Lam Research Corporation's Strategic Outlook and Growth Opportunities at the 53rd Annual JPMorgan Global Technology, Media and Communications Conference

Key Takeaways

TL;DR Summary:

Lam Research (LRCX) is poised for LT growth through tech inflections (gate-all-around, backside power, dry resist) and operational efficiency, aiming for $25B-$27B rev. (50% GM, 35% OM) by 2028. Near-term drivers include $3B+ in gate-all-around/advanced packaging sales (2025), $40B NAND upgrade cycle, and margin expansion from digital transformation. China mix to decline as leading-edge foundry/logic/DRAM grow.

1. Long-Term Financial Targets & Growth Drivers

• 2028 Targets: $25B-$27B rev. (+13% CAGR), 50% GM, 35% OM, ~$6-$7 EPS.
  • Driven by SAM expansion (etch/deposition intensity in 3D architectures) and share gains in foundry/logic (~2/3 of mix by 2028 vs. ~50% today).
  • "Best is yet to come" as tech complexity (e.g., gate-all-around, backside power) amplifies etch/deposition intensity.

2. Foundry/Logic & DRAM Growth Inflections

• 2025 Growth Drivers:
  • Gate-all-around/advanced packaging: Combined sales >$3B (vs. $1B each in 2024).
  • Backside power distribution: "Thick interconnect films require high etch/deposition intensity" (2026+ tailwind).
  • Dry resist for EUV: Wins in DRAM and foundry; deployment precedes high-NA EUV adoption.
• SAM Expansion: SAM per wafer to double by CFET inflection (vs. today) in foundry/logic.

3. NAND Upgrade Cycle

• $40B Oppt'y: Upgrading ~2/3 of industry bit capacity (still at 1xx layers) to 2xx+ nodes.
• Key Demand Driver: AI/enterprise SSD needs for higher layer counts (cost/bit) and performance (IOPS).
  • Transition supported by molybdenum metallization (improves I/O speed).

4. China Mix & Tariffs

• 2025 China Mix: Down y/y (31% in March Q vs. 38% in 2024) as leading-edge foundry/logic/DRAM grow faster.
• Tariff Impact: "Manageable" via flexible global footprint (U.S., Malaysia, Taiwan).

5. Margin Expansion & Efficiency

• Gross Margins: Hit record 49% (March Q); guide to 49.5% in June. LT 50% target supported by:
  • Operational improvements: Robotic maintenance/cobots (enhanced tool reliability, alignment precision to 50 microns).
  • Digital transformation: 100-150bps OM tailwind by 2028-2030 (cost/Opex efficiencies).

6. Competitive Differentiation