Lam Research (NASDAQ:LRCX) President and CEO Tim Archer said AI demand is reshaping the semiconductor equipment market across logic, memory, storage and packaging, creating what Bernstein analyst Stacy Rasgon described as a “renaissance” for wafer fab equipment.
Speaking at a Bernstein conference, Archer said Lam now expects wafer fab equipment, or WFE, spending of about $140 billion “with a bias to the upside”. He said AI has driven demand for higher performance across nearly every device category, including leading-edge compute, HBM, NAND storage and advanced packaging.
AI Demand Is Broadening Across End Markets
Archer said Lam has greater visibility into technology roadmaps than capacity forecasts, noting the company is already working with customers on device architectures and materials that may not ramp into manufacturing until the early 2030s. However, he said customer demand continues to accelerate faster than expected.
“Every time we come to that next checkpoint, there’s more than we thought there was,” Archer said.
He also said clean room availability remains a major constraint on the industry’s ability to ship more equipment. Once a fab begins construction, Archer said Lam can see demand roughly two years out, but building advanced semiconductor fabs “just takes time.”
NAND Upgrades Pulled Forward
Archer pushed back on the idea that Lam remains primarily a NAND-driven company, noting that five years ago about 60% of Lam’s business was memory, while last year about 60% was foundry logic. He said that shift reflected a deliberate strategy to diversify while maintaining Lam’s leadership in memory.
Still, Archer said NAND remains a key opportunity. Lam previously discussed a multiyear upgrade cycle in which customers would move installed tools from the 100-plus-layer level to 200-plus-layer devices. On its most recent earnings call, he said Lam indicated the entire $40 billion upgrade spending opportunity would likely be complete by the end of 2027.
Archer said that upgrade cycle has been pulled forward by stronger-than-expected demand for NAND in AI-related applications, including enterprise SSDs and new data storage projects. He said greenfield NAND fabs are beginning to be announced, but those are more likely to affect Lam in 2028 and beyond.
“Upgrades are great for us,” Archer said, adding that greenfield projects also benefit Lam by expanding the installed base for future upgrade cycles.
Advanced Packaging, DRAM and Logic Opportunities
Archer said advanced packaging is a fast-growing business for Lam, with revenue expected to grow more than 50% this year from the prior year. He sized the business at around $2 billion.
Lam’s role in advanced packaging includes copper plating, through-silicon via etching and dielectric gap fill processes, Archer said. He said advanced packaging has become increasingly important as the industry seeks ways to improve performance beyond traditional chip scaling.
In DRAM, Archer said Lam has benefited as shrinking dimensions make etch and deposition tools more critical. He cited recent wins in conductor etch, adoption of Lam’s dry resist technology and strength in HBM-related through-silicon via copper plating.
In foundry logic, Archer said the shift toward gate-all-around and other three-dimensional architectures has improved the fit with Lam’s portfolio. He said demand has grown for products such as selective etch, atomic layer deposition and conductor etch as device structures become more complex.
Margins Improve as Manufacturing Investments Pay Off
Archer said Lam’s improved gross margin profile reflects operational improvements, higher-value products and prior manufacturing investments. Rasgon noted that Lam’s gross margins now “start with a five” rather than a four.
Archer said some of the improvement came from Lam’s manufacturing expansion, including investments made after the COVID-era supply constraints. The company plans to open a second facility in Malaysia later this year, approximately equal in size to its first facility there, and it is expected to be in use in the second half of the year.
“A lot of it has been self-help,” Archer said. “It was with this eye that we were going to become a much bigger company.”
Archer said tariffs were already contemplated in the company’s reported numbers and outlook.
China, Services and Dry Resist
On China, Archer said Lam complies with all regulatory requirements and does not do business where it is not permitted. He said local equipment suppliers have filled gaps in areas where Lam cannot compete, but Lam still delivers value in lagging-edge nodes where sales are allowed.
Archer said China is “kind of flattish to maybe roughly up a little bit this year,” after several years of growth. He said the region remains important but is no longer the central story for Lam, with the company’s focus now shifting toward AI-driven growth in deposition and etch intensity at the leading edge.
Archer also highlighted Lam’s services business, which he said represents about one-third of the company. He said Lam has about 100,000 chambers in operation, with tools often running for multiple decades.
Lam is investing in “Equipment Intelligence” and cobots, including a product called Dextro, to automate physical maintenance tasks and improve tool performance. Archer said cobot-driven maintenance is already running in production at several customer fabs and can improve first-time-right maintenance and wafer uniformity.
Archer also discussed Lam’s dry resist technology, which replaces wet resist for certain critical lithography applications. He said Lam’s Aether suite includes an underlayer, the resist itself and a dry develop process, and is now ramping in production at two memory makers. Lam previously targeted about $1.5 billion of dry resist revenue over a five-year period, backend weighted, Archer said.
Asked why investors should buy Lam’s stock, Archer pointed to multiple waves of AI demand, rising etch and deposition intensity, and Lam’s share gains in WFE. He said the industry’s move toward 3D architectures across logic, NAND, DRAM and other areas aligns with Lam’s core strengths.
“Etch and deposition is synonymous with 3D,” Archer said. “We see etch and deposition intensity as its share of total WFE spending continuing to rise from now as far as we can see these roadmaps.”
About Lam Research (NASDAQ:LRCX)
Lam Research Corporation (NASDAQ: LRCX) is a global supplier of wafer fabrication equipment and services to the semiconductor industry. Founded in 1980 by David K. Lam and headquartered in Fremont, California, the company develops and manufactures systems used in multiple stages of semiconductor device production, including thin film deposition, plasma etch, wafer cleaning and related process modules and automation.
Lam’s product portfolio covers core process technologies employed by logic and memory manufacturers, with equipment designed to support advanced-node patterning, 3D NAND and other emerging device architectures.
