Lam Research at 53rd Annual JPMorgan Conference: Strategic Growth Path

On Tuesday, 13 May 2025, Lam Research (NASDAQ:LRCX) executives presented at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The discussion, featuring CEO Tim Archer and VP of Investor Relations Ram Ganesh, focused on ambitious financial targets for 2028 and strategies to navigate a complex global trade environment. While the company aims for robust growth, challenges such as tariff impacts and the need for technological adaptation were also addressed.

Key Takeaways

• Lam Research targets $25-27 billion in revenue by 2028, with a focus on expanding gross and operating margins.
• The company plans to increase its foundry and logic revenue mix to two-thirds, moving away from memory.
• A $40 billion opportunity is anticipated from upgrading NAND capacity to 2XX layers.
• Lam aims for $3 billion in revenue from gate-all-around and advanced packaging technologies this year.
• Digital transformation is expected to enhance operational efficiencies and margins by 2028.

Financial Results

• Lam Research targets $25-27 billion in revenue by 2028, with gross margins of 50% and operating margins of 34-35%.
• The company achieved record gross margins of 49% in the March quarter, with a target of 49.5% for the current quarter.
• A consistent 400-500 basis point improvement in gross margins has been realized over the past decade.
• The digital transformation initiative is projected to boost operating margins by 100 basis points in 2028 and 100-150 basis points by 2030.

Operational Updates

• Lam is focusing on technology migrations such as gate-all-around and backside power distribution.
• The company’s strategy includes diversifying its value chain to better serve Asian customers.
• Domestic China business mix decreased to 31% in March and is expected to decline further.
• The introduction of a maintenance cobot aims to address labor issues and enhance maintenance consistency.

Future Outlook

• Lam Research anticipates ongoing technology migrations and continued NAND upgrade cycles.
• Investment in high-bandwidth memory (HBM) and enterprise SSDs is expected to grow, driven by AI infrastructure development.
• The company aspires to become a $30 billion+ entity, doubling its size as its Serviceable Available Market (SAM) and Wafer Fabrication Equipment (WFE) expand.

Q&A Highlights

• Lam expects over $3 billion in revenue from gate-all-around and advanced packaging this year.
• Customer plans remain stable despite trade and tariff dynamics due to the strategic nature of investments.
• A $700 million business level from last year was impacted by restrictions, which are anticipated to ease.

In conclusion, Lam Research’s presentation at the JPMorgan conference highlighted its strategic initiatives and growth targets. For more detailed insights, readers are encouraged to review the full transcript.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Great. Why don’t we go ahead and get started? Good afternoon, and welcome to the first day of JPMorgan’s fifty third Annual Technology Media and Communications Conference. My name is Harlan Sur. I’m the semiconductor and semiconductor capital equipment analyst for the firm.

Very pleased to have Tim Archer, President and Chief Executive Officer of Lam Research, here with us today. Also have Ram Ganesh, Vice President of Investor Relations. For those of you that don’t know, Lam is the third largest semiconductor capital equipment company in the world, strong leadership in etch deposition with exposure to fast growing trends like next generation transistor, memory cell, advanced wiring architectures, and emerging growth opportunities in new materials, resist processing, and advanced packaging. So, thank you very much for joining us this afternoon, and I’m gonna turn it over to Ram for some safe harbor statements.

Ram Ganesh, Vice President of Investor Relations, Lam Research: Yeah. Thank you, Arlen. I have the wonderful job of reading the safe harbor statement. So, Today’s discussion may include forward looking statements that are subject to risks and uncertainties, and actual results may differ materially. Additional information concerning factors that could cause actual results to differ materially from those forward looking statements can be found in the risk factors disclosed in our public filings with the SEC, including our most recent 10 ks and 10 Q.

With that, back to you.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Yep. Thank you. Great. So, I’m going to start off with some longer term questions on the wafer equipment, WFE, spending outlook, outperformance of the industry, and outperformance of Lam, over the past several years. So, Tim, wafer equipment spending intensity bottomed 13 at about 9%.

It’s been steadily increasing over the past eleven years. Wafer equipment spending has grown at an 11% CAGR versus the semiconductor industry growth CAGR of 7% over that period of time. Lam has actually grown its revenues at a 14% CAGR over that period of time. Right? And at the Analyst Day, not that long ago, you unveiled a financial target that drives a 13% per year revenue outlook, 18% EPS CAGR through calendar twenty eight.

Long term, big picture, like walk us through a high level framework for driving towards your calendar twenty eight target of 25,000,000,000 to $27,000,000,000 in revenues, 50% gross margins, 34%, thirty five % operating margins, and $6.07 dollars of earnings power per share.

Tim Archer, President and Chief Executive Officer, Lam Research: Great. Well, thanks, Harlan. It’s fantastic to be here, and thanks for highlighting all of the past performance as well as our financial model. It helps me out. We’ve been very happy with the performance of Lam.

As you mentioned, we’ve outpaced WFE. I think what we tried to highlight at our Investor Day, and I think we continue to reiterate, is best is yet to come for Lam. The importance of etch and deposition, when we consider what the technology inflections are that are ahead, we see an opportunity for us to continue to expand our served market faster than WFE. And within that, through really our engineering efforts and ability to create great products and ability to take share within those expanding markets. And so from a revenue and top line perspective, great opportunity for outperformance.

And then you mentioned our strong financial performance. I mean, just on our most recent earnings call, we highlighted that we delivered the strongest gross margin, highest gross margin since we brought Lam and Novelis together back in 2012. And we guided to the highest operating margin for the company since the late 1990s. And so I think this combination of market tailwinds due to technology changes for etch and deposition, strong product execution and good operational performance really sets us up very nicely. The reason this is really occurring is when you look at the devices and why equipment plays such a stronger role in semiconductors is manufacturing is just becoming so much more complex.

The history of our industry has been one of two dimensional shrink primarily, but we saw in three d NAND back in roughly 2015 to 2017 timeframe, the industry started to inflect towards vertical scaling. For Lam, that’s really just changed everything. Obviously, three d NAND was a huge inflection point for Lam in terms of our ability to take share of the industry spending. Etch and deposition went through a strong period of growth. And what we really see ahead of us right now is that similar type of inflection occurring across both the foundry logic space as well as the DRAM space.

And so again, we’re already in the very early stages of those changes today, but looking forward, we see even more of those types of vertical inflections on the road map.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Yeah. And I think as a follow on to that, you know, as we move forward, and Tamil will talk a little bit more about these dynamics, but you talked about, you know, manufacturing architectures moving to more three d like architectures. Right? And as we move forward in time, we see this handoff from, you know, memory three d architectures, especially things like NAND moving towards three d architectures and foundry and logic and DRAM. And so, coincidentally, I think, you know, the mix of your business, even over the past few years, has gone from 20 to 30% foundry logic mix to over the last couple of years, fifty percent plus foundry and logic mix.

Right? And much more balanced and market exposure. Given some of, you know, the share gains in logic and foundry, given some of these new three d architectures, strong exposure to things like gate all around, backside power distribution, patterning, does the team believe that it can sustain a more balanced mix even if memory WFE comes back strong over the next several years?

Tim Archer, President and Chief Executive Officer, Lam Research: Yeah, Harlan. We, I would say five or six years ago, we recognized that while NAND had been this incredible inflection opportunity for the company, to really create this strong, sustainable, growing business that we wanted, we had to better balance the company. We’d become over weighted to NAND and in fact quite often we’d be out and people talked about us continuously as the memory company. But when we looked at certain parts of our product portfolio, we saw that we really had the tools and the technology to do dramatically better in foundry logic. We just needed those inflections to start to come to the fore that would allow us to demonstrate that.

That’s where we are now. We look at inflections like gate all around as you mentioned, the coming inflection with backside power distribution, the advent of advanced packaging in really big ways in foundry logic as well as DRAM and the work we’ve done on dry resist for EUV. When you total those up, almost all of those inflections are primarily focused at foundry logic and DRAM. And so as we deliver the products and the SAM expansion and the share gains within those spaces, you will see our business naturally balance even in the face of what we believe will be a recovering NAND market in coming years. But the other markets are just growing that much faster.

In fact, as we look long term in our model, we think that foundry logic versus memory ends up being about a two thirds, one third split. And so this strong execution and share gain in foundry logic is going to play out even more importantly for us over the coming years.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Let’s let’s let’s turn to kind of more of the near term. Right? I mean, we are we are still in a cyclical industry, and, you know, there’ll be ups and there’ll be downs. And, you know, currently, we’re going through a lot of trade and tariff related dynamics. Right?

And Liberation Day was, you know, just over a month ago, and tariffs on imports into China, you know, were put in place. Tar you know, tariffs on US got implemented April. Your customers are facing a myriad of uncertainties. Right? But certain aspects of their spending is strategic.

Right? Node migration and NAND, for example, certain aspects of their business, especially leading edge, is focused on accelerated compute and AI, right, which faces less spending pullbacks because of the strategic nature of accelerated compute. Certainly, chip design activity at the advanced nodes has been accelerating, but you also have the broader industrial, automotive, consumer focused smartphone and PC segments of the market that did slow during the twenty eighteen, twenty nineteen trade in tariff war. So I guess the question is, like, what have you observed over the past few weeks, either discussions with customers and partners, you know, on their six, nine, and twelve month forecasts, has anything changed meaningfully?

Tim Archer, President and Chief Executive Officer, Lam Research: You know, we came out on our earnings call recently. We said that, for the most part, we had seen no real changes in our customer plans. And I think that I would attribute that to a couple of things you just said. One is that there’s a good portion of the investments by our customers which are very strategic in nature. They’re focused on fast growing elements of the market, parts of the business that they feel they need to be in and investing in.

And so I think that it’s not surprising to me that those are not changing. I think also even on the parts where there may be more impacted by the demand element that you talked about, I think people still are waiting for a bit to see how that plays out. Obviously, this is a pretty dynamic environment And so the investments in the locations you’re picking and the choices you make are long term investments. And so I think that might be another reason why we haven’t seen any immediate reaction within our space. We certainly recognize that tariffs have two potential impacts.

One is we spoke on our call about direct tariff impact and we said that Lam has benefited from strategic investments we’ve made to broaden our geographic footprint of our manufacturing facilities over the years. We have a long standing strategy of trying to locate close to And so as there’s been more business in recent years in Asia, a lot of our growth has occurred there. But equally, we have footprint in The U. S.

As well. And so as we’ve looked through it, we’ve said we can’t make the direct impact zero, but by exercising the flexibility that we have within our manufacturing and supply chain operations, we can lessen the impact. So direct was in our view at least manageable and actually incorporated into the guide that we gave for the June. Longer term, I mean the indirect impact, how the global economy and the long term demand could be affected by tariffs. Obviously, we’re not experts in forecasting that impact and I think that’s something that has to play out.

But I think that if you look back to some of the results that you talked about, Lam has performed extremely well from a financial perspective even in the face of strong cycles in our business. And I think that we’ve shown flexibility to make the changes needed to protect profitability and come out of each cycle stronger. And while we keep a close eye on it, we have those conversations with customers. We also feel like if that were to be the outcome, we would actually come out stronger out of that cycle next cycle as well.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Yes. And you just talked about the diversification of your value chain as it relates to servicing your large Asia customers. Right? But on the reciprocal tariffs that were levied on many countries, including Malaysia and Taiwan, where you have operations, obviously, there is a ninety day reprieve through early July. But, you know, you have another dynamic, right, which is not only are your Asia manufacturing customers getting larger, but there’s a lot more US manufacturing being brought back here.

Right? And so the question there is, does the Lam team have enough manufacturing capability in The US to service your leading edge customers that are building plants here, you know, domestically? Right? TSMC, you know, hundred 60,000,000,000 plus of investments over the next decade. Right?

Samsung has already put a stake in the ground, and many others. Right? And if I remember, and you’re gonna have to support all of these US based manufacturing operations. I I seem to remember before your manufacturing consolidation, the team did have a pretty good manufacturing footprint in Oregon and California, but not sure how that footprint has changed as you brought on your Malaysia and Taiwan factories.

Tim Archer, President and Chief Executive Officer, Lam Research: Well, the good news is the company has gotten bigger and so we’ve expanded manufacturing. Obviously, a lot of the Asia the growth has come in those Asia facilities, we still have manufacturing in The U. S. And that’s why I say I believe that we’re extremely well positioned from a footprint perspective to respond to what needs to be done once it’s more clear as to what the long term tariff situation is. I think that if you think about servicing these customers, again coming back to our strategy, we believe that whether it’s manufacturing or it’s process development or other things, we have a strategy of being close to our customers.

And so as we see our customers shift geographically, we feel we can respond to that.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Let’s talk about 2025. Back in the April earnings call, the team reiterated their view for $100,000,000,000 in industry wafer equipment spending outlook for this year. It’s up about 5% year over year. Strength in leading edge foundry and logic, tech upgrades in NAND, strong spend in advanced DRAM and advanced packaging. New technology migration is always a tailwind, right, for the Lam team.

So given your visibility, discussions with customers, you know, which of these technology inflections is going to be the biggest growth driver for the Lam team in calendar twenty five, you think?

Tim Archer, President and Chief Executive Officer, Lam Research: I’d like to say all of them, but I think it’s important to understand why technology migration is so important for us. First, as I mentioned in the first answer, etch and deposition is becoming ever more critical. At each technology node, Lam’s served market expands. Also, each of those technology migrations opens up new applications in which there is no existing incumbent player. So when we’re looking to invest to expand our market and broaden our portfolio and to take share in those places where we’ve been historically underweighted, you need the technology migrations to open up those opportunities.

So good examples as we talked about gate all around, backside power, advanced packaging. These are really new opportunities. They’re new needs for our customers. They require etch and deposition technologies that Lam already possesses. And in some cases like advanced packaging where say copper plating being one of the key technologies in advanced packaging and also in HBM, This is an area where Lam has been a market leader for twenty plus years.

And so in some ways, tech migrations are not only advancing technology, those technologies are coming into areas of Lam’s traditional strength. And so, you know, think just from the standpoint of the importance of those inflections and those tech migrations, I think that’s just something we we watch very closely and feel very good that they they are happening.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Given most of these technology transitions across your customer base and end markets, it’s still really in the early phases of adoption curve. You know, how are discussions with your customers today, you know, shaping your view on the profile for spending in calendar twenty six?

Tim Archer, President and Chief Executive Officer, Lam Research: Yeah. For a lot of reasons, you talked about relative to uncertainty. It’s too early for us to get talk about ’26 in a quantitative way. Right. But I think that things we can be sure of in 2026 is tech migrations will continue.

The NAND upgrade cycle, which is moving some element of the capacity that exists at the 1XX layer to 2XX and beyond will continue. Obviously, there’s a lot of investment being made in technologies like HBM, things that are and even enterprise SSD, things that are driven by the ongoing build out of AI infrastructure. And so when I think about 2026, I mean it’s hard to say exactly how much capacity there will be, what the absolute levels of spending are. But where the spending will occur is very much in the areas that we focused our product development activities and also our customer engagements. And so again, we pride ourselves on being flexible to what the business environment is in any period And what we really want to make sure we get right is the underlying trends.

And I think when we look at the inflections that are currently underway and how those strengthen through 2026, ’20 ’20 ’7, ’20 ’8, we feel very confident that ’26 will be another year of great progress for Lam regardless of what the business level is.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: March, you know, your domestic China mix came in at about 31%. That’s down from about the 38, 40 percent mix last year. The team has communicated that, you know, China mix is coming down in the second half, again. But beyond that, how should we think about a sort of normalized China mix? Right?

As we think about the team and working through your calendar ’28 targets, what assumptions do you have as it relates to your domestic China mix over time?

Tim Archer, President and Chief Executive Officer, Lam Research: Obviously, many factors go into that answer, but I think what’s more, in some ways, more important to say is that in that long term model, the real key for us is growth in areas outside of China at the leading edge. As we just talked about, it’s really the inflections that are opening up new markets, allowing us to expand our SAM. I’ll just give you an example. If you think about foundry logic, of course there is trailing edge foundry logic in China, but for the most part our opportunity there is the same as what our opportunity was years ago when those processes were established. The opportunity in leading edge foundry logic for Lam, we talked at our Investor Day, we showed that with the inflections coming, like we mentioned gate all around and advanced packaging and backside power and dry resist, we have an opportunity where our served market from where we are today through the CFED inflection will actually go up by 2x per wafer.

So our served market will double through those inflections per wafer. Again, I think as we execute on those types of opportunities, naturally China for us becomes a smaller portion of business simply because our growth vectors in DRAM, our growth vectors in foundry logic and NAND are all we think so much stronger.

Ram Ganesh, Vice President of Investor Relations, Lam Research: Let’s stop. One thing I wanted to add was we never explicitly said anything about a second half China percentage. What Tim and Doug had said on the earnings call was on an annual basis 25 to 24 China as a percentage will be down.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: As the overall mix would be down.

Ram Ganesh, Vice President of Investor Relations, Lam Research: Yeah. We did say though there was a $700,000,000 level of business in second half that we saw last year Yes. Before the restriction that went away, basically, in second half.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Okay. Let’s talk about the technology migration dynamics, the detailed dynamics in foundry, logic, DRAM, and NAND. Right? In in advanced foundry and logic and DRAM, you’re targeting 3,000,000,000 plus in in gate all around in advanced packaging revenues this year. First question is, how is that tracking?

Right? Second question is, you’ve got another dynamic, is backside power distribution. Right? And I understand. I mean, there’s a very limited amount of customers that are firing on backside.

So, rather than giving us a sense of what you think your revenues could be in backside power, just given your strong position there, maybe you can just help quantify, like, what is the opportunity for Lam as more and more customers start to fire on backside power transitions? Sure.

Tim Archer, President and Chief Executive Officer, Lam Research: Okay. Yeah. These are these are all important inflections for us. If you think about the the first comment you had about gate all around and advanced packaging, I guess just to level set on what we’ve said, last year, we said each of those, the shipments to gate all around nodes and also to advanced packaging were over $1,000,000,000 each. So this year, the combined would be over $3,000,000,000 I think we feel very good that that’s that we’re still tracking to those kinds of numbers.

Again, we haven’t seen changes in this commitment to invest in technology at the leading edge. And Lam’s performance and positions are very strong there. What’s still to come are the other two big inflections that we’ve talked about, and one of them, as you just mentioned, backside power. And the way backside power improves power and performance is it puts very thick films interconnect onto the backside of the And again, when I made this comment about inflections that have very high etch depth intensity, again, if you think about the steps that are required to deposit and then etch very thick interconnect to the backside, it’s very etch and deposition intensive. It also, again, is one of those inflections that moves the technology in the area of LAM strengths.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Again,

Tim Archer, President and Chief Executive Officer, Lam Research: LAM is a deposition company, very strong in productivity, deposition of thick films, and we’re also the world leader in copper electroplating. Thick electroplated interconnect films play right to our strength. That’s an inflection that is still to come, but from a product perspective and a positioning perspective, we’re already in a very, very good place. We feel good about that. The last inflection, I don’t know if you intend to ask about it, but I feel I have to talk about it as the dry resist.

Yes. And it’s another inflection that affects both the foundry logic business, but also we reported a recent win in DRAM with that as well.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: That’s

Tim Archer, President and Chief Executive Officer, Lam Research: right. And again, just another opportunity that as the technology becomes more complex, Lam can bring our technology know how and deposition capabilities to bear on that and deliver something that helps improve EUV patterning for foundry logic. And we see that as a growth vector again that sort of layers in maybe after backside power. So we see through this next multiyear period kind of inflection after inflection after inflection, layering on top of each other to build our served market and grow our business and foundry.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Yeah. And there’s been a misconception, right, that your dry resist technology would be prime time in parallel with high NA EUV. But I think that, like you said, you already have a a win, and one of your DRAM manufacturers is already putting that into production. So this is this is a dynamic that’s gonna hit and start contributing to the top line even before the adoption curve on high NA.

Tim Archer, President and Chief Executive Officer, Lam Research: That’s right. We we’ve said that we we believe it has cost and performance benefits even before high NA EUV.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Let’s turn to NAND. You know, it it’s interesting because nobody believed the team back in second half of last year, right, when you called for NAND WFE spend growth in calendar twenty five. Right? And to the team’s credit, we’re seeing your NAND customers making the move to 200 plus layers. Right?

Despite despite the the the dynamics in the NAND market. Right? Customers are pulling back on utilizations. They’re slowing their tech migrations, but they are firing on those tech migrations. Right?

Micron is transitioning from their g eight to g nine, higher layer count, SanDisk, Kyoktia moving from BIC six to BIC eight. Samsung recently on their earnings call talked about a more aggressive move to their v nine technology. Right? So you’ve got all of these technology layer counts kind of firing. How long is it gonna take, you think, you know, that remaining two thirds of the current NAND capacity that is installed, that is still at one x x layers to move to two x x layers or higher?

How long is it gonna take? Because this is a $40,000,000,000 upgrade opportunity for the team.

Tim Archer, President and Chief Executive Officer, Lam Research: Well, for acknowledging that we’ve been saying it’s coming. Think that we certainly Obviously, it’s beneficial for us, so maybe everybody doubted that it’s really going to come. But it is when you looked I mean we gave some statistics on a call earlier in the year that about two thirds of the industry bits were still being manufactured at the 1XX layer node, right, which again our comment was not per se about the timing of when that would change, but that over time there is a necessity to move those bits forward. And so I think that that’s what you’re seeing customers now do is upgrade to take advantage of one, the lower bit cost you get from manufacturing at higher layer counts and two, the improved performance you can get from scaling up and using those more advanced device structures. So yes, we’re seeing that.

It’s hard to predict the rate and pace of the technology upgrades. What we have said is that between now and when the 2XX, the entire installed base is upgraded to 2XX, we estimate about $40,000,000,000 in upgrade spending to accomplish that transition. We haven’t put years on it because obviously it ultimately depends on the end demand and the consumption of those bits. But the technology upgrades have started and I think that as starting is always the hardest. And then once it gets going, think we’ll see a steady progression of upgrade business over the next several years related to those transitions.

One of the key points is you need to I believe that in general, you need to get bits and devices upgraded to build and meet some of the more advanced performance requirements, Especially when you look at the use of NAND in AI and enterprise, obviously enterprise SSDs is one area where there is relatively strong demand for bits. And I think that’s one of the things that ultimately is driving the upgrade cycle right now.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: And to your point, right, it’s not just higher layer counts needed for more bits, right, to support this enterprise. This is the consumption by AI and accelerated compute, but it’s also the higher performance. Right? I mean, every new generation of enterprise SSD, you need higher and higher IOPS. Right?

So you need that next generation of technology to drive the not only higher density, but better performance dynamics as well.

Tim Archer, President and Chief Executive Officer, Lam Research: Yeah. And for Lam, when we think about what we can contribute to the NAND upgrade in terms of performance, mean this is where not only do we benefit from the additional capital intensity from higher layer count, but we also begin to introduce new technologies which have significant performance benefit for the customers including the use of molybdenum as the metallization and that change directly helps with the IO performance of the devices speed and therefore is a significant improvement for those devices.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: One of the big misconceptions I feel like is out in the market and that I think the Lam team doesn’t get credit for is, you know, anytime you dominate segments of the market, there’s always going to be competitive noise. Right? Proof of concept only gets your foot in the door by your competitors. When we talk to the production engineers and fab managers at your customers who are driving the high volume mega fabs, you know, they’ve got a whole different set of metrics that they’re focused on. Right?

Not just, do you have a cryo chamber, x y z, this and that. No. Their metrics are throughput, uniformity, defectivity, smallest footprint, consumables usage, etcetera. Right? And they tell us that’s the reason why they choose Lam.

So as you develop these new systems, how does the team integrate the manufacturability requirements of your customers as a part of the development process, and how does the systems development team work closely with your services or what we call your CSBG team?

Tim Archer, President and Chief Executive Officer, Lam Research: Yeah. It’s a it’s a good question. I mean, it it you kinda highlighted the the holistic nature of what we have to deliver to the customer. Of course, we all love talking about the technology inflection and whether it’s a new material or it’s a new device architecture we’re enabling. But at the end of the day, we have to run tens of thousands or hundreds of thousands and in some cases millions of wafers through those tools.

And so what the customer really values is your ability to do that day in, day out at a cost and performance and reliability that they can count on. So it is informing not only our engineering development cycle, we’re spending a lot of time on maturing our tools earlier in the process. We have engineering facilities very close to our customers where we can work side by side with them to make sure that as we go through that pilot phase that we are working out the bugs before it’s in their high volume and that’s been very beneficial for us. But on the services side, then we’re also engineering new capabilities that we believe will be in the future even more important in high volume manufacturing. And one of those, we’ve talked about in the past is equipment intelligence, the use of all of the data that’s coming off of the machines, predictive algorithms to predict when maintenance needs to be done, help our engineers troubleshoot faster.

AI comes into play there to assist engineers in solving very complex problems on the tools. But the other innovation that I’m very excited about is what we’re doing in the area of cobots and robotic maintenance on the tools. Obviously, in many cases, as fabs are being built in different parts of the world, labor availability comes up, skilled labor. Also as the technology nodes have moved forward and the sensitivity to just little changes inside the machine really are very important for process performance, this idea of robotic maintenance is really catching And so late last year we introduced and launched the world’s first or industry’s first maintenance cobot. And what this tool does is it basically can be rolled up to our machine and instead of an engineer doing the work to do preventative maintenance or corrective maintenance on the tool, the cobot does this work.

And we found a couple of things. One is it helps solve the labor issue. But even more importantly, the cobot is incredibly repeatable at doing these tasks. And that has helped us as we look at high volume manufacturing with what’s called first time right. So after the maintenance, does the tool come and qualify first time without additional intervention?

That’s a very important metric relative to availability and performance and utilization of the systems. The process performance, there are some of the parts inside of an etch chamber for instance that need to be aligned within a 50 micron tolerance. That’s pretty hard for an engineer to do, but a cobot can accomplish that. And that gives us better uniformity around the edge of the wafer. These are things that again ultimately play into the yield the customer is going get, the uptime of those tools in production.

We think long term that kind of trust in our productivity and trust in our role as a manufacturing partner is what ultimately causes customers to take us from that step of technology proof to manufacturing implementation.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: On the financials, know, team drove record gross margins of 49% in the March, guide of 49.5% this quarter, long term target of 50%. Ten years ago, as you mentioned in your opening remarks, you were driving 45%, forty six % gross margins. Can you walk us through the consistent 400, five hundred basis point improvement trajectory over the past ten years, how much of the incremental margin improvement has been due to mix, operational efficiencies, pricing power? And what is the team focusing on to drive further margin expansion going forward?

Tim Archer, President and Chief Executive Officer, Lam Research: I won’t break it out one by one, but what I’ll say is that obviously the operational changes we’ve made have been a key part of that. At the same time, I just talked about the fact that improvements in manufacturing. I mean obviously improvements in how we support and maintain the tools affects things like our installation of warranty expenses which flow into gross margin. Really we’ve just become better across the board. We focused a lot as we just discussed on the maturity of the tools at first launch, again helping us reduce costs that get incurred in the field and affect gross margins.

Really we’ve looked at this problem holistically and we’ve realized that both things that make the tools more reliable and better for Lam, that benefit our customers, ultimately drive through to our gross margins. So you’re seeing that. Second is scale of the company. As the company has gotten bigger, we’ve been able to invest in our manufacturing facilities, our operations, our warehouses. We’re making full use of automation in warehouses of large scale, driving costs down there.

So we’re just looking for every opportunity to improve our efficiency, and it’s showing up in the margins.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: In the same way that the move to manufacturing in Malaysia started off as a headwind, but is now a tailwind. Right? On the digital transformation initiative that you laid out at Analyst Day, you’re under you know, you’re undertaking that right now. It’s a headwind to margins, but expected to be about a hundred basis point tailwind to op margins in calendar ’28, hundred ’50 basis points tailwind in 2030. Right?

How much of this margin uplift is COGS efficiencies versus OpEx efficiencies?

Tim Archer, President and Chief Executive Officer, Lam Research: Yeah. We haven’t broken that out, a lot of it is will be operational efficiencies. There’s a fair bit of OpEx efficiency that will come in. Really, what we’re doing in digital transformation is we’re ripping out the systems in the company and replacing those and doing a lot of the process reengineering that’s needed to make ourselves more efficient at scale. One of the things that if there was a silver lining to the big boom in business that came around the COVID period was we were able to identify all of the shortcomings in our systems to operate at a 20 plus billion dollar And as we mentioned at our Investor Day, we have aspirations to be a $30,000,000,000 plus company in the not so distant future.

As we said, we are poised to double the company as our SAM and the WFE grows. So we realized that we needed to invest in systems and so that’s what we’re doing. It is why it’s a tailwind. It’s a big job to replace all those systems. Just like Malaysia, on the other side of that was a more profitable company, Our view is this is a good investment for the company long term.

And on the other side of this will be operational efficiency at scale that will pay off for the company, our customers and investors.

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: Great. Tim, Ram,

Tim Archer, President and Chief Executive Officer, Lam Research: thank you

Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst, JPMorgan: very much. Appreciate your participation. Thank you.

Ram Ganesh, Vice President of Investor Relations, Lam Research: Thank you. Thank you, Arlen.

Sebastiano Petty, Telecom Cable and Satellite Analyst, JPMorgan: Good afternoon, everybody. I’m Sebastiano Petty, I cover the telecom cable and satellite space at JPMorgan. I want to welcome T Mobile CFO Peter Isvaldik. Peter, thanks for being with us today.

Peter Isvaldik, CFO, T Mobile: Thanks for having us. It’s always fun.

Sebastiano Petty, Telecom Cable and Satellite Analyst, JPMorgan: Of course. I think do you have a safe harbor?

Peter Isvaldik, CFO, T Mobile: I think they were going to put it up, to the extent that they that they are there it is. So, know, everybody please look. We’ll be making forward looking statements and referencing non GAAP metrics. Refer you to our filings for all the associated disclosures.

Sebastiano Petty, Telecom Cable and Satellite Analyst, JPMorgan: Awesome. Alright. Well, Peter, last fall, T Mobile outlined an aggressive multi

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