10.22.25
Spending on NAND WFE at Lam bottomed in Q3 of 2023, where it stayed for six quarters. Sales picked up in Q4 of 2024. They have averaged $700M per quarter for the last year, twice the rate of spending in the prior six quarters. From what the NAND manufacturers have said in their recent calls, all of this investment has been going into faster tech node migrations. This increases bit supply but does so in a way that lowers costs more than just adding wafer capacity. Since the DRAM market started to recover in the third quarter of calendar 2023, spending on DRAM equipment at Lam has averaged 70% more than it did in the downturn. Comparing this upcycle in DRAM to the prior one, WFE spending at Lam has been, on average 30% higher. That is not out of line with the overall growth in the size of the DRAM market. Looking just at Lam, DRAM equipment spending is not excessive. For the industry overall, the company nudged up their view of total WFE spending in calendar year 2025, from ~$105B to “slightly higher than ~$105B.” The reason they gave for this is stronger HBM investment in the last few months of the year. In CY 2026, the company anticipated strength across all three major device segments, partially offset by lower domestic China investment. Their expectations for NAND bit demand have increased from their prior view, though they didn’t quantify by how much. They cited cleanroom availability as a possible limiter of NAND supply growth. They guided down slightly in the December quarter compared to the one just reported.
The rest of this is from the analyst conference call, focusing on comments that pertain to the memory markets. The decline in memory investment this quarter from the prior quarter was again the result of timing of customer projects. NAND spending in calendar 2025 has been “broadly consistent” with their view at the beginning of the year. There was nothing else new and useful about DRAM or NAND in the Q&A portion of the call. Several of the questions were analysts trying to get the executives to tell them more about what they believe will happen in 2026. The company did say that sales in the second half of 2026 will be higher than in the first half.
– S. Hughes (short MU)