LAM RESEARCH CORPORATION 2025 ANNUAL REPORT ON FORM 10-K

Lam Research Corporation Delivers Strong Financial Performance in Fiscal Year 2025

Lam Research Corporation, a leading provider of semiconductor manufacturing equipment, has reported impressive financial results for the fiscal year ended June 29, 2025. The company’s revenue, profitability, and cash flow all saw significant improvements compared to the previous year, showcasing the strength of its business model and the growing demand for its products and services.

Revenue Growth Driven by Semiconductor Equipment Demand

Lam Research’s revenue increased by 23.7% in fiscal year 2025, reaching $18.44 billion, up from $14.91 billion in the prior year. This strong performance was primarily driven by increased customer spending on semiconductor equipment systems across the memory and non-memory markets, as well as growth in customer support-related revenues for upgrades, spare parts, and services.

In contrast, the company experienced a 14.5% decline in revenue in fiscal year 2024, mainly due to weakness in the non-volatile memory market, which was partially offset by strength in the DRAM market and increased revenue from customers in China.

The revenue growth in fiscal year 2025 was broad-based, with the company seeing increased demand from customers in various geographic regions. China remained the largest market, accounting for 34% of total revenue, followed by Korea (22%), Taiwan (19%), Japan (10%), the United States (7%), Southeast Asia (5%), and Europe (3%).

Improved Profitability and Margins

Lam Research’s gross margin, which represents the difference between revenue and the cost of goods sold, increased to 48.7% of revenue in fiscal year 2025, up from 47.3% in the previous year. This improvement was primarily due to enhanced factory efficiencies and a more favorable product mix, partially offset by increased transformational charges.

The company’s net income also saw a significant increase, rising by 40.0% to $5.36 billion in fiscal year 2025, compared to $3.83 billion in the prior year. This strong bottom-line performance was driven by the higher revenue and improved gross margins, as well as effective cost management.

Continued Investment in Research and Development

Lam Research maintained its commitment to innovation and technological leadership, with research and development (R&D) expenses increasing by 10.2% in fiscal year 2025 to $2.10 billion, or 11.4% of revenue. The company continued to focus on developing leading-edge semiconductor manufacturing processes, such as deposition, etch, and cleaning technologies.

The increase in R&D spending was primarily driven by higher employee-related costs due to increased headcount, as well as higher outside service expenses, including those related to transformational and lab-related activities.

Disciplined Capital Allocation and Strong Cash Flow

Lam Research’s cash and cash equivalents, including restricted cash, totaled $6.4 billion as of June 29, 2025, up from $5.9 billion at the end of the previous fiscal year. This increase was largely due to strong cash flow from operating activities, which reached $6.2 billion in fiscal year 2025, compared to $4.7 billion in the prior year.

The company used its robust cash flow to fund various strategic initiatives, including:

• $3.4 billion in treasury stock purchases, including net share settlement of employee stock-based compensation
• $1.1 billion in dividends paid to shareholders
• $759 million in capital expenditures
• $507 million in principal payments on debt instruments and debt issuance costs

Lam Research’s disciplined approach to capital allocation, which balances investments in the business, shareholder returns, and maintaining a strong balance sheet, has been a key driver of its long-term success.

Outlook and Challenges

Looking ahead, Lam Research remains cautiously optimistic about the semiconductor industry’s growth prospects, as customers continue to invest in new manufacturing capacity and technology upgrades. However, the company acknowledges that it must carefully manage the timing and prioritization of manufacturing and deliveries to balance customer requirements with the availability of resources and its operational and financial objectives.

One potential challenge on the horizon is the recently enacted One Big Beautiful Bill Act (OBBBA), which is expected to introduce changes to U.S. taxation, including the taxation of non-U.S. income. Lam Research is currently assessing the potential implications of these changes on its fiscal year 2026 financial statements.

Additionally, the company remains vigilant about global macroeconomic and political conditions, which could potentially disrupt capital markets and impact its ability to access financing, if needed, for future growth and investments.

Conclusion

Lam Research’s strong financial performance in fiscal year 2025, marked by robust revenue growth, improved profitability, and healthy cash flow, demonstrates the company’s ability to capitalize on the growing demand for semiconductor manufacturing equipment and services. Its continued investment in research and development, coupled with disciplined capital allocation, positions Lam Research well to navigate the evolving industry landscape and deliver long-term value for its shareholders.

As the semiconductor industry continues to play a crucial role in driving technological advancements, Lam Research’s innovative solutions and customer-centric approach will be instrumental in supporting the industry’s growth and ensuring its own sustained success.