Chip Stock Investor on $LRCX (Nov 3, 2026)

And who should you automatically think of when you think of not just new clean room space that needs to be filled up with equipment, but also equipment upgrades? Ta-da. The Fab Five.

The good old Fab Five. Especially company like Lam Research, which has historically been focused in the memory market. Mm-hmm. And all of them work together. Applied Materials plays here very heavily as well.

These are provided by Lam Research. Let's look at how that house or existing apartment can be subdivided first. This is a side view of a one-layer good old-fashioned DRAM chip.

DRAM requires power to hold the data that's in memory, and it holds that charge in with a capacitor. One capacitor and one transistor makes up a bit for memory. And separating those pairs of capacitors and transistors, you have wordlines and bitlines, BL and WL there in the middle.

Another look at that via schematic on the right. The challenge here is how do you take this from a two-dimensional structure to a three-dimensional one? This is where the analogy of subdividing the house, or building on top of your existing real estate to build a multi-story building starts to break down a little bit because what's happening here is same schematic on the left of the capacitor and transistor and the wordlines and bit lines getting tilted on its side.

And then they can stack those structures vertically on top of each other. But that still doesn't do the trick because how do you interconnect all of those different bits in storage?

Now the analogy works again. There's the bit line there in the middle, the big fat vertical line BL. There's the bit line. Think of that like a central elevator, and then each stop on the floor to the left and the right, there's your wordlines.

There's a little hallway and then the apartment. So they've kind of tipped the traditional structure on its side, stuck a big elevator down the middle of it, and this is ongoing work.

Designing it is one thing. Actually being able to manufacture it is something else entirely. But this is why we always ultimately, as long-term investors, end up coming back to the more durable bottlenecks, ones that are not so easy to solve.

It's because Lam Research doesn't just provide equipment for manufacturers. They actually are integral to designing and coming up with the process itself, and then they monetize it, of course, via the sale of the machine or upgrades and other services.

But, you get the idea. This is not a bottleneck that is easily solved. You don't just decide, Lam Research, we've decided to go get equipment somewhere else or design our own equipment or, hey, just expand your equipment capacity and problem solved.

Those equipment makers develop so much of what the industry does, so much of the design work and manufacturing work, and the money flows through them that this is just a pretty durable spot in the supply chain industry flowchart.