FREMONT, California, May 21 (Reuters) - Lam Research ( LRCX )

is focused on adding sensing and AI capabilities to its

semiconductor manufacturing tools to make them more productive

as it plans expanded operations in Arizona and California, its

chief executive told Reuters on Thursday.

Shares of Lam, which supplies chipmakers such as Micron

Technology ( MU ) and Taiwan Semiconductor Manufacturing Co ( TSM )

, have risen more than 75% this year as huge demand for

AI chips has spurred customers to buy more tools.

Lam CEO Tim Archer said in an interview that the company's

strategic focus over the next two years would be to equip those

tools with more sensors that generate data that can be analyzed

by AI systems to spot problems and inefficiencies early. That

would help its customers make more chips with fewer defects on

each wafer, the dinner-plate-sized silicon disks that raw chips

are printed on.

Archer made the comments as Lam held a venture capital

competition at its Fremont, California, headquarters where it

awarded a $250,000 investment to a startup called Lightfinder.

The Massachusetts Institute of Technology spinout has shrunk

down a key standalone tool for measuring chips to a size and

cost so the tool can be merged into an existing machine rather

than requiring a separate step in the chipmaking process.

"The more data you collect from the machine itself, or from

the wafer, the better your models can be about predicting what's

happening and starting to really react to problems in the

system," Archer said. "What AI is allowing us to do ... is

basically identify conditions in the system that we didn't know

were a problem before."

Archer also confirmed that Lam intends to open an additional

facility in the Phoenix area to support customers such as TSMC

and that it plans more investments at its California

headquarters, where it still carries out manufacturing work.

The Phoenix Business Journal in December reported that Lam spent

more than $45 million on a 148,000-square-foot

(13,750-square-meter) building near TSMC's massive factories

there, but Lam has not yet detailed its plans for the facility.

"Clearly, we see Arizona as a place that we need to be from

the standpoint of supporting (customers)," Archer said. "I think

you'll very soon see more investment coming here in the Fremont

area."