The rating on Lam Research Corp. reflects the volatile nature of the semiconductor capital equipment industry, the company's narrow business focus, and its high customer and product concentration. Lam's cash position and strong competitive positioning in etch systems only partially offset these factors. Lam is a global developer, manufacturer, and marketer of wafer etch, patterning, and single-wafer cleaning tools used to manufacture memory, logic, and micro-electromechanical systems. Lam has a leading share of the etch market, a niche segment in the semiconductor capital equipment market. Given its relatively narrow product focus, the company selectively competes against more diversified players such as Applied Materials Inc. and Tokyo Electron Ltd. Despite the recent signs that semiconductor equipment industry shipments have bottomed out
