ANNUAL REPORT 2018 - investor.lamresearch.com

1 A N N U A L R E P O R T 2 0 1 8. 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.

2 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). $ $ $ $ $ $ $ $ $ $ $ $ $ $ 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).

3 $1,400. $ $1,200. $ $1,000. $800 $ $600. $ $400. $ $200. $0 $ FY'14 FY'15 FY'16 FY'17 FY'18 FY'14 FY'15 FY'16 FY'17 FY'18. A reconciliation of GAAP results to non-GAAP results can be found at LETTER TO OUR STOCKHOLDERS. Dear Lam research Stockholders, Let us start by thanking you for your inve estmeent in Lam research . We believe tha hatt our partnership with our customers, employees, suppliers, the se emicicon o ductor ecosystem, and you, our invvestotors, has enabled us too bu b ild our track record of multi-year outpep rforrma mancn e. Fiscal year 2018 was no exceppti tion n. Lam concclu lude dedd the stro ro ong nge t nges fiscal year in our history with re revenue at $11 billion, representing a five-year compound an nnu nual a growwth rate, or CAGR, of 25%.

4 Fully diluted eaarninngs perr share was $ on a GAAP basis and $1 $17. 87 on a non-GAAP P1 basis, with a five-year CAGR of overr 80% and d 50% respectively. We are in one of the he mostt dyyna nammic an a d exciting periods of the semiconductor industtryry'ss his istory. The fast-rising data eco onomyy has become increa asi singly ly intertwined with the pressing demands of ou ur so social economy in vital area eass includ din ing climate change, educat atio ion, n, food and water, transportation, security, and healtth ca are. Technology- enab a led d co collection, tran nsm s ission, and analysis is of growing amounts of data is creating the oppoporttunity to develop previously unthinkable solut u ions to major global challenges, and that, in turn, is fueling treme end ndoous demand for o advanced sem mic icon o ductors that can harness the power of data.

5 Through our leading position in certain critical process steps ps that enable semiconductor manufacturing, Lam plays an increasingly crucial role supporting device roadmmap aps 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 he elp p 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 ).

6 In fiscal year 2018, we spent over $1 billion in R&D. D. and approximately $ billion over the last five years. Over the last few years, we have incorporated stockholder perspectives on various governance topics, including g capital redistribution. Our priorities for cash are first, to invest in the business and the h 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 $ to $ per share, and a plan to return at least 50% of free cash flow2 to our stockholders over the next five years.

7 1. A reconciliation of GAAP results to non-GAAP results can be found at 2. Free cash ow = Cash Flow From Operating Activities minus Capital Expenditures 3. A copy of our CSR REPORT can be found at We have also heard from you about your views on topicss including proxy access, director tenure, board refreshment, director skills and exp periiences, board and d 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 Responsibi t ( CSR )3 REPORT disclosures. We encourage bilility yo ou to continue to engage with us as your input helps us improove our governance practices.

8 We are excited abo out ou ur future and will continue to work hard too deliliver excellence in our work from the solu utions we create foforr our customers, to th he in inve v stments we make in our employees, to the value we deliver to o our stockholders. Our strong manage gemmentnt team m an and engaged Board are intensely focused on ste eer erin ing Lam to oward a future off eve v n grgrea eater succes esss th t at builds on the he strong foundation that has been creat ated ove ver more th han three deccad ades es. Again, Ag n, thank nk you u very much fo or you ur support and the trust that you have placed in us. Sincere ely, el y, Mar in Mart n B. An nstice Stephen G. Newberry C ieff Ex Ch Exec e utiv ive Of cer iv Chairman of the Board Septem Se mbe b r 7,, 2018.

9 INDEPENDENT REGISTERED PUBLIC CAUTIONARY STATEMENT REGARDING. ACCOUNTING FIRM FORWARD-LOOKING STATEMENTS. Ernst & Young LLP With the exception of historical facts, the statements contained in the Letter to Our Stockholders ( Letter ). San Jose, California 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 identi ed some, but not all, of the forward-looking statements in the Letter stock certi cates, 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.

10 Company's transfer agent. commitment, continue, will, outlook, position, . and opportunity. However, our identi cation of certain statements as forward-looking does not mean that other Computershare Investor Services statements not speci cally identi ed are not forward 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 in ections.