Lam Research and KLA Corp stocks declined 2.4% each in premarket trading on Friday, while Applied Digital shares fell nearly 1%, retracing gains from the previous session after momentum from Meta Platforms' custom chip program announcement faded. The pullback followed Thursday's rally when Reuters reported Meta plans to begin manufacturing a new AI chip codenamed 'Iris' from September, which initially sparked investor enthusiasm for chip equipment makers. The chip equipment sector supplies wafer fabrication tools used in semiconductor production, with Citi estimating the wafer fab market will grow from $145 billion currently to $200 billion in 2027 and $250 billion in 2028.
Lam Research, KLA Corp, and Applied Digital Reverse Thursday Gains
Lam Research and KLA each declined 2.4% in early premarket trading on Friday, while Applied Digital fell nearly 1%. The declines reversed part of the previous session's gains, when the three stocks posted increases of 6%, 3.8%, and 2.7% respectively on Thursday. Year-to-date, LRCX, KLA, and APLD have each risen more than 90%. On Stocktwits, retail sentiment was 'bearish' for LRCX and KLA, and 'neutral' for APLD.
Meta Platforms Partners with Broadcom and TSMC for Iris Chip Production
Reuters reported that Meta plans to begin manufacturing a new AI chip, codenamed 'Iris,' from September, according to an internal memo reviewed by the agency. Meta is designing custom chips in partnership with Broadcom, with production handled by Taiwan Semiconductor Manufacturing. The forthcoming Iris chip is part of a four-generation project for Meta Training and Inference Accelerators (MTIA) that Meta will design in-house. The internal memo indicated Meta plans to boost its total computing capacity to 14 gigawatts next year. Major cloud players such as Alphabet and Amazon have pursued a similar strategy for years, using custom chips to lower costs and reduce their dependence on suppliers like Nvidia.
Citi Projects Wafer Fab Equipment Market Growth Through 2028
Citi estimates the wafer fab equipment market will grow from $145 billion today to $200 billion in 2027 and $250 billion in 2028. The projected growth represents a second-order effect of the rapid expansion in chip production. Chip equipment makers supply the wafer fabrication tools used to turn raw silicon into microchips, positioning them to benefit from increased semiconductor manufacturing capacity.
FAQ
Why did Lam Research and KLA Corp stocks fall in premarket trading on Friday?
Lam Research and KLA Corp stocks declined 2.4% each in premarket trading on Friday as momentum from the previous session's rally faded. The stocks had risen on Thursday after Reuters reported Meta Platforms plans to manufacture a new AI chip called 'Iris' from September, but investor enthusiasm cooled by Friday morning.
What is Citi's projection for the wafer fab equipment market?
Citi estimates the wafer fab equipment market will grow from $145 billion currently to $200 billion in 2027 and $250 billion in 2028. The growth is attributed to rapid expansion in chip production, benefiting companies like Lam Research and KLA Corp that supply wafer fabrication tools used in semiconductor manufacturing.
