Lam Research Expects Advanced Packaging and AI to Boost WFE to Mid-30% by 2025

Lam Research projects that its Systems and Applications Market (SAM) will expand to mid-30% of the worldwide front-end equipment (WFE) market by 2025, driven by advancements in packaging and AI. The company's Q4 2025 earnings call revealed that revenues and profitability exceeded expectations, with gross margins reaching over 50% for the first time since the merger.

Lam Research Corporation (NASDAQ: LRCX) has projected that its Systems and Applications Market (SAM) will expand to mid-30% of the worldwide front-end equipment (WFE) market by 2025, driven by advancements in packaging and AI. The company's Q4 2025 earnings call revealed that revenues and profitability exceeded expectations, with gross margins reaching over 50% for the first time since the merger.

The earnings call highlighted Lam Research's strong performance in the June quarter, with revenue of $5.17 billion, representing a 10% increase over the previous quarter. The company's gross margin reached 50.3%, up from 49% in the March quarter, and non-GAAP earnings per share hit a record of $1.33. The company's China region represented 35% of total revenue, up from 31% in the previous quarter, underscoring the growing importance of this market.

Lam Research's President and CEO, Timothy M. Archer, noted that the company's served available market (SAM) is expected to reach around mid-30s percent of WFE in 2025 and aims to grow it to the high 30% range longer-term. Archer highlighted key product wins, including the ramping of the Halo ALD Moly tool at NAND customers, new foundry wins for gate-all-around nodes, and growth in SABRE 3D advanced packaging systems, expecting SABRE 3D market share in advanced packaging to grow nearly 5 points year-on-year in calendar 2025.

Douglas R. Bettinger, Executive VP & CFO, provided guidance for the September 2025 quarter, expecting revenue of $5.2 billion, plus or minus $300 million, with a gross margin of 50%, plus or minus 1 percentage point, and operating margins of 34%, plus or minus 1 percentage point. Earnings per share are expected to be $1.20, plus or minus $0.10.

Lam Research's strong financial performance builds upon the momentum seen in the previous quarter, where it had exceeded analyst expectations. With gross margins now exceeding 50% and continued revenue growth, Lam Research appears well-positioned to capitalize on the expanding semiconductor equipment market, particularly as demand for advanced technologies continues to drive industry investment.

References:
[1] https://www.investing.com/news/company-news/lam-research-q2-2025-slides-record-eps-gross-margin-exceeds-50-93CH-4161426
[2] https://seekingalpha.com/news/4475062-lam-research-projects-sam-expansion-to-midminus-30-percent-of-wfe-in-2025-as-advanced