Lam Research Corporation

CSBG revenue (~37% of total in Q2 FY2026) is tied to an installed base of thousands of deployed systems and provides a more stable earnings floor across cycles. Systems revenue (~63%) is directly linked to chipmaker capital expenditure decisions; LRCX revenue fell approximately 14.5% in FY2024 as memory manufacturers cut capex, illustrating the limited forward visibility that equipment orders provide.

Lam's revenue concentrates in plasma etch (globally dominant) and deposition — both serving the same semiconductor fab customers on the same capex cycle. Memory (NAND and DRAM combined) has historically accounted for roughly 65% of the WFE spending addressable by Lam, leaving limited exposure to genuinely uncorrelated demand streams.

China accounted for 34% of FY2025 revenue and rose to 43% in the September 2025 quarter, making it Lam's largest single market by a wide margin. Asia-Pacific collectively represents approximately 85% of revenue across China, Korea, Taiwan, Japan, and Southeast Asia; the US and Europe each account for low single-digit percentages.

Lam's model benefits from an expanding installed base that generates growing CSBG revenue at attractive incremental margins, and from R&D investment that amortizes across a broad customer base. In FY2025, net income grew approximately 40% on 24% revenue growth, demonstrating meaningful operating leverage — though the equipment business requires substantial field service and application engineering that limits pure software-like scalability.

CSBG revenue (~37% of total, Q2 FY2026) is recurring, mission-critical fab support tied to long-lived installed systems, representing the high-quality component of the mix. Systems revenue (~63%) is transactional capital equipment spending that chipmakers treat as discretionary; when memory manufacturers cut investment, Lam's aggregate revenue contracts materially, as FY2024 demonstrated.