Lam Research at Goldman Sachs Conference: Strategic Growth and Challenges

On Wednesday, 10 September 2025, Lam Research (NASDAQ:LRCX) participated in the Goldman Sachs Communicopia + Technology Conference 2025. The discussion, led by CFO Doug Bettinger, highlighted Lam’s strategic focus on etch and deposition technologies, robust financial performance, and the dynamic market environment. Bettinger conveyed optimism about Lam’s growth prospects, although he cautioned about potential margin pressures and regulatory impacts in China.

Key Takeaways

• Lam Research reported near-record revenue, a 50% gross margin, and all-time high earnings per share.
• The company is optimistic about the advanced foundry market, driven by AI, and expects a multi-year NAND upgrade cycle.
• The Customer Support Business Group (CSBG) is crucial, generating more revenue post-sale than the initial tool sale.
• Lam’s strategic roadmap includes new tools like Akrion and Halo, enhancing its competitive edge.
• U.S. regulations in China are not expected to materially impact Lam’s business, with licenses likely to be granted.

Financial Results

• WFE Uptick: Increased from $100 billion to $105 billion, with significant contributions from China.
• Gross Margin: Achieved a record 50%, the highest since the Novellus merger in 2012.
• Operating Margin: Reached an all-time high of 34.4%.
• Earnings Per Share: Set a new record, reflecting strong profitability.
• Shareholder Returns: Committed to returning 85% of free cash flow through dividends and buybacks.
• Dividend: Recently increased, continuing a trend of annual hikes since 2014.

Operational Updates

• Customer Support Business Group (CSBG): Expected to see modest growth, driven by better utilization and strong performance in China.
• Advanced Service Offerings: Focus on equipment intelligence for value-based service delivery.
• Product Innovations: Introduction of the Akrion tool for precise etch control and the Halo tool for NAND applications.
• Cryogenic Etch: Maintains a leading position with the only tool in production.

Future Outlook

• Strategic Positioning: Lam expects to continue outperforming due to increasing etch-and-deposition intensity.
• End Markets: Strong demand anticipated in advanced foundry and NAND markets.
• DRAM Prospects: Positive outlook for 4F² DRAM cells, potentially starting in 2027.
• WFE Guidance: Awaiting more data but positioned for strong performance.

Q&A Highlights

• China Competition: Local companies are growing but lack access to leading-edge customers. Lam maintains a strong market share where it competes.
• Regulatory Impact: U.S. government changes in China are not expected to significantly affect Lam’s operations.

For a complete understanding, readers are encouraged to refer to the full conference transcript below.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Unidentified speaker: Yesterday, so.

Doug Bettinger, CFO, Lam Research: Yeah. Okay, I think our mics just came open, Jim.

Unidentified speaker: Yes, well.

Doug Bettinger, CFO, Lam Research: Wow, that’s really loud.

Unidentified speaker: That’s very loud.

Doug Bettinger, CFO, Lam Research: Yeah.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Good morning, everybody. Welcome to the Goldman Sachs New Utopia and Technology Conference. My name is Jim Schneider. I’m the Semi-Digital Analyst here at Goldman Sachs, and it’s my pleasure to welcome Lam Research and CFO Doug Bettinger to the stage today. Welcome, Doug.

Doug Bettinger, CFO, Lam Research: Jim, thanks for having me. First, if you don’t mind popping up my safe harbor slide, I just want to remind everybody I may make forward-looking statements that we haven’t made before, although I highly doubt that. Everything I say today is guided under the safe harbor language you can find on our investor relations website. I like to keep my lawyers happy, so they should be now happy. Why don’t we jump into it?

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Excellent. Maybe before we get rolling, maybe start out on the strategic side for a second. You know, what do you think are one or two really critical strategic imperatives for Lam over the next 12 to 18 months, and what’s going to sort of dictate your success in achieving them?

Doug Bettinger, CFO, Lam Research: Yeah, you know, I think, Jim, frankly, it’s a lot of the stuff we’ve been talking about for a while. Right? We did our first investor day that we had, it’s been, had been five years that we did in February, and we brought a lot of new messaging out about how we see etch-and-dep intensity growing from where it was in 2024 in the low 30% of WFE to the high 30s. I always say we live in a good neighborhood, so that’s great. We’ve got several new products that we announced back then. In fact, we announced a new product this morning, I think, in Taiwan, Semicon Taiwan, TS3D, which is an inter-die gap-fill packaging solution. We have a variety of new products coming to market.

We’re very excited about the things we announced back in February, the Akrion conductor etch tool, first new conductor etch chamber that we’ve brought out in 20 years or longer. The Halo tool, the molybdenum tool, the biggest metallization change since the industry went to copper, frankly. Executing on the product roadmap, I think, Jim, is just what we’re going to continue doing. Right now, we’re at that point in the corporate calendar where we’re trying to figure out what is next year going to look like, what are we going to fund into next year. I don’t anticipate much change, frankly. The other thing you’re going to see us continuing to do is the close-to-customer both lab strategy as well as manufacturing strategy. There will be a continuation of that.

I don’t expect, Jim, there’s new stuff coming out necessarily, but a continuation of the things that we’ve been doing in the last couple of years that has made us as successful as we are right now.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Fair enough. Thinking back to your last earnings report in July, what do you think are the kind of one or two most incremental takeaways? Obviously, maybe not a lot of things changing, but there’s still always things that change on a month-to-month basis.

Doug Bettinger, CFO, Lam Research: Yeah, there’s always kind of new stuff. I mean, thinking about what we communicated, we upticked a little bit on WFE, and you may want to ask me about that later, but we went from, call it, $100 billion to $105 billion. A little bit of strength in China, maybe a little tiny bit in DRAM beyond what we had previously expected. That was one. We put up amazing financial numbers, I think, right? We’re close to all-time record levels of revenue, not quite there, but almost. It’s the first time we printed a 50% gross margin number since we brought Lam Research and Novellus together in 2012. I was super excited as CFO of the company to see that. We printed a 34.4% operating margin number, all-time record level for the company. That was awesome. All-time record earnings per share.

Those, I hope, resonated with people and certainly for me jumped out. I think those were the messaging. One thing I’ve been pointing out to people, and if you’ll allow me, maybe I’ll also go through, I do a lot of homework when I get ready for earnings, just kind of studying things. What are people going to want to ask or what do I want to talk about? Jim, I went back to the last time we were at these revenue levels and compared it to this time, right? You got to go back to like the December 2022 timeframe when we were at almost $5.3 billion in revenue. We almost got there in the June quarter and got in pretty close to there again. The interesting comparison, first, the profitability of the company is meaningfully higher. Back then, we were 46% gross margin. We’re now 50%. That’s great.

We’ve improved the profitability. We did that consciously with the strategy of the company to get closer to the customer. I feel really good about that. Equally important, when you look at the composition of our systems revenue, it’s actually fairly different. Back in the end of 2022, Memory was half of the business. In the June quarter, Foundry was 52% of our systems revenue. That’s a pretty big change. That didn’t happen on accident. That happened with the product strategy. It happened with the intentional positioning of these very strong products. I think when I think about that, I feel great about what we’ve executed. It didn’t happen by accident. It was because of the purposeful strategy of the company.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Now, since then, and maybe even a little bit before, I think some of your peers have sort of delivered a little bit of a deflection in their view on the forward, whether that be a significant degradation or maybe even a bit of an uptick. Can you talk about just since you reported any meaningful directional changes in what you’re seeing in terms of business?

Doug Bettinger, CFO, Lam Research: Not really any change, Jim. I mean, still very comfortable with the guidance we put out, with the color we provided, with how we see things, really no change. I think we’re all just trying to confuse you. Some people say things are a little bit stronger, some saying it’s a little bit softer. We see a little bit stronger. We see strength in China beyond what we had expected coming into the year. That’s good. Everything else pretty much as expected from everything I can think about.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Now, as we live in going to 2026, I was wondering, I mean, I don’t think you’re going to provide a quantitative outlook for us, but can you maybe just kind of give us sort of at the high level some rough qualitative color on the end markets you’re expecting, you know, which ones you expect to be, you know, up, down, sideways, heading forward?

Doug Bettinger, CFO, Lam Research: Yeah, I’m going to stay away from giving too much quantitative color, but I’ll tell you how I think about it. You know, Tim and I have been describing expectation that for the foreseeable future, we believe we are going to outperform. We believe that because of the things that I’ve already alluded to, which is etch-and-dep intensity is growing, right? Low 30% to the high 30% over a several-year timeframe. 2026 is just a guidepost along that journey. I expect that will continue. When we think about that, you’ve got gate all-around ramping in advanced foundry. You probably have some level of backside power showing up next year. Advanced packaging, which plays to the strength of our Cindian and electroplating business in TSV. You’ve got an early ramp of dry photoresist. We’re excited about that. I don’t know that that’s hugely material quite yet, but it’s meaningful.

I know you’ll ask me more about that later. When I think about the things going on in the industry, I believe we’re just really well positioned. What the quantitative number is for WFE next year, give us a quarter or so, and we’ll give you some indication of kind of how we see that. Right now, I think the important thing is we believe we’re just positioned to perform really well on a relative basis. To me, that is the most important thing.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Any color on sort of directionally, you know, foundry, logic, memory, et cetera?

Doug Bettinger, CFO, Lam Research: I guess if you go through it, I think advanced foundry is going to continue to be strong. Can’t imagine it’s not, right? Given all the excitement around AI and compute, you know, heck, I walked by Harlan Sur’s room yesterday and I was just blown away by the number of people trying to get in to see Harlan. That drives a lot of leading-edge foundry. It drives a lot of requirement for high bandwidth memory, right? You’ve got a journey in HBM from 3 to 3E to eventually 4, 8 die to 12 to 16. That evolution is continuing. It plays to the strength of our TSV, like I said. We’ve got a view that there’s a multi-year upgrade cycle happening in NAND. I think that’s kind of what you’re going to see continuing into next year, Jim.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Fair enough. Maybe just philosophically, maybe level set us, going forward. What do you think the normalized level of WFE intensity is for the industry? Overall, do you think something in the mid-teens is pretty reasonable, or is there any reason to expect we could be significantly above or below that?

Doug Bettinger, CFO, Lam Research: I don’t know. That’s not an unreasonable way to think about it, I think, from my point of view. I never really even looked at that metric, though, if I’m honest. The metric I think is most important that everybody should pay attention to is CapEx as a % of operating profit. Actually, if you look at that, that’s been trending down over the last, I don’t know, three, four years, frankly. Profitability in the industry has, frankly, never been better. Pricing is as good as it’s been. I don’t know, Jim, if I think about that metric and people are, you know, like really fixated on it, I think it will largely depend on, does revenue growth come from pricing or does it come from unit volume? If it comes from pricing, it probably trends down. If it comes from unit volume, it probably trends up.

Frankly, I’m not smart enough to know the answer to that. I don’t know. That’s kind of how I think about it. When I think about capital intensity, the way I think about it is more capital intensity per wafer unit output, right? That’s a metric that I do look very closely at. That is going up. It’s going up in foundry and logic. It’s going up in NAND. It’s going up in DRAM. That drives the need for more equipment. That’s the thing that’s most important for our business when I think about how I look at capital intensity.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Yeah, fair enough. Let’s talk a little bit more about your business in detail. I want to make you happy, so let’s talk about CSBG.

Doug Bettinger, CFO, Lam Research: CSPG.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Oh, CSBG, sorry.

Doug Bettinger, CFO, Lam Research: Yeah, yeah, yeah.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: When you think about the moving pieces in that business, you know, directionally, what’s kind of come in above or below your expectations over the past several quarters, and you’d expect that trend to continue?

Doug Bettinger, CFO, Lam Research: Thanks for asking me about it. You know, if you listen to me talk, I always say, or I often say anyway, it’s my favorite part of the business at Lam. It’s the part of the business that people always forget to ask about when I’m in a one-on-one meeting. I usually need to jam it in at the end of the meeting. First, let me, if you’re new to the story, let me explain to you what CSBG is. It’s the Customer Support Business Group. We have four components that go into this business. It’s spare parts, it’s service, it’s equipment upgrades, and then it’s what we call the Reliant product line, older equipment, equipment that’s been around for, I don’t know, a decade or longer sometimes.

The great part about this part of the business is, and people are surprised when they hear me say this, on average, we generate more revenue after we sell the tool than when we sell the tool itself. It’s not true for every single tool, but on average, it is true. Our equipment runs for decades. It really never goes away. That’s an overstatement. We give a number at the end of every calendar year that is the number of chambers in the field. You can hear us talk about this. It grows every year. That’s an important thing to not lose sight of because this is a business that just kind of keeps chugging along. No matter what WFE is doing, fabs are running. That’s just to kind of think about it. We came into the year this year thinking CSBG was going to be modestly down.

We now think it’s modestly up. Driven maybe a little bit by utilization is probably a little bit better, which drives a little more consumption of spares, maybe a little more consumption of service. China’s a little bit stronger, so Reliant has ended up being a little bit stronger. One of the things we’re really excited about, and if you’ve been listening to us talk about service, I don’t know, over the last six months, is what we describe as advanced service or service that uses equipment intelligence. We’re really excited about these cobots, right, where we’re delivering service in a more predictable fashion and kind of changing how service is delivered, at least with our equipment. Frankly, I think you’re going to see the whole industry beginning to do more and more of this. What that enables us to do is deliver service in a different way.

Historically in this industry, and I know you know this, but for the people in the room, service has been show up and do a task, right? You need to do preventive maintenance. You need to clean the chamber. Things wear out in the installed base, and that’s not super profitable business. It’s kind of cost plus because the customer can do that service themself as well. What changes with this advanced service type delivery is you’re no longer like showing up and doing a task. You’re delivering incremental value. You’re making commitments on some level of performance. That changes the conversation with the customer from what does it cost to do this to more what is the value of what we’re delivering. We’re really excited about what this looks like. The pull from customers for this is actually amazingly strong.

Generally speaking, it can be more profitable, Jim, because, again, you’re doing something unique to what you’re able to do. We’re very excited about this, and you’re going to hear us talking more and more about it.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Great. Let’s talk about the core etch and deposition markets for you. You have a very strong presence there, especially in etch. Maybe talk about, you know, which of these kind of sub-product or sub-areas are you most excited about over the next few years in terms of growth?

Doug Bettinger, CFO, Lam Research: Yeah, listen, I’m super excited. We as a management team are super excited about the new conductor etch tool. We call it Akrion. It uses a direct drive, which enables us to more precisely control kind of how the etch works down through structures. It is fairly unique in the industry. I think when you look at the evolution of some of the changes in architecture in DRAM and foundry and logic, the need to have this capability is getting more and more. We’re very excited about it. I can tell you the customers seem to be very excited about it too. I measure that by the pull I see in terms of wanting hardware in the lab to evaluate what the capability of this tool is. You’re going to hear us talking more and more about the strength of that offering. Second, the Halo tool, right?

The evolution in the industry towards using molybdenum in different metallization layers, it’s showing up first in NAND, where, for the most part, it’s replacing what we used to do with the tungsten tool. This is going to happen over, I don’t know, a multi-year timeframe. We are extraordinarily well positioned with the MOLE tool in NAND. That is going to benefit us to get early learning relative to others in the industry who have aspirations to do this as well. We’re doing extraordinarily well in NAND. I’ll be surprised if we don’t have all of the business at the end of the day. We’ve announced two wins for MOLE in foundry and logic. This is another example of something I think we’re uniquely positioned to benefit from over the next several years. It’s got a lot to do with how we’ve architected the platform.

The QSM platform, the Cloud Station, is a very productive way of depositing MOLE. That’s important given the challenges around cost here.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: One sort of other product question from a competitive point of view, can you talk about your progress in cryogenic etch and maybe where you believe your closest competitors are relative to you and sort of the performance gap you see?

Doug Bettinger, CFO, Lam Research: Yeah, our closest competitors have been talking about winning business, I don’t know, for three, four years at this point. I don’t know if they’re still talking about it, but what they described over the last three or four years hasn’t come to fruition. We’ve defended everything in NAND and frankly continue to be the only company in the industry that has a cryogenic etch tool in production today. I feel good about where we’re positioned here.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Fair enough. Relative to NAND, within that market, you’ve talked about $40 billion of NAND upgrade spending over the next several years.

Doug Bettinger, CFO, Lam Research: Yep.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: If you think about overall NAND WFE, what’s your sense of the upgrade mix within that? Could that be as high as like 75% of the market or how do you think about the percentage?

Doug Bettinger, CFO, Lam Research: Yeah, I’m not going to give a hard %, but I’ll describe it so people understand it. It’ll vary by customer, which is why I’m not going to describe it. It’ll depend on what’s in the installed base. Just to unpack it a little bit, we see, I don’t know, the NAND set of customers largely evolving bit growth by upgrading what’s already in the fab for the most part. We’ve described, like you said, Jim, a view that that will cost roughly $40 billion over the next several years, upgrading the installed base. Thinking about that, what happens in an upgrade cycle is the constraint tools need to get upgraded to the next generation capability. For the most part, we are the constraint tool in the NAND fabs, right? It’s that big high aspect ratio etch down through the structure. We pretty much own all of that.

It’s the film stack. We pretty much own all of that. It’s the metallization. Today, tungsten going to MOLE. We pretty much own all of that. When the customers go through an upgrade cycle, we come in and, depending on what’s in the customer’s fab, upgrade what’s there to get the next generation capability. When that happens, you always need a few new tools, right? You open bottlenecks, constraint tools, and so forth. You have to adjust the capacity of what’s in the given fab that you’re coming into. There is always a little bit of new equipment, and the MOLE tool is a new purchase. You’ll get a mix of both, but it will very much depend on what’s in the customer’s fab.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Talking about DRAM for a second.

Doug Bettinger, CFO, Lam Research: Sure.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: To what extent do you think Lam is beneficiary of the move in the industry to 4F² DRAM cells? Do you have an estimated timing for when that might happen and to what extent you benefit?

Doug Bettinger, CFO, Lam Research: Yeah, I think we’re going to do really, really well with 4F². Just to describe it, it’s a very high aspect ratio cell, simply stated. Generally speaking, that Akrion tool that I’ve been talking about, I think is going to do really well in the move to 4F². I think we’re going to be extraordinarily well positioned. There’s some ALD spacers in there that I think we’re going to be well positioned for in addition to that. Timing, you know, I don’t like getting out in front of the customers, but I don’t know, it’s probably 2027-ish in that range. I don’t think really next year yet, although possible, but probably 2027, Jim, if I’m guessing.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Yeah, fair enough. You know, Doug, as you know from your investor meetings, there’s been growing investor attention relative to the progress of local competitors in China.

Doug Bettinger, CFO, Lam Research: Has there been?

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: What’s your view on, from what you see today, their capability to sort of not just kind of compete more aggressively within China, but potentially move internationally outside the country?

Doug Bettinger, CFO, Lam Research: Yeah, listen, the local equipment companies in China have been growing. When I step back and think about, analyze, why is that? It’s because there are a bunch of customers in China that we’re restricted from selling to anymore. The only choice those customers have is to buy what they can buy, and a lot of that is the local equipment companies. It’s some from non-U.S. companies as well. A lot of the growth you see from the Chinese equipment companies is there, Jim. Where we are still competing, and frankly, it’s a lot in China where we’re still able to compete, our market share is actually quite high. The Chinese set of customers still want to buy the best equipment they can buy, and that’s more often than not us.

The other thing I think about is relative to competing globally, that set of suppliers for the most part does not have access today to leading-edge customers. That’s where you learn how to do some of the most challenging things that the industry needs to be done. Just the fact that they don’t have visibility into that, we’re moving very fast, and we can move fast because we have access to those leading-edge customers.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Fair enough. Related to China as well, we got an announcement from the U.S. government a couple of weeks ago that the exemption for multinationals operating in China, including Samsung, Hynix, Intel, TSMC, has been rescinded starting at the beginning of the year. Just wondering how you view the impact on your business, if any.

Doug Bettinger, CFO, Lam Research: There isn’t any. Here’s a way to understand this. It was called a verified end user. What the U.S. government did was say, you can’t have that designation any longer. You need to apply for licenses, and those licenses, for the most part, will be granted, is our understanding. There is a level of work that is required in collaboration with the customer to apply for those licenses and go through and make sure licenses are current and so forth. The best I understand things, it won’t impact business. It’s just going to require us to apply for licenses, Jim.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Okay, fair enough. I guess, just broadly speaking, if you think about the NAND industry again, I think you’ve expressed the, I think there’s a view out there in the investor community at least that the NAND industry needs consolidation. We’ve got quite a few players. Curious as to, even if there isn’t, whether you think that the industry can kind of maintain prudence in terms of supply additions on a go-forward basis and kind of maintain the sort of healthy level of profitability going forward to the extent that it can sustain ongoing spending in the space. We’ve seen, as you know, a heck of a lot of volatility and we’re coming off of a pretty sharp decline.

Doug Bettinger, CFO, Lam Research: Yeah, listen, at the end of the day, nobody in the industry tries to drive volatility or tries to spend more than is necessary relative to market demand. What inevitably happens is sometimes we just get it wrong as an industry, right? That happened in 2021, 2022, right? As everybody came through COVID, I think the industry collectively mistook demand that was pulled forward in COVID to some level of secular demand. There was a level of overinvestment that frankly took several years to get through. I think we’re finally just getting through it, Jim, to be honest. When I observe the behavior of our customers, they’re trying to be quite prudent, trying to not create that environment where things overshoot and then undershoot and bounce up and down. Inevitably, sometimes we get it wrong collectively. It’s never like somebody did it on purpose. It’s just we misread things.

For us, frankly, when I think about does the industry need consolidation or not, I don’t know. What matters at the end of the day relative to people that sell equipment is what is the end demand. If that end demand is supplied from five of our customers or from three, it almost doesn’t matter because we sell largely the same thing to everybody, largely, not precisely. End demand is the most important thing in every aspect of the industry, frankly. I get that question a lot in foundry. Hey, does it matter if there’s one leading foundry or three? Not that much because end demand is the same regardless. The same is true in NAND, same is true in DRAM.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Fair enough. I’d be remiss if I didn’t spend some time on financials. Let’s go there for a second.

Doug Bettinger, CFO, Lam Research: I love talking about the financials, Jim. I am the CFO.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Growth margins, you mentioned it before, you’re sitting around 50% right now. I mean, clearly, like anybody looking at your financials objectively would conclude that you’ve done a great job expanding margin cycle to cycle. I’m kind of curious to see what needs to happen for you to drive growth margins sustainably above 50% and maybe just kind of help us think about the puts and takes from here, either from a customer or mix or otherwise perspective.

Doug Bettinger, CFO, Lam Research: Listen, we just put out a long-term model for 2028 in February that said the model for the company is 50% gross margin and mid-30s, 34, 35% operating margin. I don’t want anybody running away ahead of that right now. Even though we just printed a 50, there are going to be some puts and takes in the medium term. Right now, we have a very favorable customer mix. By that, I mean the mix of the total business. There’s a lot of smaller customers, Jim, I guess is a way to think about it. Generally, paying a little bit more than the bigger customers. I think that stands logically to people when I describe it that way. I don’t know that we can maintain that favorable customer mix over the medium term.

Offsetting that, though, is that close-to-customer manufacturing strategy that we’re going to continue to execute on as hopefully business grows over the near term. That will drive a positive bias towards margin. The customer mix is probably a little bit of a headwind. As I think about that dynamic, I don’t want people running ahead of 50% gross margin, at least quite yet. I’ll give you an update if our outlook changes on that. Still keep thinking about it that way.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Yeah, fair enough. Relative to your manufacturing footprint, there are a bunch of things going on here. Clearly, there are a bunch of moving parts around tariffs. Obviously, President Trump has put at least an initial framework in place around semiconductor sectoral tariffs going forward. As you examine your manufacturing footprint, maybe first of all, remind investors of what that looks like. Do you anticipate any potential changes to that footprint going forward?

Doug Bettinger, CFO, Lam Research: Yeah, listen, I think we are fortunate in that we have a very global manufacturing footprint. Let me describe it. Manufacturing facilities in California, in Oregon, in Ohio, in Malaysia, in Taiwan, in Korea, and in Austria. We are a global company. We’ve got things all over the place. To the extent that tariffs get finalized and we understand what the final rules of the road are, we can adjust things if necessary, and we will. It’s maybe a little too soon to make big changes to do that quite yet, but we have an ability to respond. What I’ve also been pointing out is we can’t respond immediately. It will take some time because we don’t manufacture everything everywhere today, and moving something that’s built in one factory to another, you can’t do it instantaneously.

There’s an aspect of a supply chain that we’ll need to adjust and so forth, but we have an ability to respond, I guess, is what I would describe, Jim. It doesn’t mean that tariffs go away relative to impacting the business, but we can optimize it, I guess, is the way I think about it.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Finally, you know, we were talking about before the session started about Novellus and sort of what that meant for the company. Maybe just kind of give us a sense about, you know, remind us about the upsides and some of the difficulties you saw with that integration. You know, prospectively, how does Lam think about M&A, you know, in terms of tucking capabilities and potential to do something transformational again?

Doug Bettinger, CFO, Lam Research: Yeah, boy, that deal was so long ago. Actually, 2012. Frankly, to me, it seems like only yesterday. I joined the company in early 2013, and I vividly remember going through the integration and systems and moving stuff around. Anyway, it’s still at this point. You cannot tell when you’re walking around the company what came from Novellus, what came from Lam. We’re all one integrated company today, as you would expect in 2025. Frankly, in my opinion, when I look back in hindsight, best deal in the history of semi-cap M&A, Lam and Novellus, the changes that we saw coming with 3D architectures, with multi-patterning, the interrelationship of etch and deposition being hand and glove together just made sense. Frankly, we’ve been able to do some things over the years that we probably would have not been able to do as two separate companies. I love that, right?

When I look at members of the leadership team today, some came from former Lam, some came from former Novellus, some came from somewhere else like me. Anyway, great deal. Now, when I think prospectively, I think M&A, Jim, is largely behind this industry. Honestly, if you look at the last big deals that were attempted to be done, they didn’t get regulatory approval. I think the last one was when we tried to come together with KLA in 2016. It’s been a while at this point. The fact that the last several big deals didn’t get regulatory approval probably means we’re done as an industry with the big stuff. It doesn’t mean there might not be a tuck in or two or some smaller things. That’s possible.

What that then ends up meaning is what do you do with the cash that you generate beyond the level of investment you need in the business? We talked in February about planning to return 85% of free cash flow to shareholders, growing the dividend on an annual basis, and then supplementing that with a share buyback program. Two weeks ago, I think we raised the dividend. I think we’ve done that annually since we first put the dividend in place in 2014. We continue to buy a reasonable amount of stock back with the free cash flow of the company.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Very good. I mean, you’ve done a bunch of investor meetings over the past, you know, since you reported, but I’m kind of curious, do you think there’s anything that people are sort of, you know, misunderstanding about the Lam story from here? Maybe talk about, you know, if we are back on stage five years from now, what do you think is the one thing that’s going to surprise investors?

Doug Bettinger, CFO, Lam Research: I hope it’s the amazing execution of the company. I hope, frankly, that doesn’t surprise people. I hope everybody just looks at it and is like, yeah, Lam said they were going to do that and we did it, right? We just put a financial model out for 2028 that suggests $26 billion in revenue. That’s a reasonable amount of growth. Etch and depth intensity is growing, right, with these 3D structures. That’s going to evolve. Advanced packaging is going to continue to evolve. I hope that doesn’t surprise people, but I hope with hindsight, we all sit here five, six years from now and say, yeah, great execution from Lam, just like the last 10 years’ execution has been.

Because frankly, when I look at what we’ve done and the growth that we’ve been able to deliver, I feel really, really good about how we have executed, what we have done, how we’ve invested, how we have differentiated ourselves. I believe that is going to continue.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Yeah, anything misunderstood?

Doug Bettinger, CFO, Lam Research: I think it’s what you asked about. I don’t know that it’s misunderstood, but I think underappreciated is CSBG. Everybody, and I guarantee I got a bunch of meetings today, everybody’s going to come in and want to talk about WFE. Tell me about next year. What about China? WFE, WFE, WFE. That’s critically important, by the way. Don’t underappreciate CSBG. It is a recurring part of the business model. It is a very high-quality part of the business model. It is very cash-generative relative to, it just doesn’t need an enormous amount of investment, right? When the equipment is designed initially, the R&D is deployed, and then spares and service, it just continues to go. I don’t know that it’s misunderstood. I just feel like, Jim, it continues to be somewhat underappreciated. I keep trying to talk about it more and more and more.

I will all day today try to talk about it more and more and more. Thank you for asking about it. I don’t know that it’s misunderstood, just maybe underappreciated.

Jim Schneider, Semi-Digital Analyst, Goldman Sachs: Very good. I think that we’re out of time. Thanks, Doug, for being here. Appreciate it.

Doug Bettinger, CFO, Lam Research: Awesome. Good to see everybody this morning. Thank you.

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