What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-04-23 compared with 2026-01-29 · 83 added, 78 removed, 193 unchanged (45% of the section changed)

47 unchanged sentences

and the sufficiency of our financial resources or liquidity to support future business activities (including, but not limited to, operations, investments, debt service requirements, dividends, and capital expenditures).

Such statements are based on current expectations and are subject to risks, uncertainties, and changes in condition, significance, value, and effect, including without limitation those discussed below under the heading “Risk Factors” within Part II Item 1A and elsewhere in this report and other documents we file from time to time with the Securities and Exchange Commission (“SEC”), such as our annual report on Form 10-K for the year ended June 29, 2025 (our “2025 Form 10-K”), and our current reports on Form 8-K.

Such risks, uncertainties, and changes in condition, significance, value, and effect could cause our actual results to differ materially from those expressed in this report and in ways not readily foreseeable.

2 unchanged sentences

Documents To Review In Connection With Management’s Discussion and Analysis Of Financial Condition and Results Of Operations

For a full understanding of our financial position and results of operations for the three and six months ended December 28, 2025, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations below, you should also read the Condensed Consolidated Financial Statements and notes presented in this Form 10-Q and the financial statements and notes in our 2025 Form 10-K.

For a full understanding of our financial position and results of operations for the three and nine months ended March 29, 2026, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations below, you should also read the Condensed Consolidated Financial Statements and notes presented in this Form 10-Q and the financial statements and notes in our annual report on form 10-K for the year ended June 29, 2025 (our “2025 Form 10-K”).

Lam Research Corporation 2026 Q3 10-Q 17

10 unchanged sentences

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

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.

Demand from cloud computing, artificial intelligence (“AI”), 5G, the Internet of Things, and other markets is driving the need for increasingly powerful and cost-efficient semiconductors.

At the same time, there are growing technical challenges with traditional two-dimensional scaling.

8 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.

Wafer fabrication equipment spending levels were strong in the 2025 calendar year driven by higher levels of semiconductor demand leading to 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.

Wafer fabrication equipment investments were strong in the 2025 calendar year, and we believe there will be continued growth in 2026 with the AI market driving higher semiconductor industry spending across 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 discussed in Part II, Item 1A, “ Risk Factors, ” 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.

2 unchanged sentences

Three Months Ended

2025 September 28,

2026 December 28,

(in thousands, except per share data and percentages)

5 unchanged sentences

Diluted net income per share $ 1.45 $ 1.26

In the December 2025 quarter, revenue was up slightly compared to the three months ended September 28, 2025 (the “September 2025 quarter”), as increases in customer support-related revenue were largely offset by decreases in systems revenue due to timing of customer investments.

T he deferred revenue balance was $2.25 billion at the end of the December 2025 quarter, down relative to the balance at the end of the September 2025 quarter of $2.77 billion, due to a decrease in customer down payments.

In the March 2026 quarter, revenue increased 9% compared to the three months ended December 28, 2025 (the “December 2025 quarter”), driven by an increase in systems revenue primarily resulting from increased customer investments in the DRAM market segment as well as an increase in customer support-related revenue mainly tied to our expanding installed base and higher spares, upgrades and services revenue, partially offset by decreased customer spend on non-leading-edge equipment.

T he deferred revenue balance was $2.22 billion at the end of the March 2026 quarter, down slightly relative to the balance at the end of the December 2025 quarter of $2.25 billion.

The decrease in the deferred revenue balance included approximately $300 million of decreases in customer down payments that were largely offset by increases across other components of deferred revenue balance associated with growing business levels.

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

As a result, from time to time, we exercise discretion and judgment as to the timing and prioritization of manufacturing and deliveries of products, which has impacted, including in the current fiscal year, and may in the future impact, the timing of revenue recognition with respect to such products.

The decrease in gross margin as a percentage of revenue in the December 2025 quarter compared to the September 2025 quarter was primarily a result of unfavorable changes in customer mix.

The operating expenses in the December 2025 quarter were relatively flat compared to the September 2025 quarter.

Our cash, cash equivalents, and restricted cash balances decreased to $6.2 billion at the end of the December 2025 quarter compared to $6.7 billion at the end of the September 2025 quarter.

This decrease was primarily the result of $1,466.2 million of share repurchases, including net share settlement of employee stock-based compensation and excise tax;

$327.5 million of dividends paid to stockholders;

and $260.9 million of capital expenditures, partially offset by $1,480.0 million of cash generated from operating activities.

Employee headcount as of December 28, 2025 was approximately 19,700.

The increase in gross margin as a percentage of revenue in the March 2026 quarter compared to the December 2025 quarter was primarily a result of improved factory efficiencies.

The increase in operating expenses in the March 2026 quarter compared to the December 2025 quarter wa s primarily driven by an increase in employee-related costs as a result of beginning of calendar year seasonality and higher headcount, as well as higher costs associated with workforce optimization, partially offset by lower elective deferred compensation plan-related costs and decreased outside service spend.

Our cash, cash equivalents, and restricted cash balances decreased to $4.77 billion at the end of the March 2026 quarter compared to $6.20 billion at the end of the December 2025 quarter.

This decrease was primarily the result of $1.16 billion of share repurchases, including net share settlement of employee stock-based compensation and excise tax;

$751.2 million of principal payments on debt instruments and debt issuance costs;

$331.6 million of capital expenditures;

and $325.8 million of dividends paid to stockholders, partially offset by $1.14 billion of cash generated from operating activities.

Employee headcount as of March 29, 2026 was approximately 20,600.

Lam Research Corporation 2026 Q3 10-Q 19

RESULTS OF OPERATIONS

Three Months Ended Six Months Ended

2025 September 28,

2025 December 28,

The following table presents our revenues disaggregated by geographic region:

Three Months Ended Nine Months Ended

2026 December 28,

2025 March 29,

2026 March 30,

Revenue (in millions) $ 5,841 $ 5,345 $ 16,510 $ 13,264

China 34 % 35 % 37 % 33 %

Taiwan 20 % 19 % 20 % 16 %

Korea 23 % 20 % 19 % 23 %

Taiwan 23 % 20 % 21 % 19 %

Japan 8 % 10 % 9 % 9 %

Southeast Asia 8 % 5 % 7 % 5 %

United States 6 % 5 % 6 % 8 %

Southeast Asia 4 % 8 % 6 % 4 %

Europe 2 % 2 % 2 % 4 %

Th e increase in revenue in the six months ended December 28, 2025 compared to the same period in the prior year was predominantly driven by increases in Foundry equipment spending by our customers, as well as higher customer support-related revenue.

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

Three Months Ended Six Months Ended

2025 September 28,

2025 December 28,

Three Months Ended Nine Months Ended

2026 December 28,

2025 March 29,

2026 March 30,

(In thousands)

2 unchanged sentences

$ 5,841,488 $ 5,344,791 $ 16,510,452 $ 13,264,198

Please refer to Note 3, “Revenue,” to the Condensed Consolidated Financial Statements of this Form 10-Q for additional information regarding the composition of the two categories into which revenue has been disaggregated.

For a discussion on the March 2026 quarter compared to the December 2025 quarter, refer to “ Executive Summary ” above.

Th e increase in revenue in the nine months ended March 29, 2026 compared to the same period in the prior year was predominantly driven by increases in Foundry equipment spending by our customers, as well as higher customer support-related revenue mainly due to spares revenue.

Systems revenue includes sales of new leading-edge equipment in deposition, etch, clean and other wafer fabrication markets.

Customer support-related revenue includes sales of customer service, spares, upgrades, and non-leading-edge equipment from the Company’s Reliant® product line.

The percentage of leading- and non-leading-edge equipment and upgrade revenue from each of the markets we serve was as follows:

Three Months Ended Six Months Ended

2025 September 28,

2025 December 28,

Three Months Ended Nine Months Ended

2026 December 28,

2025 March 29,

2026 March 30,

Foundry 54 % 59 % 58 % 42 %

1 unchanged sentence

Logic/integrated device manufacturing 7 % 7 % 6 % 15 %

The decrease in the foundry market segment for the December 2025 quarter compared to the September 2025 quarter was primarily driven by mature node investments, while the memory market segment saw strengthened DRAM investments offset by lower non-volatile memory spending.

Three Months Ended Six Months Ended

2025 September 28,

2025 December 28,

The decrease in the foundry market segment for the March 2026 quarter compared to the December 2025 quarter was primarily driven b y lower mature node investments, while the memory market segment saw strengthened investments across both DRAM and non-volatile memory.

Lam Research Corporation 2026 Q3 10-Q 20

Three Months Ended Nine Months Ended

2026 December 28,

2025 March 29,

2026 March 30,

(in thousands, except percentages)

1 unchanged sentence

Percent of revenue 49.8 % 49.6 % 49.9 % 48.2 %

Gross margin as a percentage of re venue decreased in the December 2025 quarter compared to the September 2025 quarter driven primarily by unfavorable changes in customer mix.

Lam Research Corporation 2025 Q3 10-Q 20

T he increase in gross margin as a percentage of revenue in the six months ended December 28, 2025 compared to the same period in the prior year was primarily due to favorable changes in customer mix, partially offset by reduced factory efficiencies from higher tariff-related spend.

Gross margin as a percentage of re venue increased in the March 2026 quarter compared to the December 2025 quarter, driven mainly by improved factory efficiencies.

T he increase in gross margin as a percentage of revenue in the nine months ended March 29, 2026 compared to the same period in the prior year was primarily due to favorable changes in customer mix, slightly offset by reduced factory efficiencies from higher tariff-related spend.

Research and Development

Three Months Ended Six Months Ended

2025 September 28,

2025 December 28,

Three Months Ended Nine Months Ended

2026 December 28,

2025 March 29,

2026 March 30,

(in thousands, except percentages)

1 unchanged sentence

Percent of revenue 10.0 % 10.7 % 10.5 % 11.4 %

We continued to make significant R&D investments in the December 2025 quarter focused on leading-edge deposition, etch, clean and other semiconductor manufacturing processes.

R&D expense in the December 2025 quarter was relatively flat compared to the September 2025 quarter.

R&D expense in the six months ended December 28, 2025 increased compared to the same period in the prior year, driven by higher employee-related costs as a result of increased headcount and increased spending on supplies.

We continued to make significant R&D investments in the March 2026 quarter focused on leading-edge deposition, etch, clean and other semiconductor manufacturing processes.

R&D expense in the March 2026 quarter increased compared to the December 2025 quarter primarily driven by employee-related spend as a result of beginning of calendar year seasonality and higher headcount as well as increased costs related to workforce optimization, partially offset by lower elective deferred compensation plan-related costs.

R&D expense in the nine months ended March 29, 2026 increased compared to the same period in the prior year, mainly tied to employee-related costs as a result of higher headcount, and increased supplies spending, and depreciation expense.

Selling, General, and Administrative

Three Months Ended Six Months Ended

2025 September 28,

2025 December 28,

Three Months Ended Nine Months Ended

2026 December 28,

2025 March 29,

2026 March 30,

(in thousands, except percentages)

1 unchanged sentence

Percent of revenue 4.8 % 5.0 % 5.0 % 5.4 %

SG&A expense during the December 2025 quarter was relatively flat compared to the September 2025 quarter.

SG&A expense in the six months ended December 28, 2025 increased compared to the same period in the prior year, primarily as a result of higher employee-related costs due to increased headcount.

SG&A expense during the March 2026 quarter increased compared to the December 2025 quarter driven by employee-related spend as a result of beginning of calendar year seasonality and higher headcount as well as costs related to workforce optimization, partially offset by lower outside service spending and elective deferred compensation plan-related costs.

SG&A expense in the nine months ended March 29, 2026 increased compared to the same period in the prior year, primarily as a result of employee-related costs due to higher headcount.

Lam Research Corporation 2026 Q3 10-Q 21

Other Income (Expense), Net

Other income (expense), net consisted of the following:

Three Months Ended Six Months Ended

2025 September 28,

2025 December 28,

Three Months Ended Nine Months Ended

2026 December 28,

2025 March 29,

2026 March 30,

(in thousands)

1 unchanged sentence

Interest expense (39,333) (40,876) (122,681) (135,429)

Gains on deferred compensation plan-related assets, net 16,628 23,088 39,716 21,922

(Losses) gains on deferred compensation plan-related assets, net (27,265) 16,628 12,451 5,019

Foreign exchange losses, net (1,050) (8,034) (14,618) (19,505)

1 unchanged sentence

$ (35,460) $ 26,410 $ 21,024 $ 19,308

Interest income decreased in the December 2025 quarter compared to the September 2025 quarter, primarily due to lower cash balances and lower interest rates.

Interest income decreased in the six months ended December 28, 2025 compared to the same period in the prior year, primarily due to lower interest rates, partially offset by higher cash balances.

Interest expense was flat in the December 2025 quarter compared to the September 2025 quarter.

Interest expense decreased in the six months ended December 28, 2025 compared to the same period in the prior year primarily due to the maturity of $500 million of the Company’s senior notes in March 2025.

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.

Lam Research Corporation 2025 Q3 10-Q 21

Interest income decreased in the March 2026 quarter compared to the December 2025 quarter, primarily due to lower cash balances and lower interest rates.

Interest income decreased in the nine months ended March 29, 2026 compared to the same period in the prior year, primarily due to lower interest rates.

Interest expense decreased in the March 2026 quarter compared to the December 2025 quarter, primarily due to the maturity of $750.0 million of the Company’s senior notes in March 2026.

Interest expense decreased in the nine months ended March 29, 2026 compared to the same period in the prior year primarily due to the maturity of $500.0 million of the Company’s senior notes in March 2025.

The gains and 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.

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

The variation in other, net in the December 2025 quarter and the six months ended December 28, 2025 compared to the September 2025 quarter and to the same period in the prior year was primarily driven by fluctuations in the fair market value of equity investments.

The variation in other, net in the March 2026 quarter and the nine months ended March 29, 2026 compared to the December 2025 quarter and to the same nine-month period in the prior year was primarily driven by fluctuations in the fair market value of equity investments.

Income Tax Expense

Our provision for income taxes and effective tax rate for the periods indicated were as follows:

Three Months Ended Six Months Ended

2025 September 28,

2025 December 28,

Three Months Ended Nine Months Ended

2026 December 28,

2025 March 29,

2026 March 30,

(in thousands, except percentages)

1 unchanged sentence

Effective tax rate 9.3 % 13.2 % 12.6 % 12.9 %

The decrease in the effective tax rate for the December 2025 quarter compared to the September 2025 quarter was primarily due to the revaluation of deferred taxes due to changes in the U.S.

taxation of non-U.S.

income under OBBBA in the September 2025 quarter.

The increase in the effective tax rate for the six months ended December 28, 2025 compared to the same period in the prior year was primarily due to the income tax benefit from a change in tax law in the six months ended December 29, 2024, and the tax expense associated with the revaluation of deferred taxes due to changes in the U.S.

taxation of non-U.S.

income under OBBBA and GMT being fully effective in the six months ended December 28, 2025.

The decrease in the effective tax rate for the March 2026 quarter compared to the December 2025 quarter was primarily due to higher stock-based compensation excess tax benefits and the recognition of previously unrecognized tax benefits in the March 2026 quarter.

The effective tax rate for the nine months ended March 29, 2026 compared to the same period in the prior year remained consistent.

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.

4 unchanged sentences

Any change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

Lam Research Corporation 2026 Q3 10-Q 22

BEPS 2.0 GMT is fully effective for us this fiscal year.

7 unchanged sentences

Our critical accounting policies and estimates are unchanged from those disclosed in “Critical Accounting Policies and Estimates” in Part II, Item 7 of our 2025 Form 10-K.

Lam Research Corporation 2025 Q3 10-Q 22

Recent Accounting Pronouncements

18 unchanged sentences

LIQUIDITY AND CAPITAL RESOURCES

Total gross cash, cash equivalents, and restricted cash balances were $6.2 billion at December 28, 2025 compared to $6.4 billion as of June 29, 2025.

Total gross cash, cash equivalents, and restricted cash balances were $4.77 billion at March 29, 2026 compared to $6.41 billion as of June 29, 2025.

The decrease was primarily driven by $3.60 billion of share repurchases, including net share settlement on employee stock-based compensation and excise tax;

$945.3 million in dividends paid;

and $446.0 million in capital expenditures, partially offset by cash generated from operating activities totaling $3.26 billion.

$777.6 million in capital expenditures, and $754.1 million of principal payments on debt instruments and debt issuance costs, partially offset by cash generated from operating activities totaling $4.40 billion.

Lam Research Corporation 2026 Q3 10-Q 23

Cash Flows from Operating Activities

Net cash provided by operating activities of $3.26 billion during the six months ended December 28, 2025 consisted of (in thousands):

Net cash provided by operating activities of $4.40 billion during the nine months ended March 29, 2026 consisted of (in thousands):

Net income $ 4,988,114

6 unchanged sentences

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

decreases in inventory of $211.8 million and prepaid expenses and other current assets of $118.5 million, and increases in accounts payable of $110.7 million.

decreases in inventory of $224.2 million and prepaid expenses and other current assets of $136.0 million, and an increase in accounts payable of $223.8 million.

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

decreases in deferred gross profit of $400.8 million and accrued expenses and other liabilities of $103.5 million, and increases in accounts receivable of $116.0 million.

an increase in accounts receivable of $756.2 million and decreases in accrued expenses and other liabilities of $407.5 million and deferred gross profit of $474.3 million.

Cash Flows from Investing Activities

Net cash used for investing activities during the six months ended December 28, 2025 was $443.8 million, primarily consisting of capital expenditures.

Lam Research Corporation 2025 Q3 10-Q 23

Net cash used for investing activities during the nine months ended March 29, 2026 was $778.4 million, primarily consisting of capital expenditures for manufacturing capacity and lab infrastructure investments.

Cash Flows from Financing Activities

Net cash used for financing activities during the six months ended December 28, 2025 was $3.01 billion, primarily consisting of $2.44 billion in treasury stock repurchases, including net share settlement on employee stock-based compensation and excise tax and $619.5 million in dividends paid.

Net cash used for financing activities during the nine months ended March 29, 2026 was $5.24 billion, primarily consisting of $3.60 billion in treasury stock repurchases, including net share settlement on employee stock-based compensation and excise tax, $945.3 million in dividends paid, and $754.1 million of principal payments on debt instruments and debt issuance costs.

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.

Anticipated cash flows from operations based on our current business outlook, combined with our current levels of cash and cash equivalents as of December 28, 2025, are expected to be sufficient to support our anticipated levels of operations, investments, debt service requirements, capital expenditures, capital redistributions, and dividends through at least the next twelve months.

Anticipated cash flows from operations based on our current business outlook, combined with our current levels of cash and cash equivalents as of March 29, 2026, are expected to be sufficient to support our anticipated levels of operations, investments, debt service requirements, capital expenditures, capital redistributions, and dividends through at least the next twelve months.

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.

During the three months ended March 29, 2026, $750.0 million principal value of our 2026 Notes were settled upon maturity using available cash on hand.

In March 2026, we increased the issuance capacity under our commercial paper program (the “CP Program”) from $1.50 billion to $2.00 billion.

The net proceeds from the CP Program may be used for general corporate purposes, including repurchases of our Common Stock from time to time under our stock repurchase program.

As of March 29, 2026, we had no outstanding borrowings under the CP Program.

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.

3 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk

For financial market risks related to changes in interest rates and foreign currency exchange rates, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, in our 2025 Form 10-K.

Our exposure related to market risk has not changed materially since June 29, 2025.

There have been no material changes to our quantitative and qualitative disclosures about market risk set forth in Part II, Item 7A of our 2025 Form 10-K filed with the SEC on August 11, 2025.

Lam Research Corporation 2026 Q3 10-Q 24

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-Q

Item 2. Management’s Discussion and Analysis