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Lam Research Expects Advanced Packaging and AI to Boost WFE to Mid-30% by 2025
ByAinvest
Thursday, Jul 31, 2025 6:30 am ET1min read
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) reported its Q2 2025 financial results on July 30, 2025, demonstrating robust performance and a positive outlook for the semiconductor equipment market. The company's stock rose 0.65% in after-hours trading, reaching $99.58, following the announcement.Key highlights from the quarter include:
- Revenue Growth: Lam Research reported Q2 2025 revenue of $5.17 billion, up 9.5% from the previous quarter.
- Profitability: The company achieved a record non-GAAP earnings per share of $1.33, a significant improvement from $1.04 in the previous quarter.
- Gross Margin: Gross margin exceeded 50% for the first time in recent quarters, reaching 50.3%.
- Market Share: The company's Systems and Applications Market (SAM) is expected to expand to mid-30% of the worldwide front-end equipment (WFE) market by 2025, driven by advancements in packaging and AI.
Lam Research's Q4 2025 earnings call further reinforced its strong performance. The company reported a 10% quarter-over-quarter increase in revenue, with earnings per share of $1.33, surpassing the forecast of $1.20. Gross margin reached a record high of 50.3%, and free cash flow hit a record $5.4 billion, accounting for 29% of revenue.
The company's strategic initiatives in key technology inflections, such as Gate-All-Around (GAA) technology and advanced packaging, are driving growth. Lam Research is also leveraging its copper plating expertise with the SABRE 3D system, which has achieved a significant milestone of 6,000 installed plating cells, the largest in the industry.
Looking ahead, Lam Research provided revenue guidance of $5.2 billion ± $300 million for the September 2025 quarter, with a gross margin guidance of 50% ± 1%. The company anticipates stronger revenue from China and expects to outperform the wafer fabrication equipment market in 2026 due to technological advancements.
References:
[1] https://za.investing.com/news/company-news/lam-research-q2-2025-slides-record-eps-gross-margin-exceeds-50-93CH-3812291
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-lam-research-q4-2025-beats-expectations-stock-rises-93CH-4161532
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