LRCX - Lam Research Corporation

Lam Research Corporation designs and manufactures semiconductor wafer fabrication equipment, specifically etch and deposition systems used in the production of memory chips (NAND, DRAM) and logic semiconductors. Customers are chipmakers such as Samsung, SK Hynix, Micron, and TSMC, operating under a capital equipment sales model with recurring revenue from parts and services. Annual revenue is approximately $15-17B, with roughly 90% of sales coming from Asia-Pacific markets, primarily China, South Korea, Taiwan, and Japan.

Past Year Trends

• Lam Research revenue grew 23.7% YoY in FY2025 to $18.4 billion, recovering sharply from a 14.5% decline in FY2024, driven by renewed DRAM and HBM capex from Micron, SK Hynix, and Samsung ramping AI memory production. (Bullish)
• Gross margins expanded from 47.4% in Q4 FY2024 to 50.4% by Q3 FY2025, reflecting improved pricing on advanced etch and deposition tools tied to HBM and leading-edge DRAM node transitions. (Bullish)
• China revenue concentration reached 43% of total revenue in Q3 FY2025, and new U.S. export controls introduced a projected $600 million FY2026 revenue headwind by restricting shipments to domestic Chinese customers under the 50% affiliate rule. (Bearish)

Next Year Trends

• Micron raised its FY2026 capex to $20 billion (+11% YoY) with NAND capex up 63% YoY, directly increasing demand for Lam's etch and deposition tools as Micron accelerates 1-gamma DRAM node and 3D NAND layer count transitions. (Bullish)
• SK Hynix's $20.5 billion FY2026 capex plan (+17% YoY) is concentrated on HBM4 capacity expansion at its M15x fab, a node where Lam holds dominant plasma etch share and which requires significantly more etch steps per wafer than standard DRAM. (Bullish)
• Escalating U.S. export restrictions on China, which accounted for 43% of Lam's Q3 FY2025 revenue, represent a specific $600 million projected drag in FY2026 with risk of further tightening if additional domestic Chinese fabs are added to the restricted entity list. (Bearish)

Red Flags

No severe red flags identified as of August 2025.