VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Tuesday, December 30, 2025
Lam Research Corporation
LRCX · NASDAQ
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
Lam Research is a wafer fabrication equipment and services company focused on deposition, etch, and clean tools. It is modeled here into two economic segments disclosed in revenue disaggregation: Systems (new equipment and upgrades) and the Customer Support Business Group (CSBG) (spares, service, upgrades, and productivity software). Systems benefits from deep process/R&D scale and qualification-driven switching costs in high-volume fabs, though buyer concentration, rapid technology transitions, and strong rivals keep the market competitive and cyclical. CSBG monetizes the installed base through recurring spares and lifecycle services supported by a global support footprint; key pressures are third-party spares, customer insourcing, and geopolitics/export restrictions.
Primary segment
Systems
Market structure
Oligopoly
Market share
8%-12% (implied)
HHI: —
Coverage
2 segments · 7 tags
Updated 2025-12-29
Segments
Systems
Wafer fabrication equipment (etch, deposition, clean and related wafer processing tools)
Revenue
62.3%
Structure
Oligopoly
Pricing
moderate
Share
8%-12% (implied)
Peers
Customer Support Business Group (CSBG)
Aftermarket spares, service, upgrades, and lifecycle productivity solutions for Lam wafer processing equipment
Revenue
37.7%
Structure
Quasi-Monopoly
Pricing
strong
Share
—
Peers
Moat Claims
Systems
Wafer fabrication equipment (etch, deposition, clean and related wafer processing tools)
Revenue share computed from FY2025 Form 10-K Note 4 disaggregation: Systems revenue $11.491B of total $18.436B.
Design In Qualification
Demand
Design In Qualification
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Tool-of-record positions are sticky because fabs must qualify and integrate equipment; once qualified for a given application/node, customers tend to keep that supplier unless performance slips.
Erosion risks
- Node transitions reopen supplier selection (re-qualification cycles)
- Competitor process breakthroughs that improve yield/cost-of-ownership
- Government-backed regional competitors (e.g., China) gaining share
Leading indicators
- Etch/deposition/clean win-rate at leading customers
- Share trend in served markets (etch, deposition, clean)
- Customer concentration and capex cycle timing
Counterarguments
- Customers can and do requalify tools each node/architecture, so incumbency is not permanent
- Large customers have bargaining power and may dual-source to reduce dependence
Capex Knowhow Scale
Supply
Capex Knowhow Scale
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 2 evidence
Sustaining leadership in etch/deposition/clean requires large, ongoing R&D and deep process know-how (hardware + process + software integration).
Erosion risks
- R&D productivity declines (spend without competitive outcomes)
- Technology shifts that reduce etch/deposition intensity
- Talent retention challenges in highly specialized engineering roles
Leading indicators
- R&D spend as % of revenue and roadmap execution
- Time-to-ramp for new platforms at leading customers
- New product attach rates (upgrades, new chambers) per installed base
Counterarguments
- Applied Materials and Tokyo Electron also spend heavily and can match scale
- Some process steps can commoditize over time, shifting differentiation to other tool categories
Learning Curve Yield
Supply
Learning Curve Yield
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Feedback from a broad installed base can accelerate learning and iteration on process recipes, reliability, and productivity across deployments.
Erosion risks
- Customers restrict data sharing / limit feedback loops
- Competitors close the gap via partnerships and joint development
Leading indicators
- Reliability metrics (MTBF) and field escalation rates
- Customer-reported productivity improvements vs prior gen tools
Counterarguments
- Top fabs run multi-vendor fleets; learning can diffuse across suppliers via shared talent and best practices
Customer Support Business Group (CSBG)
Aftermarket spares, service, upgrades, and lifecycle productivity solutions for Lam wafer processing equipment
Revenue share computed from FY2025 Form 10-K Note 4 disaggregation: customer support-related revenue and other $6.944B of total $18.436B.
Installed Base Consumables
Demand
Installed Base Consumables
Strength: 5/5 · Durability: durable · Confidence: 4/5 · 2 evidence
A large installed base creates recurring demand for OEM spares, service, and upgrades over the tool lifecycle; upgrades also extend capability without full tool replacement.
Erosion risks
- Third-party spare parts and independent service organizations (ISOs)
- Customer insourcing of maintenance and refurbishment
- Reliability improvements reduce spares intensity
Leading indicators
- CSBG revenue as % of total revenue
- Upgrade and spares mix vs services mix
- Deferred revenue / backlog trends related to service contracts
Counterarguments
- Some customers can qualify third-party/refurbished parts to lower cost, reducing OEM capture
- Service revenues can be pressured in downturns as customers defer upgrades and non-critical maintenance
Service Field Network
Supply
Service Field Network
Strength: 4/5 · Durability: durable · Confidence: 4/5 · 2 evidence
Global support footprint and OEM expertise improve uptime and speed of problem resolution; scale helps support many fabs and tool configurations.
Erosion risks
- Geopolitical and export restrictions affecting spare parts shipments
- Localization requirements pushing customers to local service providers
- Talent constraints for field engineers
Leading indicators
- Field response time and customer satisfaction metrics (if disclosed)
- Regional service capacity expansions
- Warranty/returns and field escalation rates
Counterarguments
- Large fabs may build in-house maintenance capability and standardize procedures to reduce reliance on OEM service
- Third-party providers can undercut pricing, especially for mature tools
Data Workflow Lockin
Demand
Data Workflow Lockin
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Fleet-level equipment intelligence and productivity software can embed Lam deeper into fab operations (uptime/throughput/defect workflows), raising switching friction for support solutions.
Erosion risks
- Customer preference for vendor-neutral analytics platforms
- Data governance restrictions limiting data access and model performance
- Competitors offering comparable fleet intelligence features
Leading indicators
- Attach rate of Equipment Intelligence solutions
- Renewal rates for software/service subscriptions
- Customer expansion wins for fleet intelligence offerings
Counterarguments
- Many fabs standardize on third-party MES/analytics stacks, limiting OEM-specific lock-in
Evidence
qualify and integrate equipment
The 10-K describes substantial customer investment to qualify/integrate tools and indicates that once qualified, customers generally maintain supplier selection while performance remains strong.
The 10-K explicitly frames sustainable differentiation as supported by ongoing R&D programs and related investments in engineering and product development.
The 10-K describes Lam's core competency as integrating hardware, process, materials, software, and process control - multi-disciplinary know-how that is difficult to replicate quickly.
The 10-K disaggregates revenue and reports Systems revenue of $11.491B for FY2025 (year ended June 29, 2025). This is used as the numerator.
WFE ... $110.8B in 2025
SEMI's forecast provides the 2025 Wafer Fab Equipment (WFE) market size used as the denominator.
Showing 5 of 10 sources.
Risks & Indicators
Erosion risks
- Node transitions reopen supplier selection (re-qualification cycles)
- Competitor process breakthroughs that improve yield/cost-of-ownership
- Government-backed regional competitors (e.g., China) gaining share
- Export controls limiting addressable customers/regions
- R&D productivity declines (spend without competitive outcomes)
- Technology shifts that reduce etch/deposition intensity
Leading indicators
- Etch/deposition/clean win-rate at leading customers
- Share trend in served markets (etch, deposition, clean)
- Customer concentration and capex cycle timing
- Gross margin trend vs peer set (proxy for differentiation)
- R&D spend as % of revenue and roadmap execution
- Time-to-ramp for new platforms at leading customers
Curation & Accuracy
This directory blends AI‑assisted discovery with human curation. Entries are reviewed, edited, and organized with the goal of expanding coverage and sharpening quality over time. Your feedback helps steer improvements (because no single human can capture everything all at once).
Details change. Pricing, features, and availability may be incomplete or out of date. Treat listings as a starting point and verify on the provider’s site before making decisions. If you spot an error or a gap, send a quick note and I’ll adjust.