The rating on Freemont, Calif.-based Lam Research Corp. reflects Lam's narrow business focus within the volatile, moderate-visibility semiconductor capital equipment market. This factor is offset, to some degree, by Lam's leadership market position in its served segment (etch tools), combined with adequate financial flexibility deriving from its liquid financial profile and low financial leverage. Lam Research has a leading share of the etch market, a niche segment within the overall semiconductor capital equipment market. The company's tools deposit, etch, and polish microscopically thin layers on the surface of silicon wafers. Competitors include the diversified Applied Materials Inc. and Tokyo Electron Limited. Etch tools account for approximately 12% of the $30 billion wafer fabrication equipment market, and Lam has a one-third
