What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-08-11 compared with 2024-08-29 · 62 added, 59 removed, 217 unchanged (36% of the section changed)

11 unchanged sentences

Lam Research Corporation is a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry.

We have built a strong global presence with core competencies in areas like nanoscale applications enablement, chemistry, plasma and fluidics, advanced systems engineering and a broad range of operational disciplines.

Our products and services are designed to help our customers build smaller, and better performing devices that are used in a variety of electronic products, including mobile phones, personal computers, servers, wearables, automotive vehicles, and data storage devices.

We have built a strong global presence with core competencies in areas like nanoscale manufacturing enablement, chemistry, plasma and fluidics, advanced systems engineering and a broad range of operational disciplines.

Our products and services are designed to help our customers build smaller and better performing devices that are used in a variety of electronic products, including mobile phones, personal computers, cloud and enterprise servers, wearables, automotive vehicles, and data storage devices.

Our customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such as NVM, DRAM, and logic devices.

1 unchanged sentence

Our core technical competency is integrating hardware, process, materials, software, and process control, enabling results on the wafer.

Semiconductor manufacturing, our customers’ business, involves the complete fabrication of multiple dies or integrated circuits on a wafer.

Semiconductor manufacturing, our customers’ business, involves the fabrication of multiple dies or integrated circuits on a wafer.

This involves the repetition of a set of core processes and can require hundreds of individual steps.

Fabricating these devices requires highly sophisticated process technologies to integrate an increasing array of new materials with precise control at the atomic scale.

Fabricating these devices requires a sequence of highly sophisticated process technologies to integrate an increasing array of new materials with precise control at the atomic scale.

Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.

10 unchanged sentences

and (v) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.

During fiscal year 2024, wafer fabrication equipment spending was roughly flat on a year-on-year basis, with strength in the DRAM market, offset by declines in the non-volatile memory, Foundry, and Logic markets.

In the quarter ended March 26, 2023, we initiated a restructuring plan designed to better align the Company’s cost structure with industry investment levels.

We invested in a number of business process improvements and initiatives and incurred expenditures from these activities of approximately $315 million, inclusive of the restructuring activity during the second half of fiscal year 2023 and the 2024 fiscal year.

In the short term, the uncertain semiconductor demand environment, as well as other risks and uncertainties, may continue to negatively impact our revenue and operating margin.

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.

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 our revenue and operating margin.

Over the longer term, we believe that secular demand for semiconductors, combined with technology inflections in our 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 our products and services in the deposition, etch, and clean businesses.

Lam Research Corporation 2025 10-K 29

Table of Content

drive sustainable growth and lead to an increase in the served available market for our products and services in the deposition, etch, and clean businesses.

On October 2, 2024, the Company effected a ten-for-one stock split of its common stock and a proportional increase in the number of authorized shares.

All references made to share or per share amounts throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations have been retroactively adjusted to reflect the stock split.

The following table summarizes certain key financial information for the periods indicated below:

11 unchanged sentences

Net income per diluted share $ 4.15 $ 2.90 $ 3.32 $ 1.25 43.1 % $ (0.42) (12.7) %

Fiscal year 2025 revenue increased 23.7% compared to fiscal year 2024, driven by strong customer demand for semiconductor equipment systems as well as customer support-related revenues from customer investments across memory and non-memory markets.

Gross margin as a percentage of revenue increased in fiscal year 2025 compared to fiscal year 2024 largely due to improved factory efficiencies and favorable product mix, partially offset by increased transformational charges.

The increase in operating expenses in fiscal year 2025 compared to fiscal year 2024 was driven by higher employee-related costs primarily as a result of increased headcount, increased spending on transformational activities, and higher outside service expense.

Fiscal year 2024 revenue decreased 14.5% compared to fiscal year 2023.

2 unchanged sentences

The increase in operating expenses in fiscal year 2024 compared to fiscal year 2023 was driven by higher employee-related costs primarily as a result of increased research and development-related headcount, increased spending on transformational activities, higher deferred compensation plan-related costs, and increased spending on supplies.

Fiscal year 2023 revenue was slightly higher than fiscal year 2022.

Customer support-related revenue increased in fiscal year 2023 due to continued strength in specialty node investments, which was offset by a decline in our systems revenue as a result of semiconductor demand weakness, largely in the memory market.

Gross margin as a percentage of revenue decreased due to inflationary cost pressures that led to higher spending on material costs, as well as costs associated with restructuring related activities, partially offset by favorable customer and product mix .

The increase in operating expenses in fiscal year 2023 compared to fiscal year 2022 was driven by higher deferred compensation plan-related costs, restructuring-related charges, employee-related costs as a result of increased headcount, depreciation and amortization, and supplies, partially offset by a decrease in amortization of intangible assets as the intangible assets associated with the acquisition of Novellus have fully amortized.

We aim to balance the requirements of our customers with the availability of resources, as well as performance to our operational and financial objectives.

1 unchanged sentence

Our cash and cash equivalents and restricted cash balances totaled approximately $6.4 billion as of June 29, 2025, compared to $5.9 billion as of June 30, 2024.

Cash flows provided from operating activities was $4.7 billion for fiscal year 2024 compared to $5.2 billion for fiscal year 2023.

Cash flows provided from operating activities in fiscal year 2024 was primarily used for $2.8 billion in treasury stock purchases, including net share settlement on employee stock-based compensation;

Cash flows provided from operating activities were $6.2 billion for fiscal year 2025 compared to $4.7 billion for fiscal year 2024.

Cash flows provided from operating activities in fiscal year 2025 were primarily used for $3.4 billion in treasury stock purchases, including net share settlement of employee stock-based compensation;

$1.1 billion in dividends paid to our stockholders;

and $397 million of capital expenditures.

$759 million of capital expenditures;

and $507 million of principal payment on debt instruments and debt issuance costs.

Results of Operations

10 unchanged sentences

Lam Research Corporation 2025 10-K 30

Table of Content

Revenue decreased in fiscal year 2024 compared to fiscal year 2023 mainly due to decreases in non-volatile memory, partially offset by increases in DRAM spending by our customers.

The China region had the largest geographic concentration with 42% of our revenues during this period.

Revenue increased in fiscal year 2023 compared to fiscal year 2022 primarily due higher revenue from CSBG related to strength in mature node equipment, w hile the overall Asia region continued to account for a majority of our revenues.

The deferred revenue balance decreased to $1.6 billion as of June 30, 2024 compared to $1.8 billion as of June 25, 2023.

primarily due to a decrease in advance deposits from newer customers.

Revenue increased in fiscal year 2025 compared to fiscal year 2024 due to increased equipment spending by our customers across Memory and Foundry market segments as well as increased customer support-related revenue for upgrades, spares, and services.

Revenue decreased in fiscal year 2024 compared to fiscal year 2023 mainly due to decreases in non-volatile memory spending, partially offset by increases in DRAM spending by our customers.

The deferred revenue balance increased to $2.7 billion as of June 29, 2025 compared to $1.6 billion as of June 30, 2024 primarily due to an increase in advance deposits from newer customers.

The following table presents our revenue disaggregated between system and customer support-related revenue:

10 unchanged sentences

2024 June 25,

Memory 42 % 42 % 60 %

Foundry 45 % 40 % 38 %

Memory 42 % 42 % 42 %

Logic/integrated device manufacturing 13 % 18 % 20 %

7 unchanged sentences

Percent of revenue 48.7 % 47.3 % 44.6 % + 140 bps + 270 bps

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 decrease in gross margin as a percentage of revenue for fiscal year 2023 compared to fiscal year 2022 was due to inflationary cost pressures that led to higher spending on material costs, partially offset by favorable customer and product mix.

Research and Development

8 unchanged sentences

We continued to make significant R&D investments focused on leading-edge deposition, etch, clean, and other semiconductor manufacturing processes.

The increase in R&D expense during fiscal year 2024 compared to fiscal year 2023 was primarily driven by an increase of $58 million in employee-related costs primarily as a result of increased headcount, $33 million in spending for supplies, $18 million in deferred compensation plan-related costs, and $13 million in spending for transformational activities.

The increase in R&D expense during fiscal year 2025 compared to fiscal year 2024 was primarily driven by an increase of $118 million in employee-related costs mainly as a result of increased headcount and $35 million in higher outside service expense, inclusive of transformational and lab-related activities.

Lam Research Corporation 2025 10-K 31

Table of Content

The increase in R&D expense during fiscal year 2023 compared to fiscal year 2022 was mainly driven by an increase of $43 million in employee-related costs as a result of increased headcount, $26 million in deferred compensation plan-related costs, $22 million in spending for supplies, and $14 million of depreciation and amortization.

Selling, General, and Administrative

7 unchanged sentences

Percent of revenue 5.3 % 5.8 % 4.8 % - 50 bps + 100 bps

The increase in SG&A expense during fiscal year 2025 compared to fiscal year 2024 was primarily driven by an increase of $112 million in employee-related costs as a result of increased headcount.

The increase in SG&A expense during fiscal year 2024 compared to fiscal year 2023 was primarily driven by an increase of $30 million in transformational activity spend.

The decrease in SG&A expense during fiscal year 2023 compared to fiscal year 2022 was primarily driven by a decrease of $44 million in amortization of intangible assets, as the intangible assets associated with the acquisition of Novellus have fully amortized, as well as from $12 million in lower employee-related costs, partially offset by $17 million in higher deferred compensation plan-related costs.

Restructuring Charges, Net

11 unchanged sentences

Additionally, we made a strategic decision to relocate certain manufacturing activities to pre-existing facilities.

The restructuring plan is substantially complete as of June 30, 2024.

The restructuring plan was substantially complete as of June 30, 2024.

Restructuring charges decreased during fiscal year 2024 compared to fiscal year 2023 primarily due to lower employee severance and separation costs.

11 unchanged sentences

Interest expense (178,203) (185,236) (186,462) $ 7,033 (3.8) % $ 1,226 (0.7) %

Gains (losses) on deferred compensation plan related assets, net 58,767 20,186 (38,053) $ 38,581 191.1 % $ 58,239 (153.0) %

Gains on deferred compensation plan related assets, net 39,121 58,767 20,186 $ (19,646) (33.4) % $ 38,581 191.1 %

Foreign exchange losses, net (26,412) (4,837) (7,078) $ (21,575) 446.0 % $ 2,241 (31.7) %

1 unchanged sentence

$ 57,161 $ 96,309 $ (65,650) $ (39,148) (40.6) % $ 161,959 (246.7) %

Interest income increased in fiscal year 2024 compared to fiscal years 2023 and 2022 primarily because of higher yields and higher cash balances.

Interest income decreased in fiscal year 2025 compared to fiscal year 2024 primarily due to lower interest rates, partially offset by higher cash balances.

Interest income increased in fiscal year 2024 compared to fiscal year 2023 primarily because of higher yields and higher cash balances.

Interest expense decreased in fiscal year 2025 compared to fiscal year 2024 primarily due to the maturity of $500 million of the Company’s senior notes in March 2025.

Interest expense was flat in fiscal year 2024 compared to fiscal year 2023.

Lam Research Corporation 2025 10-K 32

Table of Content

Interest expense in fiscal year 2024 was flat compared to fiscal years 2023 and 2022.

The gains or losses on deferred compensation plan related assets, net were driven by fluctuations in the fair market value of the underlying funds for all periods presented.

The gains on deferred compensation plan related assets, net were driven by fluctuations in the fair market value of the underlying funds for all periods presented.

Foreign exchange fluctuations were primarily due to currency movements against portions of our unhedged balance sheet exposures for all periods presented.

10 unchanged sentences

Effective tax rate 10.1 % 12.2 % 11.7 % - 210 bps + 50 bps

The increase in the effective tax rate in fiscal year 2024 as compared to fiscal year 2023 and the increase in the effective tax rate in fiscal year 2023 compared to fiscal year 2022 was primarily due to the change in level and proportion of income in higher and lower tax jurisdictions.

The decrease in the effective tax rate in fiscal year 2025 as compared to fiscal year 2024 was primarily due to the recognition of previously unrecognized tax benefits from lapses of statutes of limitation in fiscal year 2025 and the change in level and proportion of income in higher and lower tax jurisdictions.

The increase in the effective tax rate in fiscal year 2024 compared to fiscal year 2023 was primarily due to the change in level and proportion of income in higher and lower tax jurisdictions.

International revenues account for a significant portion of our total revenues, such that a material portion of our pre-tax income is earned and taxed outside the United States.

International pre-tax income is taxable in the United States at a lower effective tax rate than the federal statutory tax rate.

Please refer to Note 7 of our Consolidated Financial Statements in Part II, Item 8 of this 2024 Form 10-K.

Beginning in our fiscal year 2023, a provision enacted as part of the 2017 Tax Cuts & Jobs Act requires us to capitalize research and experimental expenditures for tax purposes.

Due to this provision, we expect our cash tax payments to increase significantly in the near term and stabilize in future years as the capitalized expenditures continue to amortize.

On August 16, 2022, the IRA was signed into law.

In general, the provisions of the IRA are effective beginning with our fiscal year 2024, with certain exceptions.

The IRA includes a new 15% corporate alternative minimum tax.

We have evaluated the impacts of the IRA, including guidance issued by the Treasury Department, and do not expect it to have a material impact on our effective tax rate.

Please refer to Note 7:

Income Taxes of our Consolidated Financial Statements in Part II, Item 8 of this 2025 Form 10-K.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law by U.S.

President Donald Trump.

The impact on income taxes due to change in legislation is required, under Accounting Standards Codification (“ASC”) 740, Income Taxes, to be recognized in the period in which the law is enacted, which is during our fiscal year 2026.

In general, the OBBBA introduces changes to U.S.

taxation, including changes in the taxation of non-U.S.

We are currently assessing the potential implications of these changes to our fiscal year 2026 Consolidated Financial Statements.

Deferred Income Taxes

2 unchanged sentences

These gross deferred tax assets were offset by gross deferred tax liabilities of $197 million and $218 million and a valuation allowance primarily representing our entire California deferred tax asset balance due to the single sales factor apportionment resulting in lower taxable income in California of $424 million and $389 million at the end of fiscal years 2025 and 2024, respectively.

The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2024 and 2023 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries, tax credits, and capitalized research and experimental expenditures.

The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2025 and 2024 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries.

We evaluate if the deferred tax assets are realizable on a quarterly basis and will continue to assess the need for changes in valuation allowances, if any.

4 unchanged sentences

Lam Research Corporation 2025 10-K 33

Table of Content

Critical Accounting Policies and Estimates

14 unchanged sentences

Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes estimates for discounts and credits for future usage which are based on contractual terms outlined in volume purchase agreements and other factors known at the time.

We generally invoice customers at shipment and for professional services either as provided or upon meeting certain milestones.

We generally invoice customers at shipment and for professional services as provided.

Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery.

9 unchanged sentences

The assessment of valuation allowances against our deferred tax assets includes estimation and judgement with respect to future operating results and market conditions.

We have an accounting policy election to record deferred taxes related to Global Intangible Low-Taxed Income (“GILTI”).

We recognize the benefit from a tax position only if it is more likely than not that the position will be sustained upon audit based solely on the technical merits of the tax position.

We have a policy to include interest and penalties related to uncertain tax positions as a component of income tax expense.

Recent Accounting Pronouncements

3 unchanged sentences

Total gross cash, cash equivalents, and restricted cash balances were $6.4 billion at the end of fiscal year 2025 compared to $5.9 billion at the end of fiscal year 2024.

This increase was primarily due to cash provided by operating activities, partially offset by Common Stock repurchases in connection with our stock repurchase program, dividends paid, and capital expenditures.

Lam Research Corporation 2025 10-K 34

Table of Content

Cash Flow from Operating Activities

Cash Flows from Operating Activities

Net cash provided by operating activities of $6.2 billion during fiscal year 2025 consisted of (in thousands):

6 unchanged sentences

Significant changes in operating asset and liability accounts, net of foreign exchange impact, included the following sources of cash:

decreases in inventory of $529 million, and accounts receivable of $303 million, and increases in accounts payable of $126 million.

increases in deferred gross profit of $1.1 billion, accrued expenses and other liabilities of $328 million, and accounts payable of $212 million.

These sources of cash are offset by the following uses of cash:

decreases in accrued expenses and other liabilities of $305 million, a decrease in deferred gross profit of $277 million, and an increase in prepaid expenses and other current assets of $16 million.

Cash Flow from Investing Activities

Net cash used for investing activities during fiscal year 2024 was $371 million, primarily consisting of $397 million in capital expenditures, partially offset by proceeds from maturities and sales of available-for-sale securities of $38 million.

Cash Flow from Financing Activities

increases in accounts receivable of $859 million, prepaid expenses and other current assets of $207 million, and inventory of $181 million.

Cash Flows from Investing Activities

Net cash used for investing activities during fiscal year 2025 was $708 million, primarily consisting of $759 million in capital expenditures.

Cash Flows from Financing Activities

Net cash used for financing activities during fiscal year 2025 was $4,937 million, primarily consisting of $3,422 million in Common Stock repurchases, including net share settlement on employee stock-based compensation;

$1,150 million of dividends paid;

and $256 million of repayment of debt, largely associated with the purchase of certain properties under finance leases;

partially offset by $136 million of stock issuance and treasury stock reissuances associated with our employee stock-based compensation plans.

and $507 million of principal payments on debt instrument and debt issuance costs, partially offset by $143 million of stock issuance and treasury stock reissuances associated with our employee stock-based compensation plans.

Given that the semiconductor industry is highly competitive and has historically experienced rapid changes in demand, we believe that maintaining sufficient liquidity reserves is important to support sustaining levels of investment in R&D and capital infrastructure.

1 unchanged sentence

However, factors outside of our control, including uncertainty in the global economy and the semiconductor industry, as well as disruptions in credit markets, have in the past, are currently, and could in the future, impact customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers, and creditors.

In March 2025, $500 million principal value of our 2025 Notes were settled upon maturity using available cash on hand.

In January 2025, we entered into a Third Amended and Restated Credit Agreement.

The amendment increased the unsecured revolving credit facility commitment from $1.5 billion to $2.0 billion and extended the maturity of the facility from June 2026 to January 2030.

The facility provides for an expansion option that will allow us, subject to certain requirements, to request an increase in the facility of up to an additional $750 million, for a potential total commitment of $2.75 billion.

Please refer to Note 14, “Long-term Debt and Other Borrowing s" to our Consolidated Financial Statements, included in Part II, Item 8 of this 2025 Form 10-K for additional information.

In the longer term, liquidity will depend to a great extent on our future revenues and our ability to appropriately manage our costs based on demand for our products and services.

2 unchanged sentences

However, domestic and global macroeconomic and political conditions could cause disruptions to the capital markets and otherwise make any financing more challenging, and there can be no assurance that we will be able to obtain such financing on commercially reasonable terms or at all.

Lam Research Corporation 2025 10-K 35

Off-Balance Sheet Arrangements and Contractual Obligations

3 unchanged sentences

Our off-balance sheet arrangements and our transition tax liability are presented as purchase obligations, refer to Note 17 of our Consolidated Financial Statements in Part II, Item 8 of this 2025 Form 10-K for further discussion.

Lam Research Corporation 2024 10-K 35

Table of Content

In addition, in the ordinary course of business, we issue purchase orders based on estimates of our production needs, many times well in advance of delivery dates.

The commitments under these open purchase orders are not included in the off-balance sheet commitments disclosed in the Notes to the Consolidated Financial Statements, as we generally have the option to cancel the purchase orders at our convenience, reschedule, and/or adjust quantities based on our business needs.

As of June 29, 2025, we expect to fulfill approximately $387 million within one year related to these arrangements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis