How long will it take to reach the new mid-50s gross margin target?

Reaching the mid-50s gross margin target will take 'several years,' driven by a combination of scale, revenue growth, new product introductions, and ensuring fair compensation for the value delivered. “A little bit of both, Tim, honestly, right? Part of it is scale and scope and revenue growth. Part of it is new product introduction and getting fairly paid for the value we're delivering. I expect, Tim, this is over the next several years that we'll continue to drive it on an annual basis for sure, but it's going to take several years, I think, to get to those levels, Tim.”

How should we think about CSBG growth beyond 2026, considering NAND, Reliant, and spares?

CSBG is expected to grow faster than the framework outlined 1.5 years ago, driven by advanced services and high industry utilization. Reliant's growth will be more situational, tied to mature node investment, China, and analog/industrial/automotive sectors. “Now clearly, we've grown faster than that suggested back 1.5 years ago, and that's come a little bit from advanced services... It's come -- it came also from just really high utilization in the industry, which drives consumption of spares and service... And then I think the way to think about Reliant is think about what's going on in the mature node investment, a little bit of what's happening in China. And then more broadly, what's happening in the analog, industrial, automotive space.”

What visibility does Lam have regarding new logic entrants and their spending, and what growth should be expected into 2027 and beyond?

Lam is engaged with new logic customers, including a new U.S. logic customer. New entrants provide opportunities to showcase innovative approaches and gain market share, especially with Lam's advanced systems in foundry logic. “Yes, there's some of the stuff going on. There's clearly dialogue... We are talking to that new logic customer in the U.S. that is happening... that's an opportunity for us to showcase the significant technical improvement Lam is in on the foundry logic side.”

LRCX

Lam Research (LRCX) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q4 FY26)· Information Technology· Jul 29, 2026

Source: earnings call transcript

Executive summary

Lam Research Q4 FY26 — Record Performance and Strong AI-Driven Outlook

Lam Research achieved record financial results in Q4 FY26, driven by robust demand across memory and foundry/logic, particularly from NAND upgrades and advanced packaging. The company raised its calendar 2026 WFE outlook and anticipates an extraordinary setup for WFE growth in 2027, fueled by AI-driven demand and technology inflections. Lam is well-positioned for continued outperformance due to its leadership in etch and deposition technologies and strategic global manufacturing capabilities.

Highlights

Record revenue of $6.72 billion, up 15% sequentially and 30% year-over-year.
Record non-GAAP gross margin of 52%, the highest in 20 years.
Record non-GAAP operating margin of 38.4% and diluted EPS of $1.82.
Full-year FY26 record revenue of $23.2 billion, non-GAAP gross margin of 50.6%, and diluted EPS of $5.82, up 41% from FY25.
Calendar 2026 WFE outlook raised to the low $150 billion range, up from a prior outlook of $140 billion.
Advanced packaging revenue expected to grow greater than 70% year-on-year.

Concerns

China revenue declined sequentially, with the domestic customer base experiencing a decrease.
Non-GAAP tax rate is expected to increase to the mid-teens in the September quarter and beyond due to higher revenue in higher tax jurisdictions and an increased U.S. GILTI rate.
Days Sales Outstanding (DSO) increased to 72 days in Q4 FY26 from 64 days in Q3 FY26.

Guidance & targets

Category	Target	Timeline	Confidence
Revenue	$8.1 billion high materiality	Q1 · FY27	High
Non-GAAP Gross Margin	52% high materiality	Q1 · FY27	High
Non-GAAP Operating Margin	39.5% high materiality	Q1 · FY27	High
Non-GAAP EPS	$2.15 high materiality	Q1 · FY27	High
Diluted Share Count	approximately 1.255 billion shares medium materiality	Q1 · FY27	High
Calendar 2026 WFE	low $150 billion range high materiality	CY26	High
Long-term Non-GAAP Gross Margin	mid-50% level high materiality	next several years	High
Long-term Non-GAAP Operating Margin	mid-40% level high materiality	next several years	High
SAM as percentage of WFE	high 30s range medium materiality	faster than 2025 Investor Day outline	High
Free Cash Flow Return to Shareholders	at least 85% medium materiality	over time	High
Non-GAAP Tax Rate	mid-teens medium materiality	Q1 · FY27	High
Capital Expenditures as % of Revenue	4% to 5% medium materiality	long-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Memory Systems Revenue Increased significantly as a percentage of total systems revenue. Record level in dollar terms	46%	—	up from 39%	—
Non-Volatile Memory Systems Revenue Driven by industry focus on conversions to 256-layer and above-class devices, primarily for enterprise SSDs. NAND revenue more than doubled sequentially	23%	—	up from 12%	—
DRAM Systems Revenue Spending directed towards wafer additions and technology upgrades across 1-alpha, 1-beta, and 1-gamma nodes. Flattish on a dollar basis sequentially	23%	—	down from 27%	—
Foundry Systems Revenue Mature node spending in China was down, largely offset by strength in leading-edge process node investments (2nm and 3nm) and advanced packaging.	44%	—	down from 54%	—
Logic/Other Systems Revenue Increased as a percentage of total systems revenue.	10%	—	up from 7%	—
Taiwan Revenue Contributed a significant portion of total revenue. New record level in dollar terms	27%	—	up from 23%	—
China Revenue Declined as expected, with mixed performance between customer types. Global multinational customers grew sequentially, while domestic customer base declined	26%	—	down from 34%	—
Korea Revenue Slightly decreased as a percentage of total revenue.	20%	—	down from 23%	—
Customer Support Business Group (CSBG) Strong growth driven by upgrades and services, with spares maintaining strong levels due to high industry utilization. Third consecutive quarter of record revenueIncrease primarily due to record upgrade revenueSmaller increases in Reliant and servicesSpare part purchases remained consistent	nearly $2.5 billion	43%	17%	—

LRCX operating KPIs by quarter

LRCX operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2025 Q3 FY25	Jun 2025 Q4 FY25	Sep 2025 Q1 FY26	Dec 2025 Q2 FY26	Mar 2026 Q3 FY26	This call Jun 2026 Q4 FY26	Change vs prior quarter
Employees	~18.6K We ended the March quarter with approximately 18,600 regular full-time employees, which was an increase of approximately 300 people from the prior quarter. Source: earnings call transcript	~19K We ended the June quarter with approximately 19,000 regular full-time employees, which was an increase of approximately 400 people from the prior quarter. Source: earnings call transcript	~19.4K We ended the September quarter with approximately 19,400 regular full-time employees, which was an increase of approximately 400 people from the prior quarter. Source: earnings call transcript	~19.7K We ended the December quarter with approximately 19,700 regular full-time employees, which was an increase of approximately 300 people from the prior quarter. Source: earnings call transcript	~20.6K We ended the March quarter with approximately 20,600 regular full-time employees, which was an increase of approximately 900 people from the prior quarter. Source: earnings call transcript	~22.4K We ended the June quarter with approximately 22,400 regular full-time employees, which was an increase of approximately 1,800 people from the prior quarter. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Deferred Revenue Balance $2.43 billion Q4 FY26

up $213 million from Q3 FY26

Increase driven by a variety of factors, primarily customer downpayments.

Product announcements

Product	Type	Timeline
Akara platform	launch	since launch
VECTOR hard mask deposition platform	update	—
VECTOR diffusion barrier systems	update	—
Argos selective etch system	update	—

Risks & headwinds

China domestic customer decline Q4 FY26

China revenue declined sequentially, with domestic customer base down

Mitigation:Management noted global multinational customers in China grew sequentially, partially offsetting the decline.

Increased Non-GAAP Tax Rate Q1 FY27 and beyond

Expected to be in the mid-teens for Q1 FY27 and likely beyond, up from 11% in Q4 FY26

Mitigation:Due to increased revenue in higher tax jurisdictions (primarily US) and higher U.S. GILTI rate.

Days Sales Outstanding (DSO) increase Q4 FY26

72 days in Q4 FY26, up from 64 days in Q3 FY26

Challenging Lead Times for WFE Equipment current

Lead times are challenging

Mitigation:Lam's strategic global manufacturing and supply chain footprint helps respond to urgent customer requests, but further significant upside in the current year is difficult.

What to watch in Q1 FY27

CSBG Growth Drivers

next quarter

Current Strong upgrades, spares, and advanced services in Q4 FY26

Target Continued strength across upgrades, spares, and advanced services, potentially exceeding prior growth targets

Why it matters

CSBG is a significant revenue contributor and margin driver, expected to outperform prior growth targets, indicating sustained demand for services and upgrades.

I think you're going to see similar profile of what we saw this quarter... upgrades are going to continue to be strong... I expect spares to continue to be pretty strong... And then we're excited about what's going on in Advanced Services with all the cobot and Equipment Intelligence.

Find out whether LRCX delivers this. Inve re-checks your case every morning.

Q&A highlights

Given strong June performance and flat gross margin guidance, what is the expected profile for CSBG in the September quarter?

Management expects a similar strong profile for CSBG in the September quarter, driven by continued strong upgrades (especially from NAND investment), high industry utilization supporting spares, and excitement around Advanced Services like cobots and Equipment Intelligence.

“I think you're going to see similar profile of what we saw this quarter... upgrades are going to continue to be strong... I expect spares to continue to be pretty strong... And then we're excited about what's going on in Advanced Services with all the cobot and Equipment Intelligence.”

asked by Timothy Arcuri · answered by Douglas Bettinger

2 min read 6 chapters

Detailed narrative

AI-Driven Demand and Technology Inflections

AI is driving unprecedented demand and technical requirements, accelerating architectural scaling at both the device and packaging levels. This progression, from training to physical AI, creates new use cases and performance needs, notably in NAND for flash storage. Lam is capitalizing on these trends, with AI reshaping technology requirements in advanced foundry logic and DRAM, including Gate-all-around, CFET, HBM, 4F², and panel-level advanced packaging, all of which increase deposition and etch intensity.

NAND Upgrades and SAM Expansion

NAND revenue more than doubled sequentially in Q4 FY26, as customers focus on conversions to 256-layer and above-class devices, primarily for enterprise SSDs. Lam expects its served available market (SAM) per wafer in NAND to double from 128-layer to 500-plus layer devices.

This expansion is driven by increasing layer counts and manufacturing complexity, creating significant opportunities for Lam in addressing the challenges of stacking higher layers.

Advanced Foundry Logic and DRAM Leadership

Lam is strengthening its position in conductor etch with its Akara platform, which combines direct drive plasma technology with high aspect ratio patterning. Akara, initially adopted for 2-nanometer and below gate-all-around architectures, is now gaining momentum in advanced DRAM. Additionally, DRAM customers are adopting Lam's VECTOR hard mask deposition platform for low-k film patterning and VECTOR diffusion barrier systems, offering improved performance and cost savings compared to traditional approaches.

Advanced Packaging Growth and Panel-Level Innovation

Lam anticipates greater than 70% year-on-year growth in advanced packaging, driven by the increasing integration of chiplets, HBM stacks, and greater memory bandwidth within single packages. The industry is moving towards larger format panel-level packaging to exceed traditional wafer-based architectures.

Lam has shipped 510x515-millimeter panel systems into development programs and will ship its first 310x310-millimeter panel tool this year, positioning it at the forefront of this packaging transition.

Customer Support Business Group (CSBG) Innovations

The Customer Support Business Group (CSBG) achieved record revenue, fueled by strong demand for upgrades, Reliant, and Equipment Intelligence-enabled services. Lam's Dextro cobots, the industry's first collaborative maintenance robots, are seeing rapid adoption, doubling the number of automated preventative maintenance tasks since the start of 2026.

These solutions are improving tool availability and output, and are expanding from NAND into DRAM, creating additional service revenue opportunities.

Operational Execution and Global Manufacturing Footprint

Lam's record financial performance is a result of strong operational execution and its strategic global manufacturing and supply chain footprint. The company has leveraged its factories in Oregon, California, Ohio, Malaysia, Taiwan, Korea, and Austria to respond to accelerated customer demand. This distributed structure allows for efficient procurement and delivery, enabling Lam to meet customer needs and maintain operational velocity amidst significant growth.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.