Research and Development

New technology for process equipment can take 2—3 years to develop into a production—worthy system. Therefore, suppliers need to know customer requirements 3 years in advance. However, neither customers nor industry technology roadmaps can definitively identify requirements that far into the future. Consequently, these uncertainties can significantly add to equipment development costs, and strategies are needed to enable providing cost—effective equipment to semiconductor manufacturers now challenged by increasing costs and lower revenues. At Lam, three key strategies are employed to ensure providing timely, cost—effective solutions:

Consistent investment in technology development. Investment in research is based on development needs rather than a percent of revenue. At any given time, technology is in development at several stages — current technology transitioning to volume manufacturing, near—term technology in pilot lines, and next—generation technology at the R&D stage. In addition, product roadmaps with parallel development paths are maintained — based on a range of known viable options with the flexibility to implement new technologies that may emerge. This approach ensures a range of potential solutions to address a variety of customer requirements.

Pursuit of joint development relationships. Relationships with leading—edge customers, supplier alliances, and consortia activities are actively pursued and developed to identify technology needs and define the focus. These activities ensure the right solutions are ready when customers need them.

Leveraging the Company's technology expertise. Lam leverages its core expertise in etch and cleaning to develop new technologies. Company engineers also evaluate related new technologies designed by other companies that can be developed into products quickly and at lower costs. Staying focused on the Company's technology expertise allows Lam to seize emerging opportunities quickly and provide cost—effective product solutions.