Lam Research (LRCX) Citi’s 2025 Global Technology, Media and Telecommunications Conference summary

Industry trends and market outlook

• Strong confluence of non-lithography spending drivers, including HBM and advanced packaging, is fueling growth in the semiconductor equipment sector.

• Evolution of 3D device architectures, such as gate-all-around and advanced packaging, is increasing etch and deposition intensity, expected to reach high 30% of wafer fab equipment spending by 2028–2029.

• Product portfolio strength, with new tools like Halo, Akara, and Vantex, is driving significant customer demand and market share gains.

• China market shows strengthening in the September quarter, with international customers' spending up in June, though a pullback is expected in December.

• U.S. Commerce Department's revocation of waivers requires license applications for international customers, with expectations of approvals.

Business performance and segment highlights

• Outperforming wafer fab equipment (WFE) market by over 20 points, with a current and projected SAM in the mid-30% range, aiming for high 30% long-term.

• Foundry sales now comprise 52% of system sales, up from 50% memory share in late 2022, reflecting a shift in business composition.

• NAND segment defined by conversion-related spending, with a $40 billion multi-year upgrade cycle and high share of spending due to tool constraints.

• Advanced packaging revenue has grown from over $1 billion to more than $3 billion, driven by demand in HBM and CoWoS for AI compute applications.

• Customer Support Business Group (CSBG) revised from slightly down to modest growth, driven by higher utilization and advanced service offerings.

Financials, margins, and capital allocation

• Gross margin improved from 46% to 50% due to close-to-customer manufacturing, especially in Asia, and favorable customer mix.

• December quarter gross margin expected to be around 48% due to less favorable mix and higher tariffs.

• Capital allocation strategy remains to return at least 85% of free cash flow to shareholders via dividends and buybacks.

• Dividend raised by 13%, supported by strong CSBG cash generation, with ongoing accelerated share repurchase agreements.