Lam Research Q1 Earnings Call Highlights

Key Points

• Record September-quarter results: Lam Research reported $8.22 billion in revenue, up 22% sequentially and 54% year over year, with record 52.4% gross margin, 40.2% operating margin and $2.20 in non-GAAP EPS.
• Strong AI- and memory-driven outlook: Lam forecast December-quarter revenue of $8.6 billion and expects 2027 wafer-fabrication equipment spending to exceed $200 billion, led by DRAM, leading-edge foundry logic and NAND demand.
• Growth remains constrained by capacity and supply: Near-term component shortages and clean-room limitations could delay shipments, while China revenue is expected to decline significantly in the December quarter. Lam generated record $3.24 billion in free cash flow and returned approximately 41% of it through buybacks and dividends.

Lam Research NASDAQ: LRCX reported record revenue, profitability and earnings per share for its September 2026 quarter, as demand tied to artificial intelligence, advanced semiconductor manufacturing and packaging continued to support spending on deposition and etch equipment.

Revenue for the September quarter totaled $8.22 billion, up 22% sequentially and 54% from the same period in 2025, Chief Financial Officer Doug Bettinger said. The company recorded a gross margin of 52.4%, an operating margin of 40.2% and diluted non-GAAP earnings per share of $2.20, all records. Operating margin exceeded 40% for the first time, according to the company.

“In the September quarter, Lam again delivered record revenue and profitability,” President and Chief Executive Officer Tim Archer said. He said AI-driven semiconductor demand and rising device complexity were increasing the intensity of deposition and etch processes across memory, logic and advanced-packaging applications.

December Outlook and WFE Forecast

For the December 2026 quarter, Lam forecast revenue of $8.6 billion, plus or minus $400 million. The company expects gross margin of 52.5%, plus or minus one percentage point; operating margin of 40.5%, plus or minus one percentage point; and earnings per share of $2.33, plus or minus $0.15.

Bettinger said the December revenue outlook would have been “a little bit higher” without near-term supply-chain constraints. He did not quantify the impact, but said shipments delayed from the December period because of timing would move into the March quarter.

Lam expects calendar-year 2026 wafer-fabrication equipment, or WFE, spending to be in the mid-$150 billion range. Its preliminary forecast for 2027 calls for more than $200 billion in WFE spending, with percentage growth led by DRAM, followed by leading-edge foundry logic and NAND.

Archer said clean-room availability and supply constraints for certain components may limit the industry’s ability to fully meet demand in 2027. The company is working with suppliers to expand capacity, he said, and expects to improve the supply situation shortly. Bettinger added that Lam expects 10 new Tier 1 fabs to come online during 2027.

At the midpoint of its December-quarter outlook, Lam expects calendar-year 2026 systems revenue to grow more than 40% year over year. Archer said the company expects 2026 to be its third consecutive year of WFE outperformance, supported by growth in Lam’s served available market and product share gains.

Memory and Foundry Demand Drive Growth

Memory represented 46% of September-quarter systems revenue, unchanged from the prior quarter, while foundry accounted for 46%, up from 44%. Logic and other applications represented 8% of systems revenue.

Memory systems revenue reached a record dollar level and increased 120% from a year earlier. NAND accounted for 26% of systems revenue, compared with 23% in the June quarter, as customers continued converting to 256-layer and higher-class devices. NAND revenue rose about 40% sequentially, and Lam said it is seeing initial spending on 384-layer-class devices.

DRAM revenue also reached a record, with spending focused on technology additions and upgrades at the 1α, 1β and 1γ nodes for DDR5, LPDDR5 and high-bandwidth memory. Archer said Lam expects etch and deposition intensity to increase as DRAM architectures become more three-dimensional.

The company also discussed potential new NAND demand related to AI storage tiers. Archer said QLC NAND supports cost-effective data storage, TLC is used for higher-bandwidth context-memory and key-value-cache workloads, and SLC-class NAND is emerging for low-latency access in agentic AI applications.

Lam said shifting NAND production from TLC to SLC-class devices reduces bits per device by roughly three times. For every one-percentage-point shift of NAND bits toward SLC-class devices, about 2% more installed wafer capacity would be needed to support the same bit demand, according to the company.

Technology Investments and Advanced Packaging

Archer said foundry logic and DRAM accounted for about 80% of Lam’s systems-revenue growth year to date. The company highlighted demand for its Akara etch, conductor etch and Aether dry-resist products in advanced patterning applications.

Lam said its Aether dry-resist solution has demonstrated sub-10-nanometer resolution with High-NA EUV and can reduce exposure dose by 10%. Aether products are ramping in high-volume HBM manufacturing using Low-NA EUV, Archer said. Lam now expects cumulative Aether-related revenue to reach about $2.5 billion by the end of the decade, approximately $1 billion above its previous expectation.

The company also cited opportunities in backside power delivery, where it has secured tool-of-record wins for four products at a leading customer. In advanced packaging, Lam said its Syndion etch product won four new positions across multiple customers for advanced logic and HBM through-silicon-via applications.

Lam expects advanced-packaging revenue to grow about 70% during calendar 2026. Archer said panel-level packaging is an emerging growth opportunity, with Lam having shipped panel plating systems to more than 20 customers globally. The company expects to achieve panel-level packaging market share exceeding its position in current wafer-level packaging.

Regional Mix, Services and Capital Returns

China represented 35% of September-quarter revenue, up from 26% in the June quarter, due to investments from domestic and multinational customers. Bettinger said China’s contribution is expected to be significantly lower in the December quarter, primarily due to lower domestic-customer revenue, while multinational demand in the region should remain reasonably strong.

Korea accounted for 20% of revenue and Taiwan contributed 18%. Lam’s Customer Support Business Group generated nearly $2.5 billion in revenue, its fourth consecutive quarterly record and a 40% increase from a year earlier. The company expects full-year 2026 CSBG revenue growth of more than 30%, followed by growth of more than 15% in 2027.

Lam generated record free cash flow of $3.24 billion in the September quarter. It repurchased about $1 billion of shares and paid $325 million in dividends, returning roughly 41% of quarterly free cash flow to shareholders. The company ended the quarter with $7.5 billion in cash and short-term investments and $3 billion remaining under its authorized share-repurchase program.

About Lam Research (NASDAQ:LRCX)

Lam Research Corporation NASDAQ: LRCX is a semiconductor equipment company that develops and manufactures systems used to fabricate integrated circuits. Its technologies support key stages of wafer processing, helping semiconductor manufacturers create the increasingly complex structures found in memory, logic and other types of chips.

The company's product portfolio includes etch systems, which selectively remove materials from wafers; deposition systems, which apply thin films; and cleaning solutions used to remove contaminants and residue during manufacturing.

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