Lam Research CEO Tim Archer Talks AI Infrastructure Buildout

**SPEAKER_1** (0:02)
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**Tim Stenovec** (0:07)
We've got with us the CEO of Lam Research, Tim Archer, who joins us alongside Ed Ludlow, the host of Bloomberg Tech. Ed's out there in San Francisco. Tim is out there in Tualatin, Oregon. Tim, I wanna get to this project, we'll get to it. But before we do, shares of Lam Research just surged at the end of last month. This was just after you reported results, closing higher by close to 18%.
You reported fourth quarter results and an outlook for adjusted earnings that beat expectations. You said in a statement at the time that record revenue, operating margin and earnings per share at a record as AI driven demand continues to reshape the semiconductor industry. Can you give us some color of what you've seen day to day over the past four weeks that show what you're seeing with demand right now?

**Tim Archer** (0:56)
Well, thanks very much for having me today.
Look, I think those results just indicate we're in an accelerating demand environment for semiconductors. And what Lam does, I think most people realize, but we make the machines that help make all of those chips, and especially our strengths are in some of the most advanced manufacturing processes for chip making. So we're seeing tremendous demand with the AI build out and all the chips required to support AI. And I think that just week by week by week, we'll continue to just see not only really, we don't talk a lot about capacity. In fact, the announcement we're making here today is about a new R&D lab. We're just seeing an acceleration of the pace of innovation, the capabilities of each of those chips, and it's something that we're investing to stay ahead of that demand.

**Ed Ludlow** (1:46)
Tim, it's Ed in San Francisco, and you're right, we don't really talk about at least Lam in the context of more capacity. Your challenge is to make increasingly tiny, three-dimensional structures at atomic level precision, and that's only getting more difficult in the AI age. How do these lab investments help you get there?

**Tim Archer** (2:09)
One of the keys to really accelerating innovation is working very closely with our customers. One of the things that's very unique about the announcement, and the groundbreaking we have here in Oregon, Oregon has been kind of the heart of the Silicon Forest for more than three decades. And so a lab here in Oregon puts us close to a lot of the advanced chip making that happens very close by here by some of our very large customers. And we also have labs in Asia and Europe as well to put us close to those customers. We think that by shortening that distance and really building incredibly tight collaboration with our customers who understand what those next problems are to be solved, that accelerates the velocity of innovation with them for those next generations. So that's what's unique about our lab strategy and the type of work that's done. So Tim, why is the timing on this? I mean, why is LAM investing so heavily now? What is the semiconductor manufacturing technology matter?
Yeah, if you think about this, this lab here is part of a much bigger investment that we announced. It's $3 billion across that global lab network. And why now? The pace of innovation. AI has fundamentally changed the rate at which we have to be innovating.
I looked back just a few years ago, and when the markets were driven by things like smartphones and PCs, that cycle was operating kind of on every one to three years, you needed to really innovate something new. AI has changed that requirement such that with new AI models coming every few months, and each of those demanding more computational power, even better high bandwidth memory, even more storage, you know, Lam is looking to meet those needs. We are a manufacturer of machines that make each and every one of those types of devices, and so there's a lot of demand for us to continue to come out with the next great innovation in process and manufacturing technology to keep up.
We've also seen a tremendous boom in what's called advanced packaging. It used to be that in most cases, you built a single chip and it had a certain function, and you increased the performance of that chip by making it smaller and introducing new materials. Advanced packaging changes the game because now it is about putting many different types of chips together to create system level performance, and putting all of these chips together and stacking them into a three-dimensional architecture, it requires a lot of etch and deposition equipment. We said that our business in advanced packaging this year would be growing more than 70 percent year-on-year, and one of the particular tools, the copper elect plating tool that plays such an important role, that tool is actually developed and manufactured here in Oregon, which makes this such an important site for us.