Lam Research (LRCX) April 2025 Valuation Model and Risk Framework

This LRCX excel book includes valuation, financial forecasts, segment breakdown, and detailed operating model. Assumptions can easily be adjusted by the user.

Lam Research Corporation manufactures, markets, and services semiconductor processing equipment used in the making of integrated circuits. The Company's products are used to deposit special films on a silicon wafer and etch away portions of various films to create a circuit design. Lam Research sells its products worldwide.

Lam Research is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. Its plasma etches processes used to remove silicon and other materials deep into the wafer are collectively referred to as deep silicon etch. Its products and services are designed to help its customers build smaller and better-performing devices that are used in a variety of electronic products, including mobile phones, personal computers, servers, wearables, automotive vehicles, and data storage devices. Lam's customers include some of the world's largest chip makers, such as Micron Technology and Samsung Electronics. Customers outside the US account for over 90% of Lam's revenue. The company traces its historical roots back to 1980.

Operations

The company operates in one reportable business segment: manufacturing and servicing of wafer processing semiconductor manufacturing equipment.

Its Customer Support Business Group (CSBG) provides products and services to maximize installed equipment performance, predictability, and operational efficiency. It offers a broad range of services to deliver value throughout the lifecycle of its equipment, including customer service, spares, upgrades, and new and refurbished non-leading edge products in its deposition, etch, and clean markets.

Service offerings include fleet level Equipment Intelligence?solutions to maximize the productivity of its customers through system uptime or availability optimization, throughput improvements, and defect reduction. Its spares product line offers running cost optimization programs and focuses on product life extension to help customers increase the return on their capital purchases. Additionally, within CSBG, its Reliant product line offers new and refurbished non-leading edge products in deposition, etch, and clean markets for those applications that do not require the most advanced wafer processing capability.

Its products line for deposition processes include the SABRE, ALTUS, VECTOR, Striker, and SPEED family product line. For etch processes, Lam makes the Kiyo, Versys, Flex, Vantex, and Syndion family product line. The clean processes product lines include EOS, DV-Prime, Da Vinci, SP Series, and Coronus.

About 60% of the company's revenue comes from systems, while customer support-related revenue and other accounts for the rest.

Fremont, California-based Lam has R&D facilities located in Livermore, California; Tualatin,
Oregon; Yongin, Gyeonggi Province, Korea; Bengaluru, India; Salzburg, Austria; and Villach,
Austria. In addition, it leases or owns properties for its service, technical support, and sales
personnel throughout the US, China, Europe, India, Japan, Korea, Southeast Asia, and Taiwan and
leases or owns manufacturing facilities located in California, Ohio, Oregon, Austria, Korea,
Malaysia, and Taiwan.

Around 40% of its revenue was generated in China, followed by Korea with almost 20%; Taiwan,
Japan, and the US generate around 10% each; and the rest comes from Southeast Asia and Europe.

Overall SSR Risk Ranking: 3.5 out of 5 (Moderate)

See more analysis in the model attached.

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