentially simply repay the $750 million March 2026 notes when they mature. Day sales outstanding was 59 days in the December quarter, a decrease from 62 days in the September quarter. Inventory turns improved to 2.7 times from 2.6 times in the prior quarter and up from 1.5 times a little over two years ago. As a company, we remain focused on asset utilization, and we were pleased by the sustained progress we continue to make.

Our non-cash expenses in the December quarter included approximately $89 million for equity compensation, $91 million for depreciation, and $13 million in amortization. Capital expenditures for the December quarter was $261 million, which was up $76 million from the September quarter. Spending was driven by investments in manufacturing capacity, R&D, and lab infrastructure that supports our technology roadmap and customer needs. We also purchased a new building in Arizona to support the growing industry footprint there. This capital spending remains consistent with our global strategy of expanding capabilities close to where our customers are. Looking forward, we continue to expect capital expenditure to be in the 4%-5% of revenue range. We ended the December quarter with approximately 19,700 regular full-time employees, which was an increase of approximately 300 people from the prior quarter.

Headcount increases were primarily within the field organization to support customer growth, as well as in R&D to support our long-term product roadmap. Let's turn to our non-GAAP guidance for the March 2026 quarter. We're expecting revenue of $5.7 billion, ±$300 million. We're expecting gross margin of 49%, ±1 percentage point. We're expecting to see slight headwinds from customer mix. We're forecasting operating margins of 34%, ±1 percentage point. You'll see the normal seasonal uptick in operating expenses in the March quarter. And finally, we're forecasting earnings per share of $1.35, ±10 cents, based on a share count of approximately 1.26 billion shares. So let me wrap up.

We delivered a record year in 2025, reflecting strong execution and broad-based strength across our product portfolio. As we look into 2026, we expect meaningful year-over-year growth, supported by sustained demand in AI-driven markets and continued investment in capacity. We agree with the prevailing view that much of the market will be undersupplied in 2026 due to clean room space constraints. In line with that, we see 2026 as a second half-weighted year. With our strong balance sheet and expanding installed base and the strength of our product portfolio, we remain confident in Lam's ability to continue to outperform and deliver long-term value for our customers and shareholders. Operator, that concludes our prepared remarks. Tim and I would now like to open up the call for questions.

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. As a reminder, please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Our first question comes from Tim Arcuri with UBS. Please go ahead.

Thanks a lot. Doug, I had a question about WFE this year. So you said we're going to be constrained because of this fab, you know, readiness. Is it possible to say how much? I know you're guiding, you know, WFE to 135 this year. I mean, if we use semiconductor revenue, and you assume sort of a normal WFE and intensity number, seems like you could get to, like, 150. So maybe the constraints are costing the industry, like, $15 billion. Is it possible to give a number in terms of how much the constraints are kind of costing in terms of, you know, WFE this year, so we can kind of pro forma that out?

Yeah, Tim, I knew somebody was going to ask that question. I should have anticipated it was going to be you. Listen, it's hard for us to put a number on it, and I'm going to decline to do that as we sit here right now. And the reason, Tim, is plans are somewhat fluid, if we're honest, meaning people are trying to figure out how to get a little more Clean Room space, how to bring facilities online and bump things up a little bit. So I'm not, we're not going to put a number on it. But I think it's safe to say, and Tim can comment on this, as well. Yeah, I think it sets up for 2027 to also be a pretty good year as we think through this.

I mean, the industry seems to be sold out for most of what it's supplying, and everybody's talking about these multi-year agreements that they're working on. I think that's largely a reflection of the fact that demand is very strong, and there's just not enough clean room out there.

Yeah, I don't have much to add, Tim, other than to say that clearly you've seen a large number of fab announcements. I mean, those are those fab announcements are capacity in 2027, 2028, and beyond. And so, you know, I think there's a view that, you know, the constraints this year are gonna continue, even out until many of those new fabs open up. And so, I think we've given you a view of what we think WFE is. As Doug said, you know, we're working on productivity improvements to get a little extra output for customers. That's how we support them. But, fundamentally, it's a pretty big challenge.

Thanks a lot. Doug, and then you're guiding gross margin down a bit on up revenue. Sounds like it's-

predominantly related to China. So China was 35% in December. Is it gonna come down? Like, is that the reason why the gross margin is coming down? And if so, like, what mix do you think China will be for March?

Yeah, I'm not gonna give you a hard number, Tim, but yes, it's customer mix. It's gonna be less rich in the March quarter, and I'll also remind everybody that this isn't a fixed cost business for us. So as volume goes up and down, the component that just benefits from revenue growing isn't that big. The mix component of both product as well as customer is the important item. So you're latched onto the right thing, Tim.

The next question comes from C.J. Muse with Cantor Fitzgerald. Please go ahead.

Yeah, good afternoon. Thank you for taking the question. I guess to follow up on that last question, Doug, could you speak a bit about, you know, the work you're doing with the supply chain, bringing on manufacturing, ramping Malaysia, and how we should think about that in the context of gross margins as revenues ramp in the second half of calendar 2026 and beyond?

Yeah, C.J., I mean, we've been talking for a while, I think, about CapEx growing as a result of expanding manufacturing capability. Tim specifically talked about it doubling over the last 4 or 5 years. So it's been an item that we've been clearly very focused on. We're ramping globally, and you're right, that Malaysia location is our biggest location as we sit here today, and we're trying to get more out of that, in addition to everywhere that we are. But the mix component, C.J., is gonna be more important than anything, at least in the near term, less than just volume ramping.

Great, thanks. And then maybe a follow-up question on CSBG. I would think your customers are trying to get every bit that they can out. And so, the uplift that you saw in the December quarter, and I assume continued strength into March, you know, is that something that will sustain throughout the whole calendar year and should drive, you know, better than kind of that 12% growth CAGR? Or does that take a pause at some point as the transition focuses on greenfield investments?

Yeah, C.J., I'll let Doug speak to the specific numbers, but I think that what you should keep in mind is the CSBG. A lot of our growth, of course, is driven by customers' near-term actions and what we need to do to help them get maximum amount of output from the tools they have. But a lot of the growth really is we're transforming our service business to be much more oriented towards the use of equipment intelligence for predictive maintenance as a way of getting more output from tools, and also implementation of Dextro cobots for our automated maintenance. And both of those things not only will drive top line growth, but also margin profitability improvement, just given the efficiency with which we deliver those services. And so I think there's a number of moving pieces that are all positive for CSBG.

Yeah, and I would just add, CJ, you know, we were pleased to see the chamber count number up. Obviously, we knew that was coming, and we're happy to share it with you. So that, that's an aspect of what we're continuing to take advantage of going forward. It's very consistent, though, with what we articulated at that Investor Day back, I guess, almost a year ago. And so I would still want you thinking about CSBG growing the same way we described it back then, which is kind of high single digit, maybe low double digit. We had a very strong December quarter. It was primarily the result of Reliance systems. But that piece might be a little bit lumpy. It always is. But again, CSBG is gonna just keep chugging along.

The next question comes from Atif Malik with Citi. Please go ahead.

Hi, thank you for taking my question. The first one for Tim. Tim, on the DRAM market, when do you see the volume adoption of 4F² from 6F²? And can you talk about your SAM market share, when you move to 4F²? I know you called out Akara in your prepared remarks.

Yeah. So I, I think, 4F², I mean, obviously there's still some question as to exact timing, and, you know, customers have talked about it being something towards the end of the decade, probably full, full volume, production. But clearly, we're engaged today with customers looking at the technical needs. And, you know, we called out Akara. Akara is very well suited to the types of, of high aspect ratio, very small features that exist in 4F², as well as, you know, other, other devices we've talked about, whether it's, future gate-all-around or, or even as, foundry logic moves to CFET. And so, you know, Akara is a-- it's a, sort of a foundational tool for us in terms of capabilities that are going to be important for all of these transitions.

But you really should think about, you know, those kinds of technology transitions occurring after, probably after this next big wave of fab openings. But again, back to the constraint question, you know, in some ways, if this turns out to be, as we believe, a multi-year build-out of fabs, the fabs that come towards the end of that will be the fabs that benefit from the SAM expansion and share gain that we're going to see coming from these new products that we've talked about. So, anyway, I think 4F² is probably on the back end of that, but there's a lot in between that will also drive our business.

Great. And then, Doug, on the NAND market, I know the NAND memory dynamics were in line with your expectations in the December quarter, but NAND was down sequentially and DRAM up. Do you see the NAND makers slowing down technology migrations as they focus more on in terms of, like, minting money, given how the supply shortages are materializing? And when do you see NAND new capacity additions coming on?

Yeah, Atif. No, I, listen, NAND played out exactly as we saw it as the year began in 2025, and as we sit here looking in 2026, it'll be a growth year for NAND. There's no question about that in our minds. I think what I observed the memory customers doing, at least to the extent that they have both NAND and DRAM right now anyway, is prioritizing DRAM over NAND a little bit because profitability there is somewhat better. I think you all understand that and know that. But that doesn't mean that people aren't focused on NAND. In fact, one of our largest customers announced a new fab that's going to be dedicated, pretty... Well, not dedicated, but heavily emphasizing NAND capacity. And so that's on the come line.

We see that happening as we get into 2026 growth; that is happening. We're still sticking by; we think upgrades happen before real capacity additions, but you're gonna, you're gonna see a combination of both. And that $40 billion that we've been talking about likely happens quicker than what we originally expected a year ago. So anyway, we feel quite good about where NAND is trending.

The next question comes from Vivek Arya with Bank of America Securities. Please go ahead.

Thanks for taking my questions. So you're guiding WFE up 23%. I think last year you said you gained a point of share. Do you expect to maintain or gain share this year, Tim? What are kind of the puts and takes around the different markets? And then specifically, what are you assuming for China contribution overall for WFE and what that means for LAM in calendar 2026?

Yeah, let me take the first part of it. I mean, I think what's important to remember from the longer-term plan we laid out at last year's Investor Day and things I said on the call today, we expect to gain share and expand our SAM at every successive technology node. And so to your point, do we plan to sustain or increase share? The answer is we plan to increase our share of WFE again this year. And what needs to take place is technology transitions need to keep occurring, and what we're seeing in the environment today is those are accelerating. That's a way for customers to get more output, and more output of the types of devices that are strongly demanded by the AI environment.

At the same time, those technology transitions are driving higher deposition and etch intensity, which is pretty much our entire business. And so, from that perspective, that's a real positive for us. And then we've talked about the success of our new products. I mean, we have refreshed our conductor etch product line. We've previously refreshed our dielectric etch line. We've launched moly. Dry resist is gaining traction. We're strong in advanced packaging. Backside power is still to come, and it's going to be a driver for us. And so I think we have confidence that whatever the WFE is, if it's technology-driven, as it looks like it will be, we will continue to expand SAM, gain share of WFE.

Now, as far as China goes, I think that we are looking at China being a more kind of flattish year-on-year, and therefore, as the rest of the technology-driven part of the business grows, becoming a smaller percentage of our overall revenue.

Got it. And for my follow-up, I think in the past, you have given this $40 billion or so addressable opportunity to upgrade the installed base to higher layer counts. I'm curious, where are we now at, you know, versus that $40 billion number? How much more to go? And given this emerging role of NAND, or this enhanced role of NAND, I should say, in AI inference, is there a new number versus that $40 billion number that you had before? Thank you.

Yeah, I think we might wait until a little later in the year to refresh that number, but, you know, we've said a few times now, the specific wording we used at Investor Day was, $40 billion over several years. We've now, I think, on almost every, earnings call, said that seems to be happening faster than expected. And today, I reiterated that, which was, you know, NAND is moving faster than we expected, on the, the upgrade path. And I think we'll come out and look. As Doug just mentioned, we're starting to see, you know, more interest in investing in NAND capacity, but it trades off. I mean, when you have clean room space, everybody has to make a decision as to where to use that today.

But I think that as we move forward and we see the growth from AI inference and other use cases, NAND is going to take its place in the AI data infrastructure and memory infrastructure, and I think you'll see growth there. And so, we're just executing to the customer demand today faster than we had previously expected and anticipate more to come.

The next question comes from Srini Pajjuri with RBC Capital. Please go ahead.

Thank you. Tim, I want to go back to the previous question. The one point of WFE share that you gained, maybe if you could help us understand if it is coming primarily from foundry and logic, or if you're seeing that across the board, because foundry and logic is where you, I think, made the most progress in the last couple of years. And then, you know, Doug said you expect year-on-year growth to be meaningful this year. Just, you know, given your WFE expectation for 22% growth, should I, I guess, should we model 22%+ growth on the top line for the year?

Yeah, so let me take the first one. The share gains came from a combination of both NAND and foundry logic. And again, it's, you know, you might think already we have very high share in NAND, but as technology transition occurs and layer count increases, we have an opportunity still to gain share of some of the new applications required to enable those higher layer counts. And so, we gained share in NAND. But a lot of our focus, we talked about, over the last number of years, has been to launch products that allow us to gain share at the gate-all-around nodes, more advanced foundry logic and the transitions that are coming there, and also in advanced DRAM.

We saw this year some of those Foundry Logic share gains coming through in the numbers that you can see. So I'd say those, primarily NAND and Foundry Logic this year. Then, sorry, the second question, can you just repeat the second question?

Yeah, so I guess my second question was about, you know, your expectation for the current year. I know you said-

Yeah, no, no. We, you know, your, your comment was basically will we outperform the WFE that we just talked about?

I guess that's the message we're trying to deliver: we're gonna expand SAM, gain share, and we're gonna outperform WFE this year. That's our current view.

Okay, got it. Thanks for that. Then one quickly. On the op margin, Doug, I think at the Analyst Day, you know, you gave us the guidance for 34-35 at roughly-

... $25 billion-$27 billion, and you're already there. I think you're around $23 billion run rate, if I look at your March guidance. So I guess my question is, as we go through the next few quarters, you know, how should we think about the, you know, Op margin fall through? I know you're guiding OpEx a little bit, a little bit of growth here, but just wanna understand how we should model OpEx going forward.

Yeah, Srini, thanks for the question. Yeah, no, we're pretty pleased with how we've performed. Clearly, we're ahead of the model, right? I mean, that model had, you know, is 28 kind of model. And we're run rating, at least on a percentage basis, what the model suggests we're gonna be able to do. You know, Ram and I and Tim were debating a little bit. We probably later in the year need to come out and give you an update on that model, and I think we'll do that. Lots have changed in the last year or so, so stay tuned for that. I think as we think about this year, frankly, this is a management team that prides itself on being able to deliver leverage through to the bottom line.

We really did a great job with it last year, which is why I went through all the kind of demonstration of what we did last year. We will be focused on delivering leverage as we go through this year as well. Like I said, we'll give you an update to that longer term model probably later in the year.

The next question comes from Jim Schneider with Goldman Sachs. Please go ahead.

Good afternoon. Thanks for taking my question. You know, relative to your prior comments on NAND, understand there's a little more prioritization toward DRAM right now, but when do you expect that your customers are gonna sort of pivot from NAND upgrades to more greenfield NAND capacity additions? We saw some announcements from at least one of your customers recently on that. So I'm curious about, you know, when you expect to sort of see that upgrade business turn into greenfield business. Could that be by, you know, before the end of 2026, or is it more of a 2027 event, or maybe even later? Thank you.

Yeah, it's a great question. I think that, the way we view it right now is that, because of the clean room space constraints, it's probably, again, part of that multiyear build-out, 2027, 2028, when clean room space is sufficiently available such that they can invest in additional NAND capacity in a big way. So that's, that's probably our view right now. In the meantime, we've talked about the acceleration of the technology transitions. You do get, you know, bit growth, you get more capacity of the higher performing bits that are in strong demand of AI. And so I think that those are the decisions that people are making today, is move ahead as quickly as possible with many of the key technology transitions.

And so we're busy doing upgrades, and that's where our focus is right now. But greenfield will come eventually, and you've seen some of those initial announcements, and I think that's encouraging for all of us.

That's very clear. Thanks. And then maybe just as a follow-on, I think we all can see the trends by foundry, DRAM and NAND, they're in play right now, in terms of relative level of growth rate. But as we head into 2027 or the end of 2026, do you see, you know, the potential rank order of those growth rates sort of changing amongst those categories?

Oh, man, Jim, that's a great question, going into 2027. We just for the first time gave you a 2026 number. You're, you're asking 2027. Listen, in 2026, we're very confident everything is growing. It, it, it's unequivocal. And we're also very clear when we look, everything is constrained, frankly, right? You're hearing it from every one of our customers when they talk about things, and they're, they're talking about these multiyear agreements to kind of deliver the visibility into next year. Foundry and Logic has grown a lot this year. DRAM's grown a lot this year. NAND is growing a little bit less, but still growing, pretty well this year.

At the end of the day, though, when you look at these system architectures, all this stuff needs to fit together, and you saw one of the big accelerator guys talking about this at CES. Like, "Hey, you know, we need this NAND stuff showing up." That's happening, clearly. So, into 2027, I think we're gonna see another year where everything is growing. I'm not ready to rank order it, quite yet, Jim, though.

I think as we move through this year, though, we, we already, you know, I would say, have better visibility into the following year than I think I can ever remember. And that's simply because, you know, customers know that they're building these fabs. They're announcing them. They're signaling to their customers they're gonna have that capacity available. And so clearly, we're having discussions at this point on, what, what tools are gonna be needed, what technology nodes are gonna be running in those fabs, and they want to make sure that they can secure the capacity such that that fab can be started up and, and producing as quickly as possible. And so those discussions on those fabs are clearly out into 2027.

And but I think in terms of exactly how those decisions get made through this year, and, you know, once you have clean room space, it, you know, in some cases can, as we just talked about, they can trade off sometimes a little bit of clean room space to be used for DRAM or for NAND, or for what we've seen in a few cases, is for advanced packaging. You know, I talked about the tremendous growth in advanced packaging and the importance that it's the role that it's playing. And so, you know, we've been seeing that. So I guess we'd have to see the year continue to evolve and how the markets kind of where the demand is the shortest.

But we would anticipate, as we said, robust investment across all device segments, and I think that continues on into 2027 across all, all three segments.

The next question comes from Krish Sankar with Cowen and Company. Please go ahead.

Hi, thanks for taking my question, and congrats on the good results and guide. Doug, my first question is, I understand that you spoke about the global manufacturing footprint, it's doubled over the last four years. Just wondering, as your customers ramp up more onshore manufacturing, would it lead to you increasing shipments from your U.S. facilities in California and Oregon rather than Malaysia for some of your products? If so, what would be the margin implications?

Yeah, Krish, listen, we have a global manufacturing footprint, right? We've got factories in Oregon, California, Ohio, Malaysia, Taiwan, Korea, Austria. I think I didn't miss anything there. We have some level of flexibility, given enough time to move things around if we really need to do that. And as customers tell us what they need and where they need it, we may adjust things. Right now, I think we feel pretty good about how we've got things set up, though.

Got it. Got it. Thanks for that. And then, Tim, I just have a follow-up for you, like a technical question. Last year, you had really good traction in ALD moly. Are customers moving away from single wafer ALD to batch ALD for moly? And if so, how would that impact Lam?

No, I mean, well, at this point, if we look... We had said previously that, in kind of the order of adoption, NAND would be first to adopt, moly, and we're seeing that, followed by Foundry Logic and then, and then ultimately by DRAM. You know, what we can say right now is that the customers that have committed to production of moly using moly in NAND, have gone with Lam's tools. We have a very strong position there. And I think that the value of that, as we've talked in the past, is it means that throughout this, these first production ramps with ALD moly, we are building the installed base, we're maturing the tool, we're getting process learning. You know, competitors aren't going to give up.

Lam Research (LRCX) Q2 2026 Earnings Call Transcript

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