ANNUAL REPORT 2018 The future of Lam Research is inextricably linked to the data economy that is redefining the global semiconductor industry. The opportunities for silicon-based technologies offered through artificial intelligence and innovations in applications and services are extraordinary and touch a broad fabric of our social economy, from climate change to transportation to health care, to name a few. To capture these opportunities, our customers must solve the challenges associated with the increasingly sophisticated demands on semiconductor device performance. Our combined expertise in innovative, complex systems engineering and the integration of hardware, software, process, process control, and materials enables us to create differentiated technologies and productivity solutions that help our customers achieve their aspirations. In doing so, we strive to collaborate as strategic partners with our customers in helping them solve their most critical challenges. Once our products are installed in our customers’ facilities, our customer support organization plays a vital role in building customer trust, increasing our competitive differentiation, and contributing to our profitable growth. We believe this focus on customers, combined with our differentiated expertise, strong operating execution, and unique values-based culture, position Lam to continue to create long-term value for our stockholders. Shipments (Billions) Revenue (Billions) $12.00 $12.00 $10.00 $10.00 $8.00 $8.00 $6.00 $6.00 $4.00 $4.00 $2.00 $2.00 $0.00 $0.00 FY'14 FY'15 FY'16 FY'17 FY'18 FY'14 FY'15 FY'16 FY'17 FY'18 R&D Spending (Millions) Earnings per Share (Non-GAAP, Diluted) $1,400 $20.00 $1,200 $16.00 $1,000 $800 $12.00 $600 $8.00 $400 $4.00 $200 $0 $0.00 FY'14 FY'15 FY'16 FY'17 FY'18 FY'14 FY'15 FY'16 FY'17 FY'18 A reconciliation of U.S. GAAP results to non-GAAP results can be found at www.lamresearch.com LETTER TO OUR STOCKHOLDERS Dear Lam Research Stockholders, Let us start by thanking you for your inveesstmeent in Lam Research. We believe that our partnership with our customers, employees, suppliers, the seemicono ductor ecosystem, and you, our invveestors, has enabled us to bub ild our track record of multi-year outpep rforrmancn e. Fiscal year 2018 was no excepptionn. Lam conccluded the stroonngese t fiscal year in our history with revenue at $11 billion, representing a five-year compound annnuala growwth rate, or CAGR, of 25%. Fully diluted eaarninngs perr share was $13.17 on a GAAP basis and $177.87 on a non-GAAPP1 basis, with a five-year CAGR of over 80% and 50% respectively. We are in one of the most dyynammic ana d exciting periods of the semiconductor industtryry’ss history. The fast-rising data ecoonnomyy has become increaasingly intertwined with the pressing demands of ouur ssooccial economy in vital areas includding climate change, education, fooood aand water, transportation, security, and healtth caare. Technology- enaba led collection, trannsms ission, and analysis of growing amounts of data is creating the opporttuunity to develop previously unthinkable solutu ions to major global challenges, and that, in turn, is fueling tremeendoous demand foro advanced semmicono ductors that can harness the power of data. Through our leading position in certain critical process steps that enable semiconductor manufacturing, Lam plays an increasingly crucial role supporting device roadmmaps of our customers and, by extension, the industry. Our combined expertise in innovative, complex systems engineering and the integration of hardware, software, process, process control, and materials enables us to create differentiated technologies and productivity solutions that help our customers achieve their aspirations. We partner with our customers to heelpp them solve their most critical challenges in an era when the demands on semiconductor device performance are pushing past traditional innovation boundaries such as Moore’s Law. We believe Lam is uniquely positioned to address these unprecedented industry challenges, not just because of our technology capabilities but also because of our values-based culture, disciplined and accomplished management team, experienced and effective Board of Directors, and commitment to our future through our significant investment in research and development (“R&D”). In fiscal year 2018, we spent over $1 billion in R&DD and approximately $4.7 billion over the last five years. Over the last few years, we have incorporated stockholder perspectives on various governance topics, includingg capital redistribution. Our priorities for cash are first, to invest in the business and theh n, return excess cash to our stockholders. As such, in March, the Board authorized a capital return plan including an additional $2 billion share repurchase program, increasing the total authorized repurchases since November 2017 to $4 billion, a 120% increase in quarterly dividends from $0.50 to $1.10 per share, and a plan to return at least 50% of free cash flow2 to our stockholders over the next five years. 1. A reconciliation of U.S. GAAP results to non-GAAP results can be found at www.lamresearch.com 2. Free cash flow = Cash Flow From Operating Activities minus Capital Expenditures 3. A copy of our CSR report can be found at www.lamresearch.com We have also heard from you about your views on topicss including proxy access, director tenure, board refreshment, director skills and expperiiences, board and workforce diversity, and environmental and social governance matters. Consistent with the feedback shared with us, we have adopted proxy access as well as enhanced our proxy statement and Corporate Social Responsibilityt (“CSR”)3 Report disclosures. We encourage yoou to continue to engage with us as your input helps us improove our governance practices. We are excited aboout ouur future and will continue to work hard to deliver excellence in our work—from the ssooluutions we create for our customers, to thhe invev stments we make in our employees, to the value we deliver too our stockholders. Our strong managemment team and engaged Board are intensely focused on steeering Lam tooward a future off evev n greater success tht at builds on the strong foundation that has been created over more thhan three deccades. Again, thhank youu very much foor youur support and the trust that you have placed in us. Sincereellyy,, Martr inn B. Annstice Stephen G. Newberry ChC ief ExE ece utive Officer Chairman of the Board SeS ptemmbeb r 7,, 2018 INDEPENDENT REGISTERED PUBLIC CAUTIONARY STATEMENT REGARDING ACCOUNTING FIRM FORWARD-LOOKING STATEMENTS Ernst & Young LLP With the exception of historical facts, the statements San Jose, California contained in the Letter to Our Stockholders (“Letter”) and this Annual Report (“Report”) are forward-looking statements. Forward-looking statements are subject to the TRANSFER AGENT AND REGISTRAR safe harbor provisions created by the Private Securities For a response to questions regarding misplaced Litigation Reform Act of 1995. We have identified some, but not all, of the forward-looking statements in the Letter stock certificates, changes of address, or the and Report by use of future-oriented words and phrases consolidation of accounts, please contact the such as “aim,” “believe,” “future,” “vision,” “expected,” Company’s transfer agent. “commitment,” “continue,” “will,” “outlook,” “position,” and “opportunity.” However, our identification of certain statements as forward-looking does not mean that other Computershare Investor Services statements not specifically identified are not forward P.O. BOX 505000 looking. Forward-looking statements include, but are Louisville, Kentucky 40233-5000 not limited to, statements that relate to: investment in 1-877-265-2630 R&D and our future growth, and the impact thereof; our expectations regarding Lam’s performance compared to wafer fabrication equipment spending (at the industry Private Couriers/Registered Mail: and segment levels) in terms of future opportunities for Computershare Investor Services our business; the prospects for, ability of our products 462 South 4th Street, Suite 1600 to address and impact upon product demand from industry-driving technology inflections; the drivers and Louisville, Kentucky 40202 opportunities (e.g., in terms of amount and timing) for growth of our market segments and the served available TDD for Hearing Impaired: market; the pace, nature and impact of innovation with 1-800-952-9245 respect to industry applications; the requirements of technological advancements; the drivers for semiconductor product demand, Lam’s technology opportunities and Foreign Stockholders: extent of and prioritization of our investment therein; 1-201-680-6578 Lam’s innovation; the impact of our products, and their importance to the success of our customers and the industry; our expectations and opportunities for market Website Address: expansion and growth, and our projected growth from www.computershare.com/investor our installed base business; the key differentiators in and drivers of our future performance opportunities; the type of, ability to deliver, and the extent of delivered, value STOCK LISTING to our customers, employees and stockholders through The Company’s common stock is traded on the our products and services support; the contributions Nasdaq Global Select MarketSM under the symbol of our products and services support in addressing our LRCX. Lam Research Corporation is a Nasdaq-100 customers’ needs and the resulting effects; our positioning, ® ® drivers