LAM RESEARCH CORP

Lam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry, with core competencies in nanoscale manufacturing enablement, chemistry, plasma and fluidics, advanced systems engineering, and a broad range of operational disciplines. The company's customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such as non-volatile memory, dynamic random-access memory, and logic devices. Demand from cloud computing, artificial intelligence, 5G, the Internet of Things, and other markets is driving the need for increasingly powerful and cost-efficient semiconductors, while growing technical challenges with traditional two-dimensional scaling are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical scaling strategies like three-dimensional architecture as well as multiple patterning to enable shrinks.

The semiconductor capital equipment industry is characterized by rapid change and is highly competitive throughout the world. Lam Research's primary competitor in the dielectric and metals deposition market is Applied Materials, Inc.; for ALD and PECVD, the company also competes against ASM International and Wonik IPS; in the etch market, primary competitors are Applied Materials, Inc., Hitachi, Ltd., and Tokyo Electron, Ltd.; and in the wet clean market, primary competitors are Screen Holding Co., Ltd., Semes Co., Ltd., and Tokyo Electron, Ltd. The company's ability to succeed depends upon its ability to manufacture and ship products on a timeline that meets customers' needs, maintain existing products, and introduce product enhancements and new products that meet customer requirements on a timely basis. Once a semiconductor manufacturer has selected a particular supplier's equipment and qualified it for production, the manufacturer generally maintains that selection for that specific production application and technology node as long as the supplier's products demonstrate performance to specification in the installed base.

Lam Research generates revenue through the design, manufacture, marketing, refurbishment, and servicing of semiconductor processing equipment used in the fabrication of integrated circuits. The company's revenue is disaggregated into two categories: systems revenue, which includes sales of new leading-edge equipment in deposition, etch, clean and other wafer fabrication markets, and customer support-related revenue, which includes sales of customer service, spares, upgrades, and non-leading-edge equipment from the Reliant product line. The company serves three primary markets: foundry, memory, and logic/integrated device manufacturing. The Customer Support Business Group provides products and services to maximize installed equipment performance, predictability, and operational efficiency, offering a broad range of services including customer service, spares, upgrades, and new and refurbished non-leading-edge products in deposition, etch, and clean markets.

Lam Research's product portfolio spans deposition, etch, and clean processes. In deposition, the ALTUS product family combines CVD and ALD technologies to deposit highly conformal or selective films for advanced tungsten or molybdenum metallization in both logic and memory; the SABRE ECD product family offers precision for copper damascene manufacturing in logic and memory and includes the SABRE 3D family for advanced packaging applications such as HBM; the SPEED HDP-CVD products provide a multiple dielectric film solution for high-quality gapfill; the Striker single-wafer ALD products provide dielectric film solutions for challenging requirements; and the VECTOR PECVD products are designed to provide performance and flexibility for creating enabling structures. In etch, the Flex product family offers differentiated technologies for critical dielectric etch applications; the Vantex system creates high aspect ratio device features while maintaining critical dimension uniformity and selectivity, primarily for 3D NAND high aspect ratio hole, trench, contact, and capacitor cell applications; the Kiyo product family delivers high-performance capabilities for conductor etch; the Syndion etch product family is optimized for deep silicon etch for applications including TSVs for HBM and advanced packaging; and the Versys Metal product family provides high-productivity capability for metal etch. In clean, the Coronus bevel clean family cleans the wafer's edge to enhance die yield; and the DV-Prime, Da Vinci, EOS, and SP Series products provide wafer cleaning solutions, with EOS delivering exceptionally low on-wafer defectivity and high throughput.

The company also addresses processes for back-end wafer-level packaging, offering advanced packaging solutions that support fan-out panel-level packaging and solutions that meet the need for 3D stacking of high bandwidth memory. Additionally, Lam's products are well-suited for related markets such as complementary metal-oxide-semiconductor image sensors and micro-electromechanical systems. The Reliant product line within CSBG offers new and refurbished non-leading edge products in deposition, etch and clean markets for applications that do not require the most advanced wafer processing capability. Service offerings include fleet level Equipment Intelligence solutions to maximize productivity through system uptime or availability optimization, throughput improvements, and defect reduction, while the spares product line offers running cost optimization programs and focuses on product life extension.

On October 2, 2024, the Company effected a 10-for-one stock split of its common stock and a proportional increase in the number of authorized shares. In January 2025, the Company entered into a Third Amended and Restated Credit Agreement, which increased the unsecured revolving credit facility commitment from $1.5 billion to $2.0 billion and extended the maturity from June 2026 to January 2030, with an expansion option allowing a request for an increase of up to an additional $750.0 million for a potential total commitment of $2.75 billion ¹. In March 2025, $500 million principal value of the 2025 Notes were settled upon maturity using available cash on hand ². On April 30, 2025, the Company entered into accelerated share repurchase agreements with two financial institutions to repurchase a total of $500 million of Common Stock ³, taking an initial delivery of approximately 5.2 million shares ⁴, which represented 75% of the prepayment amount divided by the closing stock price on April 30, 2025 ⁵. During fiscal year 2025, the Company repurchased 40,499 thousand shares ⁶ for a total cost of $3,409,375 thousand ⁷ under its stock repurchase program, and the quarterly dividend declared was $0.23 per share ⁸. The Company also completed the purchase of improved properties in Fremont and Livermore, California, resulting in $250.5 million of additions to Property and equipment, net ⁹, primarily comprised of land ($40.5 million) ¹⁰ and buildings and improvements ($210.0 million) ¹¹, and released cash collateral of approximately $250 million of restricted cash ¹².

For fiscal year 2025, total revenue was $18,435,591 thousand ¹³, an increase of 23.7% ¹⁴ compared to $14,905,386 thousand ¹⁵ in fiscal year 2024. Gross margin was $8,979,059 thousand ¹⁶, or 48.7% ¹⁷ of revenue, compared to $7,052,791 thousand ¹⁸, or 47.3% ¹⁹ of revenue in the prior year. Net income was $5,358,217 thousand ²⁰, an increase of 40.0% ²¹ compared to $3,827,772 thousand ²² in fiscal year 2024. Diluted net income per share was $4.15 ²³ compared to $2.90 ²⁴ in the prior year. Cash flows provided from operating activities were $6,173,264 thousand ²⁵ for fiscal year 2025 compared to $4,652,269 thousand ²⁶ for fiscal year 2024. Cash and cash equivalents and restricted cash balances totaled $6,407,656 thousand ²⁷ as of June 29, 2025, compared to $5,850,803 thousand ²⁸ as of June 30, 2024.

Over the longer term, management believes that secular demand for semiconductors, combined with technology inflections in the industry, including 3D device scaling, multiple patterning, process flow, and advanced packaging chip integration, will drive sustainable growth and lead to an increase in the served available market for the company's products and services in the deposition, etch, and clean businesses. The company expects to continue to make substantial investments in R&D to meet customers' product needs, support its growth strategy, and enhance its competitive position, with several on-going programs relating to sustaining engineering, product and process development, and concept and feasibility. The company also aims to leverage cycles of learning from its broad installed base, maintain a collaborative focus with semi-ecosystem partners including a close-to-customer focus, identify and invest in the breadth of its product portfolio to meet technology inflections, and deliver multi-product solutions with a goal to enhance the value of Lam's solutions to customers.

The company addresses processes for back-end wafer-level packaging, which is an alternative to traditional wire bonding and can offer a smaller form factor, increased interconnect speed and bandwidth, and lower power consumption, among other benefits. Lam offers advanced packaging solutions that support fan-out panel-level packaging, a process in which chips or chiplets are cut from a large format substrate sheet several times the size of a traditional silicon wafer, which increases yield and reduces waste, and solutions that meet the need for 3D stacking of high bandwidth memory. Additionally, the company's products are well-suited for related markets that rely on semiconductor processes and require production-proven manufacturing capability, such as complementary metal-oxide-semiconductor image sensors and micro-electromechanical systems.

The increase in gross margin as a percentage of revenue for fiscal year 2025 compared to fiscal year 2024 was largely due to improved factory efficiencies and favorable product mix, partially offset by increased transformational charges. The increase in gross margin as a percentage of revenue for fiscal year 2024 compared to fiscal year 2023 was due to a more favorable customer mix, reduced spending on material costs, and higher field resource utilization, partially offset by lower factory efficiencies. The company continuously reassesses its strategic resource allocation choices in response to the changing business environment, and from time to time exercises discretion and judgment as to the timing and prioritization of manufacturing and deliveries of products, which has impacted and may in the future impact the timing of revenue recognition.

The company has agreements with third parties to outsource certain aspects of its manufacturing, production warehousing, and logistics functions, which may provide more flexibility to scale operations up or down in a timely and cost-effective manner. Certain components and sub-assemblies included in the company's products may only be obtained from a single supplier, and the company is engaged in efforts to obtain and qualify alternative sources to supply these products and in some circumstances protect against potential supply challenges by carrying inventory in excess of current need. The company's manufacturing and R&D facilities are concentrated in a limited number of locations, including Fremont and Livermore, California; Tualatin, Oregon; Yongin, Gyeonggi Province, Korea; Bengaluru, India; Salzburg, Austria; and Villach, Austria, and the company also leases or owns properties for service, technical support, and sales personnel throughout the United States, China, Europe, India, Japan, Korea, Southeast Asia, and Taiwan.

The company expects to continue to make significant investments in R&D to meet customers' product needs, support its growth strategy, and enhance its competitive position. Research and development expense was $2,096,387 thousand ²⁹ in fiscal year 2025, compared to $1,902,444 thousand ³⁰ in fiscal year 2024. Capital expenditures were $759,186 thousand ³¹ in fiscal year 2025, compared to $396,670 thousand ³² in fiscal year 2024. In May 2024, the Board of Directors authorized management to repurchase up to an additional $10.0 billion of Common Stock ³³; this authorization supplements the remaining balance from any prior authorization. As of June 29, 2025, the amount available under the repurchase program was $7,517,184 thousand ³⁴. During fiscal year 2025, the quarterly dividend declared was $0.23 per share ³⁵, and total dividends paid were $1,149,542 thousand ³⁶.

In the short term, volatility in the semiconductor industry environment from trade restrictions, tariffs, as well as other direct and indirect risks and uncertainties, have had, and in the future may have, a negative impact on the company's revenue and operating margin. The U.S. government has enacted a number of export controls regulating the sales of certain technologies to customers in China, including entity listings of multiple customers, thus restricting the sales of equipment and spare parts by U.S. equipment suppliers, which provides an advantage to international competitors that are not subject to these restrictions. Revenue in China, which includes global customers and domestic Chinese customers with manufacturing facilities in China, represented approximately 34% ³⁷, 42% ³⁸, and 26% ³⁹ of total revenue for fiscal years 2025, 2024, and 2023, respectively.

The company faces significant competition from multiple competitors, and competitors may be able to develop products comparable or superior to those offered or may adapt more quickly to new technologies or evolving customer requirements. Certain competitors, including those that are created and financially backed by foreign governments, have substantially greater financial resources and more extensive engineering, manufacturing, marketing, and customer service and support resources than the company does. The company also faces competition from its own customers, who in some instances have established affiliated entities that manufacture equipment similar to the company's, and from companies that exist in a more favorable legal or regulatory environment, who are able to sell products for certain applications at certain customers that the company is prohibited from selling to under applicable export controls.

The company's business depends on the capital equipment expenditures of semiconductor manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits, and the semiconductor capital equipment industry has historically been characterized by rapid changes in demand, leading to variability in the company's results. Revenue in China represented approximately 34% ⁴⁰, 42% ⁴¹, and 26% ⁴² of total revenue for fiscal years 2025, 2024, and 2023, respectively, and the U.S. government has enacted new rules aimed at restricting China's ability to manufacture advanced semiconductors, including expanded export license requirements and restrictions on sales to certain Chinese entities, which have limited the market for the company's products and adversely impacted revenues. The company has $4.5 billion in aggregate principal amount of senior unsecured notes outstanding ⁴³, and its credit agreements contain covenant restrictions that may limit its ability to operate its business. The company faces significant competition from multiple competitors, including those with substantially greater financial resources and those that exist in a more favorable legal or regulatory environment, and once a semiconductor manufacturer commits to purchase a competitor's equipment, the manufacturer typically continues to purchase that competitor's equipment, making it more difficult for the company to sell its equipment to that customer.

Management's message emphasizes that wafer fabrication equipment spending levels were strong in the 2025 fiscal year driven by an increase in both the memory and non-memory market segments, and that the company believes it is in a strong position with its leadership and expertise in deposition, etch, and clean markets to facilitate some of the most significant innovations in semiconductor device manufacturing. The strategic priorities emphasized for the period ahead include focusing on research and development with several on-going programs relating to sustaining engineering, product and process development, and concept and feasibility; effectively leveraging cycles of learning from the broad installed base; maintaining a collaborative focus with semi-ecosystem partners including a close-to-customer focus; identifying and investing in the breadth of the product portfolio to meet technology inflections; and delivering multi-product solutions with a goal to enhance the value of Lam's solutions to customers. Management also notes that over the longer term, secular demand for semiconductors, combined with technology inflections including 3D device scaling, multiple patterning, process flow, and advanced packaging chip integration, will drive sustainable growth and lead to an increase in the served available market for the company's products and services.