Lam Research (NASDAQ:LRCX) executives highlighted record financial performance in calendar 2025 and pointed to continued momentum driven by AI-related semiconductor demand during the company’s December 2025 quarter earnings call. Management said results for the December quarter came in ahead of guidance at the revenue midpoint, while gross margin, operating margin, and earnings per share exceeded the high end of the company’s outlook.
Record 2025 results and December quarter outperformance
CEO Tim Archer said Lam ended 2025 “on a strong note,” citing “continued strong execution in an accelerating semiconductor demand environment.” CFO Doug Bettinger said the company delivered record annual revenue of $20.6 billion, up 27% year over year, and record annual gross margin of 49.9%, the highest full-year level since the company’s merger with Novellus in 2012. For the year, Lam reported record operating margin of 34.1% and diluted EPS of $4.89, up 49% year over year (non-GAAP basis as discussed on the call).
AI-driven demand and WFE outlook shaped by fab constraints
Archer described the “AI transformation” as pushing industry spending higher, estimating wafer fab equipment (WFE) spending was close to $110 billion in 2025, with an initial view for 2026 WFE at around $135 billion. Both Archer and Bettinger repeatedly emphasized that growth is being constrained by shortages of available clean room space, and they expect WFE and Lam’s business to be “weighted to the second half” of 2026.
Asked whether constraints could be quantified, Bettinger declined to provide a specific dollar figure, citing fluid customer plans as chipmakers work to bring facilities online. Archer added that numerous fab announcements point to capacity coming in 2027, 2028, and beyond, suggesting constraints may persist until new fabs open.
Segment, regional, and CSPG trends
Bettinger broke down December quarter systems revenue by segment and highlighted a shift toward foundry investment.
- Foundry: 59% of systems revenue, slightly down sequentially but up from 35% in the December 2024 period. Bettinger attributed strength to leading-edge investments and mature-node spending in China.
- Memory: 34% of systems revenue, in line with the prior quarter. Within memory, Lam generated record DRAM revenue, with DRAM at 23% of systems revenue (up from 16% in the September quarter), driven by high-bandwidth memory demand and node migrations to 1B and 1C to support DDR5.
- Non-volatile memory (NAND): 11% of systems revenue, down from 18% in the September quarter, in line with expectations for customer plans. Bettinger said Lam expects NAND to be a growth area entering 2026 as customers prepare for the next stage of AI-driven NAND growth.
- Logic and other: 7% of systems revenue, slightly up sequentially.
By geography, China represented 35% of total revenue, down from 43% in the prior quarter, which Bettinger said was influenced by updates in the affiliate rule and resulting shipment timing. Taiwan and Korea each represented 20% of revenue, both up sequentially.
Lam’s Customer Support Business Group (CSPG) generated approximately $2.0 billion of revenue in the December quarter, up 12% sequentially and 14% year over year, primarily driven by spares growth. Archer said Lam’s equipment intelligence initiatives and Dextro cobots are part of a push toward predictive and automated maintenance, which he said can support both CSPG growth and margins. Bettinger characterized the December quarter as particularly strong—driven largely by Reliant systems—and said that element can be “lumpy,” while reiterating expectations for CSPG growth consistent with prior commentary (high single-digit to low double-digit range).
Technology transitions and product momentum
Archer emphasized that vertical scaling and new architectures are increasing deposition and etch intensity, areas he said align with Lam’s strengths. He cited transitions including gate-all-around transistors, backside power deposition, high-performance materials, and 3D advanced packaging. Archer reiterated a prior framework that gate-all-around equates to roughly $1 billion in incremental Lam served available market (SAM) for every 100,000 wafer starts per month of capacity.
On product momentum, Archer said Lam’s Acara conductor etch system doubled its installed base over the past year and won production tool-of-record positions for EUV and high aspect ratio etch applications in advanced DRAM and foundry logic. He said customers chose Acara for its ability to etch small dimensions at very high aspect ratios while maintaining profile control and reducing variability, enabled by innovations including direct-drive solid-state power delivery and “tempo plasma pulsing.” Archer also said Acara applications are expected to grow about twofold in next-generation gate-all-around devices, and that DRAM wins for the 1C node are set to ramp this year, with applications expanding further at the subsequent 1D node.
Advanced packaging was another focus. Archer said Lam expects its overall advanced packaging business to grow more than 40% in 2026 and said Lam has leadership in electroplating and TSV etch, which he linked to the move toward HBM4 and HBM4E and stacking up to 16 layers. In Q&A, management did not quantify advanced packaging growth for calendar 2025 beyond saying it “grew nicely,” and said the 2026 growth reflects both HBM strength and broader adoption of more complex packaging schemes across advanced foundry logic.
On NAND, Archer said demand is growing faster than previously expected as new high-capacity SSD use cases emerge, including “non-volatile context memory layers” that can support large-scale AI inference. He said Lam estimates that for every 2–3 million accelerators sold, overall NAND bit demand growth could increase by roughly 1 point. Bettinger said Lam still expects upgrades to come before major greenfield NAND capacity additions, with Archer suggesting large-scale greenfield additions may be more likely when clean room space becomes more available in 2027–2028.
Margins, capital return, and March quarter guidance
For the December quarter, Lam reported non-GAAP gross margin of 49.7%, above the guided range due to better-than-expected customer mix, though down about one point sequentially due to less favorable mix versus the September quarter. Operating expenses were $827 million, roughly flat sequentially, with R&D at 68% of operating expenses. Operating margin was 34.3%. Bettinger said the company expects the non-GAAP tax rate to remain in the low-to-mid teens in calendar 2026.
On capital return, Bettinger said Lam repurchased $1.4 billion of shares in the December quarter at an average price of about $154 per share and paid $328 million in dividends. For calendar 2025, Lam repurchased about 39 million shares at an average price of $104, and returned 85% of free cash flow, consistent with its plan to return at least 85% over time. Lam had $5.1 billion remaining under its repurchase authorization.
For the March 2026 quarter, Lam guided (non-GAAP): revenue of $5.7 billion ± $300 million, gross margin of 49% ± 1 point, operating margin of 34% ± 1 point, and EPS of $1.35 ± $0.10 on a share count of approximately 1.26 billion. Bettinger cited slight headwinds from customer mix and the usual seasonal uptick in operating expenses.
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.
