Great. Welcome back, everyone. I'm Joe Moore at Morgan Stanley Semiconductor Research and very happy to have with us today the management team of Lam Research, CEO Tim Archer, and CFO Doug Bettinger. I think before we get started, Doug's going to read a safe harbor, and then we'll jump right in.
Yeah, give me 30 seconds with this. I always like to keep the attorneys happy. Today's discussion may include forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially. Additional information concerning these risk factors that could cause actual results to differ, and those forward-looking statements can be found in the risk factors disclosed in our public filings with the SEC on Form 10-K and 10-Q, and with that, Joe, we're ready to go.
Great. So maybe we could start. You just did your Investor Day a couple of weeks ago, so fresh in everybody's mind. Can you remind the audience what messages you want us to take away from that meeting?
Sure. Yeah, thanks, Joe. It's great to be here. It was just a couple of weeks ago we had our Investor Day. First one we'd done in five years. And so we had a whole bunch of messages we wanted to deliver. But really, at a very high level, the message is focused around Lam's expectation and our confidence in our ability to outperform WFE as we enter this period of vertical scaling. Basically, if we look at what's on the roadmaps for every device type, whether it's NAND or Foundry Logic or DRAM, we see increased focus on increasing performance, increasing scaling by going in the third dimension. And what that means for us was that deposition and etch intensity will grow. We've seen this coming. We were obviously the leader in the transition from 2D to 3D NAND.
We saw it coming years ago that it would eventually be here in DRAM and Foundry Logic. And so we've been preparing a number of new tools. And so we introduced two significant new tools last week, as well, we can talk about, which will allow us to gain an increasingly higher share through those inflections. And then the third key message, since we hadn't updated in five years, but we've talked about it on every earnings call, was our CSBG business, which has just become an ever-increasingly important part of our growth and revenue story, and especially our profitability and stability story, because it has proven to be a lot more resilient to the kind of WFE cycles that we see in our industry.
Every year, our installed base of system grows, and every year, we're working hard to increase our ability to capture more revenue from that growing installed base, and so really, at those levels, WFE moving in our favor, the right products at the right time, and an installed base that helps us through cycles.
Great. Very strong message given your history with vertical NAND, as you mentioned. Can you talk about, maybe this is for Doug, talk about some of the market assumptions behind your 2028 financial model, both the WFE and your share?
No, sure. Yeah, listen, when you're forecasting something that's three, four years into the future, lots of assumptions go into it, Joe, as you might imagine. Maybe I'll unpack a little bit of it, and then you can ask me clarifying questions if you'd like to. I think overall, first, let's start with our outlook for WFE. We think WFE grows at a CAGR of, I don't know, mid-high single digits, a good working assumption, I think. And then maybe more importantly, when we look at the markets we're in, to the point Tim was making, we see things inflecting in the third dimension with Gate-All-Around, the NAND stacks continuing to grow, DRAM going from 6F to 4F to eventually 3D. When we look at our addressable market, we see that going from the low 30% of WFE to the mid-high 30%. So that's important.
It's just we're in a good neighborhood, is how I like to describe it. Thinking through that, then, where is that growth coming from? It's coming from every end market, right? We see NAND from current node to future node growing 1.8x, DRAM 1.7x, and Foundry and Logic, actually, where we've done really well, two times. We're obviously excited about that. Like I said, we sit in a good neighborhood. So when we look at that, Tim talked about the new products that we announced, right? Akaris, right? First new bottoms-up conductor etch platform in 20-odd years. We feel great about the strength of the product portfolio, such that in that growing share of WFE, we believe we gain a 50% share of that incremental growth in WFE because of the strength in the product portfolio, Joe. Maybe I'll stop there at the top line.
You might want to ask later about profitability and stuff. I've got other stuff I can talk about there.
Yeah, I would love to go into that as well. But maybe sticking on the topic of WFE, if you could talk about this year? You guys are looking at mid-single digits. Which end markets are driving that? Kind of how do you bottom up, get to a mid-single digit?
Yeah, when we look through it, you're getting a little bit of an uptick in NAND, primarily conversion-related spending. It's not up a huge amount, but coming off two years of almost no investment, Joe, that's good for us, right? We get a great share of spend in a conversion environment. And that's what we see happening in NAND. DRAM, when you unpack it, outside of China, DRAM is growing nicely, right? You get the move to DDR5, walking on the process nodes, high bandwidth memory, showing up where we do extremely well in the through-silicon via applications. So feel good about what's going on in DRAM. And then foundry and logic, leading edge foundry and logic continues to be strong with the move to Gate-All-Around and the incremental addressable market for us in that.
That's what's driving a little bit of the growth from 2024 to 2025.
Great, so maybe we could double-click on some of the markets, starting with NAND, and it's so impressive how well you guys have done the last couple of years, as NAND has really been tough, right? Down 70% or so from peak. You talked about the need at the update for $40 billion, sorry, over the next several years to upgrade. Can you talk about how much of that is your SAM and what your target market share is within that SAM?
Sure. What we laid out was our view. I mean, obviously, the last couple of years for NAND have been incredibly tough. I mean, the economics of the industry have been pretty challenging coming off of the peak in 2022, where we saw almost $20 billion of NAND spend down to something in the kind of mid-single digit spend at its low. But what we really laid out was the fact that two-thirds of the industry's bits now find themselves being manufactured at layers less than 200 layers on the device.
That $40 billion in upgrade spending we see over the next several years is such that customers can begin to migrate that installed base to higher layer counts, higher performing NAND bits, implementing things like QLC, implementing many of the different stacking technologies in that NAND device to make themselves more competitive and more suited to where the demand is in the marketplace. And so for us, what it means is that we will be selling upgrades to our existing installed base, that large installed base that's manufacturing today at the 128 and 1XX node. But also, we'll be able to provide new systems that help enable that layer count growth. We talked about a few of these at the Investor Day, things like PECVD carbon gap fill.
That's a critical technology for enabling stacking so that you can stack tiers of layers on top of each other to build ever taller devices. There's a tool we sell that helps to manage the stress on the wafer by depositing a film on the backside of the wafer that compensates for the front-side stress. And then, of course, we also introduced a new tool that deposits moly, molybdenum metallization, which helps with the resistance of the metal lines, which becomes increasingly critical as you go to higher layer counts. So in the upgrade market, it's a combination of both those installed base plus new tools. And we estimate that our SAM is over two-thirds of the WFE that gets spent on upgrades. And we capture a very large percentage of that SAM. So the upgrade environment is actually very favorable for Lam.
Yeah, I mean, it's impressive because your peers didn't really show the same uptick in NAND that you did. So exactly what you're saying is spending on upgrading your capacity to maybe enterprise-capable NAND and things like that rather than adding supply. And then you've talked about the ability for you to get back to NAND kind of peak revenues without getting to peak WFE. I think it's some of the effects you just talked about. Can you give more color on that?
That's right. I think it's exactly the effect of that. If we're capturing over two-thirds of the WFE, that's our SAM, and we're capturing a large portion of that. In that upgrade market, clearly, we don't need the overall WFE spending to reach that new peak before Lam's capture rate allows us to reach new NAND revenue peaks. And so we haven't given an exact time frame for that, but that $40 billion upgrades market that's going to take place over the next several years definitely presents an opportunity for us to achieve that new peak revenue.
Okay, great. And then maybe just to touch on a question we get a lot. Tokyo Electron has been pretty aggressive about cryo etch and their opportunity to gain some business in NAND through the use of that tool. Can you just talk to that generally?
Yeah, so we have talked a lot about this in the last year. We've spent a lot of time working on high aspect ratio etch many, many, many years. Obviously, we've been the leader in that space since the advent of 3D NAND. And today, we now have what we call the Cryo 3.0 process. It's a process that delivers what we believe are the industry's best results for creating very high aspect ratio, very vertical structures, again, with good repeatability and good productivity. And so we think we're extremely competitive there. We also have another very favorable offering for the customer, which is that technology can be upgraded to our existing installed base. And so again, we view our customers in this space. While the economics may start to improve in NAND, everybody's always looking for the lowest cost, easiest means of upgrading to that next technology node.
And so the upgradability of our tools to now implement Cryo 3.0, I think, gives us an edge for any future investments made by our customers. And so we feel very good about that market.
Okay, great. And then just another development in NAND, the use of hybrid bonding, something that SanDisk and Kioxia talked about in their recent IPO-type events. It's something that I think there's been some discussion of Samsung licensing some of that capability. Can you just talk about the importance of that for Lam?
Sure. So I think if you think about hybrid bonding in NAND, it's part of a much bigger trend, which is people have figured out that packaging-type technologies, advanced packaging technologies, are very suited to helping with scaling. And so we've seen that in other devices, and now it's coming to NAND, where you're going to put the array underneath the cell. You're going to bond it. And in that case, it creates opportunities for Lam because that bonding process now introduces the need for new tools that help ensure that that bond is done in a high-quality way. And just one example, we sell a tool which deposits a film around the bevel of the wafer. And that way, during that bonding process, we get a very high-performance bond. And so again, it will be important.
We show that occurring at some customers at the 200-plus layers and others at nodes beyond that. And so we do think it is the future trend of the NAND roadmap.
Okay, great. Thank you. So maybe on the other markets, starting with DRAM, you talked about 3D DRAM. What do you see as the time frame of implementation, and what are the opportunities for Lam?
Yeah, big disruptions like 3D DRAM will take some time. While we haven't put an exact time frame on it, it's probably, in our view, probably the early 2030s. But importantly, on the way there, you're going to get some important learning and some important opportunity for Lam, and that is through the transition to 4F squared, which starts to introduce the idea of vertical scaling into DRAM in the first sense. And basically, the gates become more vertical, and you end up needing high aspect ratio etch. One of the new tools we just introduced, the Akaris, conductor etch tool, what its real specialty is, is very high aspect ratio conductor etch, very suitable for the challenges that you're going to see in 4F squared. And those same capabilities will then translate nicely into 3D DRAM. So we do see this evolution taking a number of years.
But over those next seven, eight years, there will be learning along the way, and DRAM will begin to scale much more vertically. And as Doug mentioned, in that case, our SAM expands from where we are today through 3D DRAM by 1.7 times.
Okay, great. And then maybe similarly for Logic, if you could talk to Gate-All-Around and the opportunities for Lam around that investment.
Yeah, Foundry Logic, I mean, it's been a real bright spot. I mean, we always start every discussion with NAND, but probably we would now start, if we really want to talk about where we're making progress, it's Foundry Logic. Two fronts, Gate-All-Around. We talked about the fact that just in this past year, we shipped over $1 billion worth of equipment to the Gate-All-Around nodes. And the second story in Foundry Logic is Advanced Packaging, where we also said $1 billion of shipments in Advanced Packaging between Foundry Logic and HBM, but Foundry Logic really being one of the critical drivers there of especially the advanced technologies. So we see our move into Foundry Logic really being quite successful as Deposition and Etch intensity continues to grow. Gate-All-Around also creates new market opportunities, Atomic Layer Deposition, Selective Etch.
These are areas where, again, Lam looking to expand our SAM began the development of these tools a number of years ago. Now we're starting to see those processes begin to ramp, and that's contributing to that $1 billion in shipments in Gate-All-Around. We just expect it to grow. If you look beyond Gate-All-Around to CFET, the devices become even more vertical, and therefore, depth and etch intensity increases even further.
Okay, great. I wonder if you could talk to the cyclical environment in Logic spending, because it seems like to me, when I look at the spending, there's a lot of spending in Gate-All-Around. There's a lot of spending with what you guys see through Reliant and the more legacy nodes. And there's actually not that much spending in kind of 3-, 5-, 7-nanometer, which are the workhorse nodes for kind of everything that we spend all day talking about. So much of the investment is going to advanced technology, advanced packaging, and legacy. Is there an opportunity to see a rebound in kind of the more mainstream technologies as well?
Yeah, I guess, Joe, I think about it in two categories. First, the leading edge stuff, where we talked about the SAM expansion. Investment there is very strong, driven by AI and things like that, the stuff everybody in the room is excited about. So I think it's pretty well understood what's going on there. That was strong last year, we believe, continues to be strong this year. Then when you broaden it out and look at some of the more mature node spending, it's kind of, I think about it in two buckets, right? You've got a decent amount of spending occurring in the China region, which I think everybody understands. That shows up in our CSBG business and the Reliant product line. That was quite strong last year, continues to be reasonably strong this year.
And then if you look outside of China, we're coming through a classic semi-cycle and analog and microcontrollers and things like that. I think that's pretty well understood if you follow semis. Investment there was soft last year, not insignificant, but softer. And I think continues to be soft-ish this year. But as we move through that analog cycle, that'll come back around as well. And we do extremely well in some of that mature node investment, Joe, as you know.
Great, thank you. I wonder if you could talk about China a little bit, just starting with your kind of views on 2025. You seem to be conservatively approaching that market. Obviously, there's some incremental export restrictions that you have. Can you just talk to your expectations?
Yeah, our view when you look at China this year is that the % of total revenue is going to be down this year. I think you're hearing that from all of the equipment companies. We're no exception. Part of the down % is a little bit of a softening in the spending in China, but also a strengthening outside of China. That'll move that around a little bit. There were some incremental new regulations that showed up in December, and we talked about the impact of that. That was, I don't know, roughly $700 million of revenue we had forecasted, Joe, that would have shown up for us in the second half. The fact that that is no longer accessible contributes to that down tick, I guess, in the China %.
If you look at those China rules, is there a judgment call about what you can ship and what you can't? I remember two years ago, everybody had different treatments, and then it turned out you could ship stuff that you didn't think you could six months later. Is it pretty clear-cut what you're allowed to ship and not allowed to ship? Because I know there's also some customers that aren't on the entity lists that you're also not shipping to out of various other restrictions.
Yeah, listen, the way I look at this, and Tim, if you're afraid to add, there's end use and end user restriction. End use is technology nodes. We do a deep technical assessment of the capability of our tools and make sure we understand that really well so we know where we can and can't ship. There are end user restrictions, which are certain companies ended up on the entity list that might not have been before. You just can't ship to them anymore. It goes into those two buckets.
Yeah, I think, Joe, the only thing I'd add is, I mean, to your point, we do understand what we can and cannot do. If there's any question, obviously, we don't. Yeah, I think we feel very comfortable about understanding those restrictions.
Let me ask the question because you guys have a slightly larger headwind than your two closest peers from a dollar basis and a percentage basis. Any sense for why that would be?
You know, Joe, it's always hard for me to answer a question like that because I have no idea what somebody else saw or thinks or contemplated. When we give you that 700, it was a forecast from those customers that just no longer we can ship to. You can talk about what's going on here at Lam. Hard for me to guess what might have been going on at another company.
What do you think about these export controls from a competitive dynamic standpoint? You have companies like YMTC, which have been on the entity list for years, have gotten to approaching 10% share of NAND by the end of this year. You have companies like AMEC and Naura, which are not really direct competitors to Lam, but they are very excited about these rules, Chinese capital equipment companies that get a shot in the arm from all of this, and a very resourceful and resilient economy that wants semiconductor self-sufficiency. Does this all create headwinds for you 5, 10 years down the road that you are sort of creating this level of competition?
Yeah, I guess maybe I'll start and Doug can add. I think clearly local equipment companies in China have gained traction where we have not been able to compete. Obviously, where we've had to exit, they've stepped in and been able to take some of that business. Where we are able to compete, we still do extremely well. There's a value to the maturity and the reliability and the productivity of our tools and the support that we provide as a global leader in these spaces.
I think that as I step back, we think the future for Lam Research, and if we look at where deposition and etch intensity is growing and where we're investing in new products and a lot of the growth we projected at the investor day and we've talked about today, it's all coming in leading edge customers, the far leading edge, whether it be Foundry Logic and DRAM and NAND. We are really focusing our attention there and making sure that with those customers, those global leaders, we're running as fast as we can. We're helping them run as fast as they can. I think that's the way you stay ahead of any competitor, regardless of where they are in the world.
While it's always disappointing not to be able to compete everywhere, we really don't see it as a real impediment to the long-term growth of the company as we've laid out last week or two weeks ago.
It's hard to ask about the future when it comes to things like export controls because none of us knows. I guess you guys do seem to have something of a voice in that conversation. I know you've had some strong hires in the government affairs area a few years ago. Do you feel like, because obviously semiconductor companies are going to have their desire about what can and can't be built in China, do you feel like you have a voice in that conversation as well?
Yeah, I think we have a voice. I mean, obviously, we always lobby for and advocate for a level playing field for us. We would like to be able to compete globally, but we also understand that there are greater considerations at play at times. As I said, we always adhere to whatever export controls are in place wherever we do business.
Great. Maybe CSBG, I actually have two questions here, both for Tim, but I know Doug loves to talk about it. Maybe give an overview of why you're so excited about it.
It's my favorite part of the business.
Business, I know. You always get mad if I don't ask you. Tim, I want to follow up on some of the technology that.
No problem.
Yeah, listen, CSBG is a great part of the business model, right? On average, our tools, after they're sold, will generate more revenue over the life of the tool than when we sell them themselves. We spend all of these meetings talking about WFE, but this is an important part of the business. It's spare service upgrades and then the Reliant product line. Our tools literally run for decades. Tim can talk about some of the first tools he worked on that we believe are still running in the fabs today. It is a wonderful part of the business model, very cash generative, very profitable. It's just an awesome part of what we do.
Yeah, and it has stayed that way for a long time, for sure. Maybe you could talk a little bit about the Reliant portion of it. We get the question a lot, how big a portion of that is Reliant. Are you seeing a return to an actual refurbished tools business, which is where we began with that, or is it still?
Yeah, no, Reliant for the most part, we're selling older models, but new equipment. We're always looking opportunistically for something in the aftermarket that we can sell and refurbish. That used to be largely how we competed in Reliant, but not so much anymore, Joe. The biggest individual component of CSBG is spares, always has been. Reliant is number two. It was pretty strong last year, softening a little bit this year, primarily because of the China stuff that we were talking about. Although when we look at CSBG this year, we think it ends up being flattish year over year because of the strength in the upgrade business.
Great. You also talked at the analyst day about the cobot aspect of that business. I wonder if you can give us an overview of what's happening there.
Yeah, I think that there's a couple of things going on. One, with respect to semiconductors kind of re-globalizing, meaning that many regions that haven't done semiconductor manufacturing for a long time, or maybe countries that are doing it for the first time, they're running into challenges with starting up these fabs and then finding the skilled personnel to maintain them. That's true whether it's an advanced location like the United States or it's one of the newer countries entering the market. One of the ideas we have is to use equipment intelligence, which essentially is our ability to use data coming off the tool to make smart decisions about when to perform maintenance, how to match chambers to each other, and then marry that up with cobots. Basically to do automated maintenance at a level of precision that's beyond what humans can do.
In our first implementations, we've implemented this in several memory fabs now. What we're seeing is that not only is it eliminating the types of work that our engineers don't like to do, it's also doing that work much, much better. We're seeing the tools come back at a higher percentage right first time after preventative maintenance. We're seeing less unscheduled downtime, and this has real benefits for the operating cost of a fab. The use of, I think this idea of the use of robotics for maintenance of systems is just going to grow. We're expanding the number of applications. It was first done on our high aspect ratio dielectric etch systems because that was pretty intensive and frequent maintenance that had to be done.
Now we're expanding it to more systems, more applications, and I think it's going to become a big driver of what we call advanced services growth into the future.
That is pretty cool. Is that a different revenue model for you? Or I know a lot of what you do in the services is sort of ensure results on the way for a thing like that. Is that?
Essentially, it is what we would probably refer to as a results-based contract. We're basically taking over the maintenance using these cobots and using this equipment intelligence, and the customer is getting a performance result out of their tool in exchange. I think it's a win-win for us and the customer. As I said, in some of these places, it resolves this issue with not being able to hire and find enough skilled talent in that particular region.
Great. Okay. If we could follow up on the financials, if you could talk about idiosyncratic growth drivers to gross margin and operating margin.
Sure. Yeah, let me take that one. Yeah, we just gave an updated financial model for 2028, and then we did this cute little model of what a trillion-dollar industry might look like for Lam Research. For the first time, Joe, we put a gross margin number out there that started with a five handle. We were pretty excited to be able to do that. A lot of that, frankly, comes from an expansion of our Asia factory network, right? As business grows, we will expand increasingly in the Asia regions. Malaysia, actually, today is our largest factory. As business grows, we can more efficiently support that growth in business. It is not just about labor content. It is also about localization of the supply chain.
It's also about freight lanes that are shorter distances on inbound freight and things like that that enable, you know, we're just moving stuff around a shorter distance. You've actually already seen some level of benefit from that, Joe. I actually feel really good, really proud of the company in terms of, you know, when the memory market turned on in early 2023, we told you we were going to go do this and restructure things, and we did. It's showing up now as we're beginning to see some resumption of business growth. You've already seen a hundred basis point improvement in gross margin. As we look at where we are and where we're going to go from a gross margin standpoint, it's largely about that, right?
Expanding top line and supporting that for manufacturing and doing a lot of the operational work in the Asia region where the customers are, frankly, right? It is just being closer to customers. There is that, and then there is the digital transformation stuff that we began to talk about that.
Yeah, I'd love to hear more about that.
Yeah, let me unpack that for you a little bit. It's interesting. Business has grown meaningfully since the last time we did something like this at the company, right? I don't know, we're probably five times as big today, maybe even more than the last time we did something like this 20 plus years ago. The last time we did something like this, we were a single product company. We hadn't yet brought Lam and Novellus together, single factory location. We are now a global company with a global footprint, both manufacturing, customer. As we began to look at business expansion, we realized, you know what, we need to get on and modernize things here. We need better systems to support not just where we are today, but where we see this growth into the future. This is going to be a multi-year program.
We call it digital transformation, or you'll hear us describe it just as DT, easier to use an acronym, where we're modernizing business process. We are modernizing the ERP. We're going to upgrade the ERP across the totality of the company. We are making ourselves AI ready or AI capable in a lot of ways, right? You got to cleanse data and have things set up for the hooks that these compute algorithms need. We are doing all of that stuff. We are going to go through a couple of years where this is a drag on profitability, Joe. I don't know, three, four years from now, though, it will be accretive to operating profit. From the trough to where it begins to generate future returns, it's an improvement of 150 basis points to operating margin.
That is also a part of how we get from where we are today in the low 30% operating margin to that mid 30%. In addition to the gross margin stuff I talked about, DT is going to help get us there as well.
Joe, I guess one thing I'd add is, I mean, there's a common thread running to a lot of what Doug just said, whether it was where we're looking at supply chain and manufacturing, whether it's DT, a lot of this is about speed and efficiency and being able to service our customers better. One element we haven't talked about, but has been a key part of our strategy the last several years, is putting a lot of our development capability very close to our customers. This is an industry where our leading customers work with us on our most advanced tools. The closer you can be to make sure that that interaction occurs with that speed and efficiency, the faster we can turn out new tools to solve their problems. Those tools tend to be much better fit for purpose, meaning they're more competitive.
You have seen us do that. Whether it is the supply chain, whether it is our development centers we put in place like Korea and Taiwan, whether it is DT, whether it is the Semiverse in our virtual simulation and digital twin activity, all of these things are designed to create that next iteration of process or equipment solution faster for the customers. I think that is going to be highly valuable for our competitiveness as we look forward in the next few years. Great. Let me see, open up the audience if you have any questions.
You got one up here in the third row, I guess.
Here in the first.
Go ahead and shout it out. We'll repeat it.
We'll repeat it.
Would you comment on how much share you can give in two nanometers?
The question was, how much share are we going to gain in two nanometers? I don't know. You want to answer that? Listen, two nanometers is all about gate all around. There is an expansion of creating that nanosheet, right? Selective etch ALD, we feel really good about the strength of our positioning. SAM is expanding, and our product portfolio has enabled some level of share gain. We haven't broken down what magnitude of share gain versus SAM expansion, but it's a little bit of both.
Yeah, I think when you think about any one of these particular technology nodes also pulls in, whether it's two nanometers or just beyond, it's gate all around, it's the backside power distribution. You end up with a lot more advanced packaging. All these are areas that are highly suited and highly targeted to deposition and etch technologies. It is both SAM expansion plus share gain. I wouldn't tie it quite so much to the specific numerical node as much as those technology inflections like gate all around, ultimately CFET, backside power distribution, advanced packaging. Those are the types of drivers for us that are highly. How much does it matter if you have one, two, or three foundries supplying those nodes? Does it change the opportunity of?
It's only an opportunity in time. Eventually, when you look at it, all customers, I think, ultimately end up on the same technology roadmap. These things are being done, take backside power. It may exist on different points on different customers' roadmap, but everybody wants better performance at lower power. That's what backside power distribution delivers. Eventually everybody gets there. It's the same as in NAND. There may be different cut-in points for, say, Moly, but everybody wants lower resistance metal, better performance, lower power. Everybody gets there within maybe one or two nodes of each other just by their own strategic choices.
Other questions from the audience?
Got one over here.
With higher aspect ratio etch, are you guys having any sort of differences with the buyers for power delivery or the higher aspect ratio etch tools? I know like plasma power delivery systems can be a challenge.
Power delivery systems in our system. We work with a lot of leading companies for different innovative power delivery systems to our tool. Relative to high aspect ratio conductor etch, we recently talked about a new innovation on the Akaris system, the most recently introduced tool, which is what we call Direct Drive , which allows us to, it's basically the industry's first RF matchless system for plasma etching. What that allows us to do is switch and control the plasma about 100 times faster than previous approaches. Today, almost all applications for high aspect ratio include very, very fine pulsing sequences. That finer control with an RF matchless system allows us to do that. The power delivery, power source for our plasma is a technical differentiator for the company.
Less than one minute. If there's any more questions, one more over here.
Yep, one last one here.
Yeah, of the $40 billion NAND upgrade, spending by plasma network, what's kind of.
You know, size up the low end of the scenario versus like if it's being spent in three years, obviously on a per annum basis, the WFE number will be higher. If it's being spent on a five year, over the next five years, it'll be a smaller WFE number. I'm just wondering how to think about the risk guardrails on that. Obviously, if the NAND end market does better, that's helpful, but I'm just wondering how you guys think about it in the context of Samsung spending and the other guys are reluctant to spend at this point.
Yeah, so the question was just about the timing for that $40 billion. We did not put a timeframe on it. We said next several years. That is frankly because our customers and the end market will determine exactly the rate and pace at which those upgrades occur. What we are certain of is that customers will spend that amount by our estimation to move from the 100, you know, the 1XX layers up to current state of the art. Whether it is three years, four years, five years, it is less important for us. We are positioned with the right products. We have got the install base. Our SAM is over two-thirds of all that WFE spending, and we are going to capture a large portion of it. It is a great opportunity for Lam.
Awesome.
With that, we'll wrap it up there. Tim, Doug, thank you so much.
Great. Thank you. Thanks for having us, Joe.