FREMONT / LONDON (IT BOLTWISE) – Lam Research shows impressive profitability even as revenue growth loses momentum. The California-based company reported a 27.7 percent increase in sales in the first quarter of the 2025/26 fiscal year, but at a slower pace of growth than before. Dependence on the Chinese market and geopolitical risks raise questions about the sustainability of success.
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Lam Research, a leader in the semiconductor industry based in Fremont, California, recently released its quarterly results that reveal both impressive and worrying aspects. While the company posted revenue of $5.32 billion in the first quarter of fiscal 2025/26, up 27.7 percent year-on-year, the pace of growth has slowed compared to the previous quarter. This suggests that the boom in the semiconductor industry, sparked by high demand for storage and manufacturing equipment, may be losing momentum.
However, Lam Research’s profitability remains at record levels. The company’s gross margin rose slightly to 50.4 percent, while operating income rose to $1.83 billion. This corresponds to an operating margin of 34.4 percent, which represents an improvement over the 33.7 percent in the previous quarter and the 30.3 percent in the previous year. Net income was $1.57 billion, or $1.24 per share, underscoring the company’s strong earnings power.
Another important aspect is the decline in operating cash flow, which fell to $1.78 billion in the quarter from $2.55 billion in the previous quarter. Analysts attribute this decline to higher investments and increased inventories. At the same time, the Chinese market remains of central importance for Lam Research, as a significant proportion of sales come from the People’s Republic. However, this also poses risks as many customers are affected by US export restrictions.
Dependence on China and geopolitical tensions raise questions about the long-term sustainability of Lam Research’s success. Investors and market observers are curious to see whether the company is up to the challenges and how it will react to possible changes in the global market environment. The coming months could be crucial in determining whether Lam Research can maintain its strong position in the semiconductor industry or whether adjustments will be necessary to address geopolitical risks.
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