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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, welcome to the Lam Research Corporation June 26th 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 note 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, 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, we'll review our financial results for the June 2026 quarter and our outlook for the September 2026 quarter.

The press release detailing our financial results was distributed a little after 1:00 P.M. Pacific Time. The release and the accompanying presentation slides for today's call can be found on the investor section of the company's website. Today's presentation Q&A include forward-looking statements based on our current beliefs, expectations, and assumptions. These statements are subject to risks and uncertainties, actual results could differ materially from those expressed or implied in such statements.

For a discussion of factors that could cause actual results to differ materially, please refer to the risk factors in our most recently filed periodic reports on Form 10-K and Form 10-Q, subsequent filings with the SEC and the cautionary statement in the accompanying presentation slides.

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 presentation slides. 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.

Thanks, Ram. In the June quarter, Lam delivered record revenue, operating margin, and earnings per share. Sequential top-line growth was led by a doubling of NAND revenue from the prior quarter, underscoring the growing importance of storage to AI system performance. Our Customer Support Business Group also posted strong revenue growth driven by robust demand for upgrades, Reliant, and Equipment Intelligence-enabled services.

As we enter the second half of the year, we expect calendar 2026 wafer fab equipment spending, or WFE, to be in the low $150 billion range, up from our prior outlook of $140 billion with upside bias. Against this backdrop of rising demand, Lam's momentum is strong. Our $8.1 billion September quarter revenue guide represents more than 20% growth quarter-on-quarter, we see 2026 shaping up to be our third consecutive year of relative outperformance to WFE.

Looking into 2027, we see an extraordinary setup for WFE growth. AI is driving record revenue and profitability for our customers, who have signaled unprecedented long-term demand visibility. They've also announced multi-year timelines for new fab projects and are working with us to secure equipment orders to fill the incremental clean room space as it comes online. Spending on capacity is occurring alongside investments in technology transitions that are creating structural opportunities for Lam to outgrow WFE.

As a driver of industry investment, we are seeing AI progress through distinct waves, from training to inference to agentic, and now increasingly physical AI. Each wave is building on what came before, creating new AI use cases, greater demand, and new performance requirements. We're seeing the impact of this progression, notably in NAND, where expanding context windows and persistent memory requirements are driving significantly higher demand for flash storage.

In response, customers are in the near term adding bit supply and improving device capability through installed base conversions to 200+ layer architectures. As layer counts rise and manufacturing complexity grows, so does our opportunity. We expect Lam Served Available Market, or SAM per wafer in NAND, to double from the 128-layer node to 500+ layer devices.

AI is also reshaping the technology requirements in advanced foundry logic and DRAM. Gate-All-Around, CFET, HBM, 4F squared, and panel-level advanced packaging all feature prominently in the current and future AI device roadmaps. Through these transitions, increasing deposition and etch intensity remains the common thread. Higher aspect ratio structures, more complex 3D architectures, smaller pitch patterning, and new materials integration are all areas where Lam is a leader.

We see the benefit of this technology acceleration in our expanding SAM, and we are moving towards our target of high 30s SAM as a percentage of WFE faster than what we had outlined at our 2025 Investor Day. Let me highlight a few examples that illustrate why we're excited about what's ahead for Lam. Starting with conductor etch, Lam is the industry leader with an installed base of more than 40,000 chambers worldwide.

With our latest platform, Akara, we are further strengthening our position. Akara combines unique direct drive plasma technology with industry-leading high aspect ratio patterning capabilities. First adopted for 2 nm and below Gate-All-Around architectures in foundry logic, Akara is now gaining momentum in advanced DRAM. We have secured several strategic tool of record positions, including recent wins for the most challenging gate etch applications.

Since its launch, Akara's installed base has doubled every year, and we expect that growth trajectory to continue in 2027. DRAM pitch scaling is also driving higher interconnect density and wiring complexity. Shrinking dimensions place increasing demands on pattern fidelity, RC performance, and reliability, driving adoption of advanced hard masks, etch stops, and diffusion barriers.

We previously addressed these patterning challenges in foundry logic and are now extending those capabilities and our production-proven technologies into DRAM. For example, DRAM customers are adopting our Vector hard mask deposition platform for low-K film patterning. By co-optimizing the hard mask film properties with our conductor etch process, we have shown we can deliver improved transistor performance and better yield.

Lam's co-optimized solution also offers over 20% cost savings to customers compared to traditional approaches. Similarly, DRAM customers are increasingly adopting our Vector diffusion barrier systems to meet next-generation requirements. Our modular architecture combines interface cleaning, etch stop enhancement, and hermetic protection to prevent shorting at tighter pitches and reduce capacitance by approximately 5% versus competing technologies.

As devices scale, surface engineering becomes increasingly important for reducing defectivity and variability. In the transition from FinFET to Gate-All-Around, the number of applications requiring surface treatment roughly doubles. Our Argos selective etch system uniquely addresses this need.

By leveraging proprietary plasma technology, Argos creates a radical-rich environment that enables highly selective surface treatment with minimal substrate damage. As a result, we are winning leading-edge foundry logic customers at 2 nm and below and expanding Argos into a growing set of DRAM applications. Turning to advanced packaging. As an industry leader in TSV etch and electroplating, we are on track to deliver greater than 70% year-on-year growth.

The long-term opportunity is even more compelling, as AI performance will increasingly depend less on transistor density scaling and instead on integrating more chiplets, more HBM stacks, and greater memory bandwidth within a single package. We expect each successive generation of advanced packaging to require more redistribution layers, denser copper interconnects, taller mega pillar structures, and increasingly complex power delivery networks.

We also see future AI packages exceeding 9x the reticle size, roughly 3x larger than today's mainstream device designs. This is driving the industry to look beyond traditional wafer-based architectures toward larger format, panel-level packaging approaches. Panels enable the creation of larger AI packages, but they also introduce new challenges to maintain deposition uniformity, material properties, defect control, and yield across the larger panel area.

By leveraging technology and learning from our wafer-based SABRE 3D and advanced wet processing platforms, we have shipped 510 mm by 515 mm panel systems into development programs across multiple geographies. This year, we will also ship our first 310 mm by 310 mm panel tool, putting us at the leading edge of this important packaging transition. In CSBG, customers are increasingly leveraging Lam's Equipment Intelligence and fab automation solutions to help increase capacity as they race to meet growing AI demand.

Lam's Dextro Cobots, the industry's first collaborative maintenance robots, are seeing rapid adoption. The precision and repeatability of automated maintenance is leading to improved first-time right recovery, higher tool availability, and increased output, all critical at a time of industry-wide supply shortages. We are accelerating Dextro application development, and since the start of 2026, have doubled the number of preventative maintenance tasks that can be automated.

Importantly, many of the Equipment Intelligence and Dextro solutions initially proven out for NAND are now expanding into DRAM, creating additional service revenue opportunities in the second half of the year. Overall, we are still in the very early stages of a multi-year rollout of these offerings across our installed base.

To sum up, this is an exciting time for the industry and for Lam. AI is driving unprecedented demand, greater technical requirements, and accelerated architectural scaling at both the device and packaging level. These trends all point to more opportunities for Lam. With our etch and deposition technology leadership, our close customer partnerships, and our increasing operational velocity. We believe we are well-positioned to outperform this year and in the years ahead. Thank you, and here's Doug.

Excellent. Thank you, Tim. Good afternoon, everyone, and thank you for joining our call today during what I know is a very busy earnings season. We were pleased with our continued strong execution in the June quarter, resulting in our fourth consecutive quarter of record revenue, our highest quarterly gross margin in 20 years, record operating margin, and record earnings per share.

We just finished fiscal year 2026, and we had record revenue of $23.2 billion and gross margin of 50.6%. Our diluted earnings per share in fiscal year 2026 was also a record, coming in at $5.82, which was up 41% from fiscal year 2025. We're ahead of the profitability objectives we discussed at our 2025 Investor Day, delivered through robust top-line growth and strong operational execution. Let's look at the details of our June quarter financial 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 June quarter was $6.72 billion, which was up 15% sequentially and up 30% from the same period in 2025. Our deferred revenue balance at quarter end was $2.43 billion, which was an increase of $213 million from the March quarter.

The increase was driven by a variety of factors, the largest of which was customer down payments. From a market segment perspective, June quarter systems revenue in memory was 46%, an increase from 39% in the prior quarter. On a dollar basis, this represented a record level for us in total memory. Within memory, non-volatile memory accounted for 23% of our systems revenue, which was up from the March quarter level of 12%.

NAND revenue dollars more than doubled sequentially as the industry focuses on conversions to 256 layer and above class devices, primarily enabling enterprise SSDs. DRAM remained strong, representing 23% of systems revenue, compared with 27% in the March quarter. On a dollar basis, DRAM revenue was flattish with the record level we set in the March quarter.

DRAM spending remained directed towards wafer additions and technology upgrades across 1-alpha, 1beta, and 1-gamma nodes, enabling DDR5, LPDDR5, and high bandwidth memory. Foundry represented 44% of our systems revenue, down from the percentage concentration March quarter of 54%. Mature node spending with our customers in China was down sequentially. This was largely offset by strength in leading-edge process node investments in 2 nm and 3 nm capability, as well as advanced packaging.

Finally, logic and other were 10% of our systems revenue in the June quarter, which was up from the prior quarter level of 7%. Let me now discuss the regional composition of our total revenue. The Taiwan region contributed 27% of revenue, up from the March quarter at 23%. Taiwan represented a new record level for us in dollar terms.

China declined as we expected it would and accounted for 26% of revenue. I'll just remind you that China was 34% of revenue last quarter. I would mention that within China, the global multinational customers grew sequentially, while the domestic customer base declined. Our next largest geographic region was Korea at 20% of revenue in the June quarter, down a little bit from the March quarter level of 23%.

The Customer Support Business Group generated a third consecutive quarter of record revenue at nearly $2.5 billion in the June quarter, which was up 17% sequentially from March quarter and 43% higher than the same period in 2025. Sequentially, the increase was primarily due to record upgrade revenue. We also saw smaller increases in Reliant and services. Spare part purchases remained consistent with their strong level from the March quarter.

Let's look at the gross margin performance. The June quarter came in at 52%, exceeding the upper end of our guidance range and improving from the March quarter level of 49.9%. Gross margin was stronger due to a myriad of factors, including pricing actions, operational and scale efficiencies, as well as a favorable product mix. Operating expenses in the June quarter were $916 million, up from the prior quarter amount of $866 million.

The increase was mainly due to employee-related spending associated with higher headcount and variable compensation expense as a result of our improving profitability. R&D accounted for 67% of our total operating expenses. We are funding incremental product spending that should enhance the breadth and competitiveness of our future portfolio.

Operating margin for the June quarter was 38.4%, also exceeding the upper end of our guidance range and improving from the March quarter level of 35%. This improvement was primarily due to the higher revenue and stronger gross margin.

Our non-GAAP tax rate third quarter was 11%, in line with our expectations. We do believe the tax rate will be in the mid-teens in the September quarter due to the increase in revenue in higher tax jurisdictions, primarily the United States, as we enter the new fiscal year. The U.S. GILTI rate is also higher as we enter the fiscal year.

We should expect this uptick in the tax rate to continue for the remainder of 2026 and likely beyond. Other income and expense for the June quarter was approximately $19 million in expense, compared with $8 million in expense in the March quarter. The change in OI&E was primarily due to foreign exchange. As we've talked about in the past, you should expect to see variability in OI&E quarter-to-quarter.

Let's look at capital return. We allocated approximately $246 million to share repurchases, and we paid $325 million in dividends in the June quarter. We returned 45% of free cash flow in the quarter. Year-to-date, we've returned 81% of free cash flow, and our plans remain to return at least 85% of free cash flow to our shareholders over time. For the June quarter, diluted earnings per share were a record $1.82.

The diluted share count was roughly 1.26 billion shares, down from the March quarter. We have $4 billion remaining on our board-authorized share repurchase program. Let me pivot to the balance sheet. Our cash and short-term investments totaled $5.6 billion at the end of the June quarter, up from $4.8 billion at the end of the March quarter.

The primary factors behind the cash increase were cash from operating activities, somewhat offset by our capital return activities. As the business grows, we'd like to build a little bit more cash on the balance sheet to support potential liquidity needs like capital spending and working capital. Days sales outstanding were 72 days in the June quarter, an increase from 64 days in the March quarter.

Inventory at the June quarter end totaled $4.3 billion, which was an increase from the March quarter, as we are building inventory to meet growing customer demand. Nonetheless, inventory turns continued to improve, coming in at 3x versus 2.9x in the prior quarter. This is the highest inventory turns level we've delivered in almost five years.

Our non-cash expenses in the June quarter included approximately $104 million for equity compensation, $105 million in depreciation, and $15 million in amortization. Capital expenditures in the June quarter were $189 million. Capital spending was centered on lab investments in the United States and global growth in our manufacturing facilities. We ended the June quarter with approximately 22,400 regular full-time employees, which was an increase of approximately 1,800 people from the prior quarter.

We had headcount growth primarily in the factory and field organizations to support increased tool installations as well as growing manufacturing activities. We also added headcount in R&D. Now let's turn to our non-GAAP guidance for the September 2026 quarter. We're expecting revenue of $8.1 billion, ±$400 million, gross margin of 52%, ±1 percentage point, operating margins of 39.5%, ±1 percentage point.

I would just mention, we are growing spending in the September quarter, albeit at a much slower rate than the growth in revenue. And finally, we're expecting earnings per share of $2.15, ±$0.15, based on a share count of approximately 1.255 billion shares. So let me wrap up by sharing a brief update to the long-term profitability framework that we introduced at our Investor Day a year and a half ago.

Since then, demand has strengthened significantly and we're executing well to the strategy that we outlined. As Tim mentioned, we see 2026 shaping up to be our third consecutive year, our outperformance to the growth in WFE. We've been growing the CSBG business faster than the installed base, and our close-to-customer strategy has helped expand our margins.

The technology inflections increasing deposition etch intensity reinforce our confidence that we can continue to expand our SAM while creating additional opportunities for gaining share. Our SAM expansion is trending toward that high 30% range that we communicated.

Now, within this framework, we intend to drive gross margins to the mid-50% level and operating margins to the mid-40% level over the next several years as the AI transformation drives continued greater investment in global semiconductor capacity. Operator, that concludes our scripted remarks. We would now like to open up the call for questions.

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. Please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question today comes from Timothy Arcuri with UBS. Please go ahead.

Thanks a lot. Doug, I know you usually don't guide by segment, but service was up so much in June, and based upon the gross margin guidance, which you're guiding basically flattish on such a big up revenue. I would imagine that it's up big again in September. Can you give us some sense of sort of what to expect in service within the guidance for September?

Listen, Tim, I think you're going to see similar profile of what we saw this quarter, and I won't get into specific numbers necessarily, but upgrades are going to continue to be strong, I think, right? Driven by what you got going on in NAND investment. I expect spares to continue to be pretty strong given the high utilization in the industry. Then we're excited about what's going on in advanced service with all the cobot and Equipment Intelligence. I think it's going to be pretty consistent across the board, Tim, similar to what we saw this quarter.

Great, Doug. The new gross margin of mid-50s, that makes perfect sense. That's great. I guess the question is, how long will it take to get gross margin to that level? I know, obviously, if you look at your margins versus, say, the large foundry margins, you used to be within five points, and now it's between five and seven points as early as the first half of 2024, and now the gap is like 2x that. There's obviously a lot of room for you to move it up. How long will it take for you to move that up? Is it like a revenue thing or is it a time thing?

A little bit of both, Tim, honestly, right? Part of it is scale and scope and revenue growth. Part of it is new product introduction and getting fairly paid for the value we're delivering. I expect, Tim, this is over the next several years, that we'll continue to drive it on an annual basis for sure, but it's going to take several years, I think, to get to those levels, Tim.

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

Good afternoon. Thank you for taking the question. I guess a follow-up on the CSBG side of the house. It looks like you're going to grow in the mid-30s, ±. Just curious, how do you think about the growth rate beyond 2026 into 2027? How much strength should we continue to see from NAND's inside here? How are you thinking about Reliant? Does that start to recover more meaningfully? Do we see sustained kind of spares as well? Would love to hear your thoughts there.

C.J., I'll start and then I'll let Tim add on. The framework we put out the Investor Day a year and a half ago, still, I would encourage you to think about it in a similar way. Clearly we've grown faster than that suggested back a year and a half ago, and that's come a little bit from advanced services. We're super excited about that driving incremental growth.

It's come, Tim, also from just really high utilization in the industry, which drives consumption of spares and service to the extent that that continues, spares and service will continue to be really strong from that. I think the way to think about Reliant is think about what's going on in the mature node investment, a little bit of what's happening in China, and then more broadly, what's happening in the analog industrial automotive space.

That'll be a little bit more situational, I guess. That's the framework to think about. We're probably going to do a little bit better than the growth that we talked about a year and a half ago though, C.J.

Perfect. I guess, could you speak to perhaps new entrants or more meaningful spending from historically larger spenders on the logic front? What kind of visibility do you have today and what kind of growth should we expect into 2027 and beyond?

Yeah, C.J., you're funny, asking that tricky question about new logic customers. Yeah, there's some new stuff going on. There's clearly dialogue, and I'll let Tim comment a little bit. We are talking to that new logic customer in the U.S. That is happening.

Yeah, I don't have much to add other than say we're engaged. I think what's exciting for us is that, in many cases where we have new entrants come into foundry logic or memory or any of the spaces, they're always looking at some of the more innovative approaches. They're not encumbered by kind of the roadmaps and install base it's existed in.

I think that we're hopeful that when we think about all of the new systems that we've talked about, I mentioned a few in the prepared remarks, but we've talked about a lot of others in other calls. That's an opportunity for us to showcase the significant technical improvement Lam has made on the foundry logic side. I think that's what new entrants mean for us, is more opportunities to grow our share within that space.

The next question comes from Harlan Sur with JPMorgan. Please go ahead.

Good afternoon. Thanks for taking my question. As I look back historically, your gross margins seem to have taken a structural step up in 2023. I believe this corresponded to the team moving a bigger part of the volume manufacturing flowing through your more efficient low-cost Malaysia facility. As the team has continued to scale volumes higher through Malaysia since then, you've been able to drive incrementally higher margins on these products, and that continues to be a gross margin benefit.

Looking at your strong gross margin results for June and for the September outlook, how much of the incremental gross margin improvement is coming from the volume mix to Malaysia and the increases there? Or could it be product mix, new product introduction upgrades, and/or just incremental pricing increases on your systems? Maybe which of these dynamics is going to be most influential in driving you to your mid-50s sort of new long-term targets?

Yeah. Harlan, let me start. I know you want to get to the quantification. I'll let Doug do some of that to the extent that he can. I just wanted to point out, when we look at the tremendous operational execution, I refer to it as operational velocity inside the company, I wanted to just make sure it's clear.

We have been able to execute to what have been really accelerated customer demands because of what I see as a strategic asset in our global manufacturing footprint and global supply chain footprint. We have factories in Oregon and California and Ohio, in Malaysia and Taiwan and Korea and Austria. Really, as we've looked at this tremendous growth period we've gone through and expect to continue to go through, we've leveraged that full scope of sites and supply chains.

What's really helped us is that they're not all interrelated, they're not all being driven by the same demand. In that way, we can both get what we need when we need it and also at the prices that we need it. There's an element of really being able to leverage this global capability. I think that's somewhat unique in how Lam has driven our operational structure. I'll let Doug talk to the second part of your question.

Yeah, Harlan, a lot of the uptick that you're seeing gross margin has come from exactly what Tim just outlined. On top of that, we got new products coming out every single year, theoretically adding more value to customers and driving improving profitability. Clearly, that's going to be our ongoing objective.

Clearly, we're always working to get fairly paid for the value we're delivering to the customers. We're absolutely working on that. Yes, a lot of it has come from operational efficiencies, close to customer strategy. All of that were conscious strategies that we've outlined over the last several years and have been talking about.

No, I appreciate that. On advanced packaging, you came into this year with a view of greater than 40% growth. You upped that to greater than 50% growth last earnings. Now you're looking at 70% growth today, right? Is the increase in the outlook due to HBM or 2.5D-3.5D SOIC advanced packaging transitions happening faster, or is it customers just pulling in production capability from next year into this year? Curious.

Yeah, Harlan, it's just everything. Advanced packaging, I mentioned it in my prepared remarks, it's becoming quite a technical tool for our customers and for the industry to drive greater performance. It's everything you just mentioned. It's 2.5D. It's in the foundry logic space. It's in HBM.

I think that what we're excited about is, obviously, as it moves also into panel packaging, that's a place where Lam, we feel like we've gotten out to an early start there. We think that transition is very early stages, but it's in an important inflection point there as well. I think just next few years, advanced packaging growth will be a little bit hard to predict because adoption is just occurring all over the place.

Our clear leadership, Harlan, I'll just remind you, in the TSV etch and the copper electroplating, I call it the drill and fill, we just have really strong product offerings there. As that goes, we just benefit extensively from our technical leadership.

No, absolutely. Thanks, Tim. Thanks, Doug.

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

Hi, thank you for taking my questions. I know you guys talked about doubling of NAND revenues and the context window, KV cache. There is a third-party TrendForce forecasting a divergence in memory fundamentals next year. They're calling for an oversupply in NAND because of the NAND demand getting pulled down by weaker consumer, and shortages to continue in the DRAM side, which is more driven by data center. Are you seeing anything in your conversations with the memory makers that are pointing to some sort of an oversupply or a reversal in the NAND fundamentals for next year?

I think that, as we've said on NAND, clearly customers are right now progressing through upgrades to 200+ layer devices. There's some greenfield this year. It's a ways out before there's a lot of greenfield coming into NAND. I think that, again, next year, we're still having conversations about how to continue to upgrade the existing installed base and get the fleet up to kind of current state-of-the-art in terms of NAND.

I think it's a little early on 2028, but our view right now is the fundamentals are still about the same for us. I think what I tried to highlight in my prepared remarks is the Lam story is a lot bigger than just NAND. There's often this focus. What we've done is we've successfully looked at these vertical scaling trends that are occurring in both DRAM and foundry logic, and we've applied all of that learning and expertise that we have from 3D NAND into those, and those are the basis for a lot of the wins that I was talking about in my remarks. I think that's a trend that continues into 2028 and beyond as well.

You've got NAND, and then you've got DRAM and foundry logic as well. I would point out, we said that we believe 2027 looks like a great setup, not only for the industry, but for Lam. That's an environment where next year we still see DRAM being the fastest grower, foundry logic being the second fastest grower, and NAND being third. That's exactly the setup that we came into this year on. Clearly, our results so far in 2026 are quite good. We think even in that environment, Lam can do extremely well.

Thank you, Tim. Taiwan was a record revenue year. Can you just talk about your foundry share gains at 3 nm and 2 nm?

Sure. I can't tell you specifically, obviously, since some of that gets quite close to a single customer. Look, it's back to the things that we've talked about. As customers are shrinking and they're moving to Gate-All-Around, it's the verticalization of the transistor structure. It's the focus on things like RC performance.

If you go back and look at our transcripts from the last number of calls, we've been talking about things like low-k spacers, and we talked about the importance of patterning etch as features become ever smaller and taller because of EUV patterning and device shrink. I would just say anything that's related, again, to something becoming higher aspect ratio, it requires etch.

If it has to do with RC, meaning metallization resistance or dielectric capacitance, those are areas where Lam's new ALD tools, where our new etch tools like Akara are doing extremely well. Not just in Taiwan, but really at every leading-edge foundry logic customer around the world, because these are unique capabilities built into our newest tools, and they're doing great at the customer.

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

Good afternoon, and thanks for taking my question. I was wondering, as you look at the growth rates the industry is going to post in 2026, how would you handicap looking into 2027, whether you could see a similar better or worse growth rate relative to this year?

Yeah, Jim, we're not going to get into talking specifically about next year, at least not numerically. I would tell you, though, that as we look at what's being invested in, the industry is still meaningfully undersupplied, right? You've got clean room coming online over the next, I don't know, 12 months and beyond, frankly, and all that will lead to incremental opportunity as we get into 2027. It's too soon for us to put quantification around what 2027 is going to be, but it looks like it's going to set up to be a pretty darn good year, Jim. I guess I'd just leave it at that.

That's fair enough. Understand. Maybe just as a follow-up, you mentioned pricing being one of the factors that drove gross margin performance in the quarter. Can you speak to some of the factors that drove that? Do you see opportunities for further pricing actions in the short term, for example, like-to-like pricing pieces, even within the same program, the same fab project?

Yeah, Jim, we're always working on getting fairly paid for the value we're delivering. Last quarter was no different than it ever has been. Pricing is always a component of what's been going on, in addition to operational efficiency, that close to customer strategy I talked about. All these new products that we're bringing out, delivering better gross margin because it's solving more difficult technical challenges. All that contributes to what you're seeing us deliver in gross margin, and frankly, how we will strive to continue to expand gross margin to that mid-50% level. We're going to work on all of this stuff.

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

Lam Research (LRCX) Q4 2026 Earnings Call Transcript

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