Registrant’s telephone number, including area code: (~~510~~) (510) 572-0200

Securities registered pursuant to Section 12(b) of the Act:

The Nasdaq Stock Market

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The aggregate market value of the Registrant’s Common Stock, $0.001 par value, held by non-affiliates of the Registrant, as of December ~~23, 2018,~~26, 2021, the last business day of the most recently completed second fiscal quarter, was ~~$15,363,329,674.~~$77,032,123,135. Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock has been excluded from this computation based on the assumption that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination of such status for other purposes.

As of August ~~15, 2019,~~22, 2022, the Registrant had ~~144,532,998~~136,987,792 outstanding shares of Common Stock.

Documents Incorporated by Reference

Parts of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders expected to be held on or about November ~~5, 2019,~~8, 2022, are incorporated by reference into Part III of this Form 10-K. Except as expressly incorporated by reference herein, the Registrant’s proxy statement shall not be deemed to be part of this report.

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PART I

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

With the exception of historical facts, the statements contained in this discussion are forward-looking statements, which are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Certain, but not all, of the forward-looking statements in this report are specifically identified as forward-looking, by use of phrases and words such as “believe,” “estimated,” “anticipate,” “expect,” “probable,” “intend,” “plan,” “aim,” “may,” “should,” “could,” “would,” “will,” “continue,” and other future-oriented terms. The identification of certain statements as “forward-looking” does not mean that other statements not specifically identified are not forward-looking. Forward-looking statements include but are not limited to statements that relate to: trends and opportunities in the global economic ~~environment~~environment; trends and opportunities in the semiconductor industry, including in the end markets and applications for semiconductors, and in device complexity; growth or decline in the industry and the ~~semiconductor industry;~~market for, and spending on, wafer fabrication equipment; the anticipated levels of, and rates of change in, margins, market share, served addressable market, capital expenditures, research and development expenditures, international sales, revenue (actual and/or deferred), operating expenses and earnings generally; management’s plans and objectives for our current and future operations and business focus; volatility in our quarterly results; the makeup of our customer base; customer and end user requirements and our ability to satisfy those requirements; customer ~~capital~~ spending and ~~their~~ demand for our products and services, and the reliability of indicators of change in customer spending and demand; the effect of variability in our customers’ business plans or demand for our ~~equipment~~products and services; changes in demand for our products and in our market share resulting from, among other things, any changes in our customers’ proportion of capital expenditure (with respect to certain technology inflections); hedging transactions; debt or financing arrangements; our competition, and our ability to defend our market share and to gain new market share; the success of joint development and collaboration relationships with customers, suppliers, or others; outsourced activities; our supply chain and the role of suppliers in our business, including the impacts of supply chain constraints and material costs; our leadership and competency, and our ability to ~~obtain~~facilitate innovation; our research and ~~qualify alternative sources~~development programs, our ability to create sustainable differentiation; technology inflections in the industry and our ability to identify those inflections and to invest in research and development programs to meet them; our ability to deliver multi-product solutions; the resources invested to comply with evolving standards and the impact of ~~supply;~~such efforts; changes in state, federal and international tax laws, our estimated annual tax rate and the factors that affect our tax rates; anticipated growth or decline in the industry and the total market for wafer fabrication equipment, our growth relative thereto and the resulting impact on us from such growth or decline; the success of joint development and collaboration relationships with customers, suppliers, or others; outsourced activities; the role of component suppliers in our business; our leadership and competency, and our ability to facilitate innovation; our ability to continue to, including the underlying factors that, create sustainable differentiation; the resources invested to comply with evolving standards and the impact of such efforts; legal and regulatory compliance; the estimates we make, and the accruals we record, in order to implement our critical accounting policies (including but not limited to the adequacy of prior tax payments, future tax benefits or liabilities, and the adequacy of our accruals relating to them); hedging transactions; debt or financing arrangements; our investment portfolio; our access to capital markets; uses of, payments of, and impact of interest rate fluctuations on, our debt; our intention to pay quarterly dividends and the amounts thereof, if any; our ability and intention to repurchase our shares; credit risks; controls and procedures; recognition or amortization of expenses; our ability to manage and grow our cash position; our strategic relevance with our customers; our ability to scale our operations to respond to changes in our business; the value of our patents; the materiality of potential losses arising from legal proceedings; the probability of making payments under our guarantees; the impact of the COVID-19 pandemic, 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 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 quarterly reports on Form 10-Q 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on information currently and reasonably known to us. We do not undertake any obligation to release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances that occur after the date of this report or to reflect the occurrence or effect of anticipated or unanticipated events.

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~~Item 1.~~	~~Business~~

Item 1. Business

Incorporated in 1980, Lam Research Corporation (“Lam Research,” “Lam,” “we,” “our,” “us,” or the “Company”) is a Delaware corporation, headquartered in Fremont, California. We maintain a network of facilities throughout Asia, Europe, and the United States in order to meet the needs of our dynamic customer base.

Additional information about Lam Research is available on our website at www.lamresearch.com. The content on any website referred to in this Form 10-K is not a part of or incorporated by reference in this Form 10-K unless expressly noted.

Our Annual Report on Form 10-K, Quarterly Reports on Forms 10-Q, Current Reports on Forms 8-K, Proxy Statements and all other filings we make with the SEC are available on our website, free of charge, as soon as reasonably practical after we file them with or furnish them to the SEC and are also available online at the SEC’s website at www.sec.gov.

The Lam Research logo, Lam Research, and all product and service names used in this report are either registered trademarks or trademarks of Lam Research Corporation or its subsidiaries in the United States and/or other countries. All other marks mentioned herein are the property of their respective holders.

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We are 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 ~~faster,~~ 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. ~~Our vision is to realize full value from natural technology extensions of our Company.~~

Our customer base includes leading semiconductor memory, foundry, and integrated device manufacturers (“IDMs”) that make products such as non-volatile memory (“NVM”), dynamic random-access memory (“DRAM”), and logic devices. ~~We aim~~Their continued success is part of our commitment to ~~increase our strategic relevance with our customers by contributing more to their continued success.~~driving semiconductor breakthroughs that define the next generation. 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 (“ICs”) 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. Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.

Demand from cloud computing (the “Cloud”), the Internet of Things (“IoT”), 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. These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical scaling strategies like three-dimensional (“3D”) architectures as well as multiple patterning to enable shrinks.

We believe we are in a strong position with our leadership and ~~competency~~expertise in deposition, etch, and clean to facilitate some of the most significant innovations in semiconductor device manufacturing. Several factors create opportunity for sustainable differentiation for us: (i) our focus on research and development, with several on-going programs relating to sustaining engineering, product and process development, and concept and feasibility; (ii) our ability to effectively leverage cycles of learning from our broad installed base; (iii) our collaborative focus with semi-ecosystem partners; (iv) our ability to identify and invest in the breadth of our product portfolio to meet technology inflections; and (v) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.

We also address processes for back-end wafer-level packaging (“WLP”), 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. In addition, our products are well-suited for related markets that rely on

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semiconductor processes and require production-proven manufacturing capability, such as complementary metal-oxide-semiconductor image sensors (“CIS”) and micro-electromechanical systems (“MEMS”).

Our Customer Support Business Group (“CSBG”) provides products and services to maximize installed equipment performance, predictability, and operational efficiency. We offer a broad range of services to deliver value throughout the lifecycle of our equipment, including customer service, spares, upgrades, and ~~refurbishment of~~new and refurbished non-leading edge products in our deposition, etch, and clean ~~products.~~markets. Many of the technical advances that we introduce in our newest products are also available as upgrades, which provide customers with a cost-effective strategy for extending the performance and capabilities of their existing wafer fabrication lines. Service offerings include addressing productivity needs for our customers including, but not limited to, system uptime or availability optimization, throughput improvements, and defect reduction. Additionally, within CSBG, our Reliant product line offers new and refurbished ~~non-leading-edge~~non-leading edge products in ~~Clean, Deposition,~~deposition, etch and ~~Etch~~clean markets for those applications that do not require the most advanced wafer processing capability.

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Products

Market

Process/Application

Technology

Products

Deposition

Metal Films

Electrochemical Deposition (“ECD”) (Copper & Other)

SABRE^® family

Chemical Vapor Deposition (“CVD”)

Atomic Layer Deposition (“ALD”)

(Tungsten)

ALTUS^® family

Dielectric Films

Plasma-enhanced CVD (“PECVD”)

ALD

Gapfill High-Density Plasma CVD (“HDP-CVD”)

VECTOR^® family

Striker^® family

SPEED^® family

Film Treatment

Ultraviolet Thermal Processing (“ULTP”)

SOLA^® family

Etch

Conductor Etch

Reactive Ion Etch

Kiyo^® family,

Versys^® Metal family

Dielectric Etch

Reactive Ion Etch

Flex^® family

Through-silicon Via (“TSV”) Etch

Deep Reactive Ion Etch

Syndion^® family

Clean

Wafer Cleaning

Wet Clean

EOS^®, DV-Prime^®,

Da Vinci^®, SP Series

Bevel Cleaning

Dry Plasma Clean

Coronus^® family

~~Mass Metrology~~

~~Deposition, Etch, Clean~~

~~Sub-milligram Mass Measurement~~

~~Metryx~~^® ~~Family~~

Deposition Processes and Product Families

Deposition processes create layers of dielectric (insulating) and metal (conducting) materials used to build a semiconductor device. Depending on the type of material and structure being made, different techniques are employed. Electrochemical deposition creates the copper wiring (interconnect) that links devices in an integrated circuit (“IC” or “chip”). Plating of copper and other metals is also used for TSV and WLP applications. Tiny tungsten connectors and thin barriers are made with the precision of chemical vapor deposition and atomic layer deposition, which adds only a few layers of atoms at a time. Plasma-enhanced CVD, high-density plasma CVD, and ALD are used to form the critical insulating layers that isolate and protect all of these electrical structures. Lastly, post-deposition treatments such as ultraviolet thermal processing are used to improve dielectric film properties.

ALTUS^® Product Family

Tungsten deposition is used to form conductive features such as contacts, vias, and wordlines on a chip. These features are small, often narrow, and use only a small amount of metal, so minimizing resistance and achieving complete fill can be difficult. At these nanoscale dimensions, even slight imperfections can impact device

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performance or cause a chip to fail. Our ALTUS^® systems combine CVD and ALD technologies to deposit the highly conformal films needed for advanced tungsten metallization applications. The Multi-Station Sequential Deposition architecture enables nucleation layer formation and bulk ~~CVD~~CVD/ALD fill to be performed in the same chamber (“in situ”). ~~PNL~~^®~~, our~~Our ALD ~~technology, is~~technologies are used in the deposition of ~~tungsten nitride~~barrier films to achieve high step coverage with reduced thickness at lower temperatures relative to a conventional ~~barrier films.~~process.

SABRE^® Product Family

Copper deposition lays down the electrical wiring for most semiconductor devices. Even the smallest defect - say, a microscopic pinhole or dust particle - in these conductive structures can impact device performance, from loss of speed to complete failure. The SABRE^® ECD product family, which helped pioneer the copper interconnect transition, offers the precision needed for copper damascene manufacturing in logic and memory. System capabilities include cobalt deposition for logic applications and copper deposition directly on various liner materials, which is important for next-generation metallization schemes. For advanced WLP applications, such as forming conductive bumps and redistribution layers, and for filling TSVs, the SABRE^® 3D family combines Lam’s SABRE Electrofill^® technology with additional innovation to deliver the high-quality films needed at high productivity. The modular architecture can be configured with multiple plating and pre/post-treatment cells, providing flexibility to address a variety of packaging applications.

SOLA^®Product Family

Dielectric materials designed to meet the insulation requirements of logic chips often have attributes that make them unusually difficult to use. These films are easily damaged and vulnerable to losing some of their insulating capability, which can lead to poor device performance. To enable these applications, some films can be stabilized - and others enhanced to improve device performance - using specialized post-deposition film treatments available with Lam’s SOLA^® UVTP product family. SOLA^® products offer process flexibility through independent control of temperature, wavelength, and intensity at each station of the wafer path, enabled by Multi-Station Sequential Processing architecture.

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SPEED^® Product Family

Dielectric gapfill processes deposit critical insulation layers between conductive and/or active areas by filling openings of various aspect ratios between conducting lines and between devices. With advanced devices, the structures being filled can be very tall and narrow. As a result, high-quality dielectric films are especially important due to the ever-increasing possibility of cross-talk and device failure. Our SPEED^® HDP-CVD products provide a multiple dielectric film solution for high-quality gapfill with industry-leading throughput and reliability. SPEED^® products have excellent particle performance, and their design allows large batch sizes between cleans and faster cleans.

Striker^® Product Family

The latest memory, logic, and imaging devices require extremely thin, highly conformal dielectric films for continued device performance improvement and scaling. For example, ALD films are critical for spacer-based multiple patterning schemes where the spacers help define critical dimensions, as well as for insulating liners and gapfill in high aspect ratio features, which have little tolerance for voids and even the smallest defect. The Striker^® single-wafer ALD products provide dielectric film solutions for these challenging requirements through application-specific material, process and hardware options that deliver film technology and defect performance.

VECTOR^®Product Family

Dielectric film deposition processes are used to form some of the most difficult-to-produce insulating layers in a semiconductor device, including those used in the latest transistors and 3D structures. In some applications, these films require dielectric films to be exceptionally smooth and defect free since slight imperfections are multiplied greatly in subsequent layers. Our VECTOR^® PECVD products are designed to provide the performance and flexibility needed to create these enabling structures within a wide range of challenging device applications. As a result of its design, VECTOR^® produces superior thin film quality, along with exceptional within-wafer and wafer-to-wafer uniformity.

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Etch Processes and Product Families

Etch processes help create chip features by selectively removing ~~both~~ dielectric (insulating), metal, silicon and ~~metal (conducting)~~poly silicon (conducting/semiconducting) materials that have been added during deposition. These processes involve fabricating increasingly small, complex, and narrow features using many types of materials. The primary technology, reactive ion etch, bombards the wafer surface with ions (charged particles) to remove material. For the smallest features, atomic-layer etching (“ALE”) removes a few atomic layers of material at a time. While conductor etch processes precisely shape critical electrical components like transistors, dielectric etch forms the insulating structures that protect conducting parts. ~~Etch processes also create the tall, column-like features used, for example, in TSVs that link chips together and in MEMS.~~

Flex^® Product Family

Dielectric etch carves patterns in insulating materials to create barriers between the electrically conductive parts of a semiconductor device. For advanced devices, these structures can be extremely tall and thin and involve complex, sensitive materials. Slight deviations from the target feature profile - even at the atomic level - can negatively affect electrical properties of the device. To precisely create these challenging structures, our Flex^® product family offers differentiated technologies and application-focused capabilities for critical dielectric etch applications. Uniformity, repeatability, and tunability are enabled by a unique multi-frequency, small-volume, confined plasma design. Flex^® offers in situ multi-step etch and continuous plasma capability that delivers high productivity with low defectivity.

Kiyo^® Product Family

Conductor etch helps shape the electrically active materials used in the parts of a semiconductor device. Even a slight variation in these miniature structures can ~~create an electrical defect that impacts~~degrade device performance. In fact, these structures are so tiny and sensitive that etch processes ~~are pushing~~push the boundaries of the basic laws of physics and chemistry. Our Kiyo^® product family delivers the high-performance capabilities needed to precisely and consistently form these ~~conductive~~ features precisely and with high productivity. Proprietary Hydra technology in Kiyo^® products improves critical dimension (“CD”) uniformity by correcting for incoming pattern variability, and atomic-scale variability control with production-worthy throughput is achieved with plasma-enhanced ALE capability.

Syndion^® Product Family

Plasma etch processes used to remove single crystal silicon and other materials deep into the wafer are collectively referred to as deep silicon etch. These may be deep trenches for CMOS image ~~sensor pixel isolation,~~sensors, trenches for power and other devices, TSVs, and other high aspect ratio features. These are created by etching through multiple materials sequentially, where each new material involves a change in the etch process. The Syndion^® etch product family is optimized for deep silicon etch, providing the fast process switching with depth and cross-wafer uniformity control required to achieve precision etch results. The systems support both conventional single-step etch and rapidly alternating process, which minimizes damage and delivers precise depth uniformity.

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Versys^® Metal Product Family

Metal etch processes play a key role in connecting the individual components that form an IC, such as forming wires and electrical connections. These processes can also be used to drill through metal hardmasks that ~~pattern features too small~~are used to form the wiring for ~~conventional masks, allowing continued shrinking of feature dimensions.~~advanced devices. To enable these critical etch steps, the Versys^® Metal product family provides high-productivity capability on a flexible platform. Superior CD, ~~and~~ profile uniformity, and uniformity control are enabled by a symmetrical chamber design with independent process tuning features.

Clean Processes and Product Families

Clean techniques are used between manufacturing steps to clear away particles, contaminants, residues and other unwanted material that could later lead to defects and to prepare the wafer surface for subsequent processing. Wet processing technologies can be used for wafer cleaning and etch applications. Plasma bevel cleaning is used to enhance die yield by removing unwanted materials from the wafer’s edge that could impact the device area.

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Coronus^® Product Family

Bevel cleaning removes unwanted masks, residues, and films from the edge of a wafer between manufacturing steps. If not cleaned, these materials become defect sources. For instance, they can flake off and re-deposit on the device area during subsequent processes. Even a single particle that lands on a critical part of a device can ruin the entire chip. By inserting bevel clean processes at strategic points, these potential defect sources can be eliminated and more functional chips produced. By combining the precise control and flexibility of plasma with technology that protects the active die area, the Coronus^®bevel clean family cleans the wafer’s edge to enhance die yield. The systems provide active die area protection by using plasma processing with proprietary confinement technology. Applications include post-etch, pre- and post-deposition, pre-lithography, and metal film removal to prevent arcing during plasma etch or deposition steps.

DV-Prime^®,Da Vinci^®,EOS^®, and SP Series Product Families

Wafer cleaning is performed repeatedly during semiconductor device manufacturing and is a critical process that affects product yield and reliability. Unwanted microscopic materials - some no bigger than the tiny structures themselves - need to be cleaned effectively. At the same time, these processes must selectively remove residues that are chemically similar to the device films. For advanced WLP, the wet clean steps used between processes that form the package and external wiring have surprisingly complex requirements. These processes are called on to completely remove specific materials and leave other fragile structures undisturbed. In IoT products that include power devices, MEMS and image sensors, there is a unique requirement for wafer backside wet etch to uniformly thin the silicon wafer while protecting the device side of the wafer.

Based on our pioneering single-wafer spin technology, the DV-Prime^® and Da Vinci^® products provide the process flexibility needed with high productivity to address a wide range of wafer cleaning steps throughout the manufacturing process flow. As the latest of Lam’s wet clean products, EOS^® delivers exceptionally low on-wafer defectivity and high throughput to address progressively demanding wafer cleaning ~~applications, including emerging 3D structures.~~applications. With a broad range of process capability, our SP Series products deliver cost-efficient, production-proven wet clean and silicon wet etch solutions for challenging WLP and IoT applications.

~~Mass Metrology Processes and Product~~

Mass metrology measures the change in mass following deposition, etch, and clean processes to enable monitoring and control of these often-repeated core manufacturing steps. For design components like thin film stacks, high aspect-ratio structures, and complex 3D architectures, optical techniques are limited in their ability to measure accurately the thick, deep, or otherwise visually obscured features. Measuring the change in mass for these applications provides a straightforward high-precision solution for monitoring and control of the critical features in advanced device structures, where there is often little tolerance for variation. Our line of high-precision mass metrology systems provides in-line monitoring and control of deposition, etch, and clean steps in real time - recording minute changes in mass to enable advanced detection of potential process excursions.

~~Metryx~~^®~~Product Family~~

~~Metryx~~^®mass metrology systems provide high precision in-line mass measurement for semiconductor wafer manufacturing. Nearly all semiconductor processes (e.g., deposition, etch and clean) either add or remove materials from the wafer. Measuring mass change of a wafer before and after a process therefore is a simple and direct means of monitoring and controlling the process. It is widely used to identify production wafer trends and excursions as they occur, allowing corrections to be implemented quickly to prevent further yield loss. It is particularly useful for ultra-thin, ultra-thick and opaque films, and complex 3D geometries of newer chip designs, where traditional metrology and inspection techniques are ineffective.

~~The Metryx~~^® mass metrology systems are available as both platform-integrated modules and as stand-alone systems. Key applications include high aspect ratio etch (DRAM cell, 3D NAND channel hole, carbon mask open), conformal and ALD sidewall deposition, horizontal processing (recess etch, fill), film density monitoring, and wafer cleaning/polymer removal.

Fiscal Periods Presented

All references to fiscal years apply to our fiscal years, which ended June ~~30, 2019,~~26, 2022, June ~~24, 2018,~~27, 2021, and June ~~25, 2017.~~

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28, 2020.

Research and Development

The market for semiconductor capital equipment is characterized by rapid technological change and product innovation. Our ability to achieve and maintain our competitive advantage depends in part on our continued and timely development of new products and enhancements to existing products. Accordingly, we devote a significant portion of our personnel and financial resources to research and development (“R&D”) programs and seek to maintain close and responsive relationships with our customers and suppliers.

We believe current challenges for customers at various points in the semiconductor manufacturing process present opportunities for us. We expect to continue to make substantial investments in R&D to meet our customers’ product needs, support our growth strategy and enhance our competitive position.

Marketing, Sales, and Service

Our marketing, sales, and service efforts are focused on building long-term relationships with our customers and targeting product and service solutions designed to meet their needs. These efforts are supported by a team of product marketing and sales professionals as well as equipment and process engineers who work closely with individual customers to develop solutions for their wafer processing needs. We maintain ongoing service relationships with our customers and have an extensive network of service engineers in place throughout the United States, China, Europe, India, Japan, Korea, Southeast Asia, and Taiwan. We believe that comprehensive support programs and close working relationships with customers are essential to maintaining high customer satisfaction and our competitiveness in the marketplace.

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We provide standard warranties for our systems. The warranty provides that systems will be free from defects in material and workmanship and will conform to agreed-upon specifications. The warranty is limited to repair of the defect or replacement with new or like-new equivalent goods and is valid when the buyer provides prompt notification within the warranty period of the claimed defect or non-conformity and also makes the items available for inspection and repair. We also offer extended warranty packages to our customers to purchase as desired.

International Sales

A significant portion of our sales and operations occur outside the United States (“U.S.”) and, therefore, may be subject to certain risks, including but not limited to tariffs and other barriers; difficulties in staffing and managing non-U.S. operations; adverse tax consequences; foreign currency exchange rate fluctuations; changes in currency controls; compliance with U.S. and international laws and regulations, including U.S. export restrictions; the effects of the COVID-19 pandemic and the related governmental, public health and business responses to it; and economic and political conditions. Any of these factors may have a material adverse effect on our business, financial position, and results of operations and cash flows. For geographical reporting, revenue is attributed to the geographic location in which the customers’ facilities are located. Refer to Note 1920 of our Consolidated Financial Statements, included in Part II, Item 8 of this ~~report,~~2022 Form 10-K, for the attribution of revenue by geographic region.

Long-lived Assets

Refer to Note 1920 of our Consolidated Financial Statements, included in Part II, Item 8 of this ~~report,~~2022 Form 10-K, for information concerning the geographic locations of long-lived assets.

Customers

Our customers include all of the world’s leading semiconductor manufacturers. Customers continue to establish joint ventures, alliances, and licensing arrangements which have the potential to positively or negatively impact our competitive position and market opportunities. ~~Customers accounting~~Refer to Note 9 of our Consolidated Financial Statements, included in Part II, Item 8 of this report, for ~~greater than 10% of total revenues in~~information concerning customer concentrations. Our most significant customers during the fiscal ~~year 2019 included Micron Technology, Inc.; Samsung Electronics Company, Ltd.; SK hynix Inc.;~~years ending June 26, 2022, June 27, 2021, and ~~Toshiba, Inc. Customers accounting for greater than 10% of total revenues in fiscal year 2018~~June 28, 2020 included Intel Corporation; ~~Micron Technology, Inc.; Samsung Electronics Company, Ltd.; SK hynix Inc.; and Toshiba, Inc. Customers accounting for greater than 10% of total revenues in fiscal year 2017 included~~Kioxia Corporation; Micron Technology, Inc.; Samsung Electronics Company, Ltd.; SK hynix Inc.; Taiwan Semiconductor Manufacturing ~~Company, Ltd;~~Company; and ~~Toshiba, Inc.~~Yangtze Memory Technologies Co., Ltd.

A material reduction in orders from our customers could adversely affect our results of operations and projected financial condition. Our business depends upon the expenditures of semiconductor manufacturers. Semiconductor manufacturers’ businesses, in turn, depend on many factors, including their economic capability,

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the current and anticipated market demand for ICs, and the availability of equipment capacity to support that demand.

~~Backlog~~

In general, we schedule production of our systems based upon our customers’ delivery requirements and forecasts. In order for a system to be included in our backlog, the following conditions must be met: (1) we have received a written customer request that has been accepted, (2) we have an agreement on prices and product specifications, and (3) there is a scheduled shipment within the next 12 months. In order for spares and services to be included in our backlog, the following conditions must be met: (1) we have received a written customer request that has been accepted and (2) delivery of products or provision of services is anticipated within the next 12 months. Where specific spare parts and customer service purchase contracts do not contain discrete delivery dates, we use volume estimates at the contract price and over the contract period, not to exceed 12 months, in calculating backlog amounts. Our policy is to revise our backlog for order cancellations and to make adjustments to reflect, among other things, changes in spares volume estimates and customer delivery date changes. As of June 30, 2019, and June 24, 2018, our backlog was $1.6 billion and $2.0 billion, respectively. Generally, orders for our products and services are subject to cancellation by our customers with limited penalties. Because some orders are received and shipped in the same quarter and because customers may change delivery dates and cancel orders, our backlog at any particular date is not necessarily indicative of business volumes or actual revenue levels for succeeding periods.

Manufacturing

Our manufacturing operations mainly consist of assembling and testing components, sub-assemblies, and modules that are then integrated into finished systems prior to shipment to or at the location of our customers. The assembly and testing of our products is conducted predominately in cleanroom environments.

We have agreements with third parties to outsource certain aspects of our manufacturing, production warehousing, and logistics functions. These outsourcing contracts may provide us more flexibility to scale our operations up or down in a timely and cost-effective manner, ~~enabling~~with the potential to enable us to respond more quickly to ~~any~~ changes in our business. We believe that we have selected reputable providers and have secured their performance on terms documented in written contracts. However, it is possible that one or more of these providers could fail to perform as we expect, and such failure could have an adverse impact on our business and have a negative effect on our operating results and financial condition. Overall, we believe we have effective mechanisms to manage risks associated with our outsourcing relationships. Refer to Note 1617 of our Consolidated Financial Statements, included in Part II, Item 8 of this report, for further information concerning our outsourcing commitments, reported as a component of purchase obligations.

Certain components and sub-assemblies that we include in our products may only be obtained from a single supplier. ~~We believe that, in many cases,~~In response to ongoing supply chain constraints, we ~~could~~worked diligently to obtain and qualify alternative sources to supply these products. ~~Nevertheless, any~~Any prolonged inability to obtain these components could have an adverse effect on our operating results and could unfavorably impact our customer relationships.

~~Environmental Matters~~Compliance with Government Regulations

WeAs a public company with global operations, we are subject to a variety of governmental regulations across multiple jurisdictions, including those related to export controls, financial and other disclosures, corporate governance, anti-trust, intellectual property, privacy, anti-bribery, anti-corruption, anti-boycott, tax, labor, health and safety, conflict minerals, human trafficking, the management of hazardous materials, ~~that we use in~~and carbon emissions, among others. Each of these regulations imposes costs on our business ~~operations. We~~and has the potential to divert our management’s time and attention from revenue-generating and other profit maximizing activities to those associated with compliance. Efforts to comply with new and changing regulations have resulted in, and are ~~currently not aware of any pending notices of violations, fines, lawsuits, or investigations arising from environmental matters that would have a material effect on our business. We believe that~~likely to continue to result in, decreased net income and increased capital expenditures. If we are ~~generally~~alleged or found by a court or regulatory agency not to be in compliance with ~~these~~ regulations, we may be subject to fines, restrictions on our actions, reputational damage, and ~~that we have obtained (or will obtain or are otherwise addressing) all necessary environmental permits~~harm to ~~conduct~~ our business. Nevertheless, the failure to comply with present or future regulations could result in fines being imposed on us, require us to suspend production or cease operations, or cause our customers to not accept our products. These regulations could require us to alter our current operations, to acquire significant additional equipment, or to incur substantial other expenses to comply with environmental regulations. Our failure to control the use, sale, transport, or disposal of hazardous substances could subject us to future liabilities.

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competitive position, and our business, financial condition, and/or results of operations could be adversely affected. For additional details, please refer to “Legal, Regulatory and Tax Risks – We Are Exposed to Various Risks from Our Regulatory Environment” in Item 1A: Risk Factors.

~~Employees~~Regulations that impact trade, including tariffs, export controls, taxes, trade barriers, sanctions, the termination or modification of trade agreements, trade zones, and other duty mitigation initiatives, have the potential to increase our manufacturing costs, decrease margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of operations, or financial conditions. For additional details regarding the impacts of compliance with trade laws and regulations, please refer to “Business and Operational Risks – Our Future Success Depends Heavily on International Sales and the Management of Global Operations” and “Legal, Regulatory and Tax Risks – Our Sales to Customers in China, a Region of Growing Significance to Us, Could be Materially and Adversely Affected by Export License Requirements and Other Regulatory Changes, or Other Governmental Actions in the Course of the Trade Relationship Between the U.S. and China” in Item 1A: Risk Factors.

AsWe are subject to income, transaction, and other taxes in the United States and various foreign jurisdictions that impact our tax rate and profitability. For additional details regarding the impacts of ~~August 15, 2019,~~compliance with tax laws and regulations, please refer to “Legal, Regulatory and Tax Risks – Our Financial Results May Be Adversely Impacted by Higher than Expected Tax Rates or Exposure to Additional Tax Liabilities” in Item 1A: Risk Factors.

We are subject to a variety of domestic and international governmental regulations related to the handling, discharge, and disposal of toxic, volatile, or otherwise hazardous chemicals. For additional details regarding the impacts of compliance with environmental laws and regulations, please refer to “Legal, Regulatory and Tax Risks – A Failure to Comply with Environmental Regulations May Adversely Affect Our Operating Results” in Item 1A: Risk Factors.

Environmental, Social, and Governance

We strive to incorporate environmental, social and governance ("ESG") considerations into everything we do – from our operations and workplace practices, to how we source our materials and design our products. Our ESG report for calendar year 2021 details, among other items, a number of ~~key employees, these agreements do not guarantee continued service. Each~~ESG goals. One such goal is to achieve net zero emissions by 2050, which we intend to achieve in part by meeting a number of interim targets related to our ~~employees is required~~environmental impact. There have been no material impacts to ~~comply~~capital expenditures or our results of operations associated with this goal, and there are no material cash commitments associated with the goal as of fiscal year ended June 26, 2022.

Information contained on our policies relating to maintaining the confidentiality of our non-public information. As noted previously, we outsource certain aspects of our manufacturing, field service, production warehousing, and logistics functions to provide us more flexibility to scale our operations upwebsite or ~~down in a timely and cost-effective manner, enabling us to respond quickly to any changes~~ in our ~~business.~~

Inannual ESG Report is not incorporated by reference into this or any other report we file with the ~~semiconductor~~Securities and ~~semiconductor capital equipment industries, competition~~Exchange Commission, or the SEC. Refer to “Item 1A. Risk Factors” for ~~highly skilled employees is intense. Our future success depends,~~a discussion of risks and uncertainties we face related to ~~a significant extent, upon our continued ability to attract and retain qualified employees, particularly in the R&D and customer support functions.~~ESG.

Competition

The semiconductor capital equipment industry is characterized by rapid change and is highly competitive throughout the world. To compete effectively, we invest significant financial resources targeted to strengthen and enhance our product and services portfolio and to maintain customer service and support locations globally. Semiconductor manufacturers evaluate capital equipment suppliers in many areas, including but not limited to process performance, productivity, defect control, customer support, and overall cost of ownership, which can be affected by many factors such as equipment design, reliability, software advancements, and similar factors. Our ability to succeed in the marketplace depends upon our ability to manufacture and ship products on a timeline that meets our customers’ needs, maintain existing products, and introduce product enhancements and new products that meet customer requirements on a timely basis. In addition, semiconductor manufacturers must make a substantial investment to qualify and integrate new capital equipment into semiconductor production lines. As a result, 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. Accordingly, we may experience difficulty in selling to a given customer if that customer has qualified a competitor’s equipment. We must also continue to meet the expectations of our installed base of customers through the delivery of high-quality and cost-efficient spare parts in the presence of competition from third-party spare parts providers.

We face significant competition with all of our products and services. Our primary competitor in the dielectric and metals deposition market is Applied Materials, Inc. For ALD and PECVD, we also compete against ASM International and Wonik IPS. In the etch market, our primary competitors are Applied Materials, Inc.; Hitachi, Ltd.; and Tokyo Electron, Ltd., and our primary competitors in the wet clean market are Screen Holding Co., Ltd.; Semes Co., Ltd.; and Tokyo Electron, Ltd.

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We face competition from a number of established and emerging companies in the industry. We expect our competitors to continue to improve the design and performance of their current products and processes, to introduce new products and processes with enhanced price/performance characteristics, and to provide more comprehensive offerings of products. If our competitors make acquisitions or enter into strategic relationships with leading semiconductor manufacturers, or other entities, covering products similar to those we sell, our ability to sell our products to those customers could be adversely affected. Strategic investments to encourage local semiconductor manufacturing and supply chain in China could increase competition from domestic equipment manufacturers in China. There can be no assurance that we will continue to compete successfully in the future.

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Patents and Licenses

Our policy is to seek patents on inventions relating to new or enhanced products and processes developed as part of our ongoing research, engineering, manufacturing, and support activities. We currently hold a number of U.S. and foreign patents and applications covering various aspects of our products and processes. Our patents, which cover material aspects of our past and present core products, have current durations ranging from approximately one to twenty years. We believe that, although the patents we own and may obtain in the future will be of value, they alone will not determine our success. Our success depends principally upon our research and development, engineering, marketing, support, and delivery skills. However, in the absence of patent protection, we may be vulnerable to competitors who attempt to imitate our products, manufacturing techniques, and ~~processes.~~processes and may be more limited in our ability to exclude competitors than would otherwise be the case. In addition, other companies and inventors may receive patents that contain claims applicable ~~or similar~~ to our products and processes. The sale of products covered by patents of others could require licenses that may not be available on terms acceptable to us, or at all. For further discussion of legal matters, see Item 3, “Legal Proceedings,” of this report.

Human Capital

We endeavor to be a great place to work globally by investing in a multi-faceted strategy that is rooted in building an inclusive and diverse workplace. To support our employees, we tailor our programs to meet the unique cultural needs and priorities within different regions around the world.

As of August 22, 2022, we had approximately 17,700 regular full-time employees, of which over 26% were engaged in research and development. Approximately 50% of our regular full-time employees are located in the United States, 44% in Asia, and 6% in Europe.

Inclusion and Diversity

To achieve their full potential, we believe it is important for every employee to feel valued, included, and empowered. We embrace inclusion and diversity (“I&D”) and proactively create opportunities to attract, retain, develop, and reward our employees. I&D is one of our strategic focus areas for the company. The three core pillars of our strategy include fostering inclusion, increasing diversity, and sharing our progress. We employ an executive leader of I&D who is responsible for driving our I&D strategy, building partnerships, and aligning with best practices.

Employment, Recruitment and Development

Our talented people are what makes our success possible. Many of our recruitment efforts are carried out through partnerships with key universities. In fact, many of our senior executives began their careers with us right out of college, demonstrating that programs that recruit university students have the potential to contribute to our leadership pipeline. To tap into the best and brightest students, we prioritize core initiatives including an internship program, new college graduate rotation program, campus events, and thesis awards and scholarships. We accelerate employee development, broaden career opportunities, and expand professional networks for employees through our mentorship, coaching, and rotation programs. Additionally, we offer leadership development programs which are designed to scale leadership across our business by guiding managers to motivate, inspire, and lead employees through change.

Employee Engagement

Employee engagement (i.e. satisfaction) and voice are critical to Lam’s culture. We conduct a global survey at a regular cadence to gather input from employees on culture, I&D, career opportunity, and manager effectiveness. We also solicit employee feedback through in-person and online employee forums, engagement sessions, all-employee meetings, conversations with

managers, and our Human Resource Support and Employee Relations programs.

Total Rewards

Our Total Rewards program incorporates a comprehensive compensation and benefits package aimed at supporting employees’ financial, physical, and mental well-being. We conduct an annual review of salaries and benefits packages using third-party benchmarking surveys to ensure that our offerings are aligned with the marketplace and attractive to top talent. We offer our employees a competitive 401(k) benefit, an employee stock purchase plan, and annual cash bonuses. Stock awards are offered to executives and select employees.

We recognize the importance of time away from work for personal reasons, and we offer annual paid holidays and time off. Additionally, several financial benefits were added to support our employees through the pandemic, including, but not limited to, pay

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continuity for those affected by closures, expanded medical and family care leave options for employees with COVID-19 related absences, and funding for home office provisions.

Employee Health and Safety, Pandemic Response

Prioritizing the health, safety, and well-being of our employees is critical to our ongoing success. We invest in education, awareness, monitoring, and prevention programs to help recognize and control safety hazards. Our goal is to apply our environmental health and safety (“EHS”) policies, programs, and response plans to anywhere we operate and to extend them to anyone who works on our sites with the intent to provide a safe environment during both routine and extraordinary circumstances. People managers in field support, manufacturing, R&D, warehouse, and logistics operations undergo formal safety leadership training biannually to enhance their skills in safety management and communication. We screen contractors’ safety performance and require contractor compliance with specified safety standards.

We monitor our safety performance at the enterprise, regional, and site levels. By using our global incident tracking system, our corporate EHS team can assess and monitor safety trends to report to business units and executive leadership as a part of quarterly reviews. We maintain multi-site certifications for ISO 45001, the globally recognized standard for occupational health and safety management systems.

We have taken a holistic approach in response to the COVID-19 pandemic, safeguarding our employees and caring for our communities by implementing strict procedures consistent with medical guidelines and best practices for the health and safety of on-site workers; enabling staff to work remotely; and providing enhanced employee benefits to support physical and mental health.

Information about our Executive Officers

As of August ~~15, 2019,~~22, 2022, the executive officers of Lam Research were as follows:

Name

Age

Title

Timothy M. Archer

5255

President and Chief Executive Officer

Douglas R. Bettinger

5255

Executive Vice President, Chief Financial Officer, and Chief Accounting Officer

Richard A. Gottscho

6770

Executive Vice President, Chief Technology Officer

~~Kevin D. Jennings~~

~~Senior Vice President, Global Operations~~

Patrick J. Lord

5356

~~Senior~~Executive Vice President, CSBG and ~~General Manager, CSBG~~Global Operations

~~Scott G. Meikle~~Ava M. Hahn

5749

~~Senior Vice President, Global Customer Operations~~

~~Sarah A. O’Dowd~~

Senior Vice President, Chief Legal Officer and Secretary

Scott G. Meikle

Senior Vice President, Global Customer Operations

Vahid Vahedi

5356

Senior Vice President and General Manager, Etch Business Unit

Seshasayee (Sesha) Varadarajan

4447

Senior Vice President and General Manager, Deposition Business Unit

Timothy M. Archer has been our president and chief executive officer since December 2018. Prior to this, he served as our president and chief operating officer, from January 2018 to November 2018. Mr. Archer joined us in June 2012 as our executive vice president, chief operating officer. Prior to joining us, he spent 18 years at Novellus Systems, Inc., (“Novellus”) in various technology development and business leadership roles, including most recently as chief operating officer from January 2011 to June 2012; executive vice president of Worldwide Sales, Marketing, and Customer Satisfaction from September 2009 to January 2011; and executive vice president of the PECVD and Electrofill Business Units from November 2008 to September 2009. His tenure at Novellus also included assignments as senior director of technology for Novellus Systems Japan from 1999 to 2001 and senior director of technology for the Electrofill Business Unit from April 2001 to April 2002. He started his career in 1989 at Tektronix, where he was responsible for process development for high-speed bipolar ICs. Mr. Archer currently serves on the International Board of Directors for SEMI, the global industry association representing the electronics manufacturing and design supply chain. From 2020 to 2022, Mr. Archer served as chairman of the board for the National GEM Consortium, a nonprofit organization that is dedicated to increasing the participation of underrepresented groups at the master’s and doctoral levels in engineering and science. Mr. Archer completed the Program for Management Development at the Harvard Graduate School of Business and earned a B.S. degree in applied physics from the California Institute of Technology.

Douglas R. Bettinger is our executive vice president, chief financial officer, and chief accounting officer with responsibility for Finance, Tax, Treasury, Information Technology, and Investor Relations. Prior to joining the Company in 2013, Mr. Bettinger served as senior vice president and chief financial officer of Avago Technologies from 2008 to 2013. From 2007 to 2008, he served as vice president of Finance and corporate controller at Xilinx, Inc., and from 2004 to 2007, he was chief financial officer at 24/7 Customer, a privately held company. Mr. Bettinger worked at Intel Corporation from 1993 to 2004, where he held several senior-level finance positions, including corporate planning and reporting controller and Malaysia site operations controller. Mr. Bettinger currently serves on the SEMI Board of Industry Leaders and the Industrial Advisory Board of the University of Wisconsin School of Engineering. Mr. Bettinger earned an M.B.A. degree in finance from the University of Michigan and a B.S. degree in economics from the University of Wisconsin in Madison.

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Richard A. Gottscho is our executive vice president, chief technology officer, a position he has held since May 2017. Dr. Gottscho previously served as executive vice president, Global Products Group beginning in August 2010; and group vice president and

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general manager, Etch Businesses beginning in March 2007. He joined us in January 1996 and has held various director and vice president roles spanning across deposition, etch, and clean products. Prior to joining us, he was a member of Bell Laboratories for 15 years, where he headed research departments in electronics materials, electronics packaging, and flat panel displays. In 2016, Dr. Gottscho was elected to the U.S. National Academy of ~~Engineering.~~Engineering; and in 2020, he was named a semiconductor all-star by VLSI Research. He is the recipient of many awards, including the American Vacuum Society’s Peter Mark Memorial Award, the Plasma Science and Technology Division Prize, the Dry Process Symposium Nishizawa Award, and the Tegal Thinker Award. He is a fellow of the American Physical and American Vacuum Societies. He has authored numerous papers, patents, and lectures, and has served on editorial boards of peer-reviewed technical publications and program committees for major conferences in plasma science and engineering. He served as vice-chair of a National Research Council study on plasma science. Dr. Gottscho earned Ph.D. and B.S. degrees in physical chemistry from the Massachusetts Institute of Technology and Pennsylvania State University, respectively.

~~Kevin D. Jennings~~Patrick J. Lord is our ~~senior~~executive vice president ~~global operations,~~of CSBG and Global Operations, a position he has held since February 2018 in which he is responsible for worldwide manufacturing, supply chain, logistics, and facilities. Prior to that time, he had been group vice president, global operations beginning in June 2013; and vice president, strategic development, beginning in June 2012. Prior to our acquisition of Novellus in June 2012, he held a variety of executive roles covering engineering, business development, marketing, product line general management, and operations at Novellus. Mr. Jennings has over 30 years of experience in the semiconductor capital equipment industry that includes KLA-Tencor and began in 1986 at Applied Materials. He earned an M.B.A. from Pepperdine University and an undergraduate degree in electrical engineering technology from DeVry University.

~~Patrick J.~~September 2020. Dr. Lord ~~is our~~was senior vice president and general manager of ~~the Customer Support Business Group, a position he has held since~~CSBG from December ~~2016. Previously,~~2016 to September 2020. Prior to that , Dr. Lord held the position of group vice president and deputy general manager of the Global Products Group from September 2013 to December 2016. He served as the head of the Direct Metals, GapFill, Surface Integrity Group, and Integrated Metals (“DGSI”) Business Units between June 2012 and September 2013. Prior to our acquisition of Novellus in June 2012, Dr. Lord was senior vice president and general manager of the DGSI Business Units at Novellus. Additionally, Dr. Lord held the position of senior vice president of Business Development and Strategic Planning. He joined Novellus in 2001 and held a number of other positions, including ~~executive~~senior vice president and general manager of the CMP Business Unit, senior director of Business Development, senior director of Strategic Marketing, and acting vice president of Corporate Marketing. Before joining Novellus, Dr. Lord spent six years at KLA-Tencor ~~Corporation (“KLA-Tencor”)~~ in various product marketing and management roles. He earned his Ph.D., M.S., and B.S. degrees in mechanical engineering from the Massachusetts Institute of Technology.

Ava M. Hahn is our senior vice president, chief legal officer. She joined us in January 2020 and is responsible for global legal matters, ethics and compliance, and government affairs. Prior to joining us, Ms. Hahn served as executive vice president, chief compliance officer, general counsel and secretary of CA Technologies, an enterprise software company, from February 2019 to November 2019 (until its acquisition by Broadcom Corp.), general counsel and secretary of Aruba Networks from April 2013 to June 2016 (until its acquisition by Hewlett Packard Enterprise), general counsel and secretary of ShoreTel, Inc. from 2007 to 2013, and general counsel and secretary of Genesis Microchip from 2002 to 2007. Ms. Hahn also served as general counsel of venture capital firms Kleiner Perkins and Felicis Ventures. She started her career at the law firm of Wilson Sonsini Goodrich & Rosati, where she practiced corporate and securities law. Ms. Hahn earned a J.D. from Columbia Law School and a B.A. in history from the University of California at Berkeley.

Scott G. Meikle is our senior vice president of Global Customer Operations, a position he has held since September 2017. Before joining us, he was an independent consultant for a year and director, special projects at Micron Technology, Inc. for seven months. Prior to that time, he spent over five and a half years at Inotera Memories, Inc., most recently as its president from August 2012 to December 2015. Dr. Meikle started his career in process R&D and advanced to various leadership roles in business operations across multiple geographies for Micron Technology, and has over 25 years of experience in the memory devices sector of the semiconductor industry. He earned his Ph.D. and M. Eng. degrees in engineering physics from Shizuoka University and McMaster University, respectively, and a B.S. degree in physics from the University of Calgary.

Sarah A. O’Dowd is our senior vice president, chief legal officer and secretary. She joined us in September 2008 as group vice president and chief legal officer, responsible for general legal matters, intellectual property and ethics, and compliance. In addition to her Legal function, in April 2009 she was appointed vice president of Human Resources and served in this dual capacity through May 2012. Prior to joining us, she was vice president and general counsel for FibroGen, Inc., from February 2007 until September 2008. Until February 2007, Ms. O’Dowd was a shareholder in the law firm of Heller Ehrman LLP for more than 20 years, practicing in the areas of corporate securities, governance, and mergers and acquisitions for a variety of clients, principally publicly traded high-technology companies. She served in a variety of leadership and management roles at Heller Ehrman, including managing partner of the Silicon Valley and San Diego offices, member of the firm’s Policy Committee, and, as head of the firm’s business practice groups, a member of the firm’s Executive Committee. Ms. O’Dowd earned her J.D. and M.A. degrees in communications from Stanford Law School and Stanford University, respectively, and her B.A. degree in mathematics from Immaculata College.

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Vahid Vahedi is our senior vice president and general manager of the Etch Business Unit, a position he has held since February 2018. Prior to that time, he was group vice president of the Etch product group since March 2012. Previously, he served as vice president of Etch Business Product Management and Marketing, vice president of Dielectric Etch, vice president of Conductor and 3DIC Etch, and director of Conductor Etch Technology Development. He joined us in 1995. He earned his Ph.D., M.S., and B.S. degrees in electrical engineering and computer science from the University of California at Berkeley.

Sesha Varadarajan is our senior vice president and general manager of the Deposition Business Unit, a position he has held since February 2018. Prior that time, he was group vice president of the Deposition product group since September 2013. Previously, he served as the head of the PECVD/Electrofill Business Unit between June 2012 and September 2013. Prior to our acquisition of Novellus in June 2012, Mr. Varadarajan was senior vice president and general manager of Novellus’ PECVD and Electrofill Business Units. He joined Novellus in 1999 as a process engineer with the Electrofill Business Unit and held various roles in that business unit before being appointed director of technology in 2004. Between 2006 and 2008, he worked in the PECVD Business Unit, initially as director of technology, until being promoted to product general manager. In 2009, he returned to the Electrofill Business Unit as vice president and general manager. In mid-2011, he was promoted to senior vice president and general manager, where he was also responsible for the PECVD Business Unit. Mr. Varadarajan earned an M.S. degree in manufacturing engineering and material science from Boston University and a B.S. degree in mechanical engineering from the University of Mysore.


~~Item 1A.~~	~~Risk Factors~~

Item 1A. Risk Factors

In addition to the other information in this Annual Report on Form 10-K (“~~2019~~2022 Form 10-K”), the following risk factors should be carefully considered in evaluating us and our business because such factors may significantly impact our business, operating results, and financial condition. Many of the following risk factors have been, and could be further, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. As a result of these risk factors, as well as other

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risks discussed in our other SEC filings, our actual results could differ materially from those projected in any forward-looking statements. No priority or significance is intended by, nor should be attached to, the order in which the risk factors appear.

INDUSTRY AND CUSTOMER RISKS

The Semiconductor Capital Equipment Industry Is Subject to Variability and Periods of Rapid Growth or Decline; We Therefore Face Risks Related to Our Strategic Resource Allocation Decisions

The semiconductor capital equipment industry has historically been characterized by rapid changes in demand. The industry environment has moved toward being more characterized by variability across segments and customers, accentuated by consolidation within the industry. Variability in our customers’ business plans may lead to changes in demand for our equipment and services, which could negatively impact our results. The variability in our customers’ investments during any particular period is dependent on several factors, including but not limited to electronics demand, economic conditions (both general and in the semiconductor and electronics industries), industry supply and demand, prices for semiconductors, and our customers’ ability to develop and manufacture increasingly complex and costly semiconductor devices. The changes in demand may require our management to adjust spending and other resources allocated to operating activities.

During periods of rapid growth or decline in demand for our products and services, we face significant challenges in maintaining adequate financial and business controls, management processes, information systems, and procedures for training, assimilating, and managing our workforce, and in appropriately sizing our supply chain infrastructure and facilities, work force, and other components of our business on a timely basis. If we do not adequately meet these challenges during periods of increasing or declining demand, our gross margins and earnings may be negatively impacted. For example, the COVID-19 pandemic has impacted and could further impact our ability to meet the demand for our products due to production, sourcing, logistics and other challenges resulting from quarantines, shelter in place or “stay at home” orders, facility closures, workforce challenges, and travel and logistics restrictions in connection with the pandemic.

We continuously reassess our strategic resource allocation choices in response to the changing business environment. If we do not adequately adapt to the changing business environment, we may lack the infrastructure and resources to scale up our business to meet customer expectations and compete successfully during a period of growth, or we may expand our capacity and resources too rapidly and/or beyond what is appropriate for the actual demand environment, resulting in excess fixed costs.

Especially during transitional periods, resource allocation decisions can have a significant impact on our future performance, particularly if we have not accurately anticipated industry changes. Our success will depend, to a

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significant extent, on the ability of our executive officers and other members of our senior management to identify and respond to these challenges effectively.

Future Declines in the Semiconductor Industry, and the Overall World Economic Conditions on Which It Is Significantly Dependent, Could Have a Material Adverse Impact on Our Results of Operations and Financial Condition

Our business depends on the capital equipment expenditures of semiconductor manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits. With the consolidation of customers within the industry, the semiconductor capital equipment market may experience rapid changes in demand driven both by changes in the market generally and the plans and requirements of particular customers. The economic, political, and business conditions occurring nationally, globally, or in any of our key sales regions, which are often unpredictable, have historically impacted customer demand for our products and normal commercial relationships with our customers, suppliers, and creditors. Additionally, in times of economic uncertainty, our customers’ budgets for our products, or their ability to access credit to purchase them, could be adversely affected. This would limit their ability to purchase our products and services. As a result, changing economic, political or business conditions can cause material adverse changes to our results of operations and financial condition, including but not limited to:

•a decline in demand for our products or services;

•an increase in reserves on accounts receivable due to our customers’ inability to pay us;

•an increase in reserves on inventory balances due to excess or obsolete inventory as a result of our inability to sell such inventory;

•valuation allowances on deferred tax assets;

•restructuring charges;

•asset impairments including the potential impairment of goodwill and other intangible assets;

•a decline in the value of our investments;

•exposure to claims from our suppliers for payment on inventory that is ordered in anticipation of customer purchases that do not come to fruition;

•a decline in the value of certain facilities we lease to less than our residual value guarantee with the lessor; and

•challenges maintaining reliable and uninterrupted sources of supply.

Fluctuating levels of investment by semiconductor manufacturers may materially affect our aggregate shipments, revenues, operating results, and earnings. Where appropriate, we will attempt to respond to these fluctuations with cost management programs aimed at aligning our expenditures with anticipated revenue streams, which sometimes result in restructuring charges. Even during periods of

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reduced revenues, we must continue to invest in R&D and maintain extensive ongoing worldwide customer service and support capabilities to remain competitive, which may temporarily harm our profitability and other financial results.

~~Our Revenues and Operating Results Are Variable~~

Our revenues and operating results may fluctuate significantly from quarter to quarter or year to year due to a number of factors, not all of which are in our control. We manage our expense levels based in part on our expectations of future revenues. Because our operating expenses are based in part on anticipated future revenues, and a certain amount of those expenses are relatively fixed, a change in the timing of recognition of revenue and/or the level of gross profit from a small number of transactions can unfavorably affect operating results in a particular quarter or year. Factors that may cause our financial results to fluctuate unpredictably include but are not limited to:

~~economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry;~~

~~the size and timing of orders from customers;~~

~~consolidation of the customer base, which may result in the investment decisions of one customer or market having a significant effect on demand for our products or services;~~

~~procurement shortages;~~

~~the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations;~~

~~manufacturing difficulties;~~

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~~customer cancellations or delays in shipments, installations, and/or customer acceptances;~~

~~the extent that customers continue to purchase and use our products and services in their business;~~

~~our customers’ reuse of existing and installed products, to the extent that such reuse decreases their need to purchase new products or services;~~

~~changes in average selling prices, customer mix, and product mix;~~

~~our ability to develop, introduce, and market new, enhanced, and competitive products in a timely manner;~~

~~our competitors’ introduction of new products;~~

~~legal or technical challenges to our products and technologies;~~

transportation, communication, demand, information technology, or supply disruptions based on factors outside our control, such as strikes, acts of God, wars, terrorist activities, and natural or man-made disasters;

~~legal, tax, accounting, or regulatory changes (including but not limited to change in import/export regulations and tariffs) or changes in the interpretation or enforcement of existing requirements;~~

~~changes in our estimated effective tax rate;~~

~~foreign currency exchange rate fluctuations; and~~

~~the dilutive impact of our Convertible Notes (as defined below) on our earnings per share.~~

~~We May Incur Impairments to Goodwill or Long-lived Assets~~

We review our long-lived assets, including goodwill and intangible assets identified in business combinations and other intangible assets, for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Negative industry or economic trends, including reduced market prices of our Common Stock, reduced estimates of future cash flows, disruptions to our business, slower growth rates, or lack of growth in our relevant business units, could lead to impairment charges against our long-lived assets, including goodwill and other intangible assets. If, in any period, our stock price decreases to the point where our fair value, as determined by our market capitalization, is less than the book value of our assets, this could also indicate a potential impairment, and we may be required to record an impairment charge in that period, which could adversely affect our result of operations.

Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and to rely heavily on projections of future operating performance. We operate in a highly competitive environment and projections of future operating results and cash flows may vary significantly from actual results. Additionally, if our analysis indicates potential impairment to goodwill in one or more of our business units, we may be required to record additional charges to earnings in our financial statements, which could negatively affect our results of operations.

~~Our Leverage and Debt Service Obligations and Potential Note Conversion or Related Hedging Activities May Adversely Affect Our Financial Condition, Results of Operations, and Earnings per Share~~

We have $4.5 billion in aggregate principal amount of senior unsecured notes, convertible notes, and commercial paper instruments outstanding. Additionally, we have funding available to us under our $1.25 billion commercial paper program and our $1.25 billion revolving credit facility, which serves as a backstop to our commercial paper program. Our revolving credit facility also includes an option to increase the amount up to an additional $600 million, for a potential total commitment of $1.85 billion. We may, in the future, decide to enter into additional debt arrangements.

In addition, we have entered, and in the future may enter, into derivative instrument arrangements to hedge against the variability of cash flows due to changes in the benchmark interest rate of fixed rate debt. We could be exposed to losses in the event of nonperformance by the counterparties to our derivative instruments.

~~Our indebtedness could have adverse consequences, including:~~

~~risk associated with any inability to satisfy our obligations;~~

a portion of our cash flows that may have to be dedicated to interest and principal payments and may not be available for operations, working capital, capital expenditures, expansion, acquisitions, or general corporate or other purposes; and

~~impairing our ability to obtain additional financing in the future.~~

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Our ability to meet our expenses and debt obligations will depend on our future performance, which will be affected by financial, business, economic, regulatory, and other factors. Furthermore, our operations may not generate sufficient cash flows, to enable us to meet our expenses and service our debt. As a result, we may need to enter into new financing arrangements to obtain the necessary funds. If we determine it is necessary to seek additional funding for any reason, we may not be able to obtain such funding or, if funding is available, obtain it on acceptable terms. If we fail to make a payment on our debt, we could be in default on such debt, and this default could cause us to be in default on our other outstanding indebtedness.

Conversion of our Convertible Notes may cause dilution to our stockholders and to our earnings per share. The number of shares of our Common Stock into which the Convertible Notes are convertible may be adjusted from time to time, including increases in such rates as a result of dividends that we pay to our stockholders. Upon conversion of any Convertible Notes, we will deliver cash in the amount of the principal amount of the Convertible Notes and, with respect to any excess conversion value greater than the principal amount of the Convertible Notes, shares of our Common Stock, which would result in dilution to our stockholders. Prior to the maturity of the Convertible Notes, if the price of our Common Stock exceeds the conversion price, U.S. generally accepted accounting principles require that we report an increase in diluted share count, which would result in lower reported earnings per share. The price of our Common Stock could also be affected by sales of our Common Stock by investors who view the Convertible Notes as a more attractive means of equity participation in our company and also by hedging activity that may develop involving our Common Stock by holders of the Convertible Notes.

~~Our Credit Agreements Contain Covenant Restrictions That May Limit Our Ability to Operate Our Business~~

We may be unable to respond to changes in business and economic conditions, engage in transactions that might otherwise be beneficial to us, or obtain additional financing because our debt agreements contain, and any of our other future similar agreements may contain, covenant restrictions that limit our ability to, among other things:

~~incur additional debt, assume obligations in connection with letters of credit, or issue guarantees;~~

~~create liens;~~

~~enter into transactions with our affiliates;~~

~~sell certain assets; and~~

~~merge or consolidate with any person.~~

Our ability to comply with these covenants is dependent on our future performance, which will be subject to many factors, some of which are beyond our control, including prevailing economic conditions. In addition, our failure to comply with these covenants could result in a default under the Senior Notes, the Convertible Notes, or our other debt, which could permit the holders to accelerate such debt. If any of our debt is accelerated, we may not have sufficient funds available to repay such debt, which could materially and negatively affect our financial condition and results of operation.

We Have a Limited Number of Key Customers

Sales to a limited number of large customers constitute a significant portion of our overall revenue, shipments, cash flows, collections, and profitability. As a result, the actions of even one customer may subject us to variability in those areas that is difficult to predict. In addition, large customers may be able to negotiate requirements that result in decreased pricing, increased costs, and/or lower margins for us; compliance with specific environmental, social, and corporate governance standards; and limitations on our ability to share technology with others. Similarly, significant portions of our credit risk may, at any given time, be concentrated among a limited number of customers so that the failure of even one of these key customers to pay its obligations to us could significantly impact our financial results.

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~~We Depend on Creating New Products and Processes and Enhancing Existing Products and Processes for Our Success; Consequently, We Are Subject to Risks Associated with Rapid Technological Change~~

Rapid technological changes in semiconductor manufacturing processes subject us to increased pressure to develop technological advances that enable those processes. We believe that our future success depends in part upon our ability to develop and offer new products with improved capabilities and to continue to enhance our existing products. If new products or existing products have reliability, quality, design, or safety problems, our performance may be impacted by reduced orders, higher manufacturing costs, delays in acceptance of and payment for new products, and additional service and warranty expenses. We may be unable to develop and manufacture products successfully, or products that we introduce may fail in the marketplace. For more than 25 years, the primary driver of technology advancement in the semiconductor industry has been to shrink the lithography that prints the circuit design on semiconductor chips. That driver could be approaching its technological limit, leading semiconductor manufacturers to investigate more complex changes in multiple technologies in an effort to continue technology development. In the face of uncertainty on which technology solutions will become successful, we will need to focus our efforts on developing the technology changes that are ultimately successful in supporting our customer requirements. Our failure to develop and offer the correct technology solutions in a timely manner with productive and cost-effective products could adversely affect our business in a material way. Our failure to commercialize new products in a timely manner could result in loss of market share, unanticipated costs, and inventory obsolescence, which would adversely affect our financial results.

In order to develop new products and processes and enhance existing products and processes, we expect to continue to make significant investments in R&D, to investigate the acquisition of new products and technologies, to invest in or acquire such business or technologies, and to pursue joint development relationships with customers, suppliers, or other members of the industry. Our investments and acquisitions may not be as successful as we may expect, particularly as we seek to invest or acquire product lines and technologies that are new to us. We may find that acquisitions are not available to us, for regulatory or other reasons, and that we must therefore limit ourselves to collaboration and joint venture development activities, which do not have the same benefits as acquisitions. Pursuing development through collaboration and/or joint development activities rather than through an acquisition poses substantial challenges for management, including those related to aligning business objectives; sharing confidential information, intellectual property and data; sharing value with third parties; and realizing synergies that might have been available in an acquisition but are not available through a joint development project. We must manage product transitions and joint development relationships successfully, as the introduction of new products could adversely affect our sales of existing products and certain jointly developed technologies may be subject to restrictions on our ability to share that technology with other customers, which could limit our market for products incorporating those technologies. Future technologies, processes, or product developments may render our current product offerings obsolete, leaving us with non-competitive products, obsolete inventory, or both. Moreover, customers may adopt new technologies or processes to address the complex challenges associated with next-generation devices. This shift may result in a reduction in the size of our addressable markets or could increase the relative size of markets in which we either do not compete or have relatively low market share.

~~We Are Subject to Risks Relating to Product Concentration and Lack of Product Revenue Diversification~~

We derive a substantial percentage of our revenues from a limited number of products. Our products are priced up to approximately $11 million per system. As a result, the inability to recognize revenue on even a few systems can cause a significantly adverse impact on our revenues for a given quarter, and, in the longer term, the continued market acceptance of these products is critical to our future success. Our business, operating results, financial condition, and cash flows could therefore be adversely affected by:

~~a decline in demand for even a limited number of our products,~~

~~a failure to achieve continued market acceptance of our key products,~~

~~export restrictions or other regulatory or legislative actions that could limit our ability to sell those products to key customers or customers within certain markets,~~

~~an improved version of products being offered by a competitor in the markets in which we participate,~~

~~increased pressure from competitors that offer broader product lines,~~

~~increased pressure from regional competitors,~~

~~technological changes that we are unable to address with our products, or~~

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~~a failure to release new or enhanced versions of our products on a timely basis.~~

In addition, the fact that we offer limited product lines creates the risk that our customers may view us as less important to their business than our competitors that offer additional products and/or product capabilities. This may impact our ability to maintain or expand our business with certain customers. Such product concentration may also subject us to additional risks associated with technology changes. Our business is affected by our customers’ use of our products in certain steps in their wafer fabrication processes. Should technologies change so that the manufacture of semiconductors requires fewer steps using our products, this could have a larger impact on our business than it would on the business of our less concentrated competitors.

~~Strategic Alliances and Customer Consolidation May Have Negative Effects on Our Business~~

Increasingly, semiconductor manufacturing companies are entering into strategic alliances or consolidating with one another to expedite the development of processes and other manufacturing technologies and/or achieve economies of scale. The outcomes of such an alliance can be the definition of a particular tool set for a certain function and/or the standardization of a series of process steps that use a specific set of manufacturing equipment, while the outcomes of consolidation can lead to an overall reduction in the market for semiconductor manufacturing equipment as customers’ operations achieve economies of scale and/or increased purchasing power based on their higher volumes. In certain instances, this could work to our disadvantage if a competitor’s tools or equipment become the standard equipment for such functions or processes. Additional outcomes of such consolidation may include our customers re-evaluating their future supplier relationships to consider our competitors’ products and/or gaining additional influence over the pricing of products and the control of intellectual property or data.

Similarly, our customers may partner with, or follow the lead of, educational or research institutions that establish processes for accomplishing various tasks or manufacturing steps. If those institutions utilize a competitor’s equipment when they establish those processes, it is likely that customers will tend to use the same equipment in setting up their own manufacturing lines. Even if they select our equipment, the institutions and the customers that follow their lead could impose conditions on acceptance of that equipment, such as adherence to standards and requirements or limitations on how we license our proprietary rights, that increase our costs or require us to take on greater risk. These actions could adversely impact our market share and financial results.

~~We Depend on a Limited Number of Key Suppliers and Outsource Providers, and We Run the Risk That They Might Not Perform as We Expect~~

Outsource providers and component suppliers have played and will continue to play a key role in our product development, manufacturing operations, field installation and support, and many of our transactional and administrative functions, such as information technology, facilities management, and certain elements of our finance organization. These providers and suppliers might suffer financial setbacks, be acquired by third parties, become subject to exclusivity arrangements that preclude further business with us, or be unable to meet our requirements or expectation due to their independent business decisions or ~~force majeure~~ ~~events that could interrupt or impair their continued ability to perform as we expect.~~

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~~We Face Risks Related to the Disruption of Our Primary Manufacturing Facilities~~

While we maintain business continuity plans, our manufacturing facilities are concentrated in a limited number of locations. These locations are subject to disruption for a variety of reasons, such as natural or man-made disasters, terrorist activities, disruptions of our information technology resources, utility interruptions, or other events beyond our control. Such disruptions may cause delays in shipping our products, which could result in the loss of business or customer trust, adversely affecting our business and operating results.

Once a Semiconductor Manufacturer Commits to Purchase a Competitor’s Semiconductor Manufacturing Equipment, the Manufacturer Typically Continues to Purchase That Competitor’s Equipment, Making It More Difficult for Us to Sell Our Equipment to That Customer

Semiconductor manufacturers must make a substantial investment to qualify and integrate wafer processing equipment into a semiconductor production line. We believe that once a semiconductor manufacturer selects a particular supplier’s processing equipment, the manufacturer generally relies upon that equipment for that specific production line application for an extended period of time, especially for customers that are more focused on tool reuse. Accordingly, we expect it to be more difficult to sell our products to a given customer for a product line application if that customer initially selects a competitor’s equipment for the same product line application.

We Face a Challenging and Complex Competitive Environment

We face significant competition from multiple competitors, and with increased consolidation efforts in our industry, as well as the emergence and strengthening of new, regional competitors, we may face increasing competitive pressures. Other companies continue to develop systems and/or acquire businesses and products that are competitive to ours and may introduce new products and product capabilities that may affect our ability to sell and support our existing products. We face a greater risk if our competitors enter into strategic relationships with leading semiconductor manufacturers covering products similar to those we sell or may develop, as this could adversely affect our ability to sell products to those manufacturers.

We believe that to remain competitive we must devote significant financial resources to offer products that meet our customers’ needs, to maintain customer service and support centers worldwide, and to invest in product and process R&D. Technological changes and developing technologies, have required, and are expected to continue to require, new and costly investments. Certain of our 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 we do and therefore have the potential to offer customers a more comprehensive array of products and/or product capabilities and to therefore achieve additional relative success in the semiconductor equipment industry. These competitors may deeply discount or give away products similar to those that we sell, challenging or even exceeding our ability to make similar accommodations and threatening our ability to sell those products. We also face competition from our own customers, who in some instances have established affiliated entities that manufacture equipment similar to ours. In addition, we face competition from companies that exist in a more favorable legal or regulatory environment than we do, allowing the freedom of action in ways that we may be unable to match. In many cases speed to solution is necessary for customer satisfaction and our competitors may be better positioned to achieve these objectives. For these reasons, we may fail to continue to compete successfully worldwide.

In addition, our competitors may be able to develop products comparable or superior to those we offer or may adapt more quickly to new technologies or evolving customer requirements. In particular, while we continue to develop product enhancements that we believe will address future customer requirements, we may fail in a timely manner to complete the development or introduction of these additional product enhancements successfully, or these product enhancements may not achieve market acceptance or be competitive. Accordingly, competition may intensify, and we may be unable to continue to compete successfully in our markets, which could have a material adverse effect on our revenues, operating results, financial condition, and/or cash flows.

We Depend on Creating New Products and Processes and Enhancing Existing Products and Processes for Our Success; Consequently, We Are Subject to Risks Associated with Rapid Technological Change

Rapid technological changes in semiconductor manufacturing processes subject us to increased pressure to develop technological advances that enable those processes. We believe that our future success depends in part upon our ability to develop and offer new products with improved capabilities and to continue to enhance our existing products. If new products or existing products have reliability, quality, design, or safety problems, our performance may be impacted by reduced orders, higher manufacturing costs, delays in acceptance of and payment for new products, and additional service and warranty expenses. We may be unable to develop and manufacture products successfully, or products that we introduce may fail in the marketplace. For more than 25 years, the primary driver of technology advancement in the semiconductor industry has been to shrink the lithography that prints the circuit design on semiconductor chips. That driver could be approaching its technological limit, leading semiconductor manufacturers to investigate more complex changes in multiple technologies in an effort to continue technology development. In addition, the emergence of “big data” and new tools such as machine learning and artificial intelligence that capitalize on the availability of large data sets is leading semiconductor manufacturers and equipment manufacturers to pursue new products and approaches that exploit

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those tools to advance technology development. In the face of uncertainty on which technology solutions will become successful, we will need to focus our efforts on developing the technology changes that are ultimately successful in supporting our customer requirements. Our failure to develop and offer the correct technology solutions in a timely manner with productive and cost-effective products could adversely affect our business in a material way. Our failure to commercialize new products in a timely manner could result in loss of market share, unanticipated costs, and inventory obsolescence, which would adversely affect our financial results.

In order to develop new products and processes and enhance existing products and processes, we expect to continue to make significant investments in R&D, to investigate the acquisition of new products and technologies, to invest in or acquire such business or technologies, and to pursue joint development relationships with customers, suppliers, or other members of the industry. Our investments and acquisitions may not be as successful as we may expect, particularly in the event that we invest in or acquire product lines and technologies that are new to us. We may find that acquisitions are not available to us, for regulatory or other reasons, and that we must therefore limit ourselves to collaboration and joint venture development activities, which do not have the same benefits as acquisitions. Pursuing development through collaboration and/or joint development activities rather than through an acquisition poses substantial challenges for management, including those related to aligning business objectives; sharing confidential information, intellectual property and data; sharing value with third parties; and realizing synergies that might have been available in an acquisition but are not available through a joint development project. We must manage product transitions and joint development relationships successfully, as the introduction of new products could adversely affect our sales of existing products and certain jointly developed technologies may be subject to restrictions on our ability to share that technology with other customers, which could limit our market for products incorporating those technologies. Future technologies, processes, or product developments may render our current product offerings obsolete, leaving us with non-competitive products, obsolete inventory, or both. Moreover, customers may adopt new technologies or processes to address the complex challenges associated with next-generation devices. This shift may result in a reduction in the size of our addressable markets or could increase the relative size of markets in which we either do not compete or have relatively low market share.

Strategic Alliances and Customer Consolidation May Have Negative Effects on Our Business

BUSINESS AND OPERATIONAL RISKS

The COVID-19 Pandemic Has Adversely Impacted, and May Continue to Adversely Impact, Our Business, Operations, and Financial Results

The COVID-19 pandemic and efforts by national, state and local governments worldwide to control its spread have resulted in widespread measures aimed at containing the disease such as quarantines, travel bans, shutdowns, and shelter in place or “stay at home” orders, which collectively have significantly restricted the movement of people and goods and the ability of businesses to operate. These restrictions and measures, incidents of confirmed or suspected infections within our workforce or those of our suppliers or other business partners, and our efforts to act in the best interests of our employees, customers, and suppliers, have affected and are affecting our business and operations by, among other things, causing facility closures, production delays and capacity limitations; disrupting production by our supply chain; disrupting the transport of goods from our supply chain to us and from us to our customers; requiring modifications to our business processes; requiring the implementation of business continuity plans; requiring the development and qualification of alternative sources of supply; requiring the implementation of social distancing measures that require changes to existing manufacturing processes; disrupting business travel; disrupting our ability to staff our on-site manufacturing and research and development facilities; delaying capital expansion projects; and necessitating teleworking by a large proportion of our workforce. These impacts have caused and are expected to continue to cause delays in product shipments and product development, increases in costs, and decreases in revenue, profitability and cash from operations, which have caused and are expected to cause an adverse effect on our results of operations that may be material. The potential duration and impact of the pandemic on the global economy and on our business are difficult to predict and cannot be estimated with any degree of certainty, but the pandemic has resulted in significant disruption of global financial markets, increases in levels of unemployment, and economic uncertainty, which has adversely impacted our business and may continue to do so, and may lead to significant negative

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impacts on customer spending, demand for our products, the ability of our customers to pay, our financial condition and the financial condition of our suppliers, and our access to external sources of financing to fund our operations and capital expenditures.

Our Revenues and Operating Results Are Variable

•economic conditions in the electronics and semiconductor industries in general and specifically the semiconductor equipment industry;

•the size and timing of orders from customers;

•changes in our deferred revenue balance, including as a result of factors such as volume purchase agreements, multi-year service contracts, back orders, and down payments toward purchases;

•consolidation of the customer base, which may result in the investment decisions of one customer or market having a significant effect on demand for our products or services;

•procurement shortages;

•the failure of our suppliers or outsource providers to perform their obligations in a manner consistent with our expectations;

•manufacturing difficulties;

•customer cancellations or delays in shipments, installations, customer payments, and/or customer acceptances;

•the extent that customers continue to purchase and use our products and services in their business;

•our customers’ reuse of existing and installed products, to the extent that such reuse decreases their need to purchase new products or services;

•changes in average selling prices, customer mix, and product mix;

•our ability to develop, introduce, and market new, enhanced, and competitive products in a timely manner;

•our competitors’ introduction of new products;

•legal or technical challenges to our products and technologies;

•transportation, communication, demand, information technology, or supply disruptions based on factors outside our control, such as strikes, acts of God, wars, terrorist activities, widespread outbreak of illness, natural or man-made disasters, or climate change;

•legal, tax, accounting, or regulatory changes (including but not limited to changes in import/export regulations and tariffs) or changes in the interpretation or enforcement of existing requirements;

•changes in our estimated effective tax rate; and

•foreign currency exchange rate fluctuations.

For example, the COVID-19 pandemic has impacted and could further impact our ability to meet the demand for our products due to production, sourcing, logistics and other challenges resulting from quarantines, shelter in place or “stay at home” orders, facility closures, workforce challenges, and travel and logistics restrictions in connection with the pandemic.

Disruptions to Our Supply Chain and Outsource Providers Could Impact Our Ability to Meet Demand, Increase Our Costs, and Adversely Impact Our Revenue and Operating Results

Our supply chain has played and will continue to play a key role in our product development, manufacturing operations, field installation and support. Our business depends on our timely supply of products and services to meet the demand from our customers, which depends in significant part on the timely delivery of parts, materials and services, including components and subassemblies, from our direct suppliers to us, and to our direct suppliers by other companies. In addition, outsource providers have played and will continue to play a key role both in the manufacturing and customer-focused operations described above, and in many of our transactional and administrative functions, such as information technology, facilities management, and certain elements of our finance organization. These providers and suppliers might suffer financial setbacks, be acquired by third parties, become subject to exclusivity arrangements that preclude further business with us, or be unable to meet our requirements or expectation due to their independent business decisions or force majeure events that could interrupt or impair their continued ability to perform as we expect. We may also experience significant interruptions of our manufacturing operations, delays in our ability to deliver or install products or perform services or to recognize revenue, increased costs or customer order cancellations as a result of:

•the failure or inability to accurately forecast demand and obtain sufficient quantities of quality parts on a cost-effective basis;

•volatility in the availability and cost of parts, materials or services, including increased costs due to rising inflation or interest rates or other market conditions;

•difficulties or delays in obtaining required import or export approvals;

•shipment delays and increased costs of shipment due to transportation interruptions, capacity constraints, or fuel shortages;

•shortages of semiconductor or other components or materials as a result of increases in demand;

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•information technology or infrastructure failures, including those of a third-party supplier or service provider; and

•transportation or supply disruptions based on factors outside our control, such as strikes, acts of God, wars, terrorist activities, widespread outbreak of illness, natural or man-made disasters, or climate change.

Demand for electronic products and other factors, such as the COVID-19 pandemic and the conflict in Ukraine, have resulted in, and may continue to result in, a shortage of parts, materials and services needed to manufacture, deliver and install our products, as well as delays in and unpredictability of shipments due to transportation interruptions. Such shortages, delays and unpredictability have adversely impacted, and may continue to adversely impact, our suppliers’ ability to meet our demand requirements. Difficulties in obtaining sufficient and timely supply of parts, materials or services, and delays in and unpredictability of shipments due to transportation interruptions, have adversely impacted, and may continue to adversely impact, our manufacturing operations and our ability to meet customer demand. In addition, difficulties in obtaining parts, materials or services necessary to deliver or install products or perform services have adversely impacted, and may continue to adversely impact, our ability to recognize revenue, our gross margins on the revenue we recognize, and our other operating results. Although we are endeavoring to pass along some of the impact of increased costs to our customers to counteract adverse impacts to our gross margins and other operating results, such measures could be unsuccessful, or could have the effect of reducing demand, which would adversely impact our revenue.

Although we attempt to select reputable providers and suppliers and we attempt to secure their performance on terms documented in written contracts, it is possible that one or more of these providers or suppliers could fail to perform as we expect, or fail to secure or protect intellectual property rights, and such failure could have an adverse impact on our business. In some cases, the requirements of our business mandate that we obtain certain components and sub-assemblies included in our products from a single supplier or a limited group of suppliers. Where practical, we endeavor to establish alternative sources to mitigate the risk that the failure of any single provider or supplier will adversely affect our business, but this is not feasible in all circumstances. Some key parts are subject to long lead-times or available only from a single supplier or limited group of suppliers, and some sourcing or subassembly is provided by suppliers located in countries other than the countries where we conduct our manufacturing. There is therefore a risk that a prolonged inability to obtain certain components or secure key services could impair our ability to manage operations, ship products, and generate revenues, which could adversely affect our operating results and damage our customer relationships. For example, the COVID–19 pandemic has impacted and could further impact our manufacturing operations, supply chain, and customer support due to production, sourcing, logistics and other challenges resulting from quarantines, "stay at home" orders, facility closures, workforce challenges, and travel and logistics restrictions in connection with the pandemic.

Our Business Relies on Technology, Data, Intellectual Property and Other Sensitive Information That is Susceptible to Cybersecurity and Other Threats or Incidents

Our business is dependent upon the use and protection of technology, data, intellectual property and other sensitive information, which may be owned by, or licensed to, us or third parties, such as our customers and vendors. We maintain and rely upon certain critical information systems for the creation, transmission, use and storage of much of this information, and for the effective operation of our business. These information systems include but are not limited to, telecommunications, the Internet, our corporate intranet, various computer hardware and software applications, (some of which may be integrated into the products that we sell or be required in order to provide the services that we offer), network communications, and email. These information systems may be owned and maintained by us, our outsourced providers, or third parties such as vendors, contractors, customers and Cloud providers. In addition, we make use of Software-as-a-Service (SaaS) products for certain important business functions that are provided by third parties and hosted on their own networks and servers, or third-party networks and servers, all of which rely on networks, email and/or the Internet for their function.

The technology, data, intellectual property and other sensitive information we seek to protect are subject to loss, release, misappropriation or misuse, and the information systems containing or transmitting such technology, data, intellectual property and other sensitive information are subject to disruption, breach or failure, in each case as a result of various possible causes. Such causes may include mistakes or unauthorized actions by our employees or contractors, phishing schemes and other third-party attacks, and degradation or loss of service or access to data due to viruses, malware, denial of service attacks, destructive or inadequate code, power failures, or physical damage to computers, hard drives, communication lines, or networking equipment. Such causes may also include the use of techniques that change frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event, or that may continue undetected for an extended period of time.

We have experienced cybersecurity and other threats and incidents in the past. Although past threats and incidents have not resulted in a material adverse effect, we may incur material losses related to cybersecurity and other threats or incidents in the future. If we were subject to a cybersecurity or other incident, it could have a material adverse effect on our business. Such adverse effects might include:

•loss of (or inability to access, e.g. through ransomware) confidential and/or sensitive information stored on these critical information systems or transmitted to or from those systems;

•the disruption of the proper function of our products, services and/or operations;

•the failure of our or our customers’ manufacturing processes;

•errors in the output of our work or our customers’ work;

•the loss or public exposure of the personal or other confidential information of our employees, customers or other parties;

•the public release of customer financial and business plans, customer orders and operational results;

•exposure to claims from our employees or third parties who are adversely impacted by such incidents;

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•misappropriation or theft of our or a customer’s, supplier’s or other party’s assets or resources, including technology data, intellectual property or other sensitive information and costs associated therewith;

•reputational damage;

•diminution in the value of our investment in research, development and engineering; or

•our failure to meet, or violation of, regulatory or other legal obligations, such as the timely publication or filing of financial statements, tax information and other required communications.

While we have implemented ISO 27001 compliant security procedures and virus protection software, intrusion prevention systems, identity and access control, and emergency recovery processes, and we carefully select our third-party providers of information systems, to mitigate risks to the information systems that we rely on and to the technology, data, intellectual property and other sensitive information we seek to protect, those security procedures and mitigation and protection systems cannot be guaranteed to be fail-safe, and we may still suffer cybersecurity and other incidents. It has been difficult and may continue to be difficult to hire and retain employees with substantial cybersecurity acumen. In addition, there have been and may continue to be instances of our policies and procedures not being effective in enabling us to identify risks, threats and incidents in a timely manner, or at all, or to respond expediently, appropriately and effectively when incidents occur and repair any damage caused by such incidents, and such occurrences could have a material adverse effect on our business.

Our Future Success Depends Heavily on International Sales and the Management of Global Operations

Non-U.S. sales, as reflected in Part II Item 7. Results of Operation of this ~~2019~~2022 Form 10-K, accounted for approximately 92%, ~~93%~~94%, and 92% of total revenue in fiscal years ~~2019, 2018,~~2022, 2021, and ~~2017,~~2020, respectively. We expect that international sales will continue to account for a substantial majority of our total revenue in future years.

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We are subject to various challenges related to international sales and the management of global operations including, but not limited to:

•domestic and international trade regulations, policies, practices, relations, disputes and issues;

•domestic and international tariffs, export controls and other barriers;

•developing customers and/or suppliers, who may have limited access to capital ~~resources.~~resources;

•global or national economic and political conditions;

•changes in currency controls;

•differences in the enforcement of intellectual property and contract rights in varying jurisdictions;

•our ability to respond to customer and foreign government demands for locally sourced systems, spare parts, and services and develop the necessary relationships with local suppliers;

•changes in and compliance with U.S. and international laws and regulations affecting foreign operations, including U.S. and international trade restrictions and sanctions, anti-bribery, anti-corruption, anti-boycott, environmental, tax, and labor laws;

•fluctuations in interest and foreign currency exchange rates;

•the need for technical support resources in different locations; and

•our ability to secure and retain qualified people, and effectively manage people, in all necessary

locations for the successful operation of our business.

For example, the COVID-19 pandemic has impacted and could further impact our manufacturing operations, supply chain, and customer support due to production, sourcing, logistics and other challenges resulting from quarantines, stay at home orders, facility closures, workforce challenges, and travel and logistics restrictions in connection with the pandemic.

There is inherent risk, based on the complex relationships among China, Japan, Korea, Taiwan, and the United States, that political, diplomatic and national security influences might lead to trade disputes, impacts and/or disruptions, in particular those affecting the semiconductor industry. This would adversely affect our business with China, Japan, Korea, and/or Taiwan and perhaps the entire Asia Pacific region or global economy. A significant trade dispute, impact and/or disruption in any area where we do business could have a materially adverse impact on our future revenue and profits.

Tariffs, export controls, additional taxes, trade barriers, sanctions, or ~~sanctions~~the termination or modification of trade agreements, trade zones, and other duty mitigation initiatives, may increase our manufacturing costs, decrease margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of operations, or financial conditions. Certain of our international sales depend on our ability to obtain export licenses from the U.S. or foreign governments, and our inability to obtain such licenses, or an expansion of the number or kinds of sales for which export licenses are required, could potentially limit the market for our products and adversely impact our revenues. As is discussed below under the heading “Our Sales to Customers in China, a Region of Growing Significance to Us, Could be Materially and Adversely Affected by Export License Requirements and Other Regulatory Changes, or Other Governmental Actions in the Course of the Trade Relationship Between the U.S. and China,” the U.S. government has recently expanded export license requirements that impact trade with China. In addition, the U.S. government is in the process of assessing technologies that may be subject to new or additional export controls, and it is possible that such controls, if and when imposed, could adversely impact our ability to sell our products outside the U.S. Furthermore, there are risks that foreign governments may, among other things, insist on the use of local suppliers; compel companies to partner with local companies to design and supply equipment on a local basis, requiring the transfer of intellectual property rights and/or local manufacturing; utilize their influence over their judicial systems to

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respond to intellectual property disputes or issues; and provide special incentives to government-backed local customers to buy from local competitors, even if their products are inferior to ours; all of which could adversely impact our revenues and margins. Certain international sales depend on our ability to obtain export licenses from the U.S. or foreign governments. Our failure or inability to obtain such licenses, or an expansion of the number or kinds of sales for which export licenses are required, could potentially limit our markets and impact our revenues. Many of the challenges noted above are applicable in China, which is a fast-developing market for the semiconductor equipment industry and therefore an area of anticipated growth for our business.

We are exposed to potentially adverse movements in foreign currency exchange rates. The majority of our sales and expenses are denominated in U.S. dollars. However, we are exposed to foreign currency exchange rate fluctuations primarily related to revenues denominated in Japanese yen and expenses denominated in euro, Korean won, Malaysian ringgit, and ~~Korean won.~~Indian rupee. Currently, we hedge certain anticipated foreign currency cash flows, primarily anticipated revenues denominated in Japanese yen and expenses dominated in euro, Korean won, Malaysian ringgit, and ~~Korean won.~~Indian rupee. In addition, we enter into foreign currency hedge contracts to minimize the short-term impact of the foreign currency exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities, primarily third-party accounts receivables, accounts payables, and intercompany receivables and payables. We believe these are our primary exposures to currency rate fluctuation. We expect to continue to enter into hedging transactions, for the purposes outlined, for the foreseeable future. However, these hedging transactions may not achieve their desired effect because differences between the actual timing of the underlying exposures and our forecasts of those exposures may leave us either over or under hedged on any given transaction. Moreover, by hedging these foreign currency denominated revenues, expenses, monetary assets, and liabilities, we may miss favorable currency trends that would have been advantageous to us but for the hedges. Additionally, we are exposed to short-term foreign currency exchange rate fluctuations on non-U.S. dollar-denominated monetary assets and liabilities (other than those currency exposures previously discussed), and currently we do not enter into foreign currency hedge contracts against these exposures. Therefore, we are subject to potential unfavorable foreign currency exchange rate fluctuations to the extent that we transact business (including intercompany transactions) in these currencies.

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~~Table of Contents~~

The magnitude of our overseas business also affects where our cash is generated. Certain uses of cash, such as share repurchases, payment of dividends, or the repayment of our notes, can usually only be made with onshore cash balances. Since the majority of our cash is generated outside of the United States, this may impact certain business decisions and outcomes.

We Face Risks Related to the Disruption of Our Primary Manufacturing and R&D Facilities

While we maintain business continuity plans, our manufacturing and R&D facilities are concentrated in a limited number of locations. These locations are subject to disruption for a variety of reasons, such as natural or man-made disasters, widespread outbreaks of illness, terrorist activities, political or governmental unrest or instability, disruptions of our information technology resources, utility interruptions, the effects of climate change, or other events beyond our control. Such disruptions may cause delays in developing or shipping our products, in engaging with customers on new product applications, or in supporting customers, which could result in the loss of business or customer trust, adversely affecting our business and operating results. For example, the COVID-19 pandemic has impacted and could further impact our manufacturing operations, supply chain, R&D and customer support due to production, sourcing, logistics and other challenges resulting from quarantines, “stay at home” orders, facility closures, workforce challenges, and travel and logistics restrictions in connection with the pandemic.

We Are Subject to Risks Relating to Product Concentration and Lack of Product Revenue Diversification

We derive a substantial percentage of our revenues from a limited number of products. Our products are priced up to the tens of millions of dollars per system. As a result, the inability to recognize revenue on even a few systems can cause a significantly adverse impact on our revenues for a given quarter, and, in the longer term, the continued market acceptance of these products is critical to our future success. Our business, operating results, financial condition, and cash flows could therefore be adversely affected by:

•a decline in demand for even a limited number of our products;

•a failure to achieve continued market acceptance of our key products;

•export restrictions or other regulatory or legislative actions that could limit our ability to sell those products to key customers or customers within certain markets;

•an improved version of products being offered by a competitor in the markets in which we participate;

•increased pressure from competitors that offer broader product lines;

•increased pressure from regional competitors;

•technological changes that we are unable to address with our products; or

•a failure to release new or enhanced versions of our products on a timely basis.

In addition, the fact that we offer limited product lines creates the risk that our customers may view us as less important to their business than our competitors that offer additional products and/or product capabilities, including new products that take advantage of “big data” or other new technologies such as machine learning and artificial intelligence. This may impact our ability to maintain or expand our business with certain customers. Such product concentration may also subject us to additional risks associated with technology changes. Our business is affected by our customers’ use of our products in certain steps in their wafer fabrication processes. Should technologies change so that the manufacture of semiconductors requires fewer steps using our products, this could have a larger impact on our business than it would on the business of our less concentrated competitors.

We May Fail to Protect Our Critical Proprietary Technology Rights, Which Could Affect Our Business

Our success depends in part on our proprietary technology and our ability to protect key components of that technology through patents, copyrights, trade secrets and other forms of protection. Protecting our key proprietary technology helps us achieve our goals of developing technological expertise and new products and systems that give us a competitive advantage; increasing market penetration and growth of our installed base; and providing comprehensive support and service to our customers. As part of our

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strategy to protect our technology, we currently hold a number of U.S. and foreign patents and pending patent applications, and we keep certain information, processes, and techniques confidential and/or as trade secrets. However, other parties may challenge or attempt to invalidate or circumvent any patents the U.S. or foreign governments issue to us; these governments may fail to issue patents for pending applications; or we may lose trade secret protection over valuable information due to our or third parties’ intentional or unintentional actions or omissions or even those of our own employees. Additionally, intellectual property litigation can be expensive and time-consuming and even when patents are issued, or trade secret processes are followed, the legal systems in certain of the countries in which we do business might not enforce patents and other intellectual property rights as rigorously or effectively as the United States or may favor local entities in their intellectual property enforcement. The rights granted or anticipated under any of our patents, pending patent applications, or trade secrets may be narrower than we expect or, in fact, provide no competitive advantages. Moreover, because we selectively file for patent protection in different jurisdictions, we may not have adequate protection in all jurisdictions based on such filing decisions. Any of these circumstances could have a material adverse impact on our business.

Our Ability to Attract, Retain, and Motivate Key Employees Is Critical to Our Success

Our ability to compete successfully depends in large part on our ability to attract, retain, and motivate key employees with the appropriate skills, experiences and competencies. This is an ongoing challenge due to intense competition for top talent, fluctuations in industry or business economic conditions, as well as increasing geographic expansion, and these factors in combination may result in cycles of hiring activity and workforce reductions. Our success in hiring depends on a variety of factors, including the attractiveness of our compensation and benefit programs, global economic or political and industry conditions, our organizational structure, global competition for talent and the availability of qualified employees, the availability of career development opportunities, the ability to obtain necessary authorizations for workers to provide services outside their home countries, and our ability to offer a challenging and rewarding work environment. We periodically evaluate our overall compensation and benefit programs and make adjustments, as appropriate, to maintain or enhance their competitiveness. If we are not able to successfully attract, retain, and motivate key employees, we may be unable to capitalize on market opportunities and our operating results may be materially and adversely affected.

~~Certain Critical Information Systems, That We Rely on for the Operation of Our Business and Products That We Sell, Are Susceptible to Cybersecurity and Other Threats or Incidents~~

We maintain and rely upon certain critical information systems for the effective operation of our business. These information systems include but are not limited to, telecommunications, the Internet, our corporate intranet, various computer hardware and software applications, (some of which may be integrated into the products that we sell or be required in order to provide the services that we offer), network communications, and email. These information systems may be owned and maintained by us, our outsourced providers, or third parties such as vendors, contractors, customers and Cloud providers. In addition, we make use of Software-As-A-Service (SAAS) products for certain important business functions that are provided by third parties and hosted on their own networks and servers, or third-party networks and servers, all of which rely on networks, email and/or the Internet for their function. All of these information systems are subject to disruption, breach or failure from various sources, including those using techniques that change frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event, or that may continue undetected for an extended period of time. Those sources may include mistakes or unauthorized actions by our employees or contractors, phishing schemes and other third-party attacks, and degradation or loss of service or access to data due to viruses, malware, denial of service attacks, destructive or inadequate code, power failures, or physical damage to computers, hard drives, communication lines, or networking equipment.

We have experienced cyber threats and incidents in the past. Although past threats and incidents have not resulted in a material adverse effect, we may incur material losses related to cyber threats or incidents in the future. If we were subject to a cyber incident, it could have a material adverse effect on our business. Such adverse effects might include:

~~Loss of (or inability to access, e.g. through ransomware) confidential and/or sensitive information stored on these critical information systems or transmitted to or from those systems;~~

~~The disruption of the proper function of our products, services and/or operations;~~

~~The failure of our or our customers’ manufacturing processes;~~

~~Errors in the output of our work or our customers’ work;~~

~~The loss or public exposure of the personal information of our employees, customers or other parties;~~

~~The public release of customer orders, financial and business plans, and operational results;~~

~~Exposure to claims from third parties who are adversely impacted by such incidents;~~

~~Misappropriation or theft of our or a customer, supplier or other party's assets or resources, and costs associated therewith;~~

~~Diminution in the value of our investment in research, development and engineering; or~~

~~Our failure to meet, or violation of, regulatory or other legal obligations, such as the timely publication or filing of financial statements, tax information and other required communications.~~

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~~Our Financial Results May Be Adversely Impacted by Higher than Expected Tax Rates or Exposure to Additional Tax Liabilities~~

We are subject to income, transaction, and other taxes in the United States and various foreign jurisdictions, and significant judgment is required to determine worldwide tax liabilities. The amount of taxes we pay is subject to ongoing audits in various jurisdictions, and a material assessment by a governing tax authority could affect our profitability. As a global company, our effective tax rate is highly dependent upon the geographic composition of worldwide earnings and tax regulations governing each region. Our effective tax rate could be adversely affected by changes in the split of earnings between countries with differing statutory tax rates, in the valuation allowance of deferred tax assets, in tax laws, by material audit assessments, or by changes in or expirations of agreements with tax authorities. These factors could affect our profitability. In particular, the carrying value of deferred tax assets, which are predominantly in the United States, is dependent on our ability to generate future taxable income in the United States.

~~A Failure to Comply with Environmental Regulations May Adversely Affect Our Operating Results~~

We are subject to a variety of domestic and international governmental regulations related to the handling, discharge, and disposal of toxic, volatile, or otherwise hazardous chemicals. Failure to comply with present or future environmental regulations could result in fines being imposed on us, require us to undertake remediation activities, suspend production, and/or cease operations, or cause our customers to not accept our products. These regulations could require us to alter our current operations, acquire significant additional equipment, incur substantial other expenses to comply with environmental regulations, or take other actions. Any failure to comply with regulations governing the use, handling, sale, transport, or disposal of hazardous substances could subject us to future liabilities that may adversely affect our operating results, financial condition, and ability to operate our business.

If We Choose to Acquire or Dispose of Businesses, Product Lines, and Technologies, We May Encounter Unforeseen Costs and Difficulties That Could Impair Our Financial Performance

An important element of our management strategy is to review acquisition prospects that would complement our existing products, augment our market coverage and distribution ability, enhance our technological capabilities, or accomplish other strategic objectives. As a result, we may seek to make acquisitions of complementary companies, products, or technologies, or we may reduce or dispose of certain product lines or technologies that no longer fit our long-term strategies. For regulatory or other reasons, we may not be successful in our attempts to acquire or dispose of businesses, products, or technologies, resulting in significant financial costs, reduced or lost opportunities, and diversion of management’s attention. Managing an acquired business, disposing of product technologies, or reducing personnel entails numerous operational and financial risks, including difficulties in assimilating acquired operations and new personnel or separating existing business or product groups, diversion of management’s attention away from other business concerns, amortization of acquired intangible assets, adverse customer reaction to our decision to cease support for a product, and potential loss of key employees or customers of acquired or disposed operations. There can be no assurance that we will be able to achieve and manage successfully any such integration of potential acquisitions, disposition of product lines or technologies, or reduction in personnel, or that our management, personnel, or systems will be adequate to support continued operations. Any such inabilities or inadequacies could have a material adverse effect on our business, operating results, financial condition, and/or cash flows.

In addition, any acquisition could result in changes such as potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities, the amortization of related intangible assets, and goodwill impairment charges, any of which could materially adversely affect our business, financial condition, results of operations, cash flows, and/or the price of our Common Stock.

LEGAL, REGULATORY AND TAX RISKS

Our Sales to Customers in China, a Region of Growing Significance to Us, Could be Materially and Adversely Affected by Export License Requirements and Other Regulatory Changes, or Other Governmental Actions in the Course of the Trade Relationship Between the U.S. and China.

China represents a large and fast-developing market for the semiconductor equipment industry and therefore is important to our business. Revenue in China, which includes global customers and domestic Chinese customers with manufacturing facilities in China, represented approximately 31%, 35%, and 31% of our total revenue for fiscal years 2022, 2021, and 2020, respectively. The U.S. and China have historically had a complex relationship that has included actions that have impacted trade between the two countries. Recently, these actions have included an expansion of export license requirements imposed by the U.S. government, which have limited the market for our products, adversely impacted our revenues, and increased our exposure to foreign competition, and could potentially do so to an even greater extent in the future. For example, since the start of calendar year 2020, the U.S. Department of Commerce enacted a new rule that expanded export license requirements for U.S. companies to sell certain items to companies and other end-users in China that are designated as military end-users or have operations that could support military end-uses, added additional Chinese companies to its restricted entity list under suspicions of military-civil fusion, support of Russia, or other factors associated with a broadening scope of national security concerns (including Semiconductor Manufacturing International

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~~The Market~~Corporation, or SMIC, and related entities), and expanded an existing rule (referred to as the foreign direct product rule) in a manner that could cause foreign-made wafers, chipsets, and certain related items produced with many of our products to be subject to U.S. licensing requirements if Huawei Technologies Co. Ltd (“Huawei”) or its affiliates are parties to a transaction involving the items. These rules have required and may require us to apply for ~~Our Common Stock Is Volatile, Which May Affect Our Ability~~and obtain additional export licenses to ~~Raise Capital~~supply certain of our products to specified customers in China, such as SMIC (where those products would not otherwise require an export license to China), and there is no assurance that we will be issued licenses that we apply for on a timely basis or ~~Make Acquisitions or May Subject Our Business~~at all. In addition, our customers (including but not limited to ~~Additional Costs~~

~~The market price~~Chinese customers) may require U.S. export licenses for the use of our products in order to manufacture products, including semiconductor wafers and integrated circuits, for those of their customers (i.e. Huawei and its affiliates) that are subject to the expanded foreign direct product rule, which may adversely impact the demand for our ~~Common Stock~~products. The U.S. Department of Commerce could in the future add additional Chinese companies to its restricted entity list or take other actions that could expand licensing requirements or otherwise impact the market for our products and our revenue. The implementation, interpretation and impact on our business of these rules and other regulatory actions taken by the U.S. government is ~~volatile~~uncertain and ~~has fluctuated significantly over~~evolving, and these rules, other regulatory actions or changes, and other actions taken by the ~~past years. The trading price~~governments of either the U.S. or China, or both, that have occurred and may occur in the future could materially and adversely affect our ~~Common Stock could continue~~results of operations.

We Are Exposed to Various Risks from Our Regulatory Environment

We are subject to various risks related to (1) new, different, inconsistent, or even conflicting laws, rules, and regulations that may be ~~highly volatile~~enacted by legislative or executive bodies and/or regulatory agencies in the countries that we operate; (2) disagreements or disputes related to international trade; and ~~fluctuate widely~~(3) the interpretation and application of laws, rules, and regulations. As a public company with global operations, we are subject to the laws of multiple jurisdictions and the rules and regulations of various governing bodies, including those related to export controls, financial and other disclosures, corporate governance, privacy, anti-corruption, such as the Foreign Corrupt Practices Act and other local laws prohibiting corrupt payments to governmental officials, anti-boycott compliance, conflict minerals or other social responsibility legislation, immigration or travel regulations, antitrust regulations, and laws or regulations relating to carbon emissions, as well as other laws or regulations imposed in response to ~~a variety~~climate change concerns, among others. Each of ~~factors, many of which are not within~~these laws, rules, and regulations imposes costs on our ~~control or influence. These factors include but are not limited to the following:~~

~~general market, semiconductor, or semiconductor equipment industry conditions;~~

~~economic or political events, trends,~~business, including financial costs and ~~unexpected developments occurring nationally, globally, or in any~~potential diversion of our ~~key sales regions;~~management’s attention associated with compliance, and may present risks to our business, including potential fines, restrictions on our actions, and reputational damage if we do not fully comply.

~~variations in our quarterly operating results~~To maintain high standards of corporate governance and ~~financial condition, including our liquidity;~~

~~variations in our revenues, earnings, or other business and financial metrics from forecasts by us or securities analysts or from those experienced by other companies in our industry;~~

~~announcements of restructurings, reductions in force, departure of key employees, and/or consolidations of operations;~~

~~government regulations;~~

~~developments~~public disclosure, we intend to invest appropriate resources to comply with evolving standards. Changes in or ~~claims relating~~ambiguous interpretations of laws, regulations, and standards may create uncertainty regarding compliance matters. Efforts to ~~patent or other proprietary rights;~~

~~technological innovations and the introduction of new products by us or our competitors;~~

~~commercial success or failure of our~~comply with new and ~~existing products;~~

~~disruptions~~changing regulations have resulted in, and are likely to continue to result in, reduced operating income, and a diversion of ~~relationships with key customers or suppliers; or~~

~~dilutive impacts of our Convertible Notes.~~

~~In addition, the stock market experiences significant price~~management’s time and ~~volume fluctuations. Historically, we have witnessed significant volatility in the price of our Common Stock due in part~~attention from revenue-generating activities to the price of and markets for semiconductors. These and other factors have adversely affected and may again adversely affect the price of our Common Stock, regardless of our actual operating performance. In the past, following volatile periods in the price of their stock, many companies became the object of securities class action litigation.compliance activities. If we are ~~sued~~found by a court or regulatory agency not to be in ~~a securities class action, we~~compliance with the laws and regulations, our business, financial condition, and/or results of operations could ~~incur substantial costs, and it could divert management’s attention and resources and have an unfavorable impact on our financial performance and the price for our Common Stock.~~be adversely affected.

Intellectual Property, Indemnity, and Other Claims Against Us Can Be Costly and We Could Lose Significant Rights That Are Necessary to Our Continued Business and Profitability

Third parties may assert infringement, misappropriation, unfair competition, product liability, breach of contract, or other claims against us. From time to time, other persons send us notices alleging that our products infringe or misappropriate their patent or other intellectual property rights. In addition, law enforcement authorities may seek criminal charges relating to intellectual property or other issues. We also face risks of claims arising from commercial and other relationships. In addition, our bylaws and other indemnity obligations provide that we will indemnify officers and members of our Board of Directors against losses that they may incur in legal proceedings resulting from their service to us. From time to time, in the normal course of business, we indemnify third parties with whom we enter into contractual relationships, including customers and suppliers, with respect to certain matters. We have agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that our products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. In such cases, it is our policy either to defend the claims or to negotiate licenses or other settlements on commercially reasonable terms. However, we may be unable in the future to negotiate necessary licenses or reach agreement on other settlements on commercially reasonable terms, or at all, and any litigation resulting from these claims by other parties may materially and adversely affect our business and financial results, and we may be subject to substantial damage awards and penalties. Moreover, although we have insurance to protect us from certain claims and cover certain losses to our property, such insurance may not cover us for the full amount of any losses, or at all, and may be subject to substantial exclusions and deductibles.

Our Financial Results May Be Adversely Impacted by Higher than Expected Tax Rates or Exposure to Additional Tax Liabilities

We ~~May Fail~~are subject to ~~Protect~~income, transaction, and other taxes in the United States and various foreign jurisdictions, and significant judgment is required to determine worldwide tax liabilities. The amount of taxes we pay is subject to ongoing audits in various jurisdictions, and a material assessment by a governing tax authority could affect our profitability. As a global company, our effective tax rate is highly dependent upon the geographic composition of worldwide earnings and tax regulations governing each region. Our ~~Critical Proprietary Technology Rights, Which Could Affect Our Business~~

~~Our success depends~~effective tax rate could be adversely affected by changes in ~~part~~the split of earnings between countries with differing statutory tax rates, in the valuation allowance of deferred tax assets, in tax laws, by material audit assessments, or by changes in or expirations of agreements with tax authorities. These factors could affect our profitability. In particular, the carrying value of deferred tax assets, which are predominantly in the United States, is dependent on ~~our proprietary technology and~~ our ability to protect key components of that technology through patents, copyrights, trade secrets and other forms of protection. Protecting our key proprietary technology helps us achieve our goals of developing technological expertise and new products and

generate future taxable income in the United States.

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systems that give us a competitive advantage; increasing market penetration and growth of our installed base; and providing comprehensive support and service to our customers. As part of our strategy to protect our technology, we currently hold a number of U.S. and foreign patents and pending patent applications, and we keep certain information, processes, and techniques confidential and/or as trade secrets. However, other parties may challenge or attempt to invalidate or circumvent any patentsOn August 16, 2022, the U.S. or foreign governments issue to us; these governments may fail to issue patents for pending applications; or we may lose trade secret protection over valuable information due to our or third parties’ intentional or unintentional actions or omissions or even those of our own employees. Additionally, intellectual property litigation can be expensive and time-consuming and even when patents are issued, or trade secret processes are followed,Inflation Reduction Act (the “IRA”) was signed into law. In general, the ~~legal systems in certain~~provisions of the ~~countries~~IRA will be effective beginning with our fiscal year 2024, with certain exceptions. The IRA includes a new 15% corporate minimum tax as well as a 1% excise tax on corporate stock repurchases applicable to repurchases after December 31, 2022. We are in ~~which~~the process of evaluating the potential impacts of the IRA. While we do ~~business might~~ not ~~enforce patents~~currently expect the IRA to have a material impact on our effective tax rate, our analysis is ongoing and ~~other intellectual property rights as rigorously or effectively as~~incomplete, and it is possible that the United States or may favor local entities in their intellectual property enforcement. The rights granted or anticipated under any of our patents, pending patent applications, or trade secrets may be narrower than we expect or, in fact, provide no competitive advantages. Moreover, because we selectively file for patent protection in different jurisdictions, we may not have adequate protection in all jurisdictions based on such filing decisions. Any of these circumstancesIRA could have a material adverse effect on our tax liability.

Recommendations made by the Organization for Economic Co-operation and Development’s Base Erosion and Profit Shifting project have the potential to lead to changes in the tax laws in numerous countries. In addition, President Joseph Biden has made several corporate income tax proposals, including a significant increase to the U.S. corporate income tax rate and changes in the taxation of non-U.S. income. If enacted, such changes could have a material impact on our ~~business.~~effective tax rate.

~~We Are Exposed~~A Failure to ~~Various Risks from~~Comply with Environmental Regulations May Adversely Affect Our ~~Regulatory Environment~~Operating Results

We are subject to ~~various risks~~a variety of domestic and international governmental regulations related to ~~(1) new, different, inconsistent,~~the handling, discharge, and disposal of toxic, volatile, or ~~even conflicting laws, rules, and~~otherwise hazardous chemicals. Failure to comply with present or future environmental regulations could result in fines being imposed on us, require us to undertake remediation activities, suspend production, and/or cease operations, or cause our customers to not accept our products. These regulations could require us to alter our current operations, acquire significant additional equipment, incur substantial other expenses to comply with environmental regulations, or take other actions. Any failure to comply with regulations governing the use, handling, sale, transport, or disposal of hazardous substances could subject us to future liabilities that may adversely affect our operating results, financial condition, and ability to operate our business.

Our Bylaws Designate the Court of Chancery of the State of Delaware as the Sole and Exclusive Judicial Forum for Certain Legal Actions Between the Company and its Stockholders, Which May Discourage Lawsuits with Respect to Such Claims

Our bylaws provide that, unless we consent otherwise, the Court of Chancery of the State of Delaware will be ~~enacted~~the sole and exclusive forum for lawsuits asserting certain stockholder claims (including claims asserted derivatively for our benefit), such as claims against directors and officers for breach of a fiduciary duty, claims arising under any provision of the General Corporation Law of Delaware or our certificate of incorporation or our bylaws, or claims governed by ~~legislative~~the internal affairs doctrine. This is a general summary of the bylaw provision; you should refer to the language of the bylaws for details. While the forum provision does not generally apply to direct claims arising under the Securities Exchange Act of 1934 or ~~executive bodies~~the Securities Act of 1933, derivative lawsuits that assert legal claims arising under these statutes could fall within the provision, as recent court decisions have held.

As a Delaware corporation, Delaware law controls issues of our internal affairs, including duties that our directors, officers, employees, and others owe to the Company and its stockholders. We believe that our exclusive forum provision benefits us, and our stockholders, by permitting relatively prompt resolution of lawsuits concerning our internal affairs, promoting consistent application of Delaware law in these lawsuits, and reducing the possibility of duplicative, costly, multi-jurisdictional litigation with the potential for inconsistent outcomes. However, the forum provision limits a stockholder’s ability to bring a claim in a judicial forum that it believes may be more favorable than Delaware, and this could discourage the filing of such lawsuits.

FINANCIAL, ACCOUNTING AND CAPITAL MARKETS RISKS

The Market for Our Common Stock Is Volatile, Which May Affect Our Ability to Raise Capital or Make Acquisitions or May Subject Our Business to Additional Costs

The market price for our Common Stock is volatile and has fluctuated significantly over the past years. The trading price of our Common Stock could continue to be highly volatile and fluctuate widely in response to a variety of factors, many of which are not within our control or influence. These factors include but are not limited to the following:

•general market, semiconductor, or semiconductor equipment industry conditions;

•economic or political events, trends, and unexpected developments occurring nationally, globally, or in any of our key sales regions;

•variations in our quarterly operating results and financial condition, including our liquidity;

•variations in our revenues, earnings, or other business and financial metrics from forecasts by us or securities analysts or from those experienced by other companies in our industry;

•announcements of restructurings, reductions in force, departure of key employees, and/or ~~regulatory agencies~~consolidations of operations;

•margin trading, short sales, hedging and derivative transactions involving our Common Stock;

•government regulations;

•developments in, or claims relating to, patent or other proprietary rights;

•technological innovations and the introduction of new products by us or our competitors;

•commercial success or failure of our new and existing products; or

•disruptions of relationships with key customers or suppliers.

In addition, the stock market experiences significant price and volume fluctuations. Historically, we have witnessed significant volatility in the ~~countries that we operate; (2) disagreements or disputes related to international trade; and (3) the interpretation and application~~price of ~~laws, rules, and regulations. As a public company with global operations, we are subject~~our Common Stock due in part to the ~~laws~~price of ~~multiple jurisdictions~~and markets for semiconductors. These and other factors have adversely affected and may again adversely affect the price of our Common Stock, regardless of our actual operating performance. In the past, following volatile periods in the price of their stock, many companies became the object of securities class action litigation. If we are

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sued in a securities class action, we could incur substantial costs, and it could divert management’s attention and resources and have an unfavorable impact on our financial performance and the ~~rules and regulations~~price for our Common Stock.

We May Incur Impairments to Goodwill or Long-lived Assets

We review our goodwill identified in business combinations for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of ~~various governing bodies,~~these assets may exceed the fair value. We review all other long-lived assets, including ~~those related to export controls, financial~~finite-lived intangible assets, whenever events or changes in circumstance indicate that these assets may not be recoverable. The process of evaluating the potential impairment of goodwill and other ~~disclosures, corporate governance, privacy, anti-corruption, such as the Foreign Corrupt Practices Act and other local laws prohibiting corrupt payments to governmental officials, conflict minerals~~long-lived assets requires significant judgement. Negative industry or ~~other social responsibility legislation, immigration or travel regulations, and antitrust regulations, among others. Each of these laws, rules, and regulations imposes costs on our business,~~economic trends, including ~~financial costs and potential diversion~~reduced market prices of our ~~management’s attention associated with compliance, and may present risks~~Common Stock, reduced estimates of future cash flows, disruptions to our business, slower growth rates, or lack of growth in our relevant business units, could lead to impairment charges against our long-lived assets, including goodwill and other intangible assets.

When evaluating goodwill, if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative impairment test is performed and we may be required to record an impairment charge in that period, which could adversely affect our result of operations.

When evaluating other long-lived assets, if we conclude that the estimated undiscounted cash flows attributable to the assets are less than their carrying value, we recognize an impairment loss based on the excess of the carrying amount of the assets over their respective fair values, which could adversely affect our results of operations.

Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and to rely heavily on projections of future operating performance. We operate in a highly competitive environment and projections of future operating results and cash flows may vary significantly from actual results. Additionally, if our analysis indicates potential ~~fines, restrictions~~impairment, we may be required to record additional charges to earnings in our financial statements, which could negatively affect our results of operations.

Our Leverage and Debt Service Obligations May Adversely Affect Our Financial Condition, Results of Operations, and Earnings per Share

We have $5.0 billion in aggregate principal amount of senior unsecured notes outstanding. Additionally, we have funding available to us under our $1.5 billion commercial paper program and our $1.5 billion revolving credit facility, which serves as a backstop to our commercial paper program. Our revolving credit facility also includes an option to increase the amount up to an additional $600.0 million, for a potential total commitment of $2.1 billion. We may, in the future, decide to enter into additional debt arrangements.

Our indebtedness could have adverse consequences, including:

•risk associated with the alternative reference rate reform (e.g. LIBOR transition);

•risk associated with any inability to satisfy our obligations;

•a portion of our cash flows that may have to be dedicated to interest and principal payments and may not be available for operations, working capital, capital expenditures, expansion, acquisitions, or general corporate or other purposes; and

•impairment of our ability to obtain additional financing in the future.

Our ability to meet our expenses and debt obligations will depend on our ~~actions,~~future performance, which will be affected by financial, business, economic, regulatory, and ~~reputational damage~~other factors. Furthermore, our operations may not generate sufficient cash flows, to enable us to meet our expenses and service our debt. As a result, we may need to enter into new financing arrangements to obtain the necessary funds. If we determine it is necessary to seek additional funding for any reason, we may not be able to obtain such funding or, if funding is available, obtain it on acceptable terms. If we ~~are~~fail to make a payment on our debt, we could be in default on such debt, and this default could cause us to be in default on our other outstanding indebtedness.

Our Credit Agreements Contain Covenant Restrictions That May Limit Our Ability to Operate Our Business

We may be unable to ~~fully comply.~~respond to changes in business and economic conditions, engage in transactions that might otherwise be beneficial to us, or obtain additional financing because our debt agreements contain, and any of our other future similar agreements may contain, covenant restrictions that limit our ability to, among other things:

~~To maintain high standards~~•incur additional debt, assume obligations in connection with letters of ~~corporate governance~~credit, or issue guarantees;

•create liens;

•enter into transactions with our affiliates;

•sell certain assets; and ~~public disclosure, we intend to invest appropriate resources~~

•merge or consolidate with any person.

Lam Research Corporation 2022 10-K 23

Table of Contents

Our ability to comply with ~~evolving standards. Changes in or ambiguous interpretations~~these covenants is dependent on our future performance, which will be subject to many factors, some of ~~laws, regulations, and standards may create uncertainty regarding compliance matters. Efforts~~which are beyond our control, including prevailing economic conditions. In addition, our failure to comply with ~~new and changing regulations have resulted in, and are likely to continue to~~these covenants could result in ~~increased selling, general,~~a default under the Senior Notes, or our other debt, which could permit the holders to accelerate such debt. If any of our debt is accelerated, we may not have sufficient funds available to repay such debt, which could materially and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If we are found by a court or regulatory agency not to be in compliance with the laws and regulations,negatively affect our ~~business,~~ financial condition ~~and/or~~and results of ~~operations could be adversely affected.~~operation.

There Can Be No Assurance That We Will Continue to Declare Cash Dividends or Repurchase Our Shares at All or in Any Particular Amounts

Our Board of Directors has declared quarterly dividends since April 2014. Our intent to continue to pay quarterly dividends and to repurchase our shares is subject to capital availability and periodic determinations by our Board of Directors that cash dividends and share repurchases are in the best interest of our stockholders and are in compliance with all laws and agreements applicable to the declaration and payment of cash dividends or the repurchasing of shares by us. Future dividends and share repurchases may also be affected by, among other factors, our views on potential future capital requirements for investments in acquisitions and the funding of our research and development; legal risks; changes in federal, state, and international tax laws or corporate laws; contractual restrictions, such as financial or operating covenants in our debt arrangements; availability of onshore cash flow; and changes to our business model. Our dividend payments and share repurchases may change from time to time, and we cannot provide assurance that we will continue to declare dividends or repurchase shares at all or in any particular amounts. A reduction or suspension in our dividend payments or share repurchases could have a negative effect on the price of our Common Stock.


~~Item 1B.~~	~~Unresolved Staff Comments~~

Item 1B. Unresolved Staff Comments

None.

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 25

~~Table of Contents~~


~~Item 2.~~	~~Properties~~

Item 2. Properties

Our executive offices and principal operating and R&D facilities are located in Fremont and Livermore, California; Tualatin, Oregon; Yongin, Gyeonggi Province, Korea; and Villach, Austria. The majority of the Fremont and Livermore facilities are held under operating leases expiring in 2020 and 2021. The Villach facilities are held under capital leases expiring in calendar year 2021. Our Fremont, Livermore, and Villach leases include options to renew or purchase the facilities. In addition, we lease or own properties for our service, technical support, and sales personnel throughout the United States, China, Europe, India, Japan, Korea, Southeast Asia, and Taiwan and lease or own manufacturing facilities located in California, Ohio, Oregon, Austria, Korea, Malaysia, and ~~Korea.~~Taiwan. In July 2021, our new advanced technology production facility in Malaysia began production. The Company owns two properties in Fremont, as well as the majority of the Tualatin facilities. The majority of the Fremont and Livermore facilities are held under finance leases expiring in September 2027. Our Fremont, Livermore, and Villach leases include options to renew or purchase the facilities. Our facilities lease obligations are subject to periodic increases. We believe that our existing facilities are well-maintained and in good operating condition.


~~Item 3.~~	~~Legal Proceedings~~

~~While we are not currently party~~Item 3. Legal Proceedings

Please refer to ~~any legal proceedings that we believe are material, we are either a defendant or plaintiff in various actions that have arisen from time to time in~~ the ~~normal course of business, including intellectual property claims. We accrue for a liability when it is both probable that a liability has been incurred~~subsection entities “Legal Proceedings” within Note 17: Commitments and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. These accruals are reviewed at least quarterly and adjusted to reflect the effects of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, we believe that the amount of any such additional loss would be immaterialContingencies to our ~~business, financial condition, and results~~Consolidated Financial Statements included in Part II, Item 8 of ~~operations.~~this 2022 Form 10-K.


~~Item 4.~~	~~Mine Safety Disclosures~~

Item 4. Mine Safety Disclosures

Not applicable.

~~Continues on next page~~

Lam Research Corporation ~~2019~~2022 10-K 2624

Table of Contents

PART II


~~Item 5.~~	~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Stock Information

Our Common Stock is traded on the Nasdaq Global Select Market^SM under the symbol “LRCX.” As of August ~~15, 2019,~~22, 2022, we had ~~401~~462 stockholders of record.

Dividends

Our Board of Directors has declared quarterly dividends since April 2014. Our intent to continue to pay quarterly dividends is subject to capital availability and periodic determinations by our Board of Directors that cash dividends are in the best interest of our stockholders and are in compliance with all laws and agreements applicable to the declaration and payment of cash dividends by us. During fiscal year ~~2019,~~2022, our quarterly dividend declared was ~~$1.10~~$1.50 per share.

~~Repurchase~~Repurchases of Company Shares

In ~~November 2018,~~May 2022, the Board of Directors authorized management to repurchase up to an additional $5.0 billion of Common ~~Stock on such terms and conditions as it deems appropriate.~~Stock; this authorization supplements the remaining balance from any prior authorization. These repurchases can be conducted on the open market or as private purchases and may include the use of derivative contracts with large financial institutions, in all cases subject to compliance with applicable law. This repurchase program has no termination date and may be suspended or discontinued at any time. Funding for this share repurchase program may be through a combination of cash on hand, cash generation, and borrowings. As of June 30, 2019, we have purchased approximately $2.0 billion of shares under this authorization, $0.5 billion via open market trading and $1.5 billion utilizing accelerated share repurchase arrangements.

Accelerated Share Repurchase Agreements

On June ~~4, 2019,~~2, 2022, we entered into ~~four separate~~an accelerated share repurchase ~~agreements (collectively, the~~agreement (the "June ~~2019~~2022 ASR") with two financial institutions to repurchase a total of ~~$750~~$500 million of Common Stock. We took an initial delivery of approximately ~~3.1 million~~717 thousand shares, which represented 75% of the prepayment amount divided by our closing stock price on June ~~4, 2019.~~2, 2022. The total number of shares received under the June ~~2019~~2022 ASR will be based upon the average daily volume weighted average price of our Common Stock during the repurchase period, less an agreed upon discount. Final settlement of the June ~~2019~~2022 ASR ~~is anticipated to~~will occur ~~no later than~~between August 18, 2022 and November ~~20, 2019.~~4, 2022.

On ~~January 31, 2019,~~February 15, 2022, we entered into ~~two separate~~an accelerated share repurchase ~~agreements (collectively, the "January 2019~~agreement (the "February 2022 ASR") with two financial institutions to repurchase a total of ~~$760~~$600 million of Common Stock. We took an initial delivery of approximately ~~3.3 million~~758 thousand shares, which represented 75% of the prepayment amount divided by our closing stock price on ~~January 30, 2019.~~February 15, 2022. The total number of shares received under the ~~January 2019~~February 2022 ASR was based upon the average daily volume weighted average price of our Common Stock during the repurchase period, less an agreed upon discount. Final settlement of the ~~agreements~~February 2022 ASR occurred ~~during~~in May ~~2019, resulted~~2022, resulting in the receipt of approximately ~~0.8 million~~438 thousand additional shares, which yielded a weighted-average share price of ~~approximately $182.32~~$502.06 for the transaction period.

On August 31, 2021, we entered into an accelerated share repurchase agreement (the “August 2021 ASR") with two financial institutions to repurchase a total of $650 million of Common Stock. We took an initial delivery of approximately 806 thousand shares, which represented 75% of the prepayment amount divided by our closing stock price on August 31, 2021. The total number of shares received under the August 2021 ASR was based upon the average daily volume weighted average price of our Common Stock during the repurchase period, less an agreed upon discount. Final settlement of the August 2021 ASR occurred in January 2022, resulting in the receipt of approximately 265 thousand additional shares, which yielded a weighted-average share price of $606.71 for the transaction period.

~~Continues on next page~~

Lam Research Corporation ~~2019~~2022 10-K 2725

Table of Contents

Share repurchases, including those under the repurchase program, were as follows:


Period	Total Number of Shares Repurchased (1)	Average Price Paid per Share(2)			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Amount Available Under Repurchase Program
	(in thousands, except per share data)
Available balance as of June 27, 2021						$	4,222,220
Quarter ended September 26, 2021	1,737	$	608.89		1,725	3,012,476
Quarter ended December 26, 2021	685	$	634.51		677	2,582,493
Quarter ended March 27, 2022	2,231	$	597.66		2,007	1,382,287
March 28, 2022 - April 24, 2022	3	$	482.67		—	1,382,287
Board authorization, $5.0 billion, May 2022	—	$	—		—	6,382,287
April 25, 2022 - May 22, 2022	903	$	470.86		900	6,164,869
May 23, 2022 - June 26, 2022	1,015	$	507.47		1,012	5,514,636
Total	6,574	$	485.14	(3)	6,321	$	5,514,636

Period
Total Number
of Shares
Repurchased ⁽¹⁾

Average
Price Paid
per Share⁽²⁾

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

Amount
Available
Under
Repurchase
Program
(in thousands, except per share data)
Available balance as of June 24, 2018 $ 1,733,638
Quarter ended September 23, 2018 7,821
$ 183.46
7,807
108
Board authorization, $5.0 billion, November 2018 5,000,000
Quarter ended December 23, 2018 1,693
$ 145.30
1,683
5,000,000
Quarter ended March 31, 2019 6,125
$ 172.06
5,702
4,138,494
April 1, 2019 - April 28, 2019 3
$ 193.52
—
4,138,494
April 29, 2019 - May 26, 2019 1,147
$ 190.89
1,143
3,920,258
May 27, 2019 - June 30, 2019 4,728
$ 176.68
4,724
3,033,500
Total 21,517
$ 181.72
21,059
$ 3,033,500

(1)During the fiscal year ended June 26, 2022, we acquired 253 thousand shares at a total cost of $138.1 million which we withheld through net share settlements to cover minimum tax withholding obligations upon the vesting of restricted stock unit awards granted under our equity compensation plans. The shares retained by us through these net share settlements are not a part of the Board-authorized repurchase program but instead are authorized under our equity compensation plan.

(2)Average price paid per share excludes the effect of accelerated share repurchases. See additional disclosure above regarding our accelerated share repurchase activity during the fiscal year.

(3)Average price paid per share presented is for the quarter ended June 26, 2022.

~~Continues on next page~~

Lam Research Corporation ~~2019~~2022 10-K 2826

Cumulative Five-Year Return

The graph below compares Lam Research Corporation’s cumulative five-year total shareholder return on Common Stock with the cumulative total returns of the Philadelphia Semiconductor Sector Total Return Index, the Nasdaq Composite Total Return index, and the Standard & Poor’s (“S&P”) 500 ~~index, and the Philadelphia Semiconductor Sector Index.~~(TR) index. The graph tracks the performance of a $100 investment in our Common Stock and in each of the indices (with the reinvestment of all dividends) for the five years ended June ~~30, 2019.~~



COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
			Among Lam Research Corporation, the Philadelphia Semiconductor Sector Total Return Index, the Nasdaq Composite Total Return Index, and the S&P 500 ~~Index, and the Philadelphia Semiconductor Index~~(TR) Index.

*$100 invested on June ~~29, 2014~~25, 2017 in stock or June 30, ~~2014~~2017 in index, including reinvestment of dividends.
Indexes calculated on month-end basis.


	June 25, 2017		June 24, 2018		June 30, 2019		June 28, 2020		June 27, 2021		June 26, 2022
Lam Research Corporation	$	100.00	$	116.63	$	128.74	$	211.10	$	444.69	$	321.08
Philadelphia Semiconductor Sector Total Return Index	$	100.00	$	129.11	$	146.29	$	203.84	$	346.16	$	267.91
Nasdaq Composite Total Return Index	$	100.00	$	123.60	$	133.22	$	169.11	$	245.60	$	188.07
S&P 500 (TR) Index	$	100.00	$	114.37	$	126.29	$	135.77	$	191.15	$	170.86

~~Continues on next page~~

Lam Research Corporation ~~2019~~2022 10-K 2927

June 29, 2014 June 28, 2015 June 26, 2016 June 25, 2017 June 24, 2018 June 30, 2019
Lam Research Corporation 100.00
125.08
126.17
236.07
275.33
303.92
Nasdaq Composite Index 100.00
114.44
112.51
144.35
178.42
192.30
S&P 500 Index 100.00
107.42
111.71
131.70
150.64
166.33
Philadelphia Semiconductor Sector Index 100.00
108.97
113.07
172.12
222.22
251.80

Year Ended
June 30,
2019 June 24,
2018 June 25,
2017 June 26,
2016 June 28,
2015
(in thousands, except per share data)
OPERATIONS:
Revenue $ 9,653,559
$ 11,076,998
$ 8,013,620
$ 5,885,893
$ 5,259,312

Gross margin 4,358,459
5,165,032
3,603,359
2,618,922
2,284,336

Goodwill impairment (1) —
—
—
—
79,444

Operating income 2,464,732
3,213,299
1,902,132
1,074,256
788,039

Net income 2,191,430
2,380,681
1,697,763
914,049
655,577

Net income per share:
Basic $ 14.37
$ 14.73
$ 10.47
$ 5.75
$ 4.11

Diluted $ 13.70
$ 13.17
$ 9.24
$ 5.22
$ 3.70

Cash dividends declared per common share $ 4.40
$ 2.55
$ 1.65
$ 1.20
$ 0.84

BALANCE SHEET:
Working capital $ 6,188,759
$ 5,999,603
$ 6,192,383
$ 6,795,109
$ 3,639,488

Total assets 12,001,333
12,479,478
12,122,765
12,264,315
⁽²⁾
9,358,904
⁽²⁾
Long-term obligations, less current portion 4,906,379
2,749,127
2,185,338
3,744,205
⁽²⁾
1,386,536
⁽²⁾
Current portion of long-term debt and capital leases 667,131
610,030
908,439
947,733
⁽²⁾
1,355,705
⁽²⁾

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~Item 6. 30

Three Months Ended ⁽¹⁾
June 30,
2019 March 31,
2019 December 23,
2018 September 23,
2018

unaudited
(in thousands, except per share data)
QUARTERLY FISCAL YEAR 2019:
Revenue $ 2,361,147
$ 2,439,048
$ 2,522,673
$ 2,330,691
Gross margin 1,080,891
1,074,337
1,145,033
1,058,198
Operating income 617,085
565,517
690,379
591,751
Net income 541,825
547,390
568,855
533,360
Net income per share
Basic $ 3.66
$ 3.62
$ 3.67
$ 3.43
Diluted $ 3.51
$ 3.47
$ 3.51
$ 3.23
Number of shares used in per share calculations:
Basic 148,131
151,201
155,022
155,658
Diluted 154,474
157,849
162,170
165,327

Three Months Ended⁽¹⁾
June 24,
2018 March 25,
2018 December 24,
2017 September 24,
2017

unaudited
(in thousands, except per share data)
QUARTERLY FISCAL YEAR 2018:
Revenue $ 3,125,928
$ 2,892,115
$ 2,580,815
$ 2,478,140
Gross margin 1,479,408
1,330,714
1,205,567
1,149,343
Operating income 955,195
827,511
737,371
693,222
Net income (loss) 1,021,146
⁽²⁾
778,800
(9,955 )
⁽²⁾
590,690
Net income (loss) per share
Basic $ 6.35
$ 4.80
$ (0.06 )
⁽²⁾
$ 3.64
Diluted $ 5.82
$ 4.33
$ (0.06 )
⁽²⁾
$ 3.21
Number of shares used in per share calculations:
Basic 160,916
162,378
161,135
162,141
Diluted 175,432
179,779
161,135
183,880

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations contains forward-looking statements, which are subject to risks, uncertainties, and changes in condition, significance, value, and effect. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors, including but not limited to those discussed in “Risk Factors” and elsewhere in this ~~2019~~2022 Form 10-K and other documents we file from time to time with the Securities and Exchange Commission. (See “Cautionary Statement Regarding Forward-Looking Statements” in Part I of this ~~2019~~2022 Form 10-K.)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides a description of our results of operations and should be read in conjunction with our Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements included in Part II, Item 8 of this ~~2019~~2022 Form 10-K. MD&A consists of the following sections:

Executive Summary provides a summary of the key highlights of our results of operations and our management’s assessment of material trends and uncertainties relevant to our business.

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 31

Results of Operations provides an analysis of operating results.

Critical Accounting Policies and Estimates discusses accounting policies that reflect the more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.

Liquidity and Capital Resources provides an analysis of cash flows, contractual obligations, and financial position.

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, ~~faster,~~ 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.

Our customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such as NVM, DRAM, and logic devices. ~~We aim~~Their continued success is part of our commitment to ~~increase our strategic relevance with our customers by contributing more to their continued success.~~driving semiconductor breakthroughs that define the next generation. 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. 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. Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.

Demand from cloud computing, the ~~Cloud~~, IoT, 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. These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical 3D scaling strategies like three-dimensional architecture as well as multiple patterning to enable shrinks.

We believe we are in a strong position with our leadership and ~~competency~~expertise in deposition, etch, and clean to facilitate some of the most significant innovations in semiconductor device manufacturing. Our Customer Support Business Group provides products and services to maximize installed equipment performance, predictability and operational efficiency. Several factors create opportunity for sustainable differentiation for us: (i) our focus on research and development, with several on-going programs relating to sustaining engineering, product and process development, and concept and feasibility; (ii) our ability to effectively leverage cycles of learning from our broad installed base; (iii) our collaborative focus with ~~ecosystem~~semi-ecosystem partners; (iv) our ability to identify and ~~(iv)~~invest in the breadth of our product portfolio to meet technology inflections; and (v) our focus on delivering our multi-product solutions with a goal to enhance the value of Lam’s solutions to our customers.

~~Despite recent semiconductor capital investment volatility, over~~Wafer fabrication equipment spending was strong throughout the 2022 fiscal year driven by increasing device manufacturing complexity and the robust secular demand for semiconductors for NAND, DRAM, and foundry logic markets. Over the longer term, we believe that secular demand for semiconductors will continue to drive sustainable growth for our products and services, and that technology inflections in our industry, including 3D device scaling, multiple patterning, process flow, and advanced packaging chip integration, will lead to an increase in ~~our~~the served addressable market for our products and services in the deposition, etch, and ~~clean.~~clean businesses. During fiscal year 2022, customer demand remained solid; however, ongoing supply chain constraints broadened during the period and impacted our ability to fulfill demand. While ~~there could be continued variability~~we have seen improvements in both our operations and those of our suppliers, we expect supply shortages as well as inflationary cost pressures to persist in at least the ~~near-term, we believe that demand for our products~~near term. Risks and services will increase faster than overall spending on wafer fabrication equipment, as the proportion of customers’ capital expenditures rises in these technology inflection areas, and as we gain market share.

~~Continues on next page~~

Lam Research Corporation ~~2019~~2022 10-K 3228

uncertainties related to the COVID-19 pandemic, broadening supply chain challenges, and inflationary pressures may continue to negatively impact our revenue and gross margin.

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

Fiscal year ~~2019~~2022 revenue ~~decreased 13%~~increased over 17% compared to fiscal year ~~2018,~~2021, reflecting ~~lower~~continued strong customer demand for semiconductor equipment. Gross margin as a percentage of revenue decreased ~~primarily~~ due to ~~lower factory utilization.~~inflationary cost pressures that led to higher spending on material costs, freight and logistics, and labor-related expenses, as well as unfavorable customer and product mix, partially offset by decreased variable compensation. The ~~decrease~~increase in operating expenses in fiscal year ~~2019~~2022 compared to fiscal year ~~2018~~2021 was mainly driven by ~~lower~~higher employee-related costs as a result of increased headcount, supplies expense, rent, repair and ~~amortization related to intangibles acquired through business combinations,~~utilities expense, and outside services spending, partially offset by ~~restructuring charges.~~lower deferred compensation plan-related costs.

Fiscal year ~~2018~~2021 revenue increased ~~38%~~approximately 46% compared to fiscal year ~~2017,~~2020, reflecting ~~an increase in technology and capacity investments by our customers.~~stronger customer demand for semiconductor equipment. Gross margin as a percentage of revenue ~~improved~~increased primarily due to ~~favorable margin~~customer and product mix, partially offset by higher costs incurred in freight and ~~higher revenue. Operating~~logistics as well as start-up expenses for our new Malaysia manufacturing facility. The increase in operating expenses in fiscal year ~~2018 increased as~~2021 compared to fiscal year ~~2017 primarily~~2020 was mainly driven by higher employee-related costs as a result of ~~higher employee~~increased headcount and ~~increased investment in research~~outsourcing services, deferred compensation plan-related costs, and ~~development.~~supplies, partially offset by lower travel expenses and miscellaneous costs.

Our cash and cash equivalents, investments, and restricted cash and investments balances totaled approximately ~~$5.7~~$3.9 billion as of June ~~30, 2019,~~26, 2022, compared to ~~$5.2~~$6.0 billion as of June ~~24, 2018.~~27, 2021. Cash flow provided from operating activities was ~~$3.2~~$3.1 billion for fiscal year ~~2019~~2022 compared to ~~$2.7~~$3.6 billion for fiscal year ~~2018.~~2021. Cash flow provided from operating activities in fiscal year ~~2019~~2022 was primarily used for ~~$3.8~~$3.9 billion in treasury stock purchases, ~~$678~~including net share settlement on employee stock-based compensation; $815 million in dividends paid to our ~~stockholders,~~stockholders; and ~~$303~~$546 million of capital expenditures. These cash outflows were partially offset by ~~$2.0 billion of net proceeds from issuance of debt and $85~~$114 million of treasury stock reissuance and Common Stock issuance resulting from our employee equity-based compensation programs.

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 33

Results of Operations


	Year Ended
	June 26, 2022			June 27, 2021			June 28, 2020
Revenue (in millions)	$	17,227		$	14,626		$	10,045
China	31		%	35		%	31		%
Korea	23		%	27		%	24		%
Taiwan	17		%	14		%	19		%
Japan	9		%	9		%	9		%
United States	8		%	6		%	8		%
Southeast Asia	8		%	6		%	6		%
Europe	4		%	3		%	3		%

Year Ended
June 30,
2019 June 24,
2018 June 25,
2017
Revenue (in millions) $ 9,654
$ 11,077
$ 8,014
Korea 23 % 35 % 31 %
China 22 % 16 % 13 %
Japan 20 % 17 % 13 %
Taiwan 17 % 13 % 26 %
United States 8 % 7 % 8 %
Southeast Asia 6 % 7 % 5 %
Europe 4 % 5 % 4 %

Revenue ~~decreased~~increased in fiscal year ~~2019~~2022 compared to fiscal ~~year 2018, but~~years 2021 and 2020, primarily due to the increased ~~compared to fiscal year 2017, primarily as a result of the volatility of~~investment by our customers in semiconductor capital ~~investments by~~equipment as well as higher revenue from our ~~customers.~~Customer Support Business Group for spares, services, upgrades and mature node equipment. The overall Asia region continued to account for a majority of our revenues as a substantial amount of the worldwide capacity investments for semiconductor manufacturing continued to occur in this region.

~~Our~~The deferred revenue balance was ~~$449 million~~$2.2 billion as of June ~~30, 2019,~~26, 2022 compared to ~~$994 million~~$1.1 billion as of June ~~24, 2018.~~ 27, 2021, driven by additional deferrals related to tools pending full delivery and future servicing of our existing installed base.

Lam Research Corporation 2022 10-K 29

The ~~deferred~~following table presents our revenue atdisaggregated between system and customer support-related revenue:


	Year Ended
	June 26, 2022		June 27, 2021		June 28, 2020
	(in thousands)
Systems Revenue	$	11,322,271	$	9,764,845	$	6,625,130
Customer support-related revenue and other	5,904,768		4,861,305		3,419,606
	$	17,227,039	$	14,626,150	$	10,044,736

Please refer to Note 4: Revenue of our Consolidated Financial Statements in Part II, Item 8 of this 2022 Form 10-K for additional information regarding the ~~end~~composition of ~~June 2019 is recognized under Accounting Standard Codification (“ASC”) 606, while~~ the ~~same values as of June 2018 are recognized under ASC 605,~~two categories into which ~~contributes to the change in value period over period. Our deferred~~ revenue balance does not include shipments to customers in Japan, to whom title does not transfer until customer acceptance. Shipments to customers in Japan are classified as inventory at cost until the time of customer acceptance. The anticipated future revenue value from shipments to customers in Japan was approximately $78 million as of June 30, 2019, compared to $607 million as of June 24, 2018.has been disaggregated.

The percentage of ~~total Lam semiconductor systems~~leading- and non-leading-edge equipment and upgrade revenue tofrom each of the markets we serve was as ~~follows for fiscal year 2019:~~follows:



	~~Year Ended~~
	June 30, 2019
~~Memory~~	70	%
~~Foundry~~	20	%
~~Logic/integrated device manufacturing~~	10	%


	Year Ended
	June 26, 2022		June 27, 2021		June 28, 2020
Memory	60	%	61	%	58	%
Foundry	26	%	32	%	31	%
Logic/integrated device manufacturing	14	%	7	%	11	%

The decrease in gross margin as a percentage of revenue for fiscal year ~~2019~~2022 compared to fiscal year ~~2018~~2021 was ~~primarily~~ due to ~~lower factory utilization.~~inflationary cost pressures that led to higher spending on material costs, freight and logistics, and labor-related expenses, as well as unfavorable customer and product mix, partially offset by decreased variable compensation.

The increase in gross margin as a percentage of revenue for fiscal year ~~2018~~2021 compared to fiscal year ~~2017~~2020 was primarily related to customer and product mix, partially offset by increased spending on freight and logistics due in significant part to ~~favorable margin mix~~COVID-19 disruptions, start-up expenses for our Malaysia manufacturing facility, and ~~higher revenue.~~

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 34

deferred compensation plan-related costs.

Research and Development


	Year Ended									Change
	June 26, 2022			June 27, 2021			June 28, 2020			FY22 vs. FY21				FY21 vs. FY20

	(in thousands, except percentages)
Research & development	$	1,604,248		$	1,493,408		$	1,252,412		$	110,840	7.4	%	$	240,996	19.2	%
Percent of revenue	9.3		%	10.2		%	12.5		%	(0.9)%				(2.3)%

Year Ended Change
June 30,
2019 June 24,
2018 June 25,
2017 FY19 vs. FY18 FY18 vs. FY17

(in thousands, except percentages)
Research & development $ 1,191,320
$ 1,189,514
$ 1,033,742
$ 1,806
0.2 % $ 155,772
15.1 %
Percent of revenue 12.3 % 10.7 % 12.9 % 1.6% (2.2)%

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 ~~2019 increased slightly~~2022 compared to fiscal year ~~2018.~~2021 was mainly driven by an increase of $89 million in employee-related costs due in part to increased headcount and $43 million in spending for supplies, partially offset by a decrease of $44 million in deferred compensation plan-related costs.

The increase in R&D expense during fiscal year ~~2018~~2021 compared to fiscal year ~~2017~~2020 was ~~primarily~~mainly driven by an increase of $137 million in employee-related costs due ~~to an $88 million increase~~ in ~~employee compensation and benefits related~~part to increased headcount, ~~a $24~~$49 million ~~increase in supplies, and a $23 million increase~~ in outside ~~services~~service costs, $32 million in deferred compensation plan-related costs, and ~~miscellaneous expenses.~~$27 million in spending for supplies

Lam Research Corporation 2022 10-K 30

Selling, General, and Administrative


	Year Ended									Change
	June 26, 2022			June 27, 2021			June 28, 2020			FY22 vs. FY21				FY21 vs. FY20

	(in thousands, except percentages)
Selling, general, and administrative ("SG&A")	$	885,737		$	829,875		$	682,479		$	55,862	6.7	%	$	147,396	21.6	%
Percent of revenue	5.1		%	5.7		%	6.8		%	(0.6)%				(1.1)%

Year Ended Change
June 30,
2019 June 24,
2018 June 25,
2017 FY19 vs. FY18 FY18 vs. FY17

(in thousands, except percentages)
Selling, general, and administrative ("SG&A") $ 702,407
$ 762,219
$ 667,485
$ (59,812 ) (7.8 )% $ 94,734
14.2 %
Percent of revenue 7.3 % 6.9 % 8.3 % 0.4% (1.4)%

The ~~decrease~~increase in SG&A expense during fiscal year ~~2019~~2022 compared to fiscal year ~~2018~~2021 was primarily ~~due to a $65 million decrease in employee variable compensation and a $17 million decrease in amortization related to intangibles acquired through business combinations, partially offset~~driven by an increase of ~~$10~~$28 million in ~~depreciation and $8~~outside service costs, $28 million in ~~restructuring charges.~~spending for rent, repair and utilities, and $26 million in employee-related costs due in part to increased headcount, partially offset by a decrease of $29 million in deferred compensation plan-related costs.

The increase in SG&A expense during fiscal year ~~2018~~2021 compared to fiscal year ~~2017~~2020 was primarily due to a ~~$44~~$97 million increase in ~~employee compensation and benefits from~~employee-related costs due in part to increased headcount, ~~a $28~~$37 million ~~increase~~ in outside ~~services,~~service costs, and $21 million in deferred compensation plan-related costs, partially offset by a ~~$15~~$9 million ~~increase~~decrease in ~~rent, utilities~~travel and ~~repairs.~~

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 35

entertainment costs.

Other ~~Expense,~~Income (Expense), Net

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

Year Ended Change
June 30,
2019 June 24,
2018 June 25,
2017 FY19 vs. FY18 FY18 vs. FY17

(in thousands, except percentages)
Interest income $ 98,771
$ 85,813
$ 57,858
$ 12,958
15.1 % $ 27,955
48.3 %
Interest expense (117,263 ) (97,387 ) (117,734 ) $ (19,876 ) 20.4 % $ 20,347
(17.3 )%
Gains on deferred compensation plan related assets, net 10,464
14,692
17,880
$ (4,228 ) (28.8 )% $ (3,188 ) (17.8 )%
Loss on impairment of investments —
(42,456 ) —
$ 42,456
(100.0 )% $ (42,456 ) 100.0 %
Gains (losses) on extinguishment of debt, net 118
542
(36,252 ) $ (424 ) (78.2 )% $ 36,794
(101.5 )%
Foreign exchange gains (losses), net 826
(3,382 ) (569 ) $ 4,208
(124.4 )% $ (2,813 ) 494.4 %
Other, net (11,077 ) (19,332 ) (11,642 ) $ 8,255
(42.7 )% $ (7,690 ) 66.1 %
$ (18,161 ) $ (61,510 ) $ (90,459 ) $ 43,349
(70.5 )% $ 28,949
(32.0 )%


	Year Ended						Change
	June 26, 2022		June 27, 2021		June 28, 2020		FY22 vs. FY21				FY21 vs. FY20

	(in thousands, except percentages)
Interest income	$	15,209	$	19,687	$	85,433	$	(4,478)	(22.7)	%	$	(65,746)	(77.0)	%
Interest expense	(184,759)		(208,597)		(177,440)		$	23,838	(11.4)	%	$	(31,157)	17.6	%
(Losses) gains on deferred compensation plan related assets, net	(38,053)		61,838		5,999		$	(99,891)	(161.5)	%	$	55,839	930.8	%


Foreign exchange (losses) gains, net	(723)		(6,962)		(3,317)		$	6,239	(89.6)	%	$	(3,645)	109.9	%
Other, net	19,618		22,815		(9,499)		$	(3,197)	(14.0)	%	$	32,314	(340.2)	%
	$	(188,708)	$	(111,219)	$	(98,824)	$	(77,489)	69.7	%	$	(12,395)	12.5	%

Interest income decreased in fiscal year 2022 compared to fiscal year 2021 as a result of lower cash balances. Interest income decreased in fiscal year 2021 compared to fiscal year 2020 as a result of lower yield.

Interest expense decreased in fiscal year 2022 compared to fiscal year 2021 primarily due to the payoff of $800 million of our notes in June 2021. Interest expense increased in fiscal year 2019 compared to fiscal years 2018 and 2017 primarily as a result of higher yield. Interest expense in the year ended June 30, 2019, increased compared to the year ended June 24, 2018, primarily due to issuance of $2.5 billion of senior notes. The decrease in interest expense during fiscal year 20182021 compared to fiscal year ~~2017 was~~2020 primarily due to the ~~conversions of 2018 and 2041 Convertible Notes as well as the retirement~~full-year impact of the ~~2018 Convertible Notes~~issuance of $2.0 billion senior notes in ~~May 2018.~~fiscal year 2020.

The ~~gain~~gains or losses on deferred compensation plan related assets, net in fiscal years ~~2019, 2018~~2022, 2021 and ~~2017 was~~2020 were driven by ~~an improvement~~fluctuations in the fair market value of the underlying funds.

The ~~loss on impairment of investments during~~variation in other, net for the fiscal year ~~2018 is~~2022 compared to fiscal years 2021 and 2020 was primarily driven by fluctuations in the ~~result~~fair market value of ~~a decision to sell selected investments held in foreign jurisdictions in connection with our cash repatriation strategy following the December 2017 U.S. tax reform.~~

Loss on extinguishment of debt during fiscal year 2017 related to the special mandatory redemption of certain senior notes issued, as well as the termination of the Amended and Restated Term Loan Agreement following the termination of the Agreement and Plan of Merger and Reorganization with KLA-Tencor.equity investments.

As discussed in Note 7, “Income Taxes,” to our Consolidated Financial Statements in Part II, Item 8 of this 2019 Form 10-K, the “Tax Cuts & Jobs Act” (hereafter referred to as “U.S. tax reform”) was signed into law on December 22, 2017 and was effective starting in our quarter ended December 24, 2017. U.S. tax reform reduced the U.S. federal statutory tax rate from 35% to 21%, assessed a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and created new taxes on certain foreign sourced earnings. The impact on income taxes due to a change in legislation is required under the authoritative guidance of Accounting Standards Codification (“ASC”) 740, Income Taxes, to be recognized in the period in which the law is enacted. In conjunction, the SEC issued Staff Accounting Bulletin (“SAB”) 118, which allowed for the recording of provisional amounts related to U.S. tax reform and subsequent adjustments related to U.S. tax reform during an up to one-year measurement period that is similar to the measurement period used when accounting for business combinations. We recorded what we believed to be reasonable estimates during the SAB 118 measurement period. During the December 2018 quarter, we finalized the accounting of the income tax effects of U.S. tax reform. Although the SAB 118 measurement period has ended, there may be some aspects of U.S. tax reform that remain subject to future regulations and/or notices which may further clarify certain provisions of U.S.

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 36

tax reform. We may need to adjust our previously recorded amounts to reflect the recognition and measurement of our tax accounting positions in accordance with ASC 740; such adjustments could be material.

~~The below discussion around the provision for income taxes and effective tax rate are significantly impacted by U.S. tax reform.~~

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


	Year Ended									Change
	June 26, 2022			June 27, 2021			June 28, 2020			FY22 vs. FY21				FY21 vs. FY20

	(in thousands, except percentages)
Income tax expense	$	587,828		$	462,346		$	323,225		$	125,482	27.1	%	$	139,121	43.0	%
Effective tax rate	11.3		%	10.6		%	12.6		%	0.7%				(2.0)%

The increase in the effective tax rate in fiscal year 2022 as compared to fiscal year 2021 was primarily due to the change in level and proportion of income in higher and lower tax jurisdictions.

Lam Research Corporation 2022 10-K 31

Year Ended Change
June 30,
2019 June 24,
2018 June 25,
2017 FY19 vs. FY18 FY18 vs. FY17

(in thousands, except percentages)
Income tax expense $ 255,141
$ 771,108
$ 113,910
$ (515,967 ) (66.9 )% $ 657,198
576.9 %
Effective tax rate 10.4 % 24.5 % 6.3 % (14.1)% 18.2%

Table of Contents

The decrease in the effective tax rate in fiscal year ~~2019~~2021 as compared to fiscal year ~~2018~~2020 was primarily due to

~~the impact of U.S.~~ a cumulative income tax ~~reform and its mandated one-time transition tax on accumulated unrepatriated foreign earnings~~benefit reversal due to a court ruling in fiscal year ~~2018.~~

~~The increase in the effective tax rate in fiscal year 2018~~2020, as ~~compared to fiscal year 2017 was primarily due to the impact of U.S. tax reform and its mandated one-time transition tax on accumulated unrepatriated foreign earnings.~~

outlined below.

In July 2015, the U.S. Tax Court issued an opinion favorable to Altera Corporation (“Altera”) with respect to Altera’s litigation with the Internal Revenue Service (“IRS”). The litigation related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement with Altera’s foreign subsidiary. In its opinion, the U.S. Tax Court accepted Altera’s position of excluding stock-based compensation from its intercompany cost-sharing arrangement. In JuneNovember 2019, the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”)~~, through a three-judge panel, reversed~~ rejected the ~~2015 decision~~en banc appeal petitioned by Altera Corporation (“Altera”) in July 2019. In that quarter, we evaluated the impact of the ~~U.S. Tax Court.~~decision and viewed the denial as an indication that Altera’s position of excluding stock-based compensation expense in an intercompany cost-sharing arrangement was unlikely to be sustained upon further litigation. As a result, we reversed $75 million of net tax assets associated with stock-based compensation benefits related to previous years in the Condensed Consolidated Financial Statements in the three months ended December 29, 2019 and we no longer reflected a net tax benefit within our financial statements related to excluding stock-based compensation from our intercompany cost-sharing arrangement. In February 2020, Altera ~~has~~ petitioned the ~~Ninth Circuit for an en banc rehearing~~Supreme Court of ~~a larger panel of eleven Ninth Circuit judges. We will continue~~the United States ("SCOTUS") to ~~monitor and evaluate~~hear their case. In June 2020, the ~~potential impact of this litigation on our fiscal year 2020 Consolidated Financial Statements. The estimated potential impact is in~~SCOTUS denied the ~~range of $75 million, which may result in a decrease in deferred tax assets and an increase in tax expense.~~petition.

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. ~~Due to the Global Intangible Low-Taxed Income (“GILTI”) provision described in Note 7 - Income Taxes, international~~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 ~~2019~~2022 Form 10-K.

A provision enacted as part of the 2017 Tax Cuts & Jobs Act requires companies to capitalize research and experimental expenditures for tax purposes in tax years beginning after December 31, 2021 (our fiscal year 2023). If this provision is not repealed or deferred, we expect our fiscal year 2023 cash tax payments to increase significantly compared to our fiscal year 2022.

On August 16, 2022, the Inflation Reduction Act was signed into law. In general, the provisions of the IRA will be effective beginning with our fiscal year 2024, with certain exceptions. The IRA includes a new 15% corporate minimum tax. We are in the process of evaluating the potential impacts of the IRA. The impact on income taxes due to changes in legislation is required under the authoritative guidance of Accounting Standard Codification (“ASC”) 740, Income Taxes, to be recognized in the period in which the law is enacted. While we do not currently expect the IRA to have a material impact on our effective tax rate, our analysis is ongoing and incomplete, and it is possible that the IRA could have a material adverse effect on our tax liability. We will continue to monitor issuance of additional guidance.

Deferred Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Our gross deferred tax assets were ~~$471~~$1,103 million and ~~$437~~$772 million at the end of fiscal years ~~2019~~2022 and ~~2018,~~2021, respectively. These gross deferred tax assets were offset by gross deferred tax liabilities of ~~$160~~$234 million and ~~$169~~$187 million ~~at the end of fiscal years 2019 and 2018, respectively,~~ and a valuation allowance of $227 million and $200 million at the end of fiscal years 2019 and 2018, respectively. The increase in the gross deferred tax assets and valuation allowance between fiscal year 2019 and 2018 is primarily due to increases in tax carryforwards.

~~As of~~representing our ~~fiscal year ended June 30, 2019, we continue to record a valuation allowance to offset the~~ entire California deferred tax asset balance due to the single sales factor apportionment resulting in lower taxable income in ~~California. The valuation allowances were $227~~California of $309 million and ~~$200~~$277 million at the end of fiscal years ~~2019~~2022 and ~~2018,~~2021, respectively.

The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2022 and 2021 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries and tax credits and increases in gross deferred tax liabilities for capital assets.

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.

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 37

~~Table of Contents~~

Uncertain Tax Positions

We re-evaluate uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Any change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

Critical Accounting Policies and Estimates

A critical accounting policy is defined as one that has both a material impact on our financial condition and results of operations and requires us to make difficult, complex and/or subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make certain judgments, estimates and assumptions that could affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates and assumptions on historical experience and on various other assumptions we believe to be applicable and evaluate them on an ongoing basis to ensure they remain reasonable under current conditions. Actual results could differ significantly from those estimates, which could have a material impact on our business, results of operations, and financial condition. Our critical accounting estimates include:

•the recognition and valuation of revenue from arrangements with multiple performance obligations which impacts revenue;

•the valuation of inventory, which impacts gross margin;

•the valuation of warranty reserves, which impacts gross margin;

•the recognition and measurement of current and deferred income taxes, including the measurement of uncertain tax positions, which impact our provision for income tax expenses; and

Lam Research Corporation 2022 10-K 32

Table of Contents

•the valuation and recoverability of long-lived assets, which impacts gross margin and operating expenses when we record asset impairments or accelerate their depreciation or amortization.

We believe that the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our consolidated financial statements regarding the critical accounting estimates indicated above. See Note 2, “Summary of Significant Accounting Policies,” of our Consolidated Financial Statements in Part II, Item 8 of this ~~2019~~2022 Form 10-K for additional information regarding our accounting policies.

Revenue Recognition: On June 25, 2018, we adopted FASB ASU No. 2014-09 (ASC 606) - Revenue From Contracts with Customers which provides guidance for revenue recognition that superseded the revenue recognition requirements in ASC 605, Revenue Recognition and most industry specific guidance.

We recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services by following a five-step process, (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when or as we satisfy a performance obligation, as further described below.

Identify the contract with a customer. We generally consider documentation of terms with an approved purchase order as a customer contract, provided that collection is considered probable, which is assessed based on the creditworthiness of the customer as determined by credit checks, payment histories, and/or other circumstances.

Identify the performance obligations in the contract. Performance obligations include sales of systems, spare parts, and services. In addition, our customer contracts contain provisions for installation and training services which have been deemed immaterial in the context of the contract.

Determine the transaction price. The transaction price for our contracts with customers consists of both fixed and variable consideration provided it is probable that a significant reversal of revenue will not occur when the uncertainty related to variable consideration is resolved. 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. Customer invoices are generally due within 30 to 90 days after issuance.

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~~Lam Research Corporation 2019 10-K~~ 38

~~Table of Contents~~

Our contracts with customers typically do not include significant financing components as the period between the transfer of performance obligations and timing of payment are generally within one year.

Allocate the transaction price to the performance obligations in the contract. For contracts that contain multiple performance obligations, we allocate the transaction price to the performance obligations in the contract on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies.

Recognize revenue when or as we satisfy a performance obligation. Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less.

Inventory Valuation: Our policy is to assess the valuation of all inventories including manufacturing raw materials, work-in-process, finished goods, and spare parts in each reporting period. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated net realizable value if less than cost. Estimates of market value include but are not limited to management’s forecasts related to our future manufacturing schedules, customer demand, technological and/or market obsolescence, general semiconductor market conditions, and possible alternative uses. If future customer demand or market conditions are less favorable than our projections, additional inventory write-downs may be required and would be reflected in cost of goods sold in the period in which ~~we make~~ the ~~revision.~~revision is made.

Warranty: We record a provision for estimated warranty expenses to cost of sales for each system when we recognize revenue. We periodically monitor the performance and cost of warranty activities, if actual costs incurred are different than our estimates, we may recognize adjustments to provisions in the period in which those differences arise or are identified. We do not maintain general or unspecified reserves; all warranty reserves are related to specific systems.

Income Taxes: Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. Realization of our net deferred tax assets is dependent on future taxable income. We believe it is more likely than not that such assets will be realized; however, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time. In the event that we determine that we will not be able to realize all or part of our net deferred tax assets, an adjustment will be charged to earnings in the period such determination is made. Likewise, if we later determine that it is more likely than not that the deferred tax assets will be realized, then the previously provided valuation allowance will be reversed.

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. Our policy is to include interest and penalties related to ~~unrecognized~~uncertain tax ~~benefits~~positions as a component of income tax expense.

Lam Research Corporation 2022 10-K 33

Table of Contents

Long-lived ~~Assets:~~Assets: We review goodwill at least annually for ~~impairment. If~~impairment during the fourth quarter of each fiscal year and if certain events or indicators of impairment occur between annual impairment ~~tests, we will perform an impairment test at that date. In testing for a~~tests. The process of evaluating the potential impairment of goodwill ~~we: (1) allocate~~requires significant judgment. When reviewing goodwill for impairment, we first perform a qualitative assessment to ~~the reporting units to which the acquired goodwill relates; (2) estimate the fair value of our reporting units; and (3)~~ determine whether it is more likely than not that the ~~carrying value (book value) of those reporting units. Prior to this allocation of the assets to the reporting units, we assess long-lived assets for impairment. Furthermore, if the estimated~~ fair value of a reporting unit is less than ~~the~~its carrying value, we must estimate the fair value of all identifiable assets and liabilities of that reporting unit, in a manner similar to a purchase price allocation for an acquired business. This can require independent valuations of certain internally generated and unrecognized intangible assets such as in-process R&D and developed technology. Only after this process is completed can the amount of goodwill impairment, if any, be determined.value. In our goodwill impairment process we first assess qualitative factors to determine whether it is necessary to perform a quantitative analysis. We do not calculate the fair value of a reporting unit unless we determine, based onperforming a qualitative assessment, we consider business conditions and other factors including, but not limited to (i) adverse industry or economic trends, (ii) restructuring actions and lower projections that may impact future operating results, (iii) sustained decline in share price, and (iv) overall financial performance and other events affecting the reporting units. If we conclude that it is more likely than not that the ~~reporting unit’s~~ fair value of a reporting unit is less than its carrying ~~amount.~~amount, then a quantitative impairment test is performed by estimating the fair value of the reporting unit and comparing it to its carrying value, including goodwill allocated to that reporting unit.

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 39

~~Table of Contents~~

~~The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis.~~ We determine the fair value of our reporting units by using an income approach. Under the income approach, we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.

In estimating the fair value of a reporting unit, we make estimates and judgments about the future cash flows of our reporting units, including estimated growth rates and assumptions about the economic environment. Although our cash flow forecasts are based on assumptions that are consistent with the plans and estimates we are using to manage the underlying businesses, there is significant judgment involved in determining the cash flows attributable to a reporting unit. In addition, we make certain judgments about allocating shared assets to the estimated balance sheets of our reporting units. Changes in judgment on these assumptions and estimates could result in a goodwill impairment charge.

~~As a result, several factors could result in an impairment~~If after completing the quantitative assessment the carrying value of a material amount of our goodwill balance in future periods, including but not limited to: (1) weakening of the global economy, weakness in the semiconductor equipment industry, or our failure to reach internal forecasts, which could impact our ability to achieve our forecasted levels of cash flows and reduce the estimated discounted cash flow value of our reporting ~~units; and (2) a decline in our Common Stock price and resulting market capitalization, to the extent we determine that the decline is sustained and indicates a reduction in the~~unit exceeds its fair value, of our reporting units below their carrying value. Further, the value assigned to intangible assets, other than goodwill, is based on estimates and judgments regarding expectations such as the success and lifecycle of products and technology acquired. If actual product acceptance differs significantly from the estimates, we ~~may be required to~~would record an impairment charge equal to ~~write down~~ the ~~asset~~excess of the carrying value of the reporting unit over its fair value, up to ~~its realizable value.~~

the amount of the goodwill assigned to the reporting unit.

For other long-lived assets, we ~~routinely consider whether indicators~~review them whenever events or changes in circumstances indicate the carrying value of ~~impairment are present.~~an asset or asset group may not be recoverable. If such indicators are present, we determine whether the sum of the estimated undiscounted cash flows attributable to the assets is less than their carrying value. If the sum is less, we recognize an impairment loss based on the excess of the carrying amount of the assets over their respective fair values. Fair value is determined by discounted future cash flows, appraisals or other methods. We recognize an impairment charge to the extent the present value of anticipated net cash flows attributable to the asset ~~are~~is less than the asset’s carrying value. The fair value of the asset then becomes the asset’s new carrying value, which we depreciate over the remaining estimated useful life of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value. In addition, for fully amortized intangible assets, we de-recognize the gross cost and accumulated amortization in the period we determine the intangible asset no longer enhances future cash flows.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see Note 3, “Recent Accounting Pronouncements,” of our Consolidated Financial Statements, included in Part II, Item 8 of this ~~2019~~2022 Form 10-K.

Liquidity and Capital Resources

Total gross cash, cash equivalents, investments, and restricted cash and investments balances were ~~$5.7~~$3.9 billion at the end of fiscal year ~~2019~~2022 compared to ~~$5.2~~$6.0 billion at the end of fiscal year ~~2018.~~2021. This ~~increase~~decrease was primarily due to ~~cash provided by operating activities and the issuance of $2.5 billion of senior notes, partially offset by~~ Common Stock repurchases in connection with our stock repurchase program, dividends paid, and ~~dividends paid.~~

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~~Lam Research Corporation 2019 10-K~~ 40

~~Table of Contents~~

capital expenditures, partially offset by cash provided by operating activities.

Cash Flow from Operating Activities

Net cash provided by operating activities of ~~$3.2~~$3.1 billion during fiscal year ~~2019~~2022 consisted of (in ~~millions)~~thousands):

Net income $ 2,191
Non-cash charges:
Depreciation and amortization 309
Equity-based compensation expense 187
Deferred income taxes (5 )
Amortization of note discounts and issuance costs 7
Changes in operating asset and liability accounts 492
Other (5 )
$ 3,176


Net income	$	4,605,286
Non-cash charges:
Depreciation and amortization	333,739
Deferred income taxes	(257,438)
Equity-based compensation expense	259,064


Changes in operating asset and liability accounts	(1,796,226)
Other	(44,751)
	$	3,099,674

Significant changes in operating asset and liability accounts, net of foreign exchange impact, included the following ~~sources~~uses of cash: ~~decreases~~increases in accounts receivable of ~~$732 million and~~$1.3 billion, inventories of ~~$281~~$1.4 billion, and prepaid expenses and other assets of $53 million; partially offset by ~~uses~~the following sources of cash: ~~decreases~~increases in deferred profit of $605 million, accounts payable of $168 million, and accrued expenses and other liabilities of ~~$195 million, deferred profit~~$123 million.

Lam Research Corporation 2022 10-K 34

Table of ~~$178 million, accounts payable of $131 million, and prepaid assets of $18 million.~~Contents

Cash Flow from Investing Activities

Net cash ~~used~~provided by investing activities during fiscal year ~~2019~~2022 was ~~$1.6 billion,~~$612 million, primarily consisting of net ~~purchases~~sales/maturities of ~~available-for-sale~~available for sale securities of ~~$1.3~~$1.2 billion, ~~along with~~partially offset by capital expenditures of ~~$303~~$546 million.

Cash Flow from Financing Activities

Net cash used byfor financing activities during fiscal year ~~2019~~2022 was ~~$2.4~~$4.6 billion, primarily consisting of ~~$3.8~~$3.9 billion in Common Stock repurchases, ~~$678~~including net share settlement on employee stock-based compensation; and $815 million of dividends ~~paid, $2.0 billion of net proceeds from issuance of debt, and $85~~paid; partially offset by $114 million of stock issuance and treasury stock reissuances associated with our employee stock-based compensation plans.

Liquidity

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, cash equivalents, and short-term investments as of June ~~30, 2019,~~26, 2022, 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, uncertainty in the global economy and the semiconductor industry, as well as disruptions in credit markets, have in the past, 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 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. While we have substantial cash balances, we may require additional funding and need or choose to raise the required funds through borrowings or public or private sales of debt or equity securities. We believe that, if necessary, we will be able to access the capital markets on terms and in amounts adequate to meet our objectives. However, ~~given~~ the ~~possibility of changes~~ongoing COVID-19 pandemic has in ~~market conditions or other occurrences,~~the past caused disruption in the capital markets, and were it to do the same in the future, that could make any financing more challenging, and there can be no assurance that ~~such funding~~we will be ~~available in needed quantities~~able to obtain such financing on commercially reasonable terms or ~~on terms favorable to us.~~

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~~Lam Research Corporation 2019 10-K~~ 41

~~Table of Contents~~

Off-Balance Sheet Arrangements and Contractual Obligations

We have certain obligations to make future payments under various contracts, some of which are recorded on our balance sheet and some of which are not. ~~Obligations~~Certain obligations that are recorded on our balance sheet in accordance with GAAP include our long-term debt, ~~which is outlined in the following table. Our off-balance sheet arrangements are presented as~~ operating leases and ~~purchase obligations in the table. Our contractual obligations~~finance leases; refer to Notes 14 and ~~commitments as of June 30, 2019, relating to these agreements and our guarantees are included in the following table based on their contractual maturity date.~~

~~The amounts in the table below exclude $373 million of liabilities related to uncertain tax benefits as we are unable to reasonably estimate the ultimate amount or time of settlement. See Note 7~~15 of our Consolidated Financial Statements in Part II, Item 8 of this ~~2019~~2022 Form 10-K for further discussion. ~~The amounts in the table below also exclude $10 million associated with funding commitments related~~Our off-balance sheet arrangements and our transition tax liability are presented as purchase obligations, refer to ~~non-marketable equity investments as we are unable to make a reasonable estimate regarding the timing~~Note 17 of ~~capital calls.~~

Total
Less than
1 Year
1-3 Years 3-5 Years
More than
5 Years
(in thousands)
Operating leases $ 98,389
$ 37,427
$ 36,581
$ 12,556
$ 11,825
Capital leases (1) 50,049
7,729
17,422
10,097
14,801
Purchase obligations 424,561
345,498
28,946
13,442
36,675
Long-term debt and interest expense (2) 6,468,517
660,840
1,079,096
257,630
4,470,951
One-time transition tax on accumulated unrepatriated foreign earnings (3) 798,892
69,469
138,938
199,723
390,762
Other long-term liabilities (4) 190,821
4,785
13,692
7,802
164,542
Total $ 8,031,229
$ 1,125,748
$ 1,314,675
$ 501,250
$ 5,089,556


~~(1)~~	Excludes $26.5 million associated with our build-to-suit lease arrangements that are classified as capital leases in the Consolidated Balance Sheets in Part II, Item 8 of this 2019 Form 10-K for which cash payment is not anticipated.

~~(2)~~

The conversion period for the 2.625% Convertible Senior Notes due May 2041 (the “2041 Notes”) was open as of June 30, 2019, and as such the net carrying value of the 2041 Notes is included within current liabilities on our Consolidated Balance Sheet. The principal balances of the 2041 Notes are reflected in the payment period in the table above based on the contractual maturity assuming no conversion. See Note 14 of our Consolidated Financial Statements in Part II, Item 8 of this 2019 Form 10-K for additional information concerning the 2041 Notes and associated conversion features.


~~(3)~~	~~We may choose to apply existing tax credits, thereby reducing the actual cash payment.~~


~~(4)~~	Certain tax-related liabilities and post-retirement benefits classified as other non-current liabilities on the Consolidated Balance Sheet are included in the “More than 5 Years” category due to the uncertainty in the timing and amount of future payments. Additionally, the balance excludes contractual obligations recorded in our Consolidated Balance Sheet as current liabilities.

~~Operating Leases~~

We lease most of our administrative, R&D, and manufacturing facilities; regional sales/service offices; and certain equipment under non-cancelable operating leases. Certain of our facility leases for buildings located in Fremont and Livermore, California; Tualatin, Oregon; and certain other facility leases provide us with an option to extend the leases for additional periods or to purchase the facilities. Certain of our facility leases provide for periodic rent increases based on the general rate of inflation. In addition to amounts included in the table above, we have guaranteed residual values for certain of our Fremont and Livermore facility leases of up to $250 million. See Note 16 to our Consolidated Financial Statements in Part II, Item 8 of this ~~2019~~2022 Form 10-K for further discussion.

~~Capital Leases~~

~~Capital leases reflect building and office equipment lease obligations. The amounts in the table above include the interest portion of payment obligations.~~

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~~Table of Contents~~

~~Purchase Obligations~~

Purchase obligations consist of significant contractual obligations either on an annual basis or over multi-year periods related to our outsourcing activities or other material commitments, including vendor-consigned inventories. The contractual cash obligations and commitments table presented above contains our minimum obligations at June 30, 2019, under these arrangements and others. For obligations with cancellation provisions, the amounts included in the preceding table were limited to the non-cancelable portion of the agreement terms or the minimum cancellation fee. Actual expenditures will vary based on the volume of transactions and length of contractual service provided.

I~~ncome Taxes~~

During the December 2017 quarter, a one-time transition tax on accumulated unrepatriated foreign earnings, estimated at $991 million, was recognized associated with the December 2017 U.S. tax reform. In accordance with SAB 118, we finalized the amount of the transition tax during the period ended December 23, 2018. The final amount is $868.4 million. The Company elected to pay the one-time transition tax over a period of eight years with 8% of the transition tax to be paid each September 15 for years 2018 through 2022, and 15%, 20%, and 25%, respectively, to be paid each September 15 for years 2023 through 2025.

~~Long-Term Debt~~

In June 2012, with the acquisition of Novellus, we assumed $700 million in aggregate principal amount of 2.625% Convertible Senior Notes due May 2041. We pay cash interest on the 2041 Notes at an annual rate of 2.625%, on a semi-annual basis. The 2041 Notes may be converted, under certain circumstances, into our Common Stock.

During the quarter-ended June 30, 2019, the market value of our Common Stock was greater than or equal to 130% of the 2041 Notes conversion prices for 20 or more trading days of the 30 consecutive trading days preceding the quarter end. As a result, the 2041 Notes are convertible at the option of the holder and are classified as current liabilities in our Consolidated Balance Sheets for fiscal year 2019.

On March 12, 2015, we completed a public offering of $500 million aggregate principal amount of Senior Notes due March 15, 2020 (the “2020 Notes”) and $500 million aggregate principal amount of Senior Notes due March 15, 2025 (the “2025 Notes”). We pay interest at an annual rate of 2.75% and 3.80%, respectively, on the 2020 Notes and 2025 Notes, on a semi-annual basis on March 15 and September 15 of each year.

On June 7, 2016, we completed a public offering of $800.0 million aggregate principal amount of Senior Notes due June 15, 2021, (the “2021 Notes”), together with the 2020 Notes, and 2021 Notes, the “Senior Notes”, and collectively with the Convertible Notes, the “Notes”). We pay interest at an annual rate of 2.80% on the 2021 Notes on a semi-annual basis on June 15 and December 15 of each year.

On March 4, 2019, we completed a public offering of $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $1 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”, collectively with the 2026 and 2029 Notes, the “Senior Notes issued in 2019”). We will pay interest at an annual rate of 3.75%, 4.00%, and 4.875%, respectively on the 2026, 2029 and 2049 Notes, on a semi-annual basis on March 15 and September 15 of each year, beginning September 15, 2019.

We may redeem the 2020, 2021, 2025, 2026, 2029 and 2049 Notes (collectively the “Senior Notes”) at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the Senior Notes and accrued and unpaid interest before February 15, 2020, for the 2020 Notes, before May 15, 2021 for the 2021 Notes, before December 15, 2024 for the 2025 Notes, before January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, and before September 15, 2048 for the 2049 Notes. We may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after February 15, 2020, for the 2020 Notes, on or after May 15, 2021 for the 2021 Notes, on or after December 24, 2024, for the 2025 Notes, on or after January 15, 2026 for the 2026 Notes, on or after December 15, 2028 for the 2029 Notes, and on or after September 15, 2048 for the 2049 Notes. In addition, upon the occurrence of certain events, as described in the indenture, we will be required to make an

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~~Lam Research Corporation 2019 10-K~~ 43

~~Table of Contents~~

~~offer to repurchase the Senior Notes at a price equal to 101% of the principal amount of the respective note, plus accrued and unpaid interest.~~

~~During fiscal year 2019, 2018, and 2017, we made $117 million, $753 million, and $1.7 billion, respectively, in principal payments on long-term debt and capital leases.~~

~~Revolving Credit Arrangements~~

On March 12, 2014, the Company established an unsecured Credit Agreement. This agreement was amended on November 10, 2015 (the “Amended and Restated Credit Agreement”), October 13, 2017 (the “2nd Amendment”), and February 25, 2019 (the “3rd Amendment”). Under the Amended and Restated Credit Agreement (as amended by the 2nd and 3rd Amendment), the Company has a revolving credit facility of $1.25 billion with a syndicate of lenders with an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $600 million, for a potential total commitment of $1.85 billion. The facility matures on October 13, 2022.

Interest on amounts borrowed under the credit facility is, at our option, based on (1) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5%, or (c) one-month London Interbank Offered Rate (“LIBOR”) plus 1.0%, plus a spread of 0.0% to 0.5%, or (2) LIBOR multiplied by the statutory reserve rate, plus a spread of 0.9% to 1.5%, in each case as the applicable spread is determined based on the rating of our non-credit enhanced, senior unsecured long-term debt. Principal and any accrued and unpaid interest is due and payable upon maturity. Additionally, we will pay the lenders a quarterly commitment fee that varies based on our credit rating. The Amended Credit Agreement contains affirmative covenants, negative covenants, financial covenants, and events of default. As of June 30, 2019, we had no borrowings outstanding under the Amended Credit Agreement and were in compliance with all financial covenants.

~~Commercial Paper Program~~

On November 13, 2017, we established a commercial paper program (the “CP Program”) under which we may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $1.25 billion. Individual maturities may vary, but cannot not exceed 397 days from the date of issue. The net proceeds from the CP Program will be used for general corporate purposes, including repurchases of our Common Stock from time to time under our stock repurchase program. If at any time, funds are not available under favorable terms under the CP Program, we may utilize the Amended Credit Agreement for funding. Amounts available under the CP Program may be re-borrowed. The CP Program is backstopped by our Revolving Credit Arrangement. As of June 30, 2019, we had no outstanding borrowings under the CP Program.

~~Other Guarantees~~

We have issued certain indemnifications to our lessors for taxes and general liability under some of our agreements. We have entered into certain insurance contracts that may limit our exposure to such indemnifications. As of June 30, 2019, we had not recorded any liability on our Consolidated Financial Statements in connection with these indemnifications, as we do not believe, based on information available, that it is probable that we will pay any material amounts under these guarantees.

Generally, we indemnify, under pre-determined conditions and limitations, our customers for infringement of third-party intellectual property rights by our products or services. We seek to limit our liability for such indemnity to an amount not to exceed the sales price of the products or services subject to our indemnification obligations. We do not believe, based on information available, that it is probable that we will pay any material amounts under these guarantees.

We provide guarantees and standby letters of credit to certain parties as required for certain transactions initiated during the ordinary course of business. As of June 30, 2019, the maximum potential amount of future payments that we could be required to make under these arrangements and letters of credit was $43 million. We do not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid.

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~~Table of Contents~~

We have entered into indemnification agreements with our officers and directors, consistent with our Bylaws and Certificate of Incorporation; and under local law, we may be required to provide indemnification to our employees for actions within the scope of their employment. Although we maintain insurance contracts that cover some of the potential liability associated with these indemnification agreements, there is no guarantee that all such liabilities will be covered. We do not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under such indemnification agreements or statutory obligations.

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~~Item 7A.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Investments

We maintain an investment portfolio of various holdings, types, and maturities. As of June ~~30, 2019,~~26, 2022, our mutual funds are classified as trading securities. Investments classified as trading securities are recorded at fair value based upon quoted market prices. Any material differences between the cost and fair value of trading securities is recognized as ~~“Other~~other income (expense)”, net in our Consolidated Statement of Operations. All of our other investments are classified as available-for-sale and consequently are recorded in the Consolidated Balance Sheets at fair value with unrealized gains or losses reported as a separate component of accumulated other comprehensive income, net of tax.

Lam Research Corporation 2022 10-K 35

Table of Contents

Interest Rate Risk

Fixed-Income Securities

Our investments in various interest-earning securities carry a degree of market risk for changes in interest rates. At any time, a sharp rise in interest rates could have a material adverse impact on the fair value of our fixed-income investment portfolio. Conversely, declines in interest rates could have a material adverse impact on interest income for our investment portfolio. We target to maintain a ~~capital preservation-focused~~conservative investment policy, which focuses on the safety and preservation of our capital by limiting default risk, market risk, reinvestment risk, and concentration risk. ~~The following table presents the hypothetical fair values~~As of ~~fixed-income~~June 26, 2022, our fixed income securities ~~that would result from selected potential decreases and increases in interest rates.~~total $135.7 million. Market changes ~~reflect immediate~~with hypothetical parallel shifts in the yield curve of plus or minus 50 basis points (“BPS”), 100 BPS, and 150 ~~BPS. The hypothetical fair values as~~BPS, with a minimum interest rate of ~~June 30, 2019,were as follows:~~

Valuation of Securities
Given an Interest Rate
Decrease of X Basis Points

Fair Value
as of

Valuation of Securities
Given an Interest Rate
Increase of X Basis Points
June 30,
2019
(150 BPS) (100 BPS) (50 BPS) —% 50 BPS 100 BPS 150 BPS
(in thousands)
U.S. Treasury and agencies 467,445
466,940
466,427
465,914
465,403
464,891
464,379
Government-sponsored enterprises 16,108
16,062
16,015
15,969
15,921
15,875
15,828
Foreign government bonds 24,592
24,542
24,493
24,443
24,394
24,344
24,294
Corporate notes and bonds 1,478,541
1,475,154
1,471,766
1,468,378
1,464,989
1,461,600
1,458,211
Mortgage backed securities - residential 6,240
6,208
6,176
6,144
6,112
6,080
6,048
Mortgage backed securities - commercial 30,157
30,014
29,871
29,727
29,585
29,442
29,299
Total $ 2,023,083
$ 2,018,920
$ 2,014,748
$ 2,010,575
$ 2,006,404
$ 2,002,232
$ 1,998,059
zero BPS, are not significant.

We mitigate default risk by investing in high credit quality securities and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to achieve portfolio liquidity and maintain a prudent amount of diversification.

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Long-Term Debt

As of June ~~30, 2019,~~26, 2022, we had ~~$4.5~~$5.0 billion in principal amount of fixed-rate long-term debt outstanding, with a fair value of ~~$5.7~~$4.5 billion. The fair value of our Notes is subject to interest rate risk and market ~~risk, and other factors due to the convertible feature, as applicable.~~risk. Generally, the fair value of Notes will increase as interest rates fall and decrease as interest rates rise. ~~Additionally, the fair value of the 2041 Notes will increase as our Common Stock price increases and decrease as our Common Stock price decreases.~~ The interest and market value changes affect the fair value of our Notes but do not impact our financial position, cash flows, or results of operations due to the fixed nature of the debt obligations. We do not carry the Notes at fair value but present the fair value of the principal amount of our Notes for disclosure purposes.

Equity Price Risk

Publicly Traded Securities

The values of our investments in publicly traded securities, including mutual funds related to our obligations under our deferred compensation plans, are subject to market price risk. ~~The following table presents the hypothetical fair values~~As of June 26, 2022, our publicly traded securities ~~that would result from potential decreases and increases in the price of each security in the portfolio.~~total $95.2 million. Potential fluctuations in the price of each security in the portfolio of plus or minus 10%, 15%, or 25% ~~were selected based on potential near-term changes in those security prices. The hypothetical fair values as of June 30, 2019, were as follows:~~

Valuation of Securities
Given an X% Decrease
in Stock Price

Fair Value
as of

Valuation of Securities
Given an X% Increase
in Stock Price
June 30,
2019
(25)% (15)% (10)% —% 10% 15% 25%
(in thousands)
Mutual funds $ 58,306
$ 66,080
$ 69,967
77,741
$ 85,515
$ 89,402
$ 97,176
are not significant.

Foreign Currency Exchange (“FX”) Risk

We conduct business on a global basis in several major international currencies. As such, we are potentially exposed to adverse as well as beneficial movements in foreign currency exchange rates. The majority of our revenues and expenses are denominated in U.S. dollars. However, we are exposed to foreign currency exchange rate fluctuations ~~primarily related to revenues denominated in Japanese yen and euro-denominated and Korean won-denominated expenses.~~on non-U.S dollar transactions or cash flows.

We enter into foreign currency forward contracts to minimize the short-term impact of exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities, primarily cash, third-party accounts receivable, accounts payable, and intercompany receivables and payables. In addition, we hedge certain anticipated foreign currency cash ~~flows, primarily on revenues denominated in Japanese yen and expenses denominated in euro and Korean won.~~flows.

To protect against adverse movements in value of anticipated ~~revenues denominated in Japanese yen and expenses denominated in euro and Korean won,~~non-U.S. dollar transactions or cash flows, we enter into foreign currency forward and option contracts that generally expire within 12 months and no later than 24 months. The option contracts include collars, an option strategy that is comprised of a combination of a purchased put option and a written call option with the same expiration dates and ~~Japanese yen~~ notional amounts but with different strike prices. These foreign currency hedge contracts are designated as cash flow hedges and are carried on our balance sheet at fair value, with the effective portion of the contracts’ gains or losses included in accumulated other comprehensive income (loss) and subsequently recognized in earnings in the same period the hedged revenue and/or expense is recognized. We also enter into foreign currency forward contracts to hedge the gains and losses generated by the remeasurement of certain non-U.S.-dollar denominated monetary assets and liabilities, primarily cash, third-party accounts receivable, accounts payable, and intercompany receivables and payables. The change in fair value of these balance sheet hedge contracts is recorded into earnings as a component of other income (expense), net, and offsets the change in fair value of the foreign currency denominated monetary assets and liabilities also recorded in other income (expense), net, assuming the hedge contract fully covers the hedged items. The notional amount and unrealized gain of our outstanding forward and option contracts that are

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designated as cash flow hedges, as of June ~~30, 2019,~~26, 2022, are shown in the table below. This table also shows the change in fair value of these cash flow hedges assuming a hypothetical foreign currency exchange rate movement of plus or minus 10 percent and plus or minus 15 percent.

Lam Research Corporation 2022 10-K 36

Table of Contents


													Notional Amount		Unrealized FX Gain/(Loss)		Valuation of FX Contracts Given an X% Increase (+)/Decrease(-) in Each
															June 26, 2022		= +/- (10%)		= +/- (15%)
													(in thousands)
Forward contracts, cash flow hedges											Forward contracts, cash flow hedges
Sell											Sell	Japanese yen	$	541,999	$	27,396	$	50,808	$	76,213
Buy											Buy	Euro	150,020		(9,365)		13,927		20,891
Buy											Buy	Indian rupee	70,768		(630)		7,109		10,663
Buy											Buy	Korean won	57,220		(4,110)		5,287		7,930
Buy											Buy	Malaysian ringgit	28,203		133		2,793		4,189
															$	13,424	$	79,924	$	119,886

		Notional Amount		Unrealized FX Gain/(Loss)			Valuation of FX Contracts Given an X% Increase (+)/Decrease(-) in Each
				June 30, 2019			= +/- (10%)		= +/- (15%)
		(in millions)
Forward contracts
Sell	Japanese yen	$	115.8	$	(1.6	)	$	11.6	$	17.4
Buy	Euro	43.8		(0.7		)	4.8		7.5
Buy	Korean won	14.6		(0.3		)	1.4		2.2
				$	(2.6	)	$	17.8	$	27.1

The notional amount and unrealized loss of our outstanding foreign currency forward contracts that are designated as balance sheet hedges, as of June ~~30, 2019,~~26, 2022, are shown in the table below. This table also shows the change in fair value of these balance sheet hedges, assuming a hypothetical foreign currency exchange rate movement of plus or minus 10 percent and plus or minus 15 percent. These changes in fair values would be offset in other income (expense), net, by corresponding change in fair values of the foreign currency denominated monetary assets and liabilities, assuming the hedge contract fully covers the intercompany and trade receivable balances.


		Notional Amount		Unrealized FX Gain/(Loss)		Valuation of FX Contracts Given an X% Increase (+)/Decrease(-) in Each
				June 26, 2022		= +/- (10%)		= +/- (15%)
		(in thousands)
Forward contracts, balance sheet hedges
Sell	Korean won	$	322,808	$	6	$	32,261	$	48,391
Buy	Chinese renminbi	64,434		12		6,447		9,671
Buy	Euro	43,321		(18)		4,324		6,486
Buy	Taiwan dollar	33,752		(33)		3,360		5,041
Buy	British pound	20,983		(2)		2,097		3,146
Buy	Singapore dollar	12,243		(1)		1,224		1,836
Buy	Swiss francs	8,841		(3)		883		1,324
Sell	Indian rupee	3,060		(4)		307		460
Sell	Malaysian ringgit	908		—		91		136
Buy	Japanese yen	736		—		74		111
				$	(43)	$	51,068	$	76,602

Notional
Amount

Unrealized FX
Gain/(Loss)

Valuation of FX Contracts Given an X%
Increase (+)/Decrease(-) in Each
June 30,
2019 = +/- (10%) = +/- (15%)
(in millions)
Forward contracts, balance sheet hedge
Buy British pound $ 45.8
$ — $ 2.8
$ 4.3
Buy Japanese yen 39.3
0.6 4.0
6.0
Buy Taiwan dollar 29.0
— 2.9
4.3
Buy Swiss francs 26.7
— 2.6
4.0
Buy Euro 24.0
— 7.3
8.2
Buy Chinese renminbi 14.4
— 1.4
2.2
Buy Indian rupee 9.5
— 1.0
1.4
Buy Singapore dollar 8.9
— 0.9
1.3
Buy Korean won 7.8
— 0.8
1.2
$ 0.6 $ 23.7
$ 32.9

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Lam Research Corporation ~~2019~~2022 10-K 4837

~~Interest Rate Contracts~~

Interest rate risk is present with both fixed- and floating-rate debt. Interest rate swap agreements designated as fair value hedges are used to mitigate our exposure to changes in the fair value of fixed-rate debt resulting from fluctuations in benchmark interest rates. Accordingly, benchmark interest rate fluctuations impact the fair value of our fixed-rate debt, which are offset by corresponding changes in the fair value of the swap agreements. Interest rate swaps may also be used to adjust interest rate exposures when appropriate, based on market conditions, and for qualifying hedges, the interest differential of swaps is included in interest expense. During the fiscal year ended June 26, 2016, we entered into a series of interest rate contracts with a total notional value of $400 million where we received fixed rates and paid variable rates based on certain benchmark interest rates. Such interest rate swap arrangements were designated as fair value hedges of the fair value of the underlying debt instrument.

~~The following table shows the change in fair value of these fair value hedges, assuming a hypothetical benchmark interest rate movement of plus or minus 10 BPS and plus or minus 15 BPS.~~

Interest rate risk is also present on anticipated issuances of debt. We manage our interest rate exposure on anticipated issuances of debt through forward-starting interest rate swap agreements. Forward-starting interest rate swap agreements designated as cash flow hedges are used to mitigate our exposure to changes in future interest payments that results from fluctuations in benchmark interest rates prior to the issuance of the debt. Accordingly, benchmark interest rate fluctuations impact the interest cash flows of the Company’s anticipated debt issuances, which are offset by corresponding changes in the fair value of the forward-starting interest rate swap agreements. During the fiscal year ended June 26, 2016, we entered into and settled a series of forward-starting interest rate swap agreements associated with our June 2016 debt offering. Such forward-starting interest rate swap agreements were designated as hedges of the cash flows associated with benchmark interest rates underlying future interest payments on the June 2016 debt issuances.

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~~Lam Research Corporation 2019 10-K~~ 49

Item 8. Financial Statements and Supplementary Data

There were no retrospective changes to the Consolidated Statements of Operation for any quarters in the two most recent fiscal years that would require disclosure under Item 302 of Regulation S-K.

Index to Consolidated Financial Statements

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Lam Research Corporation ~~2019~~2022 10-K 5038

Table of Contents

LAM RESEARCH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)


	Year Ended										Year Ended
	June 30, 2019			June 24, 2018			June 25, 2017				June 26, 2022		June 27, 2021		June 28, 2020
Revenue	$	9,653,559		$	11,076,998		$	8,013,620		Revenue	$	17,227,039	$	14,626,150	$	10,044,736
Cost of goods sold	5,295,100			5,911,966			4,410,261			Cost of goods sold	9,355,232		7,820,844		5,436,043
Gross margin	4,358,459			5,165,032			3,603,359			Gross margin	7,871,807		6,805,306		4,608,693
Research and development	1,191,320			1,189,514			1,033,742			Research and development	1,604,248		1,493,408		1,252,412
Selling, general, and administrative	702,407			762,219			667,485			Selling, general, and administrative	885,737		829,875		682,479
Total operating expenses	1,893,727			1,951,733			1,701,227			Total operating expenses	2,489,985		2,323,283		1,934,891
Operating income	2,464,732			3,213,299			1,902,132			Operating income	5,381,822		4,482,023		2,673,802
Other expense, net	(18,161		)	(61,510		)	(90,459		)
Other income (expense), net										Other income (expense), net	(188,708)		(111,219)		(98,824)
Income before income taxes	2,446,571			3,151,789			1,811,673			Income before income taxes	5,193,114		4,370,804		2,574,978
Income tax expense	(255,141		)	(771,108		)	(113,910		)	Income tax expense	(587,828)		(462,346)		(323,225)
Net income	$	2,191,430		$	2,380,681		$	1,697,763		Net income	$	4,605,286	$	3,908,458	$	2,251,753
Net income per share:										Net income per share:
Basic	$	14.37		$	14.73		$	10.47		Basic	$	32.92	$	27.22	$	15.55
Diluted	$	13.70		$	13.17		$	9.24		Diluted	$	32.75	$	26.90	$	15.10
Number of shares used in per share calculations:										Number of shares used in per share calculations:
Basic	152,478			161,643			162,222			Basic	139,899		143,609		144,814
Diluted	159,915			180,782			183,770			Diluted	140,628		145,320		149,090

See Notes to Consolidated Financial Statements

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Lam Research Corporation ~~2019~~2022 10-K 5139

Table of Contents

LAM RESEARCH CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	Year Ended										Year Ended
	June 30, 2019			June 24, 2018			June 25, 2017				June 26, 2022		June 27, 2021		June 28, 2020
Net income	$	2,191,430		$	2,380,681		$	1,697,763		Net income	$	4,605,286	$	3,908,458	$	2,251,753
Other comprehensive income (loss), net of tax:										Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(6,648		)	9,649			(2,843		)	Foreign currency translation adjustment	(50,342)		14,398		(6,441)
Cash flow hedges:										Cash flow hedges:
Net unrealized gains (losses) during the period	2,461			(6,960		)	5,841			Net unrealized gains (losses) during the period	30,849		22,139		(30,603)
Net (gains) losses reclassified into earnings	(2,749		)	3,729			8,971
Net (gains) losses reclassified into net income										Net (gains) losses reclassified into net income	(29,054)		(3,468)		2,137
	(288		)	(3,231		)	14,812				1,795		18,671		(28,466)
Available-for-sale investments:										Available-for-sale investments:
Net unrealized gains (losses) during the period	3,535			(45,382		)	(3,789		)
Net (gains) losses reclassified into earnings	(199		)	43,086			(1		)
Net unrealized (losses) gains during the period										Net unrealized (losses) gains during the period	(4,638)		(4,098)		1,842
Net losses reclassified into net income										Net losses reclassified into net income	1,390		786		935
	3,336			(2,296		)	(3,790		)		(3,248)		(3,312)		2,777
Defined benefit plans, net change in unrealized component	(2,981		)	129			(546		)	Defined benefit plans, net change in unrealized component	5,941		326		1,949
Other comprehensive (loss) income, net of tax	(6,581		)	4,251			7,633
Other comprehensive income (loss), net of tax										Other comprehensive income (loss), net of tax	(45,854)		30,083		(30,181)
Comprehensive income	$	2,184,849		$	2,384,932		$	1,705,396		Comprehensive income	$	4,559,432	$	3,938,541	$	2,221,572

See Notes to Consolidated Financial Statements

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Lam Research Corporation ~~2019~~2022 10-K 5240

Table of Contents

LAM RESEARCH CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

June 30,
2019 June 24,
2018
ASSETS:
Cash and cash equivalents $ 3,658,219
$ 4,512,257
Investments 1,772,984
437,338
Accounts receivable, less allowance for doubtful accounts of $5,021 as of June 30, 2019 and $5,343 as of June 24, 2018 1,455,522
2,176,936
Inventories 1,540,140
1,876,162
Prepaid expenses and other current assets 133,544
147,218
Total current assets 8,560,409
9,149,911
Property and equipment, net 1,059,077
902,547
Restricted cash and investments 255,177
256,301
Goodwill 1,484,597
1,484,904
Intangible assets, net 216,950
317,836
Other assets 425,123
367,979
Total assets $ 12,001,333
$ 12,479,478
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Trade accounts payable $ 376,561
$ 510,983
Accrued expenses and other current liabilities 946,641
1,309,209
Deferred profit 381,317
720,086
Commercial paper and current portion of convertible notes and capital leases 667,131
610,030
Total current liabilities 2,371,650
3,150,308
Senior notes, convertible notes, and capital leases, less current portion 3,822,768
1,806,562
Income taxes payable 892,790
851,936
Other long-term liabilities 190,821
90,629
Total liabilities 7,278,029
5,899,435
Commitments and contingencies

Temporary equity, convertible notes 49,439
78,192
Stockholders’ equity:
Preferred stock, at par value of $0.001 per share; authorized - 5,000 shares, none outstanding —
—
Common stock, at par value of $0.001 per share; authorized - 400,000 shares; issued and outstanding 144,433 shares at June 30, 2019, and 156,892 shares at June 24, 2018 144
157
Additional paid-in capital 6,409,405
6,144,425
Treasury stock, at cost, 140,573 shares at June 30, 2019, and 119,679 shares at June 24, 2018 (11,602,573 ) (7,846,476 )
Accumulated other comprehensive loss (64,030 ) (57,449 )
Retained earnings 9,930,919
8,261,194
Total stockholders’ equity 4,673,865
6,501,851
Total liabilities and stockholders’ equity $ 12,001,333
$ 12,479,478


	June 26, 2022		June 27, 2021
ASSETS:
Cash and cash equivalents	$	3,522,001	$	4,418,263
Investments	135,731		1,310,872
Accounts receivable, less allowance of $5,606 as of June 26, 2022 and $5,255 as of June 27, 2021	4,313,818		3,026,430
Inventories	3,966,294		2,689,294
Prepaid expenses and other current assets	347,391		207,528
Total current assets	12,285,235		11,652,387
Property and equipment, net	1,647,587		1,303,479
Restricted cash and investments	251,534		252,487
Goodwill	1,515,113		1,490,134
Intangible assets, net	101,850		132,365
Other assets	1,394,313		1,061,300
Total assets	$	17,195,632	$	15,892,152
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Trade accounts payable	$	1,011,208	$	829,710
Accrued expenses and other current liabilities	1,974,272		1,719,483
Deferred profit	1,571,898		967,325
Current portion of long-term debt and finance lease obligations	7,381		11,349
Total current liabilities	4,564,759		3,527,867
Long-term debt and finance lease obligations, less current portion	4,998,449		4,990,333
Income taxes payable	931,117		948,037
Other long-term liabilities	422,941		398,727
Total liabilities	10,917,266		9,864,964
Commitments and contingencies	0		0

Stockholders’ equity:
Preferred stock, at par value of $0.001 per share; authorized - 5,000 shares, none outstanding	—		—
Common stock, at par value of $0.001 per share; authorized 400,000 shares as of June 26, 2022 and June 27, 2021; issued and outstanding 136,975 shares as of June 26, 2022, and 142,501 shares as of June 27, 2021	137		143
Additional paid-in capital	7,414,916		7,052,962
Treasury stock, at cost, 157,087 shares as of June 26, 2022, and 150,766 shares as of June 27, 2021	(19,481,429)		(15,646,701)
Accumulated other comprehensive loss	(109,982)		(64,128)
Retained earnings	18,454,724		14,684,912
Total stockholders’ equity	6,278,366		6,027,188
Total liabilities and stockholders’ equity	$	17,195,632	$	15,892,152

See Notes to Consolidated Financial Statements

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Lam Research Corporation ~~2019~~2022 10-K 5341

Table of Contents

LAM RESEARCH CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Year Ended
June 30,
2019 June 24,
2018 June 25,
2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,191,430
$ 2,380,681
$ 1,697,763
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 309,281
326,395
306,905
Deferred income taxes (4,980 ) 3,046
104,936
Equity-based compensation expense 187,234
172,216
149,975
Income tax benefit on equity-based compensation plans —
—
38,747
Excess tax benefits on equity-based compensation plans —
—
(38,635 )
Impairment of investments —
42,456
—
(Gains) losses on extinguishment of debt, net (118 ) (542 ) 36,252
Amortization of note discounts and issuance costs 7,343
14,428
25,282
Gain on sale of assets —
—
(163 )
Other, net (5,701 ) 34,260
19,052
Changes in operating asset and liability accounts:
Accounts receivable, net of allowance 732,138
(501,628 ) (411,287 )
Inventories 281,355
(701,008 ) (307,875 )
Prepaid expenses and other assets (17,864 ) (14,391 ) (27,269 )
Trade accounts payable (131,472 ) 35,655
126,819
Deferred profit (178,074 ) 112,413
258,473
Accrued expenses and other liabilities (194,559 ) 751,766
50,307
Net cash provided by operating activities 3,176,013
2,655,747
2,029,282
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets (303,491 ) (273,469 ) (157,419 )
Business acquisition, net of cash acquired —
(115,697 ) —
Purchases of available-for-sale securities (2,930,049 ) (2,532,829 ) (4,581,851 )
Proceeds from maturities of available-for-sale securities 466,539
650,255
891,002
Proceeds from sales of available-for-sale securities 1,137,302
5,035,460
1,806,963
Proceeds from sale of assets —
—
1,291
Other, net (7,355 ) (15,184 ) (12,815 )
Net cash (used for) provided by investing activities (1,637,054 ) 2,748,536
(2,052,829 )


	Year Ended
	June 26, 2022		June 27, 2021		June 28, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,605,286	$	3,908,458	$	2,251,753
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	333,739		307,151		268,525
Deferred income taxes	(257,438)		(151,477)		(17,777)
Equity-based compensation expense	259,064		220,164		189,197






Other, net	(44,751)		(17,392)		6,628
Changes in operating asset and liability accounts:
Accounts receivable, net of allowance	(1,287,680)		(928,928)		(641,827)
Inventories	(1,351,344)		(792,591)		(411,608)
Prepaid expenses and other assets	(53,121)		(59,189)		(14,354)
Trade accounts payable	167,884		184,615		208,478
Deferred profit	604,573		508,008		76,207
Accrued expenses and other liabilities	123,462		409,344		211,229
Net cash provided by operating activities	3,099,674		3,588,163		2,126,451
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures and intangible assets	(546,034)		(349,096)		(203,239)

Purchases of available-for-sale securities	(567,819)		(3,389,388)		(2,897,627)
Proceeds from maturities of available-for-sale securities	190,269		2,381,758		1,647,379
Proceeds from sales of available-for-sale securities	1,543,434		1,472,152		1,235,248



Other, net	(7,575)		(42,155)		(25,845)
Net cash provided by (used for) investing activities	612,275		73,271		(244,084)

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Lam Research Corporation ~~2019~~2022 10-K 5442

Table of Contents


	Year Ended										Year Ended
	June 30, 2019			June 24, 2018			June 25, 2017				June 26, 2022		June 27, 2021		June 28, 2020
CASH FLOWS FROM FINANCING ACTIVITIES:										CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt and capital lease obligations and payments for debt issuance costs	(117,653		)	(755,694		)	(1,688,313		)
Principal payments on long-term debt and finance lease obligations and payments for debt issuance costs										Principal payments on long-term debt and finance lease obligations and payments for debt issuance costs	$	(11,889)	$	(862,060)	$	(667,537)
Net proceeds from issuance of long-term debt	2,476,720			—			—			Net proceeds from issuance of long-term debt	—		—		1,974,651
Net (repayment) proceeds from commercial paper	(361,754		)	359,604			—

Proceeds from borrowings on revolving credit facility	—			750,000			—			Proceeds from borrowings on revolving credit facility	—		—		1,250,000
Repayment of borrowings on revolving credit facility	—			(750,000		)	—			Repayment of borrowings on revolving credit facility	—		—		(1,250,000)
Excess tax benefits on equity-based compensation plans	—			—			38,635

Treasury stock purchases	(3,780,611		)	(2,653,249		)	(811,672		)	Treasury stock purchases	(3,865,663)		(2,697,704)		(1,369,649)
Dividends paid	(678,348		)	(307,609		)	(243,495		)	Dividends paid	(815,290)		(726,992)		(656,838)
Reissuances of treasury stock related to employee stock purchase plan	77,961			75,624			59,663			Reissuances of treasury stock related to employee stock purchase plan	108,178		97,764		85,439
Proceeds from issuance of common stock	6,813			9,258			12,913			Proceeds from issuance of common stock	5,682		24,123		8,084
Other, net	(13,208		)	9			(125		)	Other, net	45		(2,113)		1,920
Net cash used for financing activities	$	(2,390,080	)	$	(3,272,057	)	$	(2,632,394	)	Net cash used for financing activities	(4,578,937)		(4,166,982)		(623,930)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	$	(4,041	)	$	2,593		$	(63	)	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(30,227)		7,215		(2,750)
Net (decrease) increase in cash, cash equivalents and restricted cash	(855,162		)	2,134,819			(2,656,004		)	Net (decrease) increase in cash, cash equivalents and restricted cash	(897,215)		(498,333)		1,255,687
Cash, cash equivalents and restricted cash at beginning of year	4,768,558			2,633,739			5,289,743			Cash, cash equivalents and restricted cash at beginning of year	4,670,750		5,169,083		3,913,396
Cash, cash equivalents and restricted cash at end of year	$	3,913,396		$	4,768,558		$	2,633,739		Cash, cash equivalents and restricted cash at end of year	$	3,773,535	$	4,670,750	$	5,169,083
Schedule of non-cash transactions										Schedule of non-cash transactions
Accrued payables for stock repurchases	$	29		$	116		$	—		Accrued payables for stock repurchases	$	46	$	20,005	$	82
Accrued payables for capital expenditures	23,185			24,001			17,285			Accrued payables for capital expenditures	80,296		61,392		37,812
Dividends payable	158,868			174,372			72,738			Dividends payable	205,615		185,431		167,129
Transfers of finished goods inventory to property and equipment, net	54,533			57,886			46,855
Transfers of finished goods inventory to property and equipment										Transfers of finished goods inventory to property and equipment	75,068		80,252		51,694
Supplemental disclosures:										Supplemental disclosures:
Cash payments for interest	$	76,933		$	84,401		$	104,619		Cash payments for interest	$	175,528	$	203,932	$	171,889
Cash payments for income taxes, net	300,268			142,800			28,104			Cash payments for income taxes, net	807,669		518,567		222,909

Reconciliation of cash, cash equivalents, and restricted cash	June 30, 2019			June 24, 2018			June 25, 2017			Reconciliation of cash, cash equivalents, and restricted cash	June 26, 2022		June 27, 2021		June 28, 2020
Cash and cash equivalents	3,658,219			4,512,257			2,377,534			Cash and cash equivalents	$	3,522,001	$	4,418,263	$	4,915,172
Restricted cash and investments	255,177			256,301			256,205
Restricted cash and cash equivalents										Restricted cash and cash equivalents	251,534		252,487		253,911
Total cash, cash equivalents, and restricted cash	3,913,396			4,768,558			2,633,739			Total cash, cash equivalents, and restricted cash	$	3,773,535	$	4,670,750	$	5,169,083

See Notes to Consolidated Financial Statements

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Lam Research Corporation ~~2019~~2022 10-K 5543

Table of Contents

LAM RESEARCH CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except per common share data)


	Common Stock Shares	Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income(Loss)		Retained Earnings		Total
Balance at June 30, 2019	144,433	$	144	$	6,409,405	$	(11,602,573)	$	(64,030)	$	9,930,919	$	4,673,865
Issuance of common stock	1,288	1		8,083		—		—		—		8,084
Purchase of treasury stock	(5,371)	(5)		—		(1,369,697)		—		—		(1,369,702)
Reissuance of treasury stock	513	1		63,057		22,381		—		—		85,439
Equity-based compensation expense	—	—		189,197		—		—		—		189,197
Effect of conversion of convertible notes	4,468	4		(12,328)		—		—		—		(12,324)


Reclassification from temporary to permanent equity	—	—		38,444		—		—		—		38,444
Adoption of ASU 2016-02	—	—		—		—		—		3,018		3,018
Net income	—	—		—		—		—		2,251,753		2,251,753
Other comprehensive loss	—	—		—		—		(30,181)				(30,181)
Cash dividends declared ($4.60 per common share)	—	—		—		—		—		(665,099)		(665,099)
Balance at June 28, 2020	145,331	145		6,695,858		(12,949,889)		(94,211)		11,520,591		5,172,494
Issuance of common stock	1,089	1		24,122		—		—		—		24,123
Purchase of treasury stock	(5,819)	(5)		—		(2,717,622)		—		—		(2,717,627)
Reissuance of treasury stock	484	—		76,954		20,810		—		—		97,764
Equity-based compensation expense	—	—		220,164		—		—		—		220,164
Effect of conversion of convertible notes	1,416	2		24,869		—		—		—		24,871

Reclassification from temporary to permanent equity	—	—		10,995		—		—		—		10,995

Adoption of ASU 2018-18	—	—		—		—		—		1,157		1,157
Net income	—	—		—		—		—		3,908,458		3,908,458
Other comprehensive income	—	—		—		—		30,083		—		30,083
Cash dividends declared ($5.20 per common share)	—	—		—		—		—		(745,294)		(745,294)
Balance at June 27, 2021	142,501	143		7,052,962		(15,646,701)		(64,128)		14,684,912		6,027,188
Issuance of common stock	795	$	1	$	5,681	$	—	$	—	$	—	$	5,682
Purchase of treasury stock	(6,574)	(7)		—		(3,845,697)		—		—		(3,845,704)
Reissuance of treasury stock	253	—		97,209		10,969		—		—		108,178
Equity-based compensation expense	—	—		259,064		—		—		—		259,064




Net income	—	—		—		—		—		4,605,286		4,605,286
Other comprehensive loss	—	—		—		—		(45,854)		—		(45,854)
Cash dividends declared ($6.00 per common share)	—	—		—		—		—		(835,474)		(835,474)
Balance at June 26, 2022	136,975	$	137	$	7,414,916	$	(19,481,429)	$	(109,982)	$	18,454,724	$	6,278,366

Common
Stock
Shares Common
Stock Additional
Paid-in
Capital Treasury
Stock Accumulated
Other
Comprehensive
Income(Loss) Retained
Earnings Total
Balance at June 26, 2016 160,201
$ 160
$ 5,572,898
$ (4,429,317 ) $ (69,333 ) $ 4,820,109
$ 5,894,517
Sale of common stock 2,661
3
12,910
—
—
—
12,913
Purchase of treasury stock (5,322 ) (5 ) —
(811,667 ) —
—
(811,672 )
Income tax benefits on equity-based compensation plans —
—
38,747
—
—
—
38,747
Reissuance of treasury stock 825
1
34,865
24,797
—
—
59,663
Equity-based compensation expense —
—
149,975
—
—
—
149,975
Effect of conversion of convertible notes 1,388
1
(1,596 ) —
—
—
(1,595 )
Exercise of warrants 1,970
2
(5 ) —
—
—
(3 )
Reclassification from temporary to permanent equity —
—
37,691
—
—
—
37,691
Net income —
—
—
—
—
1,697,763
1,697,763
Other comprehensive income —
—
—
—
7,633
—
7,633
Cash dividends declared ($1.65 per common share) —
—
—
—
—
(268,181 ) (268,181 )
Balance at June 25, 2017 161,723
162
5,845,485
(5,216,187 ) (61,700 ) 6,249,691
6,817,451
Sale of common stock 1,934
2
9,256
—
—
—
9,258
Purchase of treasury stock (14,786 ) (15 ) —
(2,653,350 ) —
—
(2,653,365 )
Reissuance of treasury stock 677
1
52,562
23,061
—
—
75,624
Equity-based compensation expense —
—
172,216
—
—
—
172,216
Effect of conversion of convertible notes 10,199
10
(26,776 ) —
—
—
(26,766 )
Effect of bond hedge, cash in lieu of shares (2,855 ) (3 ) 13
—
—
—
10
Reclassification from temporary to permanent equity —
—
91,669
—
—
—
91,669
Adoption of ASU 2016-09 —
—
—
—
—
40,065
40,065
Net income —
—
—
—
—
2,380,681
2,380,681
Other comprehensive income —
—
—
—
4,251
—
4,251
Cash dividends declared ($2.55 per common share) —
—
—
—
—
(409,243 ) (409,243 )
Balance at June 24, 2018 156,892
157
6,144,425
(7,846,476 ) (57,449 ) 8,261,194
6,501,851

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~~Lam Research Corporation 2019 10-K~~ 56

~~Table of Contents~~

Common
Stock
Shares Common
Stock Additional
Paid-in
Capital Treasury
Stock Accumulated
Other
Comprehensive
Income(Loss) Retained
Earnings Total
Sale of common stock 1,090
1
6,812
—
—
—
6,813
Purchase of treasury stock (21,059 ) (21 ) —
(3,780,503 ) —
—
(3,780,524 )
Reissuance of treasury stock 622
—
53,555
24,406
—
—
77,961
Equity-based compensation expense —
—
187,234
—
—
—
187,234
Effect of conversion of convertible notes 2,783
3
(11,361 ) —
—
—
(11,358 )
Exercise of warrants 4,105
4
(12 ) —
—
—
(8 )
Reclassification from temporary to permanent equity —
—
28,752
—
—
—
28,752
Adoption of ASU 2014-09⁽¹⁾
—
—
—
—
—
139,355
139,355
Adoption of ASU 2016-16⁽¹⁾
—
—
—
—
—
(443 ) (443 )
Adoption of ASU 2018-02⁽¹⁾
—
—
—
—
(2,227 ) 2,227
—
Net income —
—
—
—
—
2,191,430
2,191,430
Other comprehensive loss —
—
—
—
(4,354 ) —
(4,354 )
Cash dividends declared ($4.40 per common share) —
—
—
—
—
(662,844 ) (662,844 )
Balance at June 30, 2019 144,433
$ 144
$ 6,409,405
$ (11,602,573 ) $ (64,030 ) $ 9,930,919
$ 4,673,865

¹⁾~~Refer to Note 3 - Recent Accounting Pronouncements for more information regarding these FASB Accounting Standard Updates.~~

See Notes to Consolidated Financial Statements

~~Continues on next page~~

Lam Research Corporation ~~2019~~2022 10-K 5744

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June ~~30, 2019~~26, 2022

Note 1: Company and Industry Information

The Company designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits. Semiconductor manufacturing, our customers’ business, involves the complete 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. Along with meeting technical requirements, wafer processing equipment must deliver high productivity and be cost-effective.

The Company sells its products and services primarily to companies involved in the production of semiconductors in the United States, China, Europe, Japan, Korea, Southeast Asia, and Taiwan.

The semiconductor industry is cyclical in nature and has historically experienced periodic downturns and upturns. Today’s leading indicators of changes in customer investment patterns, such as electronics demand, memory pricing, and foundry utilization rates, may not be any more reliable than in prior years. Demand for the Company’s equipment can vary significantly from period to period as a result of various factors including, but not limited to economic conditions; supply, demand, and prices for semiconductors; customer capacity requirements; and the Company’s ability to develop and market competitive products. For these and other reasons, the Company’s results of operations for fiscal years ~~2019, 2018,~~2022, 2021, and ~~2017~~2020 may not necessarily be indicative of future operating results.

Reclassification: Certain amounts for the fiscal ~~years 2018 and 2017 Consolidated Statement of Cash Flows, and certain amounts within the 2017~~year 2021 footnotes have been reclassified to conform to the fiscal year ~~2019~~2022 presentation.

Note 2: Summary of Significant Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates, and assumptions that could affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates and assumptions on historical experience and on various other assumptions it believes to be applicable and evaluates them on an ongoing basis to ensure they remain reasonable under current conditions. Actual results could differ significantly from those estimates.

Revenue Recognition: On June 25, 2018, the Company adopted FASB ASU No. 2014-09 (ASC 606) - Revenue From Contracts with Customers which provides guidance for revenue recognition that superseded the revenue recognition requirements in ASC 605, Revenue Recognition and most industry specific guidance.

The Company recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services by following a five-step process, (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below.

Identify the contract with a customer. The Company generally considers documentation of terms with an approved purchase order as a customer contract provided that collection is considered probable, which is assessed based on the creditworthiness of the customer as determined by credit checks, payment histories, and/or other circumstances.

Identify the performance obligations in the contract. Performance obligations include sales of systems, spare parts, and services. In addition, customer contracts contain provisions for installation and training services which have been deemed immaterial in the context of the contract.

Determine the transaction price. The transaction price for the Company’s contracts with its customers consists of both fixed and variable consideration provided it is probable that a significant reversal of revenue will not occur when the uncertainty related to variable consideration is resolved. Fixed consideration includes amounts to be

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~~Lam Research Corporation 2019 10-K~~ 58

~~Table of Contents~~

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. The Company generally invoices customers at shipment and for professional services either as provided or upon meeting certain milestones. Customer invoices are generally due within 30 to 90 days after issuance. The Company’s contracts with customers typically do not include significant financing components as the period between the transfer of performance obligations and timing of payment are generally within one year.

Allocate the transaction price to the performance obligations in the contract. For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to historical discounting trends for products and services and pricing practices in different geographies.

Recognize revenue when or as the Company satisfies a performance obligation. Revenue for systems and spares are recognized at a point in time, which is generally upon shipment or delivery. Revenue from services is recognized over time as services are completed or ratably over the contractual period of generally one year or less.

Lam Research Corporation 2022 10-K 45

Table of Contents

Inventory Valuation: Inventories are stated at the lower of cost or net realizable value using standard costs that approximate actual costs on a first-in, first-out basis. Finished goods are reported as inventories until the point of title transfer to the customer. Unless specified in the terms of sale, title generally transfers at the physical transfer of the products to the freight carriers. Transfer of title for shipments to Japanese customers occurs at the time of customer acceptance.

Management evaluates the need to record adjustments for impairment of inventory at least quarterly. The Company’s policy is to assess the valuation of all inventories including manufacturing raw materials, work-in-process, finished goods, and spare parts in each reporting period. Obsolete inventory or inventory in excess of management’s estimated usage requirement is written down to its estimated market value if less than cost. Estimates of market value include but are not limited to management’s forecasts related to the Company’s future manufacturing schedules, customer demand, technological and/or market obsolescence, general semiconductor market conditions, and possible alternative uses. If future customer demand or market conditions are less favorable than the Company’s projections, additional inventory write-downs may be required and would be reflected in cost of goods sold in the period in which the revision is made.

Warranty:Typically, the sale of semiconductor capital equipment includes providing parts and service warranties to customers as part of the overall price of the system. The Company provides standard warranties for its systems. The Company records a provision for estimated warranty expenses to cost of sales for each system when it recognizes revenue. The Company does not maintain general or unspecified reserves; all warranty reserves are related to specific systems. All actual or estimated parts and labor costs incurred in subsequent periods are charged to those established reserves on a system-by-system basis.

While the Company periodically monitors the performance and cost of warranty activities, if actual costs incurred are different than its estimates, the Company may recognize adjustments to provisions in the period in which those differences arise or are identified. In addition to the provision of standard warranties, the Company offers customer-paid extended warranty services. Revenues for extended maintenance and warranty services with a fixed payment amount are recognized on a straight-line basis over the term of the contract. Related costs are recorded as incurred.

Equity-based Compensation — Employee Stock Plans: The Company recognizes the fair value of equity-based compensation expense. The Company determines the fair value of its RSUs, excluding market-based performance RSUs, based upon the fair market value of Company’s Common Stock at the date of grant, discounted for dividends. The Company estimates the fair value of its market-based performance RSUs using a Monte Carlo simulation model at the date of the grant. The Company estimates the fair value of its stock options using a Black-Scholes option valuation model. This model requires the input of ~~highly~~ subjective assumptions, including expected stock price volatility and the estimated life of each award. The Company amortizes the fair value of equity-based awards over the vesting periods of the award, and the Company has elected to use the straight-line method of amortization.

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~~Lam Research Corporation 2019 10-K~~ 59

~~Table of Contents~~

as well as the tax effect of carryforwards. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Realization of its net deferred tax assets is dependent on future taxable income. The Company believes it is more likely than not that such assets will be realized; however, ultimate realization could be negatively impacted by market conditions and other variables not known or anticipated at this time. In the event that the Company determines that it will not be able to realize all or part of its net deferred tax assets, an adjustment will be charged to earnings in the period such determination is made. Likewise, if the Company later determines that it is more likely than not that the deferred tax assets will be realized, then the previously provided valuation allowance will be reversed.

The Company recognizes 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. The Company’s policy is to include interest and penalties related to ~~unrecognized~~uncertain tax ~~benefits~~positions as a component of income tax expense.

Goodwill and Intangible ~~Assets:~~Assets: The valuation of intangible assets acquired in a business combination requires the use of management estimates including but not limited to estimating future expected cash flows from assets acquired and determining discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available. The Company amortizes intangible assets with estimable useful lives over their respective estimated useful lives.

Goodwill represents the amount by which the purchase price in each business combination exceeds the fair value of the net tangible and identifiable intangible assets acquired. Each component of the Company for which discrete financial information is available and for which management regularly reviews the results of operations is considered a reporting unit. All goodwill acquired in a business combination is assigned to one or more reporting units as of the acquisition date. Goodwill is assigned to the Company’s reporting units that are expected to benefit from the synergies of the combination. The goodwill assigned to a reporting unit is the difference between the acquisition consideration assigned to the reporting unit on a relative fair value basis and the fair value of acquired assets and liabilities that can be specifically attributed to the reporting unit. The Company tests goodwill and identifiable intangible assets with indefinite useful lives for impairment at least annually. The Company amortizes intangible assets with estimable useful lives over their respective estimated useful lives, and the Company reviews for impairment whenever events or changes in circumstances indicate that the carrying amount

Lam Research Corporation 2022 10-K 46

Table of ~~the intangible asset may not be recoverable and the carrying amount exceeds its fair value.~~Contents

The Company reviews goodwill at least annually for ~~impairment. If~~impairment during the fourth quarter of each fiscal year and if certain events or indicators of impairment occur between annual impairment ~~tests,~~tests. The process of evaluating the ~~Company would perform an impairment test at that date. In testing for a~~ potential impairment of goodwill requires significant judgment. When reviewing goodwill for impairment, the Company ~~(1) allocates goodwill~~first performs a qualitative assessment to ~~its reporting units to which~~determine whether it is more likely than not that the ~~acquired goodwill relates, (2) estimates the fair value of its reporting units, and (3) determines the carrying value (book value) of those reporting units. Furthermore, if the estimated~~ fair value of a reporting unit is less than its carrying value. In performing a qualitative assessment, it considers business conditions and other factors including, but not limited to (i) adverse industry or economic trends, (ii) restructuring actions and lower projections that may impact future operating results, (iii) sustained decline in share price, and (iv) overall financial performance and other events affecting the ~~carrying value,~~reporting units. If the Company ~~must estimate the fair value of all identifiable assets and liabilities of~~concludes that reporting unit, in a manner similar to a purchase price allocation for an acquired business. This can require independent valuations of certain internally generated and unrecognized intangible assets such as in-process R&D and developed technology. Only after this process is completed can the amount of goodwill impairment, if any, be determined. In the Company’s goodwill impairment process, it first assesses qualitative factors to determine whether it is ~~necessary to perform a quantitative analysis. The Company does~~more likely than not ~~calculate~~that the fair value of a reporting unit ~~unless the Company determines, based on a qualitative assessment, that it is more-likely-than-not that its fair value~~ is less than its carrying ~~amount. The Company performs an annual goodwill~~amount, then a quantitative impairment ~~analysis as~~test is performed by estimating the fair value of the ~~first day of~~reporting unit and comparing it to its ~~fourth fiscal quarter.~~carrying value, including goodwill allocated to that reporting unit. The Company did not record impairments of goodwill during the years ended June ~~30, 2019,~~26, 2022, June ~~24, 2018,~~27, 2021, or June ~~25, 2017.~~28, 2020.

~~The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis.~~ The Company determines the fair value of its reporting units by using an income approach. Under the income approach, the Company determines fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.

In estimating the fair value of a reporting unit, the Company makes estimates and judgments about the future cash flows of its reporting units, including estimated growth rates and assumptions about the economic environment. Although the Company’s cash flow forecasts are based on assumptions that are consistent with the plans and estimates it is using to manage the underlying businesses, there is significant judgment involved in

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~~Lam Research Corporation 2019 10-K~~ 60

~~Table of Contents~~

determining the cash flows attributable to a reporting unit. In addition, the Company makes certain judgments about allocating shared assets to the estimated balance sheets of its reporting units. Changes in judgment on these assumptions and estimates could result in a goodwill impairment charge.

~~As a result, several factors could result in impairment~~If after completing the quantitative assessment the carrying value of a material amount of the Company’s goodwill balance in future periods, including but not limited to: (1) weakening of the global economy, weakness in the semiconductor equipment industry, or failure ofreporting unit exceeds its fair value, the Company to reach its internal forecasts, which could impact the Company’s ability to achieve its forecasted levels of cash flows and reduce the estimated discounted cash flow value of its reporting units and (2) a decline in the Company’s stock price and resulting market capitalization and to the extent the Company determines that the decline is sustained and indicates a reduction in the fair value of the Company’s reporting units below their carrying value. Further, the value assigned to intangible assets, other than goodwill, is based on estimates and judgments regarding expectations such as the success and lifecycle of products and technology acquired. If actual product acceptance differs significantly from the estimates, the Company may be required towould record an impairment charge equal to ~~write down~~ the ~~asset~~excess of the carrying value of the reporting unit over its fair value, up to ~~its realizable value.~~the amount the goodwill assigned to the reporting unit.

Impairment of Long-lived Assets (Excluding Goodwill): The Company ~~routinely considers whether indicators~~reviews intangible assets whenever events or circumstances indicate that the carrying value of ~~impairment of long-lived assets are present.~~an asset or asset group may not be recoverable. If such indicators are present, the Company determines whether the sum of the estimated undiscounted cash flows attributable to the assets is less than their carrying value. If the sum is less, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their respective fair values. Fair value is determined by discounted future cash flows, appraisals, or other methods. The Company recognizes an impairment charge to the extent the ~~present~~fair value ~~of anticipated net cash flows~~ attributable to the asset are less than the asset’s carrying value. The fair value of the asset then becomes the asset’s new carrying value, which the Company depreciates over the remaining estimated useful life of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value. For the periods presented, there was noimpairment of long-lived assets. In addition, for fully amortized intangible assets, we derecognize the gross cost and accumulated amortization in the period we determine the intangible asset no longer enhances future cash flows.

Fiscal Year: The Company follows a 52/53-week fiscal reporting calendar, and its fiscal year ends on the last Sunday of June each year. The Company’s most recent fiscal ~~year ended on June 30, 2019 included 53 weeks, and the fiscal~~ years ended June ~~24, 2018,~~26, 2022, June 27, 2021, and June ~~25, 2017,~~28, 2020, and each included 52 weeks.

Principles of Consolidation: The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Cash Equivalents and Investments: Investments purchased with an original maturity of three months or less are considered cash equivalents. The Company also invests in certain mutual funds, which include equity and ~~fixed- income~~fixed-income securities, related to its obligations under its deferred compensation plan, and such investments are classified as trading securities on the consolidated balance sheets. All of the Company’s other investments are classified as available-for-sale at the respective balance sheet dates. The Company accounts for its investment portfolio at fair value. Investments classified as trading securities are recorded at fair value based upon quoted market prices. Differences between the cost and fair value of trading securities are recognized as ~~“Other~~other income (expense)”, net in the Consolidated Statement of Operations. The investments classified as available-for-sale are recorded at fair value based upon quoted market prices, and difference between the cost and fair value of available-for-sale securities is presented as a component of accumulated other comprehensive income (loss). ~~Unrealized losses on available-for-sale securities are charged against other income (expense) when a decline in~~Following the fiscal year 2021 adoption of Accounting Standard Codification Topic 326, under Subtopic 326-30, the Company evaluates its investments with fair value is determined to be other than temporary. The Company considers several factors to determine whether a loss is other than temporary. These factors include but are not limited to (1) the extent to which the fair value is less than amortized cost ~~basis, (2)~~by first considering whether the ~~financial condition and near-term prospects of~~Company has the issuer, (3) the length of time a security is in an unrealized loss position, and (4) the Company’s ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. The Company’s ongoing consideration of these factors could result in additional impairment charges in the future, which could adversely affect its results of operation. An other-than-temporary impairment is triggered when there is an intent to sell the security or whether it is ~~more-likely-than-not~~more likely than not that the ~~security~~Company will be required to ~~be sold~~sell the security before recovery ~~or the security is not expected to recover the entire~~of its amortized cost ~~basis~~basis. In either such situation, the difference between fair value and amortized cost is recognized as a loss in the income statement. Where such sales are not likely to occur, the Company considers whether a portion of the ~~security. Other-than-temporary impairments attributed to~~loss is the result of a credit loss. To the extent such losses are the result of credit losses, those amounts are recognized in the income statement. ~~The specific identification method is used to determine~~All other differences between fair value and amortized cost are recognized in other comprehensive income. No such losses were recognized through the ~~realized gains and losses on investments. The Company recorded a $42.5 million other-than-temporary impairment charge~~income statement during the ~~year~~years ended June ~~24, 2018.~~26, 2022 and June 27, 2021. No other-than-temporary impairment charges were recognized during the ~~years~~year ended June ~~30, 2019 or June 25, 2017.~~28, 2020.

~~Continues on next page~~

Lam Research Corporation ~~2019~~2022 10-K 6147

Allowance for ~~Doubtful Accounts:~~Expected Credit Losses: The Company maintains an allowance for expected losses resulting from the inability of its customers to make required payments. The Company evaluates its allowance for ~~doubtful accounts~~expected credit losses based on a combination of factors. In circumstances where specific invoices are deemed uncollectible, the Company provides a specific allowance ~~for bad debt~~ against the amount due to reduce the net recognized receivable to the amount it reasonably believes will be collected. The Company also provides allowances based on its write-off history. Bad debt expense was not material for fiscal years ended June ~~30, 2019,~~26, 2022, June ~~24, 2018,~~27, 2021, and June ~~25, 2017.~~28, 2020.

Property and Equipment:Property and equipment is stated at cost. Equipment is depreciated by the straight-line method over the estimated useful lives of the assets, generally three to five years. Furniture and fixtures are depreciated by the straight-line method over the estimated useful lives of the assets, generally five years. Software is amortized by the straight-line method over the estimated useful lives of the assets, generally three to five years. Buildings are depreciated by the straight-line method over the estimated useful lives of the assets, generally twenty-five years. Leasehold improvements are generally amortized by the straight-line method over the shorter of the life of the related asset or the term of the underlying lease. Amortization of ~~capital~~finance leases is included with depreciation expense.

Derivative Financial Instruments:In the normal course of business, the Company’s financial position is routinely subjected to market risk associated with interest rate and foreign currency exchange rate fluctuations. The Company’s policy is to mitigate the effect of ~~these~~interest rate fluctuations on certain proposed debt instruments and exchange rate fluctuations on certain foreign currency denominated business exposures. The Company has a policy that allows the use of derivative financial instruments to hedge foreign currency exchange rate fluctuations on forecasted revenue and expenses and net monetary assets or liabilities denominated in various foreign currencies. The Company carries derivative financial instruments (derivatives) on the balance sheet at their fair values. The Company does not use derivatives for trading or speculative purposes. The Company does not believe that it is exposed to more than a nominal amount of credit risk in its interest rate and foreign currency hedges, as counterparties are large, global and well-capitalized financial institutions. The ~~Company’s exposures are in liquid currencies (Japanese yen, Swiss francs, euros, Taiwanese dollars, Chinese renminbi, Singapore dollars,~~Company maintains an active currency hedging program and ~~Korean won), so~~believes there is minimal risk that appropriate derivatives to maintain the Company’s hedging program would not be available in the future.

To hedge foreign currency risks, the Company uses foreign currency exchange forward and option contracts, where possible and prudent. These hedge contracts are valued using standard valuation formulas with assumptions about future foreign currency exchange rates derived from existing exchange rates, interest rates, and other market factors.

The Company considers its most current forecast in determining the level of foreign currency denominated revenue and expenses to hedge as cash flow hedges. The Company combines these forecasts with historical trends to establish the portion of its expected volume to be hedged. The revenue and expenses are hedged and designated as cash flow hedges to protect the Company from exposures to fluctuations in foreign currency exchange rates. If the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge are reclassified from accumulated other comprehensive income (loss) to other income (expense), net on the Consolidated Statement of Operations at that time.

Leases:Lease expense for operating leases is recognized on a straight-line basis over the lease term. The Company includes renewals and terminations in the calculation of the right-of-use asset and liability when the provision is reasonably certain to be exercised. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future lease payments when the rate implicit in the lease is unknown.

The Company has elected the following practical expedients and accounting policy elections for accounting under ASC 842: (i) leases with an initial lease term of 12 months or less are not recorded on the balance sheet; and (ii) lease and non-lease components of a contract are accounted for as a single lease component.

Guarantees: The Company has certain ~~operating~~finance leases that contain provisions whereby the properties subject to the ~~operating~~finance leases may be remarketed at lease expiration. The Company has guaranteed to the lessor an amount approximating the lessor’s investment in the property. Also, the Company’s guarantees generally include certain indemnifications to its lessors ~~under operating lease agreements~~ for environmental matters, potential overdraft protection obligations to financial institutions related to one of the Company’s subsidiaries, indemnifications to the Company’s customers for certain infringement of third-party intellectual property rights by its products and services, indemnifications for its officers and directors, and the Company’s warranty obligations under sales of its products.

Foreign Currency Translation:The Company’s non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, primarily generate and expend cash in their local currency. Accordingly, all balance sheet accounts of these local functional currency subsidiaries are translated into U.S. dollars at the fiscal period-end exchange rate, and income and expense accounts are translated into U.S. dollars using average rates in effect for the period, except for costs related to those balance sheet items that are translated using historical exchange rates. The resulting translation adjustments are recorded as cumulative translation adjustments and are a component of accumulated other comprehensive

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~~Lam Research Corporation 2019 10-K~~ 62

income (loss). ~~Translation~~Remeasurement adjustments are recorded in other income (expense), net, where the U.S. dollar is the functional currency.

Lam Research Corporation 2022 10-K 48

Note 3: Recent Accounting Pronouncements

Recently Adopted or Effective

In May 2014, the FASB released ASU 2014-09, “Revenue from Contracts with Customers,” to supersede nearly all existing revenue recognition guidance under GAAP. The FASB issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015–14, ASU 2016–08, ASU 2016–10, ASU 2016–12 and ASU 2016–20, respectively; all of which in combination with ASU 2014-09 were codified as Accounting Standard Codification Topic 606 (“ASC 606”). The core principle of the standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company ~~adopted ASC 606 on the first day of the current~~did not adopt any new accounting standards during fiscal year June 25, 2018, under the modified retrospective approach, applying the amendments to prospective reporting periods. Results for reporting periods beginning on or after June 25, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under ASC 605. In connection with the adoption of ASC 606, the Company’s revenue recognition policy has been amended, refer to Note 2 - Summary of Significant Accounting Policies for2022 that had a ~~description of the policy.~~

The cumulative effect of the changes made to the Company’s Consolidated Balance Sheet as of June 25, 2018 for the adoption of ASC 606 to all contracts with customers that were not completed as of June 24, 2018 was recorded as an adjustment to retained earnings as of the adoption date as follows:

June 24, 2018 June 25, 2018
As reported Adjustments As Adjusted
(in thousands)
Total assets $ 12,479,478
$ 12,955
$ 12,492,433
Deferred profit $ 720,086
$ (160,695 ) $ 559,391
Total liabilities $ 5,899,435
$ (126,400 ) $ 5,773,035
Stockholder’s equity $ 6,501,851
$ 139,355
$ 6,641,206

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 63

Upon adoption, the Company recorded a cumulative effect adjustment of $139.4 million, net of tax adjustment of $21.0 million, which increased the June 25, 2018 opening retained earnings balance on the Condensed Consolidated Balance Sheet, primarily as a result of changes in the timing of recognition of system sales. Under ASC 606, the Company recognizes revenue from sales of systems when the Company determines that control has passed to the customer which is generally (1) for products that have been demonstrated to meet product specifications prior to shipment upon shipment or delivery; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized upon completion of installation and receipt of customer acceptance; (3) for transactions where legal title does not pass upon shipment or delivery and the Company does not have a right to payment, revenue is recognized when legal title passes to the customer and the Company has a right to payment, which is generally at customer acceptance.

~~The impact of adoption of ASC 606 on the Company's Consolidated Statement of Operations and Consolidated Balance Sheet was as follows:~~

Year Ended
June 30, 2019
As Reported Without adoption of ASC 606 Effect of Change Higher/(Lower)
(in thousands)
Revenue $ 9,653,559
$ 9,049,790
$ 603,769
Cost of goods sold $ 5,295,100
$ 5,016,679
$ 278,421

June 30, 2019
As Reported Without adoption of ASC 606 Effect of Change Higher/(Lower)
(in thousands)
Deferred profit $ 381,317
$ 846,422
$ (465,105 )
Retained earnings $ 9,930,919
$ 9,465,814
$ 465,105

~~Except as disclosed above, the adoption of ASC 606 did not have a significant~~material impact on the Company’s Consolidated ~~Statement~~Financial Statements.

Updates Not Yet Effective

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” which requires business entities to make annual disclosures, including the nature of ~~Operations~~transactions and the related accounting policy used to account for the ~~year ended June 30, 2019.~~

~~In January 2016, the FASB released ASU 2016-01, “Financial Instruments – Overall – Recognition~~transactions, significant terms and ~~Measurement of Financial Assets~~conditions, and ~~Financial Liabilities.” The FASB issued~~line items affected, about transactions with a subsequent amendment to the initial guidance in February 2018 within ASU 2018-03. These amendments change the accounting for and financial statement presentation of equity investments, other than thosegovernment (including government assistance) that are accounted for ~~under the equity method of~~by analogizing to a grant or contribution accounting ~~or those that result in consolidation of the investee.~~model. The ~~amendments provide clarity on the measurement methodology~~guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, with early adoption permitted. The Company is required to be used for the required disclosure of fair value of financial instruments measured at amortized cost on the balance sheet and clarifies that an entity should evaluate the need for a valuation allowance on deferred tax assets related to available-for-sale securities in combination with the entity’s other deferred tax assets, among other changes. The Company’s adoption ofadopt this standard in the first quarter of fiscal year ~~2019 did~~2023 for the annual reporting period ending June 25, 2023. The guidance may be applied either prospectively to all in-scope transactions at the date of initial application or retrospectively. The Company does not expect adoption of this standard to have a material impact on its Consolidated Financial Statements.

In ~~August 2016,~~June 2022, the FASB ~~released~~issued ASU ~~2016-15, “Statement~~2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of ~~Cash Flows – Classification of Certain Cash Receipts and Cash Payments.~~Equity Securities Subject to Contractual Sale Restrictions,” ~~The amendment provides and~~which clarifies ~~guidance~~that a contractual restriction on the ~~classification~~sale of ~~certain cash receipts~~an equity security is not considered part of the unit of account of the equity security and, ~~cash payments~~therefore, is not considered in measuring fair values; it also requires additional disclosures, including the ~~statement~~nature and remaining duration of ~~cash flows to eliminate diversity in practice.~~such restrictions. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2023, with early adoption permitted. The Company ~~adopted the~~is required to adopt this standard ~~update~~prospectively in the first quarter of fiscal year ~~2019, using a retrospective transition method.~~2025 for the annual reporting period ending June 29, 2025. The ~~Company’s~~Company does not expect adoption of this standard ~~did not~~to have a material impact on its Consolidated Financial Statements.

In October 2016, the FASB released ASU 2016-16, “Income Tax – Intra-Entity Transfers of Assets Other than Inventory.” This standard update improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. The Company adopted this standard in the first quarter of fiscal year 2019 using a modified-retrospective approach through a cumulative-effect adjustment directly to retained earnings. The Company’s adoption of this standard resulted in a $0.4 million decrease to retained earnings and a corresponding $0.4 million offset to other assets on its Consolidated Financial Statements.

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 64

In November 2016, the FASB released ASU 2016-18, “Statement of Cash Flows – Restricted Cash.” This standard update requires that restricted cash and restricted cash equivalents be included in cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. The Company adopted this standard in the first quarter of fiscal year 2019, using a retrospective transition method to each period presented. The adoption of this standard did not have a material impact on its Consolidated Financial Statements.

In February 2018, the FASB released ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This standard update addresses a specific consequence of the Tax Cuts and Jobs Act (“U.S. Tax Reform”) and allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from U.S. tax reform. Consequently, the update eliminates the stranded tax effects that were created as a result of the historical U.S. federal corporate income tax rate to the newly enacted U.S. federal corporate income tax rate. The Company adopted this standard in the first quarter of fiscal year 2019 using a modified-retrospective approach through a cumulative-effect adjustment directly to retained earnings. The adoption of this standard resulted in a $2.2 million increase to retained earnings, with a corresponding $2.2 million decrease to other comprehensive income.

In August 2018, the Securities and Exchange Commission (“SEC”) adopted amendments to eliminate, integrate, update or modify certain of its disclosure requirements. The amendments are part of the SEC’s efforts to improve disclosure effectiveness and were focused on eliminating disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded. The Company adopted these amendments in the first quarter of fiscal Year 2019. The adoption of these amendments resulted in minor changes within its Consolidated Financial Statements.

~~Updates Not Yet Effective~~

In February 2016, the FASB issued ASU 2016-02, “Leases.” The amendment establishes the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. In January 2018 and July 2018 the FASB issued ASU 2018-01 and ASU 2018-11 amending the effects of ASU 2016-02. The standard requires lessees to reflect the majority of leases on their balance sheets as assets and obligations. The Company is required to adopt this standard starting in the first quarter of fiscal year 2020 using a modified-retrospective approach.

The standard provides for certain practical expedients. Among the practical expedients is an optional transition method that allows companies to apply the guidance at the adoption date and recognize a cumulative-effect adjustment to retained earnings/(deficit) on the adoption date. The Company plans to elect this practical expedient upon adoption. The Company also plans to elect the package of practical expedients that will allow it to carry forward its determination of whether a lease exists, the classification of a lease, and whether initial direct lease costs exist for purposes of transition to the new standard. The Company does not expect to use the hindsight practical expedient. The Company also plans to elect the short-term lease exemption whereby we will not record an asset or liability for short-term leases.

The Company has completed its scoping reviews, identified its significant leases by geography and by asset type, and developed its accounting policies and expected policy elections, which will take effect upon adoption of the standard. The Company’s implementation of its identified accounting system, which will support the future state leasing process, is almost completed. The Company currently estimates that, upon adoption, it will have total lease assets and total lease liabilities consistent with its existing disclosures.

In June 2016, the FASB released ASU 2016-13, “Financial Instruments – Credit Losses.” The amendment revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses on financial instruments, including but not limited to available-for-sale debt securities and accounts receivable. The Company is required to adopt this standard starting in the first quarter of fiscal year 2021 using a modified-retrospective approach. Early adoption is permitted. The Company is currently in the process of evaluating the impact of adoption on its Consolidated Financial Statements.

In November 2018, the FASB issued ASU 2018-18, "Collaborative Arrangements (Topic 808).” The amendment clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer for a good or service that is a distinct unit of account. The

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 65

amendment also precludes entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The Company is required to adopt this standard starting in the first quarter of fiscal year 2021. The standard should be applied retrospectively to the period when the Company initially adopted ASC 606. The Company is currently evaluating the impact of adoptions on its Consolidated Financial Statements.

~~In April 2019, the FASB issued ASU 2019-04, ”Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~”, that clarifies and improves areas of guidance related to the recently issued standards on credit losses (ASU 2016-13), hedging (ASU 2017-12), and recognition and measurement of financial instruments (ASU 2016-01). The amendments generally have the same effective dates as their related standards. If already adopted, the amendments of ASU 2016-01 and ASU 2016-13 are effective for fiscal years beginning after December 15, 2019 and the amendments of ASU 2017-12 are effective as of the beginning of the Company’s next annual reporting period. As discussed above, the Company adopted ASU 2016-01 in the first quarter of fiscal year 2019 and does not expect the amendments of ASU 2019-04 will have a material impact on the its consolidated financial statements. The Company continues to evaluate the impact of ASU 2016-13 and will consider the amendments of ASU 2019-04 as part of that process.

Revenue of ~~$593.7~~$908.7 million included in deferred profit at June ~~25, 2018~~27, 2021 was recognized during fiscal year ~~2019.~~2022.

The following table summarizes the transaction price for contracts that have not yet been recognized as revenue as of June ~~30, 2019~~26, 2022 and when the Company expects to recognize the amounts as revenue:


	Less than 1 Year		1-3 Years			More than 3 Years			Total
	(in thousands)
Deferred revenue	$	2,014,210	$	160,266	(1)	$	23,623	(1)	$	2,198,099

Less than 1 Year 1-3 Years More than 3 Years Total
(in thousands)
Deferred revenue $ 404,544
$ 42,309
⁽¹⁾
$ 2,452
⁽¹⁾
$ 449,305
(1) This amount is reported in Deferred profit on the Company's Consolidated Balance Sheets as the customers can demand the liability to be performed at any time.

Disaggregation of Revenue

The following table presents the Company’s revenue disaggregated between system and its customer-support related revenue:


	Year Ended
	June 26, 2022		June 27, 2021		June 28, 2020
	(in thousands)
Systems Revenue	$	11,322,271	$	9,764,845	$	6,625,130
Customer support-related revenue and other	5,904,768		4,861,305		3,419,606
	$	17,227,039	$	14,626,150	$	10,044,736

System revenue includes sales of new leading-edge equipment in deposition, etch and clean 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 Company operates in ~~one~~1 reportable business segment: manufacturing and servicing of wafer processing semiconductor manufacturing equipment. Refer to Note 1920 - Segment, Geographic Information, and Major ~~Customers;~~Customers; for additional information

Lam Research Corporation 2022 10-K 49

regarding the Company’s evaluation of reportable business segments and the disaggregation of revenue by the geographic regions in which the Company ~~operates in.~~operates.

Additionally, the Company serves ~~three~~3 primary markets: memory, foundry, and logic/integrated device manufacturing. The following table presents the percentages of ~~system revenues~~leading- and non-leading-edge equipment and upgrade revenue to each of the primary markets ~~we serve:~~the Company serves:



	~~Year Ended~~
	June 30, 2019
~~Memory~~	70	%
~~Foundry~~	20	%
~~Logic/integrated device manufacturing~~	10	%


	Year Ended
	June 26, 2022		June 27, 2021		June 28, 2020
Memory	60	%	61	%	58	%
Foundry	26	%	32	%	31	%
Logic/integrated device manufacturing	14	%	7	%	11	%

Note 5: Equity-based Compensation ~~Plans~~Plan

The Company has stock plans that provide for grants of equity-based awards to eligible participants, including stock options and restricted stock units, of the Company’s Common Stock. An option is a right to purchase

~~Continues on next page~~

~~Lam Research Corporation 2019 10-K~~ 66

Common Stock at a set price. An RSU award is an agreement to issue a set number of shares of Common Stock at the time of vesting. The ~~Company’s options and RSU awards typically vest over a period of three years or less. The~~ Company also has an employee stock purchase plan that allows employees to purchase its Common Stock at a discount through payroll deductions.

The Lam Research Corporation ~~2007 Stock Incentive Plan, as amended and restated, 2011 Stock Incentive Plan, as amended and restated, and the~~ 2015 Stock Incentive Plan ~~(collectively~~(the “Plan”) was approved by the ~~“Stock Plans”), provide~~stockholders and provides for the grant of non-qualified equity-based awards to eligible employees, consultants, ~~and~~ advisors, and non-employee directors of the Company and its subsidiaries. ~~The 2015 Stock Incentive Plan was approved by shareholders authorizing up to 18,000,000~~As of the date of stockholder approval 19,232,068 authorized shares were available for issuance under the plan. Additionally, 1,232,068 shares that remained available for grants under the Company’s 2007 Stock Incentive Plan were added to the shares available for issuance under the 2015 Stock Incentive Plan. AsPlan; as of June ~~30, 2019, there were a total of 9,379,904~~26, 2022, 8,038,265 shares remain available for future issuance ~~under the Stock Plans. New shares are issued from the Company’s balance of authorized Common Stock from the 2015 Stock Incentive Plan~~ to satisfy stock option exercises and vesting of awards.

The Company recognized the following equity-based compensation expense and benefits in the Consolidated Statements of Operations:

Year Ended
June 30,
2019 June 24,
2018 June 25,
2017
(in thousands)
Equity-based compensation expense $ 187,234
$ 172,216
$ 149,975
Income tax benefit recognized related to equity-based compensation $ 47,396
$ 87,505
$ 38,381
Income tax benefit realized from the exercise and vesting of options and RSUs $ 49,242
$ 90,297
$ 92,749


	Year Ended
	June 26, 2022		June 27, 2021		June 28, 2020
	(in thousands)
Equity-based compensation expense	$	259,064	$	220,164	$	189,197
Income tax benefit recognized related to equity-based compensation	$	37,466	$	49,313	$	36,135
Income tax benefit realized from the exercise and vesting of options and RSUs	$	72,564	$	97,275	$	67,060

The estimated fair value of the Company’s equity-based awards, less expected forfeitures, is amortized over the awards’ vesting terms on a straight-line basis.



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.001 Per Share	LRCX	The Nasdaq Stock Market
		(Nasdaq Global Select Market)



		Page
Part I.
Item 1.	Business	43
Item 1A.	Risk Factors	1412
Item 1B.	Unresolved Staff Comments	2524
Item 2.	Properties	2624
Item 3.	Legal Proceedings	2624
Item 4.	Mine Safety Disclosures	2624
Part II.
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2725
Item 6.	[Reserved~~Selected Financial Data~~]	3028
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3228
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	4635
Item 8.	Financial Statements and Supplementary Data	5038
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	9874
Item 9A.	Controls and Procedures	9874
Item 9B.	Other Information	9874
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspection	74
Part III.
Item 10.	Directors, Executive Officers and Corporate Governance	9975
Item 11.	Executive Compensation	9975
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	9975
Item 13.	Certain Relationships and Related Transactions, and Director Independence	9975
Item 14.	Principal ~~Accounting~~Accountant Fees and Services	9975
Part IV.
Item 15.	Exhibits, Financial Statement Schedules	~~100~~76
Item 16.	Form 10-K Summary	76
Exhibit Index		~~101~~77
Signatures		~~105~~80



			Page
Consolidated Statements of Operations — Years Ended June ~~30, 2019,~~26, 2022, June ~~24, 2018,~~27, 2021, and June ~~25, 2017~~28, 2020			5139
Consolidated Statements of Comprehensive Income — Years Ended June ~~30, 2019,~~26, 2022, June ~~24, 2018,~~27, 2021, and June ~~25, 2017~~28, 2020			5240
Consolidated Balance Sheets — June ~~30, 2019,~~26, 2022, and June ~~24, 2018~~27, 2021			5341
Consolidated Statements of Cash Flows — Years Ended June ~~30, 2019,~~26, 2022, June ~~24, 2018,~~27, 2021, and June ~~25, 2017~~28, 2020			5442
Consolidated Statements of Stockholders’ Equity — Years Ended June ~~30, 2019,~~26, 2022, June ~~24, 2018,~~27, 2021, and June ~~25, 2017~~28, 2020			5644
Notes to Consolidated Financial Statements			5845
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)			9571



(Mark One)

☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



LAM RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)



Period	Total Number of Shares Repurchased ⁽¹⁾	Average Price Paid per Share⁽²⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Amount Available Under Repurchase Program
	(in thousands, except per share data)
Available balance as of June 24, 2018					$	1,733,638
Quarter ended September 23, 2018	7,821	$	183.46	7,807	108
Board authorization, $5.0 billion, November 2018					5,000,000
Quarter ended December 23, 2018	1,693	$	145.30	1,683	5,000,000
Quarter ended March 31, 2019	6,125	$	172.06	5,702	4,138,494
April 1, 2019 - April 28, 2019	3	$	193.52	—	4,138,494
April 29, 2019 - May 26, 2019	1,147	$	190.89	1,143	3,920,258
May 27, 2019 - June 30, 2019	4,728	$	176.68	4,724	3,033,500
Total	21,517	$	181.72	21,059	$	3,033,500


~~(2)~~	~~Average price paid per share excludes effect of accelerated share repurchases, see additional disclosure above regarding our accelerated share repurchase activity during the fiscal year.~~



	June 29, 2014	June 28, 2015	June 26, 2016	June 25, 2017	June 24, 2018	June 30, 2019
Lam Research Corporation	100.00	125.08	126.17	236.07	275.33	303.92
Nasdaq Composite Index	100.00	114.44	112.51	144.35	178.42	192.30
S&P 500 Index	100.00	107.42	111.71	131.70	150.64	166.33
Philadelphia Semiconductor Sector Index	100.00	108.97	113.07	172.12	222.22	251.80


~~(1)~~	~~Goodwill impairment analysis during fiscal year 2015 resulted in a non-cash impairment charge to our Clean reporting unit, extinguishing the goodwill ascribed to the reporting unit.~~


~~(2)~~	~~Adjusted for effects of retrospective implementation of ASU 2015-3 in the first quarter of fiscal 2017.~~



	Three Months Ended ⁽¹⁾
	June 30, 2019		March 31, 2019		December 23, 2018		September 23, 2018
	unaudited (in thousands, except per share data)
QUARTERLY FISCAL YEAR 2019:
Revenue	$	2,361,147	$	2,439,048	$	2,522,673	$	2,330,691
Gross margin	1,080,891		1,074,337		1,145,033		1,058,198
Operating income	617,085		565,517		690,379		591,751
Net income	541,825		547,390		568,855		533,360
Net income per share
Basic	$	3.66	$	3.62	$	3.67	$	3.43
Diluted	$	3.51	$	3.47	$	3.51	$	3.23
Number of shares used in per share calculations:
Basic	148,131		151,201		155,022		155,658
Diluted	154,474		157,849		162,170		165,327



	Three Months Ended⁽¹⁾
	June 24, 2018			March 25, 2018		December 24, 2017				September 24, 2017
	unaudited (in thousands, except per share data)
QUARTERLY FISCAL YEAR 2018:
Revenue	$	3,125,928		$	2,892,115	$	2,580,815			$	2,478,140
Gross margin	1,479,408			1,330,714		1,205,567				1,149,343
Operating income	955,195			827,511		737,371				693,222
Net income (loss)	1,021,146		⁽²⁾	778,800		(9,955		)	⁽²⁾	590,690
Net income (loss) per share
Basic	$	6.35		$	4.80	$	(0.06	)	⁽²⁾	$	3.64
Diluted	$	5.82		$	4.33	$	(0.06	)	⁽²⁾	$	3.21
Number of shares used in per share calculations:
Basic	160,916			162,378		161,135				162,141
Diluted	175,432			179,779		161,135				183,880



FORM			10-K


~~Item 6.~~	~~Selected Financial Data~~


~~(1)~~	Our reporting period is a 52/53-week fiscal year. The fiscal years ended June 30, 2019, and June 24, 2018, included 53 and 52 weeks, respectively. All quarters presented above included 13 weeks, except for the quarter ended March 31, 2019, which includes 14 weeks.


~~(2)~~	The comparability of our quarter ended December 24, 2017 was affected by a $757 million provisional charge associated with the December 2017 U.S. tax reform. During the quarter ended June 24, 2018, $116 million of this provisional charge was reversed.


~~Item 7.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~



Net income	$	2,191
Non-cash charges:
Depreciation and amortization	309
Equity-based compensation expense	187
Deferred income taxes	(5		)
Amortization of note discounts and issuance costs	7
Changes in operating asset and liability accounts	492
Other	(5		)
	$	3,176



	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	(in thousands)
Operating leases	$	98,389	$	37,427	$	36,581	$	12,556	$	11,825
Capital leases (1)	50,049		7,729		17,422		10,097		14,801
Purchase obligations	424,561		345,498		28,946		13,442		36,675
Long-term debt and interest expense (2)	6,468,517		660,840		1,079,096		257,630		4,470,951
One-time transition tax on accumulated unrepatriated foreign earnings (3)	798,892		69,469		138,938		199,723		390,762
Other long-term liabilities (4)	190,821		4,785		13,692		7,802		164,542
Total	$	8,031,229	$	1,125,748	$	1,314,675	$	501,250	$	5,089,556



	Valuation of Securities Given an Interest Rate Decrease of X Basis Points						Fair Value as of		Valuation of Securities Given an Interest Rate Increase of X Basis Points
							June 30, 2019
	(150 BPS)		(100 BPS)		(50 BPS)		—%		50 BPS		100 BPS		150 BPS
	(in thousands)
U.S. Treasury and agencies	467,445		466,940		466,427		465,914		465,403		464,891		464,379
Government-sponsored enterprises	16,108		16,062		16,015		15,969		15,921		15,875		15,828
Foreign government bonds	24,592		24,542		24,493		24,443		24,394		24,344		24,294
Corporate notes and bonds	1,478,541		1,475,154		1,471,766		1,468,378		1,464,989		1,461,600		1,458,211
Mortgage backed securities - residential	6,240		6,208		6,176		6,144		6,112		6,080		6,048
Mortgage backed securities - commercial	30,157		30,014		29,871		29,727		29,585		29,442		29,299
Total	$	2,023,083	$	2,018,920	$	2,014,748	$	2,010,575	$	2,006,404	$	2,002,232	$	1,998,059



	Valuation of Securities Given an X% Decrease in Stock Price						Fair Value as of	Valuation of Securities Given an X% Increase in Stock Price
	Valuation of Securities Given an X% Decrease in Stock Price						June 30, 2019	Valuation of Securities Given an X% Increase in Stock Price
	(25)%		(15)%		(10)%		—%	10%		15%		25%
	(in thousands)
Mutual funds	$	58,306	$	66,080	$	69,967	77,741	$	85,515	$	89,402	$	97,176



	Fair Value as of		Valuation of Fair Value Hedge Given an Interest rate increase (+)/Decrease (-) of X Basis Points
	June 30, 2019		= +/- 10 BPS		= +/- 15 BPS
	(in millions)
Interest Rate Contracts	$	3.6	$	2.1	$	3.2



	June 24, 2018					June 25, 2018
	As reported		Adjustments			As Adjusted
	(in thousands)
Total assets	$	12,479,478	$	12,955		$	12,492,433
Deferred profit	$	720,086	$	(160,695	)	$	559,391
Total liabilities	$	5,899,435	$	(126,400	)	$	5,773,035
Stockholder’s equity	$	6,501,851	$	139,355		$	6,641,206



	June 30, 2019
	As Reported		Without adoption of ASC 606		Effect of Change Higher/(Lower)
	(in thousands)
Deferred profit	$	381,317	$	846,422	$	(465,105	)
Retained earnings	$	9,930,919	$	9,465,814	$	465,105


~~(1)~~	~~This amount is reported in Deferred profit on the Company's Consolidated Balance Sheets as the customers can demand the liability to be performed at any time.~~



	Options Outstanding
	Number of Shares		Weighted-Average Exercise Price
June 26, 2016	907,411		$	47.41
Granted	90,128		$	119.67
Exercised	(389,460	)	$	33.92
Forfeited or expired	(14,020	)	$	69.81
June 25, 2017	594,059		$	66.69
Granted	63,980		$	190.07
Exercised	(166,481	)	$	55.62
Forfeited or expired	(8,630	)	$	84.44
June 24, 2018	482,928		$	86.53
Granted	181,450		$	164.54
Exercised	(110,427	)	$	61.69
Forfeited or expired	(59,068	)	$	126.05
June 30, 2019	494,883		$	115.96



Range of Exercise Prices	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Options Outstanding	Weighted-Average Remaining Life (Years)	Weighted-Average Exercise Price		Number of Options Exercisable	Weighted-Average Remaining Life (Years)	Weighted-Average Exercise Price
$11.09-$23.55	4,810	0.91	$	21.88	4,810	0.91	$	21.88
$29.34-$35.68	39,060	1.61	$	31.29	39,060	1.61	$	31.29
$42.61-$51.76	60,769	1.11	$	48.43	60,769	1.11	$	48.43
$75.57-$190.07	390,244	5.18	$	136.11	159,602	3.55	$	95.61
$11.09-$190.07	494,883	4.36	$	115.96	264,241	2.65	$	73.91



	Service-based RSUs Outstanding				Market-based RSUs Outstanding
	Number of Shares		Weighted-Average Grant Date Fair Value		Number of Shares		Weighted-Average Grant Date Fair Value
June 26, 2016	3,256,513		$	71.34	1,078,591		$	63.12
Granted	1,224,877		114.13		435,694		111.75
Vested	(1,677,318	)	69.10		(592,321	)	46.67
Forfeited or canceled	(116,466	)	76.76		(59,509	)	66.81
June 25, 2017	2,687,606		$	92.01	862,455		$	83.83
Granted	964,391		183.97		285,866		170.15
Vested	(1,362,369	)	87.80		(407,024	)	76.88
Forfeited or canceled	(96,540	)	108.67		(47,571	)	91.36
June 24, 2018	2,193,088		$	134.34	693,726		$	104.59
Granted	893,622		161.64		163,529		165.78
Vested	(1,135,284	)	115.23		(301,622	)	70.58
Forfeited or canceled	(154,541	)	141.38		(120,859	)	104.73
June 30, 2019	1,796,885		$	159.36	434,774		$	144.57


	Number of Shares (in thousands)	Weighted-Average Grant Date Fair Value
Outstanding, June 27, 2021	1,306	$	345.70
Granted	606	518.45
Vested	(747)	261.38
Forfeited or canceled	(64)	404.08
Outstanding, June 26, 2022	1,101	$	475.33




	(in thousands)
Balance as of June 26, 2016	$	417,432
Settlements and effective settlements with tax authorities	(6,691		)
Lapse of statute of limitations	(113,491		)
Increases in balances related to tax positions taken during prior periods	6,557
Decreases in balances related to tax positions taken during prior periods	(11,528		)
Increases in balances related to tax positions taken during current period	47,168
Balance as of June 25, 2017	339,447
Settlements and effective settlements with tax authorities	(693		)
Lapse of statute of limitations	(88,837		)
Increases in balances related to tax positions taken during prior periods	2,044
Decreases in balances related to tax positions taken during prior periods	(1,320		)
Increases in balances related to tax positions taken during current period	54,772
Balance as of June 24, 2018	305,413
Settlements and effective settlements with tax authorities	(3,705		)
Lapse of statute of limitations	(28,176		)
Increases in balances related to tax positions taken during prior periods	78,927
Decreases in balances related to tax positions taken during prior periods	(1,577		)
Increases in balances related to tax positions taken during current period	69,890
Balance as of June 30, 2019	$	420,772


~~(1)~~	~~Diluted shares outstanding do not include any effect resulting from note hedges associated with the Company’s 2018 Notes as their impact would have been anti-dilutive.~~


	June 26, 2022
									(Reported Within)
	Cost		Unrealized Gain		Unrealized (Loss)		Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash & Investments		Other Assets
	(in thousands)
Level 1:
Money market funds	$	712,076	$	—	$	—	$	712,076	$	712,076	$	—	$	—	$	—

Mutual funds	84,851		12,027		(1,659)		95,219		—		—		—		95,219
Level 1 total	796,927		12,027		(1,659)		807,295		712,076		—		—		95,219
Level 2:




Corporate notes and bonds	137,859		—		(2,128)		135,731		—		135,731		—		—


Level 2 Total	137,859		—		(2,128)		135,731		—		135,731		—		—
Total subject to fair value hierarchy	$	934,786	$	12,027	$	(3,787)	$	943,026

Cash							1,017,253		1,015,747		—		1,506		—
Time deposits							2,044,206		1,794,178		—		250,028		—
Total							$	4,004,485	$	3,522,001	$	135,731	$	251,534	$	95,219



	June 30, 2019
	Unrealized Losses Less than 12 Months					Unrealized Losses 12 Months or Greater					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss
	(in thousands)
U.S. Treasury and agencies	$	25,704	$	(7	)	$	3,983	$	(17	)	$	29,687	$	(24	)
Mutual funds	4,859		(78		)	9,007		(205		)	13,866		(283		)
Government-sponsored enterprises	—		—			10,953		(41		)	10,953		(41		)
Corporate notes and bonds	67,984		(15		)	40,455		(84		)	108,439		(99		)
Mortgage backed securities - residential	6,129		(4		)	—		—			6,129		(4		)
	$	104,676	$	(104	)	$	64,398	$	(347	)	$	169,074	$	(451	)



	Cost		Estimated Fair Value
	(in thousands)
Due in one year or less	$	4,842,996	$	4,844,145
Due after one year through five years	331,707		333,019
Due in more than five years	41,612		41,756
	$	5,216,315	$	5,218,920