Lam Research Corp.

The stable outlook on Lam reflects our expectation that the company will maintain its competitive position in the etch, deposition, and clean product specialty area within the WFE industry. We also expect Lam will adhere to a consistent financial policy framework whereby a credit cushion against potential industry volatility is maintained. Although unlikely over the next two years, we would consider upgrading Lam if it continued to enhance its competitive position by expanding its market share and product portfolio through industry cycles while adhering to a conservative financial policy that includes maintaining adjusted leverage of well below the mid-1x area. We could lower our rating on Lam if its financial performance deteriorated materially below our base-case due to end market

...Lam Research Corp. outpaced wafer fabrication equipment (WFE) industry growth over the past decade, and we expect the trajectory to remain healthy over the medium term. Lam's revenue grew at a compound annual growth rate of approximately 16% between 2013 and 2020, exceeding the rate of growth in the WFE industry, primarily due to its market share gains. The expansion of Lam's addressable market reflects the higher etch and deposition equipment utilization across all served markets and exceptionally strong in the NAND memory market. Lam derives about 60% of systems revenue from memory, and about 40% from foundry and logic chip makers. We believe the WFE industry has become less volatile in recent years due to broadening demand for semiconductors and the growing complexity in process technologies and chip manufacturing, driving more sustained demand for semiconductor equipment and tools. Although consolidations among chip makers resulted in a more concentrated customer list, we expect more...

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