LAM RESEARCH CORPLRCX
LAM RESEARCH CORP Income Taxes Disclosure
Income Taxes
The components of income before income taxes were as follows:
| Year Ended | |||||||||||||||||
| June 29, 2025 | June 30, 2024 | June 25, 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| United States | $ | 219,435 | $ | 282,736 | $ | 151,759 | |||||||||||
| Foreign | 5,738,694 | 4,077,486 | 4,957,451 | ||||||||||||||
| $ | 5,958,129 | $ | 4,360,222 | $ | 5,109,210 | ||||||||||||
Significant components of the provision (benefit) for income taxes attributable to income before income taxes were as follows:
| Year Ended | |||||||||||||||||
| June 29, 2025 | June 30, 2024 | June 25, 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Federal: | |||||||||||||||||
| Current | $ | 701,819 | $ | 566,106 | $ | 541,416 | |||||||||||
| Deferred | (372,783) | (186,238) | (136,178) | ||||||||||||||
| 329,036 | 379,868 | 405,238 | |||||||||||||||
| State: | |||||||||||||||||
| Current | 22,979 | 20,081 | 32,082 | ||||||||||||||
| Deferred | 12,448 | (15,118) | (2,813) | ||||||||||||||
| 35,427 | 4,963 | 29,269 | |||||||||||||||
| Foreign: | |||||||||||||||||
| Current | 238,363 | 143,595 | 196,842 | ||||||||||||||
| Deferred | (2,914) | 4,024 | (33,070) | ||||||||||||||
| 235,449 | 147,619 | 163,772 | |||||||||||||||
| Total provision for income taxes | $ | 599,912 | $ | 532,450 | $ | 598,279 | |||||||||||
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. Significant components of the Company’s net deferred tax assets and liabilities were as follows:
| June 29, 2025 | June 30, 2024 | ||||||||||
| (in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Tax carryforwards | $ | 431,533 | $ | 396,036 | |||||||
| Allowances and reserves | 216,788 | 189,429 | |||||||||
| Equity-based compensation | 10,813 | 9,981 | |||||||||
| Inventory valuation differences | 61,484 | 64,135 | |||||||||
| Outside basis differences of foreign subsidiaries | 1,002,861 | 680,598 | |||||||||
| R&D capitalization | 96,594 | 75,196 | |||||||||
| Operating lease liabilities | 50,722 | 57,972 | |||||||||
| Intangible assets | 4,831 | 4,908 | |||||||||
| Other | 21,099 | 37,878 | |||||||||
| Gross deferred tax assets | 1,896,725 | 1,516,133 | |||||||||
| Valuation allowance | (424,347) | (389,315) | |||||||||
| Net deferred tax assets | 1,472,378 | 1,126,818 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Capital assets | (129,145) | (142,963) | |||||||||
| Amortization of goodwill | (11,102) | (11,287) | |||||||||
| Right-of-use assets | (50,722) | (57,337) | |||||||||
| Other | (6,370) | (6,596) | |||||||||
| Gross deferred tax liabilities | (197,339) | (218,183) | |||||||||
| Net deferred tax assets | $ | 1,275,039 | $ | 908,635 | |||||||
Realization of the Company’s net deferred tax assets is based upon the weighting of available evidence, including such factors as the recent earnings history and expected future taxable income. The Company believes it is more likely than not that such deferred tax assets will be realized with the exception of $424.3 million primarily related to California deferred tax assets. At June 29, 2025, the Company continued 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.
At June 29, 2025, the Company had state tax credit carryforwards of $642.2 million. Substantially all of these credits can be carried forward indefinitely.
A reconciliation of income tax expense provided at the federal statutory rate (21% in fiscal years 2025, 2024, and 2023) to actual income tax expense is as follows:
| Year Ended | |||||||||||||||||
| June 29, 2025 | June 30, 2024 | June 25, 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Income tax expense computed at federal statutory rate | $ | 1,251,207 | $ | 915,647 | $ | 1,072,934 | |||||||||||
| State income taxes, net of federal tax benefit | (13,581) | (37,965) | (23,252) | ||||||||||||||
| Foreign income taxed at different rates | (451,199) | (313,795) | (430,314) | ||||||||||||||
| Settlements and reductions in uncertain tax positions | (266,805) | (18,947) | (28,968) | ||||||||||||||
| Tax credits | (116,699) | (125,523) | (103,019) | ||||||||||||||
| State valuation allowance, net of federal tax benefit | 42,759 | 44,916 | 49,073 | ||||||||||||||
| Equity-based compensation | 17,391 | (11,296) | 15,816 | ||||||||||||||
| Increases in uncertain tax positions | 138,029 | 62,333 | 34,661 | ||||||||||||||
| Other permanent differences and miscellaneous items | (1,190) | 17,080 | 11,348 | ||||||||||||||
| $ | 599,912 | $ | 532,450 | $ | 598,279 | ||||||||||||
Effective from fiscal year 2022, the Company has a 15-year tax incentive ruling in Malaysia for one of its foreign subsidiaries. The impact of the tax incentive decreased worldwide taxes by approximately $584.8 million, $416.3 million, and $576.0 million for fiscal years 2025, 2024, and 2023, respectively. The benefit of the tax incentive on diluted earnings per share was approximately $0.45, $0.32, and $0.42 in fiscal years 2025, 2024, and 2023, respectively.
Earnings of the Company’s foreign subsidiaries included in consolidated retained earnings that are indefinitely reinvested in foreign operations aggregated to approximately $1.3 billion at June 29, 2025. If these earnings were remitted to the United States, they would be subject to foreign withholding taxes of approximately $152.1 million at the current statutory rates. The potential tax expense associated with these foreign withholding taxes would be offset by $121.7 million of foreign tax credits that would be generated in the United States upon remittance. Other potential tax consequences, such as state income inclusions of these earnings, cannot be estimated.
On July 4, 2025, the OBBBA was signed into law by U.S. President Donald Trump. The impact on income taxes due to change in legislation is required, under ASC 740, Income Taxes, to be recognized in the period in which the law is enacted, which is during the Company’s fiscal year 2026. In general, the OBBBA introduces changes to U.S. taxation, including changes in the taxation of non-U.S. income. The Company is currently assessing the potential implications of these changes to its fiscal year 2026 Consolidated Financial Statements.
The Company’s gross uncertain tax positions were $720.3 million, $723.8 million, and $640.2 million as of June 29, 2025, June 30, 2024, and June 25, 2023, respectively. During fiscal year 2025, gross uncertain tax positions decreased by $3.5 million. The amount of uncertain tax positions that, if recognized, would impact the effective tax rate was $604.6 million, $622.6 million, and $550.1 million, as of June 29, 2025, June 30, 2024, and June 25, 2023, respectively.
The aggregate changes in the balance of gross uncertain tax positions were as follows:
| (in thousands) | |||||
| Balance as of June 26, 2022 | $ | 617,373 | |||
| Settlements and effective settlements with tax authorities | (50,238) | ||||
| Lapse of statute of limitations | (22,103) | ||||
| Increases in balances related to tax positions taken during prior periods | 5,841 | ||||
| Decreases in balances related to tax positions taken during prior periods | (4,316) | ||||
| Increases in balances related to tax positions taken during current period | 93,615 | ||||
| Balance as of June 25, 2023 | 640,172 | ||||
| Settlements and effective settlements with tax authorities | (9,548) | ||||
| Lapse of statute of limitations | (10,114) | ||||
| Decreases in balances related to tax positions taken during prior periods | (12,326) | ||||
| Increases in balances related to tax positions taken during current period | 115,600 | ||||
| Balance as of June 30, 2024 | 723,784 | ||||
| Settlements and effective settlements with tax authorities | (7,668) | ||||
| Lapse of statute of limitations | (211,696) | ||||
| Increases in balances related to tax positions taken during prior periods | 69,016 | ||||
| Decreases in balances related to tax positions taken during prior periods | (3,983) | ||||
| Increases in balances related to tax positions taken during current period | 150,868 | ||||
| Balance as of June 29, 2025 | $ | 720,321 | |||
The Company had accrued $86.3 million, $105.7 million, and $74.4 million cumulatively for gross interest and penalties as of June 29, 2025, June 30, 2024, and June 25, 2023, respectively.
The Company is subject to audits by state and foreign tax authorities. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the relevant taxing authorities will occur.
The Company files U.S. federal, U.S. state, and foreign income tax returns. As of June 29, 2025, tax years 2005-2025 remain subject to examination in the jurisdictions where the Company operates.
The IRS is examining the Company’s U.S. federal income tax returns for the fiscal years ended June 30, 2019, June 28, 2020, and June 27, 2021. To date, no significant adjustments have been proposed by the IRS. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur.
The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its uncertain tax positions as a result of tax examinations or lapses of statutes of limitation. The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $52.9 million, excluding interest and penalties.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 11, 2025 | Showing above |
| 2024 | Aug 29, 2024 | |
| 2023 | Aug 15, 2023 | |
| 2022 | Aug 24, 2022 | |
| 2021 | Aug 17, 2021 | |
| 2020 | Aug 18, 2020 | |
| 2019 | Aug 20, 2019 | |
| 2018 | Aug 14, 2018 | |
| 2017 | Aug 15, 2017 | |
| 2016 | Aug 17, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.