Lam Research Q4 2025 Earnings Report

Lam Research EPS Results

• Actual EPS: $1.33
• Consensus EPS: $1.21
• Beat/Miss: Beat by +$0.12
• One Year Ago EPS: $1.03

Lam Research Revenue Results

• Actual Revenue: $5.17 billion
• Expected Revenue: $4.99 billion
• Beat/Miss: Beat by +$183.20 million
• YoY Revenue Growth: +33.60%

Lam Research Announcement Details

• Quarter: Q4 2025
• Date: 7/30/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 5:00PM ET

Lam Research (NASDAQ:LRCX) designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers ALTUS systems to deposit conformal films for tungsten metallization applications; SABRE electrochemical deposition products for copper interconnect transition that offers copper damascene manufacturing; SOLA ultraviolet thermal processing products for film treatments; and VECTOR plasma-enhanced CVD ALD products. It also provides SPEED gapfill high-density plasma chemical vapor deposition products; and Striker single-wafer atomic layer deposition products for dielectric film solutions. In addition, the company offers Flex for dielectric etch applications; Kiyo for conductor etch applications; Syndion for through-silicon via etch applications; and Versys metal products for metal etch processes. Further, it provides Coronus bevel clean products to enhance die yield; Da Vinci, DV-Prime, EOS, and SP series products to address various wafer cleaning applications; and Metryx mass metrology systems for high precision in-line mass measurement in semiconductor wafer manufacturing. The company sells its products and services to semiconductors industry in the United States, China, Europe, Japan, Korea, Southeast Asia, Taiwan, and internationally. The company was incorporated in 1980 and is headquartered in Fremont, California.

Lam Research Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record Q2 performance: Revenue of $5.17 B (+10% Q/Q), gross margin at 50.3% (highest since 2012), and EPS of $1.33 reached new company highs.
• Positive Sentiment: Record foundry revenues driven by gate-all-around and mature node strength, with upgrade sales up mid-teens percent as NAND customers scale to higher layer counts for AI applications.
• Neutral Sentiment: CY2025 WFE outlook raised to $105 B (flat in H2 vs. H1); Lam’s SAM is expected to expand to mid-30% of WFE with a goal to capture over 50% of incremental spending.
• Positive Sentiment: New technology wins include HALO ALD Moly ramp in NAND and logic, SABER 3D plating (6 K installed cells), VANTEX/Aqara etchers, and autonomous fab cobots in equipment services.
• Neutral Sentiment: Q3 FY 2025 guidance: $5.2 B ± $0.3 B revenue, ~50% gross margin ± 1 pt, ~34% operating margin ± 1 pt, and $1.20 ± $0.10 EPS.

Presentation

[Operator]

Good day, and welcome to Lam Research's June Quarter of twenty twenty five Earnings Conference Call. All participants will be in a listen only mode for the duration of the call. After today's presentation, there will be an opportunity to ask questions. To withdraw your question, please press star then 2. Please also note that this event is being recorded today.

[Operator]

I would now like to turn the conference over to Ram Ganesh, Vice President, Investor Relations. Please go ahead.

[Ram Ganesh, VP - IR at Lam Research]

Thank you, and good afternoon, everyone. Welcome to the Lam Research quarterly earnings conference call. With me today are Tim Archer, President and Chief Executive Officer and Doug Bittinger, Executive Vice President and Chief Financial Officer. During today's call, we will share an overview on the business environment and we will review our financial results for the June 2025 quarter and our outlook for the September. The press release detailing our financial results was distributed a little after 1PM Pacific Time.

[Ram Ganesh, VP - IR at Lam Research]

The release can also be found on the Investor Relations section of the company's website along with the presentation slides that accompany today's call. Today's presentation and Q and A include forward looking statements that are subject to risks and uncertainties reflected in the risk factors disclosed in our SEC public filings. Please see accompanying slides in the presentation for additional information. Today's discussion of our financial results will be presented on a non GAAP financial basis unless otherwise specified. A detailed reconciliation between GAAP and non GAAP results can be found in the accompanying slides in the presentation.

[Ram Ganesh, VP - IR at Lam Research]

This call is scheduled to last until 3PM Pacific Time. A replay of this call will be made available later this afternoon on our website. And with that, I'll hand the call over to Tim.

[Timothy Archer, President, CEO & Director at Lam Research]

Thanks, Ram, and good afternoon, everyone. Lam delivered another great quarter. Revenues and profitability came in at the upper end of our guided ranges. Our gross margins exceeded 50% for the first time since the merger of Lam and Novelis and EPS hit a new high for the company. We achieved record foundry revenues driven by strong performance in both gate all around and mature node markets.

[Timothy Archer, President, CEO & Director at Lam Research]

And again, our upgrades business grew to a new high, up mid teens percent over the prior quarter as NAND customers migrate to higher layer count, higher performance devices to meet the faster readwrite requirements and greater storage demands of AI applications. In short, we are executing well on the served market expansion and share growth story we laid out at our Investor Day earlier this year. Three d scaling of device and advanced packaging architectures is accelerating growth in etch and deposition intensity. And Lam's new products targeting key technology inflections are winning with customers. Furthermore, in advanced services, Lam is at the forefront of realizing the vision of an autonomous fab.

[Timothy Archer, President, CEO & Director at Lam Research]

We are gaining momentum with our equipment intelligence enabled dextro cobots, which provide device makers with an unprecedented level of equipment maintenance precision and repeatability. The result is enhanced tool to tool matching, improved machine availability, lower operational costs, and in some cases, higher yield. In the June, Lam expanded our dextro capabilities to cover three additional tool types, and we are accelerating the roadmap to support more products and more shipments in coming quarters. Turning to the overall market environment for calendar year 2025. We expect wafer fabrication equipment or WFE spending to be in the $105,000,000,000 range, up from our prior view of approximately $100,000,000,000 predominantly due to an uptick in domestic China related spending.

[Timothy Archer, President, CEO & Director at Lam Research]

We see non China investments remaining broadly consistent with our prior view. Currently, we expect WFE in the second half of the calendar year to be roughly flat with the first half. Looking forward to 2026, it is still too early to comment on the overall level of WFE spending. However, our strong position in gate all around, advanced packaging, high bandwidth memory and NAND layer conversions, we feel confident that Lam is well positioned to outperform. In 2025, Lam's served available market or SAM is set to expand to around mid-30s percent of WFE due to these industry drivers, and we expect them to work in Lam's favor again in 2026.

[Timothy Archer, President, CEO & Director at Lam Research]

Longer term, we are on a solid path to grow our SAM to the high 30% range of WFE by continuing to deliver critical solutions for atomic level device scaling, new materials innovation and advanced packaging integration. The key R and D investments that we've made over the last several years have enabled us to create the broadest, most competitive product portfolio in the company's history, thereby putting us in a strong position to win over 50% share of the incremental SAM over time. I'll share a couple of examples that underscore our early progress toward our SAM expansion and share gain goals. First is our HALO ALD Moly tool, which is ramping at multiple NAND customers this year. We expect Moly adoption to increase broadly as more customers convert NAND capacity to 200 layers and higher in the next few years.

[Timothy Archer, President, CEO & Director at Lam Research]

WAM is leading the industry transition to ALD Moly not only in NAND, but also in foundry logic. AI is driving greater transistor performance requirements and in turn, accelerating the inflection to gate all around device architectures. However, below two nanometers, gate all around structures begin to encounter significant resistance capacitance or RC challenges. Narrower transistor contacts in these devices cause greater electron scattering resulting in higher resistance of the deposited tungsten films. Replacing tungsten with molybdenum solves the resistance problem, but the process of depositing this higher performance material is inherently slower and more complex.

[Timothy Archer, President, CEO & Director at Lam Research]

This is driving a roughly 3x increase in LAM metal deposition SAM per wafer when transitioning to advanced gate all around nodes. Today, we are the only company with ALD Moly tools already production in foundry logic. And in the June, we secured a key win at another leading foundry customer for their next generation application. As Moly adoption expands across various metal interconnect layers, the flexibility of Lam's unique multi station architecture to execute both plasma and thermal processing in the same chamber enables optimization of process conditions and process step sequencing to meet requirements for different applications and over multiple generations of future logic devices. Another area where we have made strong progress is advanced packaging.

[Timothy Archer, President, CEO & Director at Lam Research]

Advanced packaging is critical for scaling system performance to address next generation AI requirements and so far has enabled up to 100% improvement in memory density, four times improvement in bandwidth, and an approximate 40% gain in power efficiency. RAMSAM is growing with greater adoption of next generation packaging architectures for DRAM, CPUs, GPUs, and ASICs used in data centers. In 2021, leading edge foundry logic customers spent just 1% of WFE on advanced packaging. With AI's rapid adoption of advanced packaging, that number has grown more than six times. In the future, we expect end consumer devices like mobile application processors and laptop CPUs to also feature more complex packaging schemes as on device AI becomes mainstream.

[Timothy Archer, President, CEO & Director at Lam Research]

We are a leader in the advanced packaging inflection and are leveraging our experience to win more opportunities. For example, Lam has amassed unmatched experience in copper plating hardware design and process technology over the last twenty years. We have by far the largest installed base in the industry and recently achieved a significant milestone of 6,000 installed plating cells. By incorporating our learning from the installed base into improvements in our latest SABER three d system, we are delivering best in class coplanarity, uniformity and defectivity in high volume advanced packaging environments. The experience we have gained at the leading edge is now cascading to additional wins with next tier customers seeking to adopt a proven best in class solution.

[Timothy Archer, President, CEO & Director at Lam Research]

SABER three d market share in advanced packaging is expected to grow nearly five points year on year in calendar 2025. Finally, let me pivot to the strong momentum we're seeing with our newest generation etch tools. In NAND, we continue to solidify our leadership in high aspect ratio dielectric etch. Equipped with our cryo process, our VANTEX system recently won a key multi generation etch decision at a major NAND customer. This further confirms our differentiation in both technology innovation and high volume production worthiness in the NAND segment.

[Timothy Archer, President, CEO & Director at Lam Research]

Across all device types, our state of the art conductor etch tool, Aqara, is off to a solid start since its launch earlier this year. By combining direct power coupling with Lam's unique plasma pulsing capabilities, Aqara delivers industry leading depth uniformity and profile control that is vital for DRAM scaling. In the June, Akara secured multiple new application wins at a top DRAM maker. So, to wrap up, I'm excited by the breadth of opportunities I see ahead for the company and am encouraged by the outstanding progress our team has already made for the long term goals we communicated at our February Investor Day. Etch and deposition intensity is rising with three d scaling.

[Timothy Archer, President, CEO & Director at Lam Research]

Our products are winning in key technology inflections. And as a result, there is tremendous potential for Lam to continue expanding SAM and to grow share at each successive process technology node. Now here's Doug to talk about our quarterly financial performance and the September outlook.

[Douglas Bettinger, EVP & CFO at Lam Research]

Excellent. Thank you, Tim. Good afternoon, everyone, and thank you for joining our call today during what I know was a busy earnings season. We executed well in the June including delivering a record gross margin percentage of 50.3% in the post Novelis period. These past two quarters represent Lam's highest gross margin percentage since we merged the companies in 2012.

[Douglas Bettinger, EVP & CFO at Lam Research]

Our June financial results came in above the midpoint of all of our guidance ranges with earnings per share actually exceeding the guidance range. For our 2025 fiscal year, we had record revenue of $18,400,000,000 and gross margin of 48.8%. Our free cash flow generation fiscal twenty twenty five was 29% of revenue and approximately $5,400,000,000 which was also a record for the company in dollar terms. We're delivering on the profitability objectives discussed at our Investor Day earlier this year through a growing top line, favorable mix and strong operational execution. Let's look at the details of our June results.

[Douglas Bettinger, EVP & CFO at Lam Research]

Revenue came in at $5,170,000,000 which was an increase of 10% from the prior quarter. Their deferred revenue balance at the end of the quarter was $2,680,000,000 which was an increase of approximately $670,000,000 from the March. This was related to customer advanced down payments from several newer customers. From a market segment perspective, June systems revenue in the Foundry segment represented 52% of our systems revenue, an increase from the percentage concentration in the March of 48%. In dollar terms, this level represents a second consecutive record quarter and we also set a new record from a fiscal year perspective.

[Douglas Bettinger, EVP & CFO at Lam Research]

We benefited from continued momentum processes as well as investments in mature nodes by domestic Chinese customers. Memory was 41% of systems revenue, a slight decrease from the prior quarter level of 43%. Non volatile memory came in at 27% of our systems revenue, which was higher than the March level of 20%. We continue to encourage you to think of NAND investments focused primarily on upgrades, which we anticipate will require an investment of roughly $40,000,000,000 over several years. DRAM declined from March coming in at 14 of systems revenue compared with 23% last quarter.

[Douglas Bettinger, EVP & CFO at Lam Research]

The decline in the June was related to the timing of certain customer projects. For the 2025 fiscal year, DRAM revenue reached a new record in dollar terms with spending focused on technology upgrades to the one beta and One Gamma nodes enabling DDR5 and LPDDR5. High bandwidth memory was also a key investment area. The Logic and Other segment came in at 7% of systems revenue in the June, slightly lower than the prior quarter level of 9%. Now I'll go through the regional composition of our total revenue.

[Douglas Bettinger, EVP & CFO at Lam Research]

The China region came in at 35%, an increase from the prior quarter level of 31%. We saw increasing investment from global multinational customers in this region to the highest level since the December 2022. The majority of our China revenue nonetheless continued to come from domestic Chinese customers. The next largest geographic concentration were Korea at 22% and Taiwan at 19% of revenue in the June, both of which were a decrease from 24% concentration in the March. Japan revenue at 14% was a record for Lam in dollar terms.

[Douglas Bettinger, EVP & CFO at Lam Research]

The Customer Support Business Group revenue in the June totaled approximately $1,700,000,000 consistent with the March, as well as the June of a year ago. We had a third consecutive record quarter for upgrade revenue driven by NAND technology convergence. We also saw strength in our spares business offset by a decline in Reliant Systems. Sitting here today, we do think we will see modest growth in CSBG for the calendar year. Let's look at profitability.

[Douglas Bettinger, EVP & CFO at Lam Research]

The June gross margin came in at 50.3%, close to the top end of our guided range and improving from the March level of 49%. The increase is tied to a stronger mix and continued progress in our operational efficiencies from our close to customer manufacturing strategy. Operating expenses for the June were $822,000,000 up from the prior quarter level of $763,000,000 This was a bit higher than our original estimate coming into the quarter, primarily due to increased incentive compensation tied to the company's improved profitability. R and D accounted for 69% of total operating expenses. The June operating margin was 34.4% and near the high end of our guidance.

[Douglas Bettinger, EVP & CFO at Lam Research]

This operating profit represents a record level for Lam in both dollars as well as percentage terms. Our non GAAP tax rate for the quarter came in at 4.8%. As I indicated on the last earnings call, the rate in the June reflects a tax reserve release tied to a statute of limitations expiration. Our estimate for the September is for the tax rate to be back in the low to mid teens range. Other income and expense for the June was approximately $4,000,000 in income compared with $7,000,000 in expense in the March.

[Douglas Bettinger, EVP & CFO at Lam Research]

The improvement in OI and E was primarily the result of increased interest income tied to a higher cash balance, as well as gains on our venture investment portfolio. As we've talked about in the past, you should expect to see variability in OI and E quarter to quarter. For capital return in the June, we allocated approximately 1,300,000,000 to share buybacks through a combination of open market share repurchases and an accelerated share repurchase program. That ASR will continue to execute into the September. We also paid $295,000,000 in dividends.

[Douglas Bettinger, EVP & CFO at Lam Research]

The June diluted earnings per share were 1.33 exceeding the high end of our guidance range, driven by that higher revenue, stronger gross margin performance and the lower tax rate. The diluted share count was 1,280,000,000.00 shares, which was a reduction from the March and was consistent with our guidance. We have $7,500,000,000 remaining on our board authorized share repurchase program. Let me pivot to the balance sheet. Cash and cash equivalents totaled $6,400,000,000 at the end of the June, an increase from $5,500,000,000 at the end of the March.

[Douglas Bettinger, EVP & CFO at Lam Research]

The main reason for the cash increase was cash from operating activities, including those customer advanced down payments, which was partially offset by cash allocated to the share buyback, dividends and capital expenditures. Their sales outstanding were fifty nine days in the June, which was down from sixty two days in the March. June inventory turns improved to 2.4 times compared with 2.2 times in the prior quarter. We're making progress in managing inventory levels and we'll continue to work on this as we go forward. Our non cash expenses for the June included approximately $94,000,000 in equity compensation, dollars 86,000,000 in depreciation and $12,000,000 in amortization.

[Douglas Bettinger, EVP & CFO at Lam Research]

Capital expenditures were $172,000,000 which was down from March level of $288,000,000 Spending in the June was mainly centered on lab investments in The United States and Asia, as well as manufacturing facilities in Asia, supporting our global strategy to be close to our customers development and manufacturing locations. I would point out that offsetting this capital spending, we received more than $50,000,000 in benefits through the advanced manufacturing investment credit, as well as other Chips Act related programs. We ended the June with approximately 19,000 regular full time employees, which was an increase of approximately 400 people from the prior quarter. We had headcount increases primarily within R and D to support the long term product roadmap. In addition, we had increases within the factory and field organizations for increasing manufacturing activities and a higher volume of tool installations.

[Douglas Bettinger, EVP & CFO at Lam Research]

Let's look at our non GAAP guidance for the September. We're expecting revenue of $5,200,000,000 plus or minus $300,000,000 We expect stronger China revenue driven by foundry spending in the September. We're expecting gross margin of 50% plus or minus one percentage point. This guidance includes our current assessment of the direct impact of tariffs on our business. Operating margins of 34% plus or minus 1%.

[Douglas Bettinger, EVP & CFO at Lam Research]

And finally, earnings per share of $1.2 plus or minus $0.10 based on a share count of approximately 1,270,000,000.00 shares. So let me wrap up. In completing the first half of the calendar year 2025, I was pleased that we made solid progress on the objectives we shared at the beginning of the year. Sitting here today, as Tim mentioned, we now see WFE relatively balanced half on half. We continue to prioritize strategic investments that extend our technology leadership, operational efficiencies and profitability, which reinforces our long term value creation agenda.

[Douglas Bettinger, EVP & CFO at Lam Research]

Operator, that concludes our prepared remarks. Tim and I would now like to open up the call for questions.

[Operator]

We will now begin the question and answer session. At this time, we will take our first question, which will come from C. J. Muse with Cantor Fitzgerald. Please go ahead.

[CJ Muse, Senior Managing Director at Cantor Fitzgerald]

Yes, good afternoon. Thank you for taking the question. I guess first question, your tool business is likely growing three times the growth rate of WFE, here in calendar twenty five. And you indicated, you know, expectations for relative outperformance to continue in calendar twenty six. Is there a framework for thinking about rank order of the key drivers of this outperformance that you could share?

[Timothy Archer, President, CEO & Director at Lam Research]

Sure. I think it's all the things that we've talked about in the past. I mean, we look at foundry logic, I mentioned extensively the discussion of Moly today, but we're also looking at other tools around the gate all around structure. It's things like selective etch, ALD. We still have backside power to come.

[Timothy Archer, President, CEO & Director at Lam Research]

That will be an area we believe of outperformance for LEM, given our strength in etching deposition and the role that it plays there. We continue to see ourselves gaining against WFE the more that advanced packaging is incorporated across every type of device, whether it's foundry, logic, HBM. And even in NAND, you're starting to see on every NAND maker's roadmap things like cell bonded to array or cell under array. So, really, as I look to the future, I mean, it basically is one in which depth and etch intensity just continues to rise faster than WFE. Lam has an incredibly strong position already and a portfolio of products that are just doing great in the marketplace.

[Timothy Archer, President, CEO & Director at Lam Research]

And so, I think if we continue to stay focused and execute, it will be those technology drivers that will carry us forward.

[CJ Muse, Senior Managing Director at Cantor Fitzgerald]

Very helpful. And then a question for you, Doug. In terms of gross margins, you've got it sounds like some tailwind from China. So curious, does that continue into the December? And is there kind of a new normalized gross margin ex kind of China that we should be thinking about?

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes, Tim, we are benefiting from a favorable mix, both customer as well as a little bit of product. We do have some level of headwinds as I look forward. Tariffs are ticking up a little bit. I don't expect as we get into the December, we're going to continue to have quite as favorable of a level of mix. And so I'll be pretty direct about how I want everybody thinking about the December gross margin.

[Douglas Bettinger, EVP & CFO at Lam Research]

You should be kind of thinking about where consensus is today, which is about 48%. Think that's what you're going to see in December. I'm not going to get over the skis yet in terms of what you should be thinking about as we head into next year, because I'm not exactly sure what the mix is going to be CJ, but I'll give you a very direct guidance on December, which I just did. Very helpful. Thank you.

[Timothy Archer, President, CEO & Director at Lam Research]

Thanks, U. J.

[CJ Muse, Senior Managing Director at Cantor Fitzgerald]

Thanks.

[Operator]

And our next question will come from Timothy Arcuri with UBS. Please go ahead.

[Timothy Arcuri, Managing Director at UBS Group]

Thanks a lot. Doug, so taking your comment about gross margin being down a smidge, and I know it doesn't have a lot to do with volume, and also looking at the commentary about WFE being pretty flat half on half, I know you're going to gain share, on the system side during the back half of the year for sure. But can you give us just a little bit of a sense, like do you think that December revenue is down as well just like gross margin? Or do you think it's pretty flat?

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes, Tim. Mean, you should think about our revenue likely mirroring what we described WFP to be, right? We told you we now think WP is roughly flat half on half, flattish. And if you think through that, you know what March was, you know that both June and September are roughly the same revenue level, so that you should conclude the December quarter look largely top line wise like March did, roughly.

[Timothy Arcuri, Managing Director at UBS Group]

Got it. Okay. So it is down. Okay. Okay.

[Douglas Bettinger, EVP & CFO at Lam Research]

And then Yes, will be down. And that's part of the gross margin, Tim.

[Timothy Arcuri, Managing Director at UBS Group]

Yes. Okay, cool. And then can you just talk about just there was a there's like a lot of puts and takes for next year. I know there was a pretty big CapEx cut from a big logic maker. But it sounds like you still feel like the bias to next year I mean, you're not giving us a number, but if you had to, you would say that the bias to next year is up. Is that fair?

[Timothy Archer, President, CEO & Director at Lam Research]

Well, we're not going to give a 2026 number. But I think that what we're trying to do is frame out that regardless of what WFE is, we think that the drivers of WFE spending are significantly in Lam's favor. I think that it's just too early. Mean, there are tremendous number of projects in play right now. It's hard to know exact timing.

[Timothy Archer, President, CEO & Director at Lam Research]

But if you look what are the drivers for '26, '27, '28, It's what I just talked about in the last question, HBM, advanced packaging, gate all around, NAND layer scaling, Moly. We didn't talk about I didn't mention dry resist, EUV patterning. These are all areas where Lam has new products that have been in our customers' R and D facilities for the last several years. They're ready to go. We don't control the customers' project timing, but we feel incredibly confident that when those projects go, Lam expands our SAM and gains share.

[Timothy Archer, President, CEO & Director at Lam Research]

Might be 26, it might be 27. Our strategy doesn't change at this point based on the customers' timing. We're in the right position.

[Timothy Arcuri, Managing Director at UBS Group]

Totally. Got it. Thank you.

[Douglas Bettinger, EVP & CFO at Lam Research]

Thanks, Tim.

[Operator]

Our next question will come from Harlan Sur with JPMorgan. Please go ahead.

[Harlan Sur, ED - Equity Research at J.P. Morgan]

Hey, guys. Good afternoon and great job on the quarterly execution. Your China business was strong in the June, was up about 20% sequentially. Is the team still embedding about a $700,000,000 negative impact from China in the second half of this year due to the restrictions that were put in place back in December? But irrespective of that, on top of all of this, you're anticipating a better overall China business this year.

[Harlan Sur, ED - Equity Research at J.P. Morgan]

Right? So relative to ninety days ago, what has changed within your China customer base? Do you think that this is potential pull forward of equipment of ahead of any potential tariffs or just more focused on bringing manufacturing capabilities domestically just given the choppy geopolitical environment?

[Douglas Bettinger, EVP & CFO at Lam Research]

Well Harlan, you stuck like three or four questions in there. Let me try. Yes, that $700,000,000 number that was revenue we had identified to specific customers. Regulations haven't changed, so that's no different. I think when we think about the fact that WP is a little bit stronger and it's driven by a little bit more spending in China, it's just a little bit more spending from a handful of customers is how I would be thinking about it.

[Douglas Bettinger, EVP & CFO at Lam Research]

It's nearly impossible for us to say it's a pull in because of any specific reason. They're just spending a little bit more when unpack it.

[Harlan Sur, ED - Equity Research at J.P. Morgan]

Okay. Perfect. Thank you for that. And then maybe for Tim, as we track a lot of these next generation AI XPU and GPU programs, like many of them are moving from two and a half D to three d packaging. And then on the flip side, your memory customers, as you pointed out, are gearing up for a strong migration to HBM4 next year.

[Harlan Sur, ED - Equity Research at J.P. Morgan]

Some of them are actually signaling increases in spending in the second half of this year, right, versus their expectations coming into the year. I think you guys did greater than a billion in advanced packaging and HBM last year. You came into this year targeting greater than 3,000,000,000 in advanced packaging and gate all around. But if you just single out advanced packaging, is that business coming in better versus your expectations entering this year? And is that what is also helping to drive maybe a slightly better second half shipment and revenue profile?

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes, it's a little bit Harlan. I think advanced packaging and total is probably a little bit stronger than we expected. It's not wildly stronger, but HBM is strong and there's probably a little bit of upside related to that as well as the China stuff we were talking about.

[Timothy Archer, President, CEO & Director at Lam Research]

And Harlan, I would just say from a technology perspective, I mean, kind of hit it. The packaging schemes are getting more complex. You mentioned 2.5 d to three d. I've always said for years now, you hear three d, you should think of LAM. And that means vertical scaling and more etch and deposition.

[Timothy Archer, President, CEO & Director at Lam Research]

HBM 3E to 4E obviously does things that are beneficial for us both from an advanced packaging perspective, but also from a front end equipment perspective. The die size cell size gets a little bit bigger, the die gets bigger because of increased number of TSVs to feed the higher IO count. By our estimate, and I think some of our customers' commentary, you need approximately 30% more wafers to produce an equivalent number of bits when you move from 3e to 4e. So, look, as AI performance requirements continue to demand these greater capabilities, we're just seeing increased WFE in the etch and deposition spaces. Similarly, SSD speeds, when you talk I mentioned CBA, is another packaging enabled capability, that's being directly put in for performance, it's part of the ability to create higher performance for SSDs, higher readwrite speeds.

[Timothy Archer, President, CEO & Director at Lam Research]

So, I think that everywhere these kind of packaging capabilities are being leveraged for performance and next gen capabilities. Thanks,

[Harlan Sur, ED - Equity Research at J.P. Morgan]

Tim. Thanks, Doug.

[Timothy Archer, President, CEO & Director at Lam Research]

Thanks, Harlan.

[Operator]

Our next question will come from Krish Sankar with Cowen and Company. Please go ahead.

[Krish Sankar, Managing Director at TD Cowen]

Yes. Hi, thanks for taking my question. I have two of them. Doug, I just want to clarify one thing on China sales. If I heard you right, you said the multinationals grew relatively more in June versus March.

[Krish Sankar, Managing Director at TD Cowen]

If true, you think it was because of potential for restrictions on tools for MNCs in China? Or do you think something else was going on?

[Douglas Bettinger, EVP & CFO at Lam Research]

No, Chris. Again, it's hard to isolate, hey, spending was a little stronger. What was the reason? I don't know that I would specifically identify it to that. But yes, you picked up on the commentary exactly right.

[Douglas Bettinger, EVP & CFO at Lam Research]

The global multinationals in China grew by more than 90% quarter over quarter. So there was a big increase in spending from that and that contributed to part of the uptick you saw in the China regional spending.

[Krish Sankar, Managing Director at TD Cowen]

Got it. Got it. Very helpful. And then a follow-up for Tim. Tim, on the two nanometer gate all around, especially at the leading Taiwan foundries, are all the tool decisions already made?

[Krish Sankar, Managing Director at TD Cowen]

Or do you think there are still some PTO hours that are still in flux?

[Timothy Archer, President, CEO & Director at Lam Research]

Chris, don't want to speak to any one specific customer where they are in timing. But I would say that, look, I mean, when we're not the guy in position, we're fighting right to the end until production fabs are built. But I would say that from the big drivers of SAM expansion and share gains, we've been looking forward past two nanometers for quite some time. And a number of things I talked about in terms of inflections are beyond two nanometers. I just highlighted Moly adoption and foundry logic, dry resist.

[Timothy Archer, President, CEO & Director at Lam Research]

There's a lot coming beyond and we're already well engaged with those more advanced applications. So, probably the best I can say without talking too much about one customer.

[Krish Sankar, Managing Director at TD Cowen]

Got it. Thanks a lot and thanks Doug.

[Douglas Bettinger, EVP & CFO at Lam Research]

Thanks Chris.

[Operator]

And our next question will come from Stacy Rasgon with Bernstein Research. Please

[Timothy Archer, President, CEO & Director at Lam Research]

go ahead.

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

Hi, guys. Thanks for taking my questions. First, I wanted to zero in again on on China. So the multinational is clearly the source of the upside in the quarter. Is it the local spending that's the upside in the September quarter in the multinational you see sustaining?

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

And I guess given all of that, given the decline you're guiding for December quarter, that pretty much just trying to normalizing into December? Is there something else going on there?

[Douglas Bettinger, EVP & CFO at Lam Research]

Stacy, I'm not going to break down the specificity of the regional composition for the guide, but China is up in the quarter. And yes, you got December. You're thinking about December in the right way.

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

Got it. So there's nothing else going on unusual in December? It's mostly just the trend of normalization? I mean, the gross margin guidance seems to indicate that as well.

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes. Revenue is going to be a little bit softer in December, just normal profile. Mix is a little bit softer in December. We're kind of back to a little bit of a run rate. And frankly, Stacy, you should also be thinking about tariffs, right?

[Douglas Bettinger, EVP & CFO at Lam Research]

Tariffs are a little bit higher in the December quarter than they are in September. So there's a lot of moving pieces, guess, is why I'm rambling on here a little bit. Yes.

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

No, I hear you. And for my follow-up, I just want to ask about Taiwan. I thought you said Foundry was at a record level, but Taiwan was actually down sequential. I guess I'm just having a little bit of trouble squaring that. Where am I what am I missing?

[Douglas Bettinger, EVP & CFO at Lam Research]

Taiwan last quarter was 24 percent revenue. This quarter, it was 19%. Revenue was up. So on a like for like basis, Taiwan was down a little bit. But understand, Taiwan is not the only geographic location where there's foundries in the world, right? There's foundries all over the globe.

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

Where are you seeing the foundry spending picking up then?

[Douglas Bettinger, EVP & CFO at Lam Research]

I'm not going to break down the geographic distribution, but there's a leading edge foundry investing in Japan. There's trailing edge foundry spending in China as well as globally. So it's a little bit all over Stacy. Japan, I would point out to you, I mentioned this record revenue in the Japan region. So I think you probably know there's a large new foundry in Japan.

[Stacy Rasgon, MD & Senior Analyst at AB Bernstein]

That's what I'm trying to tie out. Thank you very much. Helpful.

[Douglas Bettinger, EVP & CFO at Lam Research]

Yeah. You're welcome.

[Operator]

And our next question will come from Jim Schneider with Goldman Sachs. Please go ahead.

[James Schneider, Analyst at Goldman Sachs]

Good afternoon. Thanks for taking my question. Relative to your outlook on 2026, realize it's very early and you don't want to give a view there. But I mean, do you have confidence that Lam's business can actually grow in 2026 even if CapEx is not up for the broader industry?

[Douglas Bettinger, EVP & CFO at Lam Research]

Jim, we're not going to give a good number for next year. The important thing, and I think Tim described as well, listen, etch and depth as a percent of total WFE we see growing. And we feel extraordinarily good about the strength of the product portfolio right now such that we reiterated, Tim reiterated today that of this expanding SAM, we're going to gain 50% of it as our view of things. At the end of the day, we're only halfway through 25%. So we're not going to quite stick our neck out about 26% yet.

[Douglas Bettinger, EVP & CFO at Lam Research]

It'll be what it'll be, but we feel great about our relative outperformance into the next several years. That was the important message, Jim, that we try to deliver.

[James Schneider, Analyst at Goldman Sachs]

Understand. Well, I had to give the rookie try. Just a second question as a follow-up. Just wondering, obviously, NAND was a pretty good step up in the quarter. Do you see that strength sustaining through the end of the year or the next couple of quarters from where you stand today?

[James Schneider, Analyst at Goldman Sachs]

Or is it sort of like a pop up and pop down potentially? Thank you.

[Douglas Bettinger, EVP & CFO at Lam Research]

This is Jim. I'm also not going to get into the quarterly breakdown of NAND spending. The important thing though, and we reiterated this and we said it back at the Investor Day, is you should think about NAND over the next several years needing to spend roughly $40,000,000,000 to work through technology conversions, upgrades, if you will. Our view of that hasn't changed. That's the most important thing to think about.

[Douglas Bettinger, EVP & CFO at Lam Research]

The spending profile over the next several years we see continuing.

[Timothy Archer, President, CEO & Director at Lam Research]

The only thing I would add as well is while there's this focus on upgrades, we're also significantly advancing the technologies. And so I mentioned a couple of the items. I mean, the demands of AI for both storage and speed and density is driving things like the Moly adoption that I talked about. It's driving the CBA that I talked about. It's also driving QLC to get density.

[Timothy Archer, President, CEO & Director at Lam Research]

And QLC, talked about a win we had for cryo etching. Cryo produces a much more vertical high aspect ratio dielectric memory hole. That's a critical capability that enables helps enable QLC. And so, you're looking at multiple technology drivers. And then if you just look at layer count itself, over the last couple of years, we've been talking about all the other drivers, whether it's back side deposition for stress management with our carbon gap fill for tier stacking.

[Timothy Archer, President, CEO & Director at Lam Research]

And eventually, back to advanced packaging, the question we had there, you start stacking cells on top of cells to go to very high layer counts. And from an etch and deposition perspective, we're going get a lot of upgrades to the installed base, but you're also going to see a lot of new tools get pulled in, in the future to help enable these technology advancements that are needed both for performance and cost scaling.

[Douglas Bettinger, EVP & CFO at Lam Research]

Thank you. Thanks, Jim. Welcome on board.

[Operator]

And our next question will come from Atif Malik with Citi. Please go ahead.

[Atif Malik, Director - Technology Equity Research at Citigroup]

Hi, thank you for taking my question. Doug, you talked about modest growth in CSBG this year. I understand you don't want to talk about WFE next year, but is it safe to assume that the CSBG business snaps back next year in a more meaningful way given the restrictions and all that that has happened in China over the years normalizes?

[Douglas Bettinger, EVP & CFO at Lam Research]

You guys all want us to give you next year and I'm just not going to do it, Atif. Listen, the way to think about CSBG though is consistent with how you should be thinking about it over the last several years, right? Chamber count grows every year. So that creates incremental opportunity for us to kind of grow spares, upgrade service and so forth. We're really excited about the advanced servicing.

[Douglas Bettinger, EVP & CFO at Lam Research]

Tim talked about equipment intelligence and cobots. That's cool stuff. We're super jazzed about that. I'm not sure exactly how Reliant is going to play out next year. It is down a good amount this year.

[Douglas Bettinger, EVP & CFO at Lam Research]

I'm hopeful that it does better next year, but I'm just not ready to kind of give you specificity. But the tailwinds you've always seen in CSBG continue to be there.

[Timothy Archer, President, CEO & Director at Lam Research]

Yes. I want to I mean, basically just to add the strong performance in CSBG can show up in ways that aren't just CSBG revenue. And I think that's we talk about advanced services and I mentioned all the benefits that we see coming with equipment intelligence and our Dextro cobots, things like better machine availability, more repeatability of maintenance cycle to maintenance cycle. These things ultimately have an impact on how the customer feels about our tool as the most production worthy system for not only this current generation of manufacturing but all future. And so I think that we look at these two businesses, the CSBG business and our systems business is very synergistic.

[Timothy Archer, President, CEO & Director at Lam Research]

And better we do in Advanced Services, the better we're going to do in terms of gaining share on the system side. And so, I think we're investing in Advanced Services with that in mind, not just for its own revenue generating purposes.

[Atif Malik, Director - Technology Equity Research at Citigroup]

Thank you.

[Douglas Bettinger, EVP & CFO at Lam Research]

Thanks, Adam.

[Operator]

Our next question will come from Blayne Curtis with Jefferies. Please go ahead.

[Blayne Curtis, Managing Director at Jefferies Financial Group]

Hey, guys. Thanks for taking my questions. I want to ask on DRAM. Obviously, AI is super strong. I think there's a lot of concerns about maybe some inventory in the HBM side.

[Blayne Curtis, Managing Director at Jefferies Financial Group]

Obviously, smaller business for you and lumpy, but just kind of curious what you're seeing in DRAM and kind of any perspective for the rest of the year?

[Timothy Archer, President, CEO & Director at Lam Research]

Yes. I mean, I think that if we look kind of to the second half of the year, I mean, the only comment and I'll let Doug add is, we have seen some HBM related strength. I mean, HBM is definitely the hot thing in DRAM right now. But we look at it I mean, it's been hot, I mean, view there being a long road ahead. I mean, some of the data we looked at only something like 7% of total DRAM bits will actually be HBM in 2025.

[Timothy Archer, President, CEO & Director at Lam Research]

We don't know where that goes, but it looks like a long tailwind of build out in HBM. I talked about the impact of the changes from HBM3 to HBM4 and whatever comes beyond that and how it's impacting number of wafers required to produce the same number of bits. And those are things that expand WFE overall. But within that, etch is becoming more critical as well as you have to execute more precision to build these more advanced DRAMs. And so, I think it shouldn't be overlooked the importance of the new Acara wins that I talked about within DRAM.

[Timothy Archer, President, CEO & Director at Lam Research]

As you mentioned, it hasn't been a big business for us, but we're gaining share in DRAM. And I think that as we gain share in an expanding market, that's a great twofer. So we're really pretty positive about DRAM momentum right now.

[Blayne Curtis, Managing Director at Jefferies Financial Group]

Thanks. And then just want to ask, Doug, on gross margin for December. Is there anything more than the geographic mix? I think you said product mix, but then it would seem like China falling off the headwind as well. But maybe you just clarify what you meant by the product.

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes, there's customer mix, there's a little bit of product mix, and frankly, there's a little bit of tariff showing up incrementally in December. Those are the things to be thinking about, Blaine. And frankly, overall revenue levels too, I think, I told you December is going be down a little bit. So there's a lot of moving pieces in gross margin. All of that contributes some portion to it.

[Blayne Curtis, Managing Director at Jefferies Financial Group]

Got you. So when you say customers, it's related to the geographic mix?

[Douglas Bettinger, EVP & CFO at Lam Research]

There's some smaller customers in China and that tends to be what I'm describing when I say customer mix. It's not specific to any one region. It's just there's smaller customers.

[Blayne Curtis, Managing Director at Jefferies Financial Group]

Thanks for that.

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes. Thanks, Blaine.

[Operator]

Our next question will come from Vijay Rakesh with Jefferies pardon me, from Mizuho. Please go ahead.

[Vijay Rakesh, Managing Director at Mizuho Financial Group]

Yes. Thanks a lot. Just wondering on the WFE side, think I you have ITC, the investment tax rate going to 35%. Do you see that driving a tailwind to WFE as you look at next year? And I have a follow-up.

[Douglas Bettinger, EVP & CFO at Lam Research]

Vijay, not that I can specifically correlate. Might there be, there might be, but I've not deeply sat down and thought about this or tried to correlate. It's probably something I need to do.

[Vijay Rakesh, Managing Director at Mizuho Financial Group]

Got it. And then on the China side, obviously, good to see the pickup there. As you look out, do you expect that mix to kind of normalize, kind of mean revert to where you guys were might be early in the year or last year? Thanks.

[Douglas Bettinger, EVP & CFO at Lam Research]

Vijay, it's a good question. I told you I think September is up in China. I think December is probably going to lighten up a little bit. Previously we described the view that last year to this year China as a percent of total mix was going to be down. I think it's probably going to be flat to maybe slightly down.

[Douglas Bettinger, EVP & CFO at Lam Research]

It got a little bit stronger and that was part of why Tim described an uptick in WFE.

[Vijay Rakesh, Managing Director at Mizuho Financial Group]

Got it. Thank you.

[Timothy Archer, President, CEO & Director at Lam Research]

Thanks, Vijay.

[Operator]

And our next question will come from Edward Yang with Oppenheimer. Please go ahead.

[Edward Yang, Stock Analyst at Oppenheimer & Co. Inc.]

Hi, Tim, Doug. Thanks for the time. And congrats on the strong quarter. This is the third consecutive quarter where you've not only beat numbers, but the guidance has also exceeded consensus by double digits. So I guess taking that into context, I mean, you look at that record, I mean, it just more conservatism in your planning?

[Edward Yang, Stock Analyst at Oppenheimer & Co. Inc.]

Or what has kind of surprised you by this magnitude?

[Douglas Bettinger, EVP & CFO at Lam Research]

I guess, if you unpack it, revenue came in a little bit better. Gross margin came in a little bit better. And frankly, that tax rate came in a little bit lower. And I don't know that I would describe a conservative bias, but that's just kind of how the quarter unfolded. Now you might point out that, hey, that happens at Lam more often than not.

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes, maybe. But that tax rate was lower than we expected for sure. It's just a it's a little bit of all of it.

[Timothy Archer, President, CEO & Director at Lam Research]

Yeah. I think that also not to say much about the conservatism piece, but I think that in general, we're also in an environment where a lot of the markets that we're selling to look at the number I hate to say it, number of times I had to mention AI, but the reality is you've seen AI and demand kind of generally exceeding expectations here and it's driving demand for chips. And because so much of the more advanced requirements are for etch and deposition, we're outperforming that. And so I think maybe it's just us wanting to see it before we really commit to it. But I think we're getting a better and better view of how these technology transitions are occurring. I think that's what's giving us confidence that we, I think, well telegraphed at our Investor Day earlier this year when we talked about pretty aggressive $2,028,000,000,000,000 dollars semiconductor industry goals for the company.

[Edward Yang, Stock Analyst at Oppenheimer & Co. Inc.]

Yes. And thanks for that perspective, Tim. And my next question is just on mobile and your thoughts on that end market. The carriers have reporting really strong handset sales lately. Verizon, AT and T, their upgrades were up 20% and this is after a long stretch of flat.

[Edward Yang, Stock Analyst at Oppenheimer & Co. Inc.]

So hard to know what's behind it. I think one of the carriers called it tariff pull ins, the other denied it. But it feels like maybe we're starting a meaningful shift, there and if we are in the early stages of a broader handset refresh cycle, how would that affect Lam, across logic, DRAM and NAND And can you size your exposure? And are your ASPs in that segment above or below your corporate average?

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes. It's a great question. We're one step removed from kind of smartphones and PC sales. But the way it shows up for us though at the end of the day, yes, I do see a little bit of growth in mobile. I see a little bit of growth in client PC client.

[Douglas Bettinger, EVP & CFO at Lam Research]

But frankly, content is growing, right? When you look at the new phones coming out this year, there's more DRAM, there's more NAND, there's bigger baseband chips as AI becomes a thing. And that happens in PCs as well, right? There's not a huge unit story in PCs, although they're up, I don't know, low single digits this year. There's a content story there with terabyte.

[Douglas Bettinger, EVP & CFO at Lam Research]

In fact, I'm starting to see two terabyte PCs. That's what shows up for us. And it will show up with our large foundry customers at the leading edge and the DRAM customers that are selling HBM and frankly, the NAND customers that are selling SSDs. That's how it shows up in our business.

[Edward Yang, Stock Analyst at Oppenheimer & Co. Inc.]

Thank you.

[Douglas Bettinger, EVP & CFO at Lam Research]

You're welcome. Thank you.

[Operator]

And our next question will come from Daiyin Chen with Stifel. Please go ahead.

[Brian Chin, Director at Stifel Financial Corp]

Hi, good afternoon. Thanks for letting us ask a few questions. Maybe first, is the Vantex oxide etch when you referenced, is that for a 400 layer application?

[Timothy Archer, President, CEO & Director at Lam Research]

I'm not going to jump in exactly which technology node it is. But it's when I said multi generational, you can interpret that as being everything from current generation through the next couple generations. It's an important win because, again, customers tend to pick a new type of tool with the idea that they'll reuse that tool, they'll upgrade that tool for multiple technology nodes. It's a significant win for us.

[Brian Chin, Director at Stifel Financial Corp]

And maybe just a quick follow-up on that though, Ken. Do you think that the selection, if it's to be implemented at more recent nodes suggests maybe like a faster ramp upward in terms of vertical scaling?

[Timothy Archer, President, CEO & Director at Lam Research]

Well, I mean, Ventex has been in the marketplace for quite a while. I think, as you know, there's been a lot of talk over the last couple of years about leadership within the dielectric high aspect ratio etch space, particularly in NAND. And I think that you've seen a tremendous amount of innovation from Lam. And what I would just say is that we can't our performance doesn't necessarily drive whether the customer scales faster or doesn't scale faster. That's driven by their own end market needs.

[Timothy Archer, President, CEO & Director at Lam Research]

But what I would point out is the key markets within NAND right now, one of them, of course, is QLC. And if you have a very good cryo etch process that produces a very vertical high aspect ratio memory hole, you're more likely to be successful creating a QLC device. And so, I think what Lam does with our customers and we're engaged so closely with them is we try to create the technologies that allow them to create the devices that make them successful. And when they're successful, then they move quickly. And I think that that's what we're seeing, not just in Ventex but in many of the other items like I talked about faster readwrite speed and the relatively quick adoption we're seeing now of Molly in NAND. So a very similar kind of thing, enabling technology.

[Brian Chin, Director at Stifel Financial Corp]

Great. So maybe like SSD, very worthy. Maybe a quick follow-up question. On CSBG, just to slightly decompose it, upgrades likely up Q on Q. This is overall up a little Q on Q.

[Brian Chin, Director at Stifel Financial Corp]

Do you think that off the June that Reliant has maybe largely bombed out or stabilized here, even if you're not necessarily wanting to signal for some recovery in that part of the business?

[Douglas Bettinger, EVP & CFO at Lam Research]

Yes, Brian, I'm not going to get in the habit of decomposing a forward looking statement on CSBG. It is stronger than we previously thought in total, right? Previously, we've been describing we thought it was going to be flattish. I know we said we think it would be modestly up. So that's good.

[Douglas Bettinger, EVP & CFO at Lam Research]

Upgrades are extremely strong. Service and spares are doing well. And Reliance is down right now. That's kind of how to think about it.

[Brian Chin, Director at Stifel Financial Corp]

Okay. Thanks.

[Douglas Bettinger, EVP & CFO at Lam Research]

Thanks, Brian.

[Operator]

And our next question will come from Tom O'Malley with Barclays. Please go ahead.

[Thomas O'Malley, Director - Equity Research at Barclays]

Hey, guys. Thanks for taking my question. Doug, you mentioned the tariff environment is very different in the December versus the September. I was curious if you can unpack that a little. Are you referring specifically to February, any of the country specific tariffs?

[Thomas O'Malley, Director - Equity Research at Barclays]

What are you seeing as the most impactful quarter over quarter September, December?

[Douglas Bettinger, EVP & CFO at Lam Research]

I didn't really say it was, I forget what word you used. There are more tariff headwinds in December than our September. That's all we communicated. That's all I was trying to communicate.

[Thomas O'Malley, Director - Equity Research at Barclays]

Gotcha. And then on customers in China, I think Stacy went through it with you guys, but more specifically, like going into September, you obviously felt like there would be a fall off and in a very short window, those customers came back. Is December really a view of conservatism as you expect, you know, this as a one time kind of come back from the China customers or in Q4, is this more of a conservative outlook or do you think that you could see customers stepping back in because obviously the lead time here seems like it's relatively short to service these guys? Thank you.

[Douglas Bettinger, EVP & CFO at Lam Research]

When we describe the business, we don't try to be conservative or aggressive. We call it like we see it, and that's exactly what we're doing right now.

[Operator]

Our next question will come from Charles Shee with Needham. Please go ahead.

[Charles Shi, Senior Analyst at Needham & Company]

Hi, thanks for taking my question. I want to double click on some of your China guidance numbers there. So, maybe this is for

[Charles Shi, Senior Analyst at Needham & Company]

Doug. I think based on your guidance for the next two quarters, it looks like your China I know we have to back out some of the multinational numbers from your China revenue. It looks like domestic China revenue looks like it's tracking flattish year over year. And is that right? And I think the old I mean, the prevailing view for China WFE, this is still a down year.

[Charles Shi, Senior Analyst at Needham & Company]

So, is it really about outperformance, company idiosyncratic factors, or is that because, you know, you did add 5,000,000,000 to WFE number forecast for this year, maybe your view on China WFE is kind of shifting towards maybe this is not really a down year for China WFE. Thanks.

[Douglas Bettinger, EVP & CFO at Lam Research]

Yeah, boy, you put a lot in there, Charles. Listen, I'm not going to get into global multinationals year over year, blah, blah, blah. It was up decently in the current quarter. We up sided China WFE in total a little bit and then described a view that it's flat to maybe slightly down in the composition of what we're seeing. That's the color we provided.

[Charles Shi, Senior Analyst at Needham & Company]

Thanks.

[Douglas Bettinger, EVP & CFO at Lam Research]

Operator, we'll do one more question.

[Operator]

Of course. Our last question here will come from Tim Schultz Melender with Rothschild. Please go ahead.

[Timm Schulze-Melander, Partner & Equity Research Analyst at Rothschild & Co Redburn]

Yes. Hi, there. Thanks for taking my questions. I think maybe they're questions for Tim. So the first one was on Moly.

[Timm Schulze-Melander, Partner & Equity Research Analyst at Rothschild & Co Redburn]

Impressive that you already have positions in production. Just wanted to ask for some color, maybe how should we think about your share? Or how do you think about your share in Moly? Kind of what is that going to look like on maybe a one to three year view? And then the second one was on Advanced Packaging.

[Timm Schulze-Melander, Partner & Equity Research Analyst at Rothschild & Co Redburn]

And it was really just to ask about how do you think about the size and the profitability of that opportunity for Lam when you compare hybrid bonding with other three d packaging technologies? Thank you.

[Timothy Archer, President, CEO & Director at Lam Research]

Okay. Great. Well, I'll take the Moly one first. I guess, we haven't put out a share projection for Moly. But I guess, if you look at where we are right now and where we've been, I mean, we've been the leader in ALD metalization, like in the tungsten space for many, many, many years.

[Timothy Archer, President, CEO & Director at Lam Research]

In many cases, it's tungsten that is transitioning to moly, so we would expect to lead in that as well. We're the only company with ALD Moly in production in foundry logic. I mentioned a number of places where we're already running in NAND. Those are the two markets that are adopting Moly at this point. So I think that from a share perspective at this point, we're doing quite well and we would expect to continue to do so as we gain more experience.

[Timothy Archer, President, CEO & Director at Lam Research]

There's a first mover benefit in any of these markets. You get experience, you build that in, Your next applications and tools are better, and you just kind of keep building on that. So, it's been our recipe for many, many years. On advanced packaging, what I would say is the only thing we've sized up in the past, we said $1,000,000,000 last year. We said bigger this year.

[Timothy Archer, President, CEO & Director at Lam Research]

We didn't put out a specific advanced packaging number other than to lump it with gate all around at $3,000,000,000 more than $3,000,000,000 total. But we're doing well. I mean, you think about our position. We have very strong position in key applications like copper plating, many of the dielectric deposition processes. And so, almost regardless of the advanced packaging scheme, the more complex it is, the bigger our SAM gets.

[Timothy Archer, President, CEO & Director at Lam Research]

I think you asked about gross margin. We aim for it to be similar gross margins to all of our technology enabling applications.

[Timm Schulze-Melander, Partner & Equity Research Analyst at Rothschild & Co Redburn]

Great. That's very helpful. Thanks very much, Tim.

[Douglas Bettinger, EVP & CFO at Lam Research]

Thank you. Thanks for the question. Operator, that concludes our prepare our Q and A. Thank you everyone for joining the call today. We'll see you later in the quarter, I'm sure.

Participants

Executives

• Ram Ganesh, VP - IR
• Timothy Archer, President, CEO & Director
• Douglas Bettinger, EVP & CFO

Analysts

• CJ Muse, Senior Managing Director at Cantor Fitzgerald
• Timothy Arcuri, Managing Director at UBS Group
• Harlan Sur, ED - Equity Research at J.P. Morgan
• Krish Sankar, Managing Director at TD Cowen
• Stacy Rasgon, MD & Senior Analyst at AB Bernstein
• James Schneider, Analyst at Goldman Sachs
• Atif Malik, Director - Technology Equity Research at Citigroup
• Blayne Curtis, Managing Director at Jefferies Financial Group
• Vijay Rakesh, Managing Director at Mizuho Financial Group
• Edward Yang, Stock Analyst at Oppenheimer & Co. Inc.
• Brian Chin, Director at Stifel Financial Corp
• Thomas O'Malley, Director - Equity Research at Barclays
• Charles Shi, Senior Analyst at Needham & Company
• Timm Schulze-Melander, Partner & Equity Research Analyst at Rothschild & Co Redburn