Lam Research Posts Record $5.84 Billion Q3, Lifts 2026 WFE Forecast to $140 Billion

By NineScrolls Team · 2026-04-23 · 4 min read · Industry

Headline Numbers

Lam Research reported its fiscal third quarter 2026 results on April 22, delivering a third consecutive record quarter. Revenue reached $5.84 billion, up 9% sequentially and 24% year over year. Gross margin came in at 49.9% and operating margin at 35%, both at the high end of the guided range. Diluted earnings per share hit a record $1.47, above the high end of guidance.

The Customer Support Business Group — which covers spares, service, upgrades, and the installed base — crossed $2 billion in a quarter for the first time, posting $2.1 billion in revenue, up 25% year over year.

2026 WFE Forecast Raised to $140 Billion

The most consequential call from the earnings release is Lam's new view on the wafer fabrication equipment market. CEO Tim Archer said the company now expects 2026 WFE to total "$140 billion with a bias to the upside," up from the roughly $135 billion range previously discussed.

Archer tied the upward revision directly to AI-driven technology transitions: "Semiconductor technology inflections required to meet escalating AI compute needs are driving higher deposition and etch intensity." That framing matters — Lam's core franchise sits in plasma etch and thin film deposition, and the company is calling out intensity per wafer, not just wafer volume.

Segment Mix: Foundry Surge, Memory Record

Systems revenue skewed heavily toward foundry and memory. Foundry accounted for 54% of systems revenue and was up 35% year over year. Memory contributed 39%, with DRAM a record 27% and non-volatile memory 12%. Logic and other device types made up the remaining 7%.

Geographically, China was 34% of total revenue, with Korea and Taiwan at 23% each. Lam flagged an expected China revenue decline in the June quarter as one item to watch.

Advanced packaging revenue is on track to grow more than 50% in calendar 2026 — a pace that reflects rising demand for hybrid bonding, TSV fill, and through-silicon interconnects used in HBM stacks and chiplet assembly.

Dielectric Etch Wins and NAND Pull-Forward

Lam disclosed two specific competitive wins at what it described as a key foundry-logic customer. "This quarter, we achieved both dielectric etch wins at a key foundry logic manufacturer. Our first dielectric etch wins at this customer," Archer said. Dielectric etch — the step that cuts contact and via structures through oxide and nitride stacks — has historically been contested between Lam and Tokyo Electron, and new wins at a leading-edge foundry displace incumbent tool-of-record share for the life of that node.

On memory, Archer said the industry's roughly $40 billion NAND capacity-conversion program is being pulled forward, with "the majority of spending occurring before the end of calendar year 2027." In DRAM, Lam's total dielectric deposition served available market is growing more than 20% as customers shift to 1c and denser architectures, and the company cited its Striker carbide deposition solution winning in bitline-spacer applications.

June Quarter Guidance and Watch Items

For the June 2026 quarter, Lam guided to $6.6 billion in revenue, plus or minus $400 million, with gross margin of 50.5% plus or minus 1 point, operating margin of 36.5% plus or minus 1 point, and a record $1.65 EPS plus or minus $0.15. At the midpoint, that is roughly 13% sequential growth.

Two items warrant attention. Customer down payments fell to their lowest level in nearly four years — a softer forward-order signal that contrasts with the raised full-year WFE outlook. And Lam is launching its second Malaysia manufacturing facility in the second half of 2026 to support the higher run-rate.

What This Means for Plasma Processing and Thin Film Deposition

Lam's results are a direct read on the plasma processing and thin film deposition equipment market, because roughly 70% of Lam's systems revenue comes from etch and deposition tools. A $140 billion WFE year with upside bias implies another record year for plasma etch chambers, ALD reactors, PECVD systems, and electrochemical deposition platforms across the supply chain.

The AI-driven "higher deposition and etch intensity" framing is specifically what matters for thin film deposition systems: gate-all-around transistors, backside power delivery, 3D DRAM, and 400-plus-layer NAND all require more ALD cycles, more PECVD and dielectric deposition steps, and more cryogenic and pulsed plasma etch passes per wafer. That translates to unit demand for plasma sources, RF generators, ESC chucks, and advanced showerheads that scales faster than the wafer-count growth.

For the equipment supply chain — plasma sources, sputter targets, vacuum components, gas delivery, and process monitoring — the 50%-plus advanced packaging growth plus DRAM dielectric SAM expansion are the two cleanest signals. Hybrid bonding and HBM stacking drive precision plasma activation and surface treatment demand, while 1c DRAM drives dielectric CVD/ALD precursor, mass-flow controller, and abatement volumes. Lam's Malaysia capacity expansion and second-half ramp suggest component suppliers should plan for sustained throughput through 2027, even as the China revenue mix rolls off.