Lam Research Q3 Earnings Call Highlights

23 Apr 2026, 14:38 by Jessica Moore · The Cerbat Gem

Lam Research (NASDAQ:LRCX) reported March 2026 quarter results that came in at the upper end of guidance ranges, with earnings per share exceeding the top end of the company’s outlook. President and CEO Timothy Archer said the company is “off to a solid start in calendar year 2026,” citing record revenue levels and a strong setup tied to “an accelerating AI-driven semiconductor demand environment.”

Archer said Lam now expects 2026 wafer fabrication equipment (WFE) spending of $140 billion “with a bias to the upside,” up from the $135 billion range discussed in January, as “spending projections from customers have moved higher across all device segments.” He added the company believes this “sets the stage for another year of compelling WFE growth in 2027,” while also emphasizing ongoing industry constraints that limit near-term execution.

March quarter financial performance and segment mix

Executive Vice President and CFO Douglas Bettinger said March quarter revenue was $5.84 billion, up 9% sequentially and up 24% year-over-year. He described it as the company’s “3rd consecutive record revenue quarter.” Bettinger also reported deferred revenue of $2.22 billion, flat sequentially, though he noted customer down payments decreased by roughly $300 million and are now “at the lowest level we’ve seen in nearly 4 years.”

In systems revenue mix, Bettinger said Foundry represented 54% in the March quarter (down from 59% in December), with dollar revenue “approximately flat sequentially” and up 35% year-over-year. Memory represented 39% of systems revenue (up from 34%), driven by record DRAM revenue that accounted for 27% of systems revenue (up from 23%). Non-volatile memory was 12% of systems revenue (slightly up from 11%). Logic and Other was 7%, in line with the prior quarter.

Regionally, China accounted for 34% of total revenue, slightly down from 35% in the prior quarter, and Bettinger said China revenue in the June quarter “will decline from these levels.” Korea and Taiwan each represented 23% of revenue, both up from 20%, and both were record revenue levels in dollar terms for Lam in the March quarter.

Record customer support revenue and installed base initiatives

Lam’s Customer Support Business Group (CSBG) posted a record $2.1 billion in March-quarter revenue, up 6% sequentially and up 25% year-over-year. Archer highlighted the “1st $2 billion-plus revenue quarter” for CSBG, with demand strong across spares, upgrades, and services.

During Q&A, Bettinger said CSBG strength is supported by high industry utilization and described spares and service as “quite strong” in March. He said CSBG performance should “sustain roughly at these levels” through the remaining quarters of calendar 2026, “maybe up a little bit.” He also pointed to offsetting factors, including softer mature-node spending affecting Reliant.

Archer emphasized a growing focus on productivity improvements in constrained fabs, describing Equipment Intelligence as a way to analyze “massive amounts of data coming from our tools on every single wafer” to shorten troubleshooting time, improve tool matching, and support faster ramps. He also discussed Lam’s Dextro cobots, saying customers have seen higher output and, in some cases, improved yield due to more precise and repeatable automated maintenance. Archer said Lam expanded Dextro coverage to eight tool types in the March quarter, up from six in the prior quarter, and introduced a next-generation version with “10 times more compute power” in a smaller footprint.

AI-driven technology inflections across NAND, DRAM, foundry and packaging

Archer said AI-driven demand is increasing deposition and etch intensity and is expanding Lam’s served available market (SAM) as a percentage of WFE to “slightly more than the mid-thirties % level” in 2026, with the company still targeting the “high thirties %” over the next few years.

NAND: Archer said AI demand is moving into the storage layer, including higher layer count QLC-based NAND for SSDs used in data centers. He reiterated prior commentary that roughly $40 billion in conversion spending would be required over several years to move existing NAND capacity beyond 200 layers, but said Lam now anticipates the conversion will be “pulled forward,” with the “majority of spending occurring before the end of calendar year 2027.” In Q&A, he attributed the change to rising AI data center demand and the need to accelerate conversion from older “1XX 100-plus layer technologies” to 200-plus layers, with additional greenfield investment needed over time as complexity reduces effective output capacity.
DRAM: Archer said AI’s power and efficiency requirements are driving a transition to 1C generation devices and increased adoption of more advanced dielectric films. He highlighted Lam’s Striker carbide solution for bitline spacer applications and said Striker-based solutions are “the tools of record at all leading memory makers” for that application. Bettinger said March quarter featured record DRAM revenue, with high bandwidth memory investments remaining strong and spending “gravitating towards the 1C node and beyond.”
Foundry/Logic: Archer said calendar 2025 was a record year for Lam in foundry logic and said momentum is carrying into 2026. He noted Lam achieved “both dielectric etch wins at a key foundry logic manufacturer,” describing them as the company’s first dielectric etch wins at that customer.
Advanced packaging: Archer said Lam’s advanced packaging revenue growth is expected to exceed 50% in calendar 2026. In Q&A, Bettinger also cited advanced packaging as a contributor to PECVD share gains, noting the tool’s broad use, including underfill in packaging.

Margins, capital return, and June-quarter outlook

Profitability improved in the March quarter, with gross margin at 49.9% (high end of guidance), which Bettinger attributed to favorable product mix and improved factory efficiencies. Operating expenses were $866 million, up from $827 million in the prior quarter, driven by seasonal employee-related costs and higher headcount, with R&D representing 68% of OpEx. Operating margin was 35% (high end of guidance), and the non-GAAP tax rate was 9.2%, which Bettinger said benefited from higher equity compensation vesting.

On margins, Bettinger credited years of factory footprint expansion closer to customers, which reduced logistics costs and improved supply chain efficiency. Archer added that increased tool maturity and reliability has reduced installation and warranty spending, supporting gross margin. Bettinger told analysts to model gross margin “roughly in the levels that we just guided you to in June” for the rest of the year.

Lam returned significant capital in the quarter, including roughly $800 million in buybacks (including a $200 million accelerated share repurchase) at an average price of about $211 per share, $326 million in dividends, and the retirement of $750 million of maturing unsecured notes. Bettinger said the company returned 139% of free cash flow in the March quarter and still plans to return at least 85% of free cash flow to shareholders over time. He also noted $4.3 billion remains under the company’s repurchase authorization.

For the June 2026 quarter, Lam guided to revenue of $6.6 billion plus or minus $400 million, gross margin of 50.5% plus or minus one point, operating margin of 36.5% plus or minus one point, and EPS of $1.65 plus or minus $0.15 on approximately 1.255 billion shares. Bettinger said lead times are “stretching out a little bit” amid strong demand. He also said Lam’s second Malaysia manufacturing facility is expected to come online in the second half of the year and will be approximately the same size as the company’s first Malaysia site, which he called the largest in Lam’s manufacturing network.

Looking further out, Archer said Lam is already in discussions with customers about 2027 and beyond, including fabs expected to open in 2028, to ensure the company can prepare its resources and supply chain. Bettinger added that, based on what Lam can see, “it feels like it’s setting up to be a pretty good year in 2027.”

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.