Lam Research makes the machines that chip factories cannot do without. Every time a semiconductor manufacturer builds a chip, it must deposit ultra-thin layers of material, carve precise patterns into those layers, and then clean the wafer so nothing contaminates the next step. Lam sells the equipment that does all three jobs, under product names like ALTUS, Sabre, Kiyo, Flex, Vantex, and Coronus. Each machine sale generates revenue, and so does every spare part, upgrade, and service contract that follows. That ongoing stream of parts and services, handled by the Customer Support Business Group, means Lam earns money both when customers build new factories and when they keep existing lines running. The diagram below traces where the money goes.
Five years of financial data tell a clear story about this business: it swings hard with the chip industry, but each swing has left it structurally stronger than the last. Revenue rose from $14.6 billion in fiscal 2021 to $17.2 billion in fiscal 2022, then held roughly flat at $17.4 billion in fiscal 2023 before falling back to $14.9 billion in fiscal 2024 as memory chip makers slashed spending. Then fiscal 2025 brought the sharpest recovery yet, with revenue reaching $18.4 billion. That is a bigger peak than any prior year in this five-year window.
The margin picture is even more telling. Gross margin, the share of each revenue dollar left after making the products, has climbed steadily through the cycle. It was 46.5% in fiscal 2021, dipped slightly through fiscal 2022 and 2023, then rose to 47.3% in fiscal 2024 and 48.7% in fiscal 2025. The company earned more cents per dollar of revenue at the bottom of the cycle in fiscal 2024 than it did at the top in fiscal 2022. That suggests pricing power and improving factory efficiency, not just volume recovery.
Free cash flow, which is the money left after paying for buildings and equipment, has followed the same upward arc. It was $3.2 billion in fiscal 2021, fell to $2.6 billion in fiscal 2022, then rose steadily to $4.7 billion in fiscal 2023, $4.3 billion in fiscal 2024, and $5.4 billion in fiscal 2025. The business generated more free cash flow in fiscal 2024, a down year for revenue, than it did in fiscal 2022, a strong year. That reflects how much the cost structure has been tightened. Net debt turned negative in fiscal 2023, meaning the company now holds more cash than it owes in debt. By fiscal 2025, net debt had reached negative $2.7 billion.
Now for the risks, and they are specific. The most immediate is China. In fiscal 2025, China accounted for 34% of Lam's revenue, which is $6.3 billion at the reported total. The U.S. government has placed export controls on sales to Chinese customers involved in advanced chip manufacturing, and the filing warns those restrictions could tighten further. Competitors from countries not subject to these controls can fill the gap that Lam is forced to leave. This is not a hypothetical threat: China's share of Lam's revenue was 42% in fiscal 2024 and 26% in fiscal 2023, showing just how much that number can move.
A second risk sits inside the technology itself. Chips have historically been made smaller by squeezing features closer together on a flat surface. That approach is running into physical limits. Lam's current products are well suited to the new strategies that replace it, such as stacking chip layers vertically in three-dimensional structures and using advanced packaging to connect multiple chips together. But those new architectures require Lam to keep developing the right tools fast enough. If a competitor solves a critical etch, deposition, or clean problem first and gets qualified in a customer's factory, Lam can be locked out of that application for years, because chip makers rarely swap out qualified equipment mid-production.
Customer concentration adds another layer of fragility. Samsung Electronics and Taiwan Semiconductor Manufacturing Company are named as the most significant customers. A small number of large buyers make up a substantial share of revenue and cash flow. If one major customer cuts orders, the impact is not easily offset by others. Supply chain exposure compounds this: some components for Lam's machines come from only one or two suppliers, and disruptions from shortages, tariffs, or geopolitical tension could delay shipments and push up costs.