Good day, everyone, and welcome to the Lam Research Corporation June 2017 Conference Call. At this time, I would like to turn the conference over to Mr. Satya Kumar, Vice President of Investor Relations of Lam Research. Please go ahead.

Yeah. Thank you and good afternoon, everyone. Welcome to the Lam Research Quarterly Earnings Conference Call. With me today are Martin Anstice, President and Chief Executive Officer; and Doug Bettinger, Executive Vice President and Chief Financial Officer. During today's call, we will share our outlook on the business environment, review our financial results for the June 2017 quarter, and our outlook for the September 2017 quarter. The press release detailing our financial results was distributed a little after 1:00 PM Pacific Time this afternoon. It can also be found on the Investor Relations section of the company's website along with the presentation slides that accompany today's call. Today's presentation and Q&A include forward-looking statements that are subject to risks and uncertainties reflected in the Risk Factor disclosures of our SEC public filings. Please see accompanying slide in the presentation for additional information. Today's discussion of our financial results will be presented on a non-GAAP financial basis unless otherwise specified. A detailed reconciliation between GAAP and non-GAAP results can be found today in today's earnings press release. This call is scheduled to last until 3:00 PM Pacific Time. And as always, we ask that you limit yourself to one question per firm and a brief follow-up, so that we can accommodate as many questions as possible. As a reminder, the replay of this call will be available later this afternoon on our website. And with that, let me hand the call over to Martin.

Thank you, Satya. We delivered another record quarter, highlighted by over $3 in earnings per share and reported for the first time in the company's history nearly $5 billion in cumulative shipments in the first half of the calendar year. Shipments, revenue, profit margins and EPS were all well above the midpoint of our guidance range for the June quarter. In this context, I would like to thank sincerely our customers for the opportunity to contribute to their success, and our employees for their dedication and hard work, making these achievements possible. We will first start with a short update on near-term demand trends, add some context to the drivers behind our success over the last several years, and frame the exciting and sustainable opportunity we believe the company has going forward. As a brief headline, since our last earnings call, DRAM and NAND demand-driven spending both have increased our expectations for calendar 2017 and calendar 2018 company performance. We have continued investing in capacity and flexibility for business success. Our operational execution and performance we believe continues to set a competitive standard in our industry. Demand trends are robust, particularly in memory both in enterprise and consumer end markets. Applications such as machine learning and artificial intelligence are foundational to the next generation of technology innovation, and they are driving strong memory content growth for DRAM and NAND that offer attractive economics for our customers. The substantial density increases made possible by 3D NAND are driving strong content growth for high-end smartphone devices this year. Combined, we see tremendous opportunity over the next several years for robust, non-volatile memory growth in consumer end markets driven by innovations such as AR/VR, 5G, automated driving, robotics, and other IoT applications. We continue to be very enthusiastic about the opportunity for a…

Okay. Great. Thank you, Martin, and thank you all for joining us this afternoon during what I know is a busy earnings season. We're pleased with the results we have to share with you today for both the June quarter and for our just concluded fiscal year 2017. So let me go ahead and just jump into the numbers. In the June quarter, we performed above the midpoint of guidance for all metrics. We delivered record levels of shipments, revenues, cash from operations, gross margin dollars, operating income dollars, and earnings per share for the quarter and for the fiscal year. Each of these metrics achieved strong double-digit growth in fiscal year 2017 compared to the prior fiscal year. We believe these results and milestones clearly demonstrate solid execution against our multiyear outperformance objectives. Our upward trajectory of shipments continued in June quarter coming in at $2.543 billion, which is up 5% sequentially and above the midpoint of the guided range. Shipments for the 2017 fiscal year were $8.586 billion, which was a 46% increase compared to fiscal year 2016. Memory shipments remained strong with the combined memory segment making up 73% of total system shipments, which was in line with the prior quarter. Non-volatile memory accounted for 59% of the shipments, which was up from 50% in the March quarter. Demand for 3D NAND equipment continues to be robust with customers executing their plans for increasing layer counts and improving device densities. DRAM shipments represented 14% of system shipments, which was down from 23% in the prior quarter. Shipments for foundry customers were 22% of system shipments in the June quarter, which was down a little from the 24% in the prior quarter. And finally, the logic and other segment accounted for 5% of system shipments versus 3% last…

Absolutely. And we'll take our first question today from C.J. Muse with Evercore ISI.

Yeah. Good afternoon. Thank you for taking my question. You talked about memory is the driver of the upside to your outlook here. And just curious if you could put some numbers around how you're thinking about WFE for both DRAM and NAND this year and next? We would love to hear your thoughts there.

Yeah. I think I'm not sure we have that much to add frankly to everything that I've seen, written, read by analysts or other equipment companies. And frankly speaking, the primary purpose of this dialog is to talk about the economics of the company, not the industry. So, what we've tried to articulate, C.J., is an enhanced view of performance this year, so the slightly less than $10 billion shipments reference is an important one, and that embeds in it a commentary on SAM expansion and share growth. And we have opined on kind of the sustainability of spending and a strong kind of outlook for calendar 2018. But as is customary, I like to take a shot at putting a quantitative reference at the beginning of the year and one at the end, and let other people have their moment of glory in the middle.

Okay. Let me ask another question then. If I look at what you discussed in terms of shipments and revenues for the full year, it looks like you're going to outgrow WFE roughly by 3 times. And I guess, that's pretty outstanding outperformance. What's the encore next year? How should we think about your relative performance and changes technology-wise that can sustain continued outperformance into 2018, 2019 and beyond?

Yeah. I mean, I think we certainly have a view that the last five years and this year don't end at the end of this year. We're working really hard to make sure that there's an opportunity and demonstrated performance of sustainable growth and outperformance. And the best way to think about that frankly is to think about the commentary that we've made available around our product portfolio increasing its share of wafer fabrication equipment spending. So that comes about from our own investments in new products and capabilities, and it comes about from what I believe is an unmatched positioning of this company to the totality of technology inflections in the industry, and it comes about through device architecture challenges – device architecture decisions and process flow decisions of our customers. So, we have provided a quantitative reference today that says above 35% of WFE is what we believe we're competing for, you have all of the disclosure, I think, previously on market share, and we see both trends as positive, not just in next year but in the years to come. So, there's an ebb and a flow always on a short-term basis, but I mean we feel really good about long-term demand for silicon-enabled innovation. We feel really good about discipline in the ecosystem, and we feel really good about the unique opportunities for this company.

Thanks, C.J.

Great. Thank you.

Moving on, we'll take our next question from Farhan Ahmad with Credit Suisse.

Hi. Thanks for taking my question and congrats on the great set of results. Martin, can you just talk about the mix of spending between logic foundry and memory in the second half? The first half was very strong in terms of memory spending, do you expect the second half to be pretty similar in mix or do you expect a change?

Yeah. So obviously, there's some company disclosure, which is reasonable balance in shipments first half and second half. When we look at kind of WFE, I think, a more or less memory as an aggregated segment is actually also pretty balanced with kind of DRAM a little stronger in the second half and NAND was a little stronger in the first half. And similarly, kind of foundry and kind of microprocessor, other logic kind of balance themselves out as well. So foundry was a little stronger in the first half, and we believe microprocessor and other logic is a little stronger in the second half. So kind of all in, pretty balanced spending year is the one that we would assume today.

Got it. And then I just wanted to ask you a question about the overall services business. If I assume that that mix of business is pretty flat from last year, because I believe at the end of last year also, you had indicated that's 25% of the revenue. So the services business has grown at extremely fast rate at this year. Can you talk about what has driven that exceptional level of growth, which could be about 40% or more from last year to this year?

Yeah. I mean it's inevitably kind of two or three things. One part of the growth of the installed base business, which is in spare parts and services and upgrades and refurbishments is the size of the installed base, and as Doug talked about in his prepared comments, the installed base has grown significantly in the last five years. So that's kind of baseline number one. The second element of this could be – is the breadth of products and services that we've made available to the industry, and I think the industry's natural inclination to take a greater advantage of the full portfolio of productivity solutions. So, the installed base business, spares and service and upgrades and refurbishment is all about productivity, generally speaking. It's about making an installed base more productive, and as we've talked about for many, many years, as an industry, the technology challenges don't get any easier, but that's also true for productivity challenges. So, as we introduce advanced products and services focused on productivity and so on and so forth, that plays into the performance of the company. Last thing I would say is that as the technical specifications of device manufacturing are more difficult, that naturally also plays into an enhancement of some elements of the installed base support business.

Thank you. That's all I have.

Thanks, Farhan.

Our next question today comes from Harlan Sur with JPMorgan.

Good afternoon. Congratulations on another well-executed quarter, just solid all around. Maybe stepping back a bit and sort of looking at the end markets' supply and demand dynamics. We had two relatively big memory customers report recently. The CapEx outlook by both looks very healthy, and the view by both is on a go-forward basis, CapEx trends look good on a go-forward basis. That's also in line with some of your prepared commentary. But the market seems to be interpreting higher CapEx as new capacity, new wafer starts especially in DRAM. So it's raising some cyclical red flags here. Given your forward pipeline, your visibility, do you guys see any signs that there will be meaningful uptick in total DRAM industry wafer starts this year or next year, or is more of the DRAM spend focused on accelerating technology migrations on the installed base?

Yeah. I would say to the best of our abilities, the answer to your question is no, we do not see meaningful expansion of an installed base. Clearly, compared to last year, the investment level in calendar 2017 in DRAM is significantly improved and enhanced. But I think a couple references for you. We do not believe that the installed base in terms of wafer starts of output is any greater at the end of this calendar year than was true at the end of calendar 2015. Statement number one. Statement number two, when we look at kind of capital intensity of memory at the segment level and look at kind of DRAM specifically, it's a long way from kind of creating kind of the anxiety levels that we think would be relevant to kind of cyclical imbalance. Though we have the same conviction that I think is expressed by all, if not most of our customers, around disciplined investment, which doesn't mean it's perfect. I'm sure there's an ebb and a flow from one week and one month from one quarter to the next, but the fundamental headlines around content and density and demand and how that's playing out in terms of spending in a consolidated industry I think are pretty healthy.

Thanks for the color there. And then on the installed base business, obviously great to see the continued growth trends there, very stable annuity-like business. I'm assuming that you guys are also driving leverage in this segment, maybe Doug, if you could comment on services' op margin performance versus corporate margins, are service op margins accretive to corporate average? And are you guys able to drive the same amount of leverage that you are for the total business?

Yeah, no. It's a very nice part of the business model. It's very cash-generative. As I think I've indicated before, it's probably a little bit accretive to the operating income on a percentage basis. It doesn't have anywhere near the amount of investment that is required in the new equipment side. But what I really like about it, Harlan, is the broad base of it. It's got many, many, many engagements, lots of customers. It's just a very stable predictable business, and your characterization of an annuity is exactly right, it is a great part of the business model.

Thanks, guys. Congrats.

Thank you, Harlan.

Moving along, our next question comes from Toshiya Hari with Goldman Sachs. Toshiya Hari - Goldman Sachs & Co. LLC: Hey, good afternoon, and congrats on the strong results. I had two questions. First on the opportunity in China. If you can talk a little bit about some of the developments over the past couple quarters both on the memory side and the foundry side. Martin, if you can talk a little bit about how you view the second half of 2017 and more importantly longer term?

Yeah. I mean, again I'm not sure I have kind of too much to say incrementally here. As we've said for the last couple quarters, we believe that China is an increasingly important part of the industry measured by the level of spending. Today, spending in China is dominated by the global player presence in China, but this is a year where there is a foundry, DRAM and flash investments by the domestic Chinese community. And as is consistent with I'm sure every disclosure from every other significant equipment company, we're participating in that, as you might expect, and our presence and our plans in China are at least as good as our average, so it's an important region with an important focus for us. And we would still say today that the calendar 2018 is a bigger story than calendar 2017 for the kind of China. So, certainly that plays into our qualitative statements that we believe calendar 2018 is a strong year for the industry. Toshiya Hari - Goldman Sachs & Co. LLC: Okay, great. And then my second question was on the logic business. Martin, I think you briefly talked about shipments being a little bit stronger into the second half relative to the first half. But longer term, obviously, this is a part of the market where you've historically been under-indexed, and at the same time you've talked about some wins at the 10-nanometer node. So, I guess from a timing perspective, when should we expect this part of your business to inflect to the upside in a more meaningful way?

I mean, I guess that it's always true that it shows upward revenues when customers spend money on the applications you've won. There's no pendulum swing here. This is kind of a multiple year transition, and we're super pleased about the progress, which doesn't mean it can't be better, and it doesn't mean our aspirations aren't greater than we currently have achieved. But we're walking towards an objective where the position of the company in logic is at least as good, if not better, than the position of the company in foundry and it will take a number of technology nodes to get to that point, and we're not there today. But I'm super pleased with our progress. And the comments on logic and foundry, I mean I don't want to miss the foundry headline, which we talked about last year. The performance of the company in foundry last year against the average of the industry I thought was just outstanding. So, I think we reported 40% increase year-over-year compared to about a 25% assumption on WFE. So, it's going to take a couple of nodes to kind of fully realize our ambition if we're successful in all respects, and we're certainly working hard to achieve that.

And Toshiya, it'll be stronger in the second half than it was in the first half for sure. Toshiya Hari - Goldman Sachs & Co. LLC: Okay. Great. Thank you so much. Congrats again.

Thank you.

Thank you.

Yeah.

Our next question today comes from Edwin Mok with Needham & Company. Arthur Su - Needham & Co. LLC: Hi, this is actually Arthur on for Edwin. Congrats in a great quarter, and thanks for taking our question.

Sure. Arthur Su - Needham & Co. LLC: Martin, I had a question for you on your natural – your comment on natural technology extension. So, some of your peers have talked about increasing metrology intensity going hand in hand with more complex 3D NAND devices. Given your leadership in 3D NAND, how do you think about your product portfolio in terms of metrology, does it make sense to offer metrology system under the same roof to provide a more comprehensive solution?

Didn't we try that strategy? You know, and I mean, I guess that wasn't at the heart necessarily of kind of the Lam and KT ambition. But it was an inevitable kind of part of that strategy. Today's kind of process control ambition, metrology ambition is really kind of defined around a couple of things. One of them is that the real-time process control kind of dialog and the second is the potential for some level of integrated metrology. So, we've articulated our ambition, I think, in terms of SAM expansion on that, and the second part of our strategy is to increase the competitiveness of our underlying etch and deposition and clean products by dealing with one of the most fundamental challenges of the industry, which is tighter specs and the need to open up device design and device manufacturing process windows. So that's where our focus is. So, my comments around kind of natural technology extensions were intended to be a little bit more holistic than kind of metrology and process control. And really, this is kind of like not a new headline or new thoughts in the company. But I feel like consistent frankly with the trends of most of the industry participants, I wanted to make sure that everybody understands that we think holistically about how best to harness value from all of the assets and all of the strengths of the company. And so, when we look at that obviously, our vision is to create sustainable, profitable and kind of accretive growth for the company. And by natural extensions, we mean focusing on kind of the assets and the strengths of the company as currently defined, with a requirement for kind of high confidence business plans and leverage in our financial models. So, it's an emerging investment for the company, it's still quite small, I would say. The investment by the company in products and services and markets beyond our core is in the $20 million to $30 million range probably for the year. But I think it's an important part of the long-term vision for the future of the company. Arthur Su - Needham & Co. LLC: Great. Thanks for that clarification. Just a quick follow-up question. ASML talked about the progress they've made with their EUV tool and the potential that it can address up to 15 layers upon insertion at 7-nanometer. Given your strength in etch and deposition, has that in any way shaped your initial view on your patterning opportunity, and do you believe that Lam is also well positioned to remain competitive due to improving economics of your multi-patterning processes?

Yeah, I think that's a really good point. Actually I mean, every single day from us and every other participant is delivering litho multi-patterning schemes or spacer-based multi-patterning schemes, we're making the economics better. And to answer the first part of your question, the disclosures recently and the editorial hasn't changed our fundamental view of our opportunity. We still believe we have SAM expansion through the 5-nanometer technology node that we've currently kind of articulated in the Analyst Meeting. We triangulate around public statements and private statements from all of the industry participants that all kind of talk to us. We feel like we have nice opportunity. We have decent strength, and that our focus is on controlling the things that we can control and making the best of it. So, nothing new to say, and one big part of the economics of the company quite frankly has been multi-patterning in memory and logic both. Arthur Su - Needham & Co. LLC: Great. Thank you.

Yeah, thank you.

Moving on, our next question comes from Krish Sankar with Bank of America Merrill Lynch.

Yeah, hi. Thanks for taking my question and congrats again, guys, on another great quarter. I had a couple of them. Number one, Martin, if you look at the WFE spend on 3D NAND, obviously it's really healthy driven by – end demand is obviously greenfield, the yield's are pretty low, there's some conversion from 2D to 3D, kind of curious if any one of those vectors slows down, do you think 3D NAND can sustain in current levels, or are you worried about that going forward?

Well, I mean, I think the fundamental thing we look at is demand, right, which is not so much a unit conversation these days, it's a content conversation. And when you kind of look at this year and you look at the road map for smartphone content and service content particularly, I mean, I think that's the most important commentary around sustainability of spending because the spending, despite very critical and strategic technology transition this year, is predominantly defined around the importance of responding to demand and keeping supply and demand in balance to the best of our customers' ability, and as an industry participant, we're trying to support that. So, when I think about kind of how they spend money greenfield or conversion 2D to 3D, or 3D scaling, as we articulated in our Analyst Meeting, we're actually agnostic to how they go execute. If you look at the unique elements of the Lam Research serviceable markets, there are pretty similar opportunities for us in both implementations. And our view today is quite similar to the view we had a couple of months ago, more or less the 3D-capable capacity in NAND installed base at the end of the year will be approximately half of the installed base, which is not to say the transition is kind of half done, because in the context of the demand message and the technology road map for this particular inflection, I mean there's a lot of years of opportunity ahead of us, and we're certainly excited about participating and enabling to the extent that we can to the success of our customers.

Got it. Got it. That's very helpful. And then another question on the DRAM side, I think you did articulate the fact that you're not seeing a whole lot of capacity expansion, and clearly last year was a cyclical low for DRAM CapEx, and this year it's still below 2015 levels. Is it purely a function of the fact that the number of process steps is increasing as you go below 20 nanometers, it's more difficult to do, that's why even though optically it looks like CapEx is higher, it's not really as high as you think you'd expect it to be?

I don't know if we're completely qualified to answer the full scope of your question. I mean, I will tell you for our piece of the pie, yeah, and this is true in most every part of the industry, the investment in a given kind of wafer outs kind of goes up in technology inflections, and the trick for our customers obviously is making sure that the density in this case or the number of chips on the surface of the wafer goes up in proportion to the increase in kind of cost, and as I think is well-publicized to this point in time, the most challenging part of the semiconductor kind of road map from a kind of long-term perspective is DRAM. Although frankly speaking, there is kind of three or four nodes depending on how you define it in the road map that we have with customers in front of us today. By the end of this year, we estimate that only 25% of the installed base is actually at the 1x technology node. So, there's kind of a decent amount of sustainability and value proposition, I think, in front of the industry for DRAM.

Thanks, Krish.

It's very helpful. Thanks, Martin.

Our next question today comes from Patrick Ho with Stifel. Patrick Ho - Stifel, Nicolaus & Co., Inc.: Thank you very much. Martin, first in terms of the capital intensity trend particularly for etch and deposition where we've seen growth in the percentage of the spend of those two areas, given some of the continued changing dynamics of the industry, do you see both of them continuing to increase maybe at a more moderate level, or does it assume flattened out particularly if EUV comes into play?

So I think we've articulated as precisely as we can do in our Analyst Meeting, and I'd pull the slides and update the slides for the WFE assumptions that you think are most relevant, but we've articulated with the assumptions made that I think more or less is being reinforced by other disclosures since we made them, insertions in second phase of 7-nanometer and insertions planned in DRAM. Our serviceable market increases through the end of this decade and probably slightly beyond. So, on that one axis, as I've said, it's a nice opportunity for us and one where we continue to be very focused on. Patrick Ho - Stifel, Nicolaus & Co., Inc.: Right. That's helpful. Doug, you talked about R&D being 65% of total OpEx. On a going-forward basis given some of the projects you have in hand, do you see that percentage potentially increasing as you keep kind of SG&A as flat as you can, or 65% kind of the right run rate we should be looking at?

Yeah, Patrick. We're going to keep trying to drive that higher obviously. That's the good kind of spending that generates growth in the future. It's not to say every quarter it's going to be up, but on a year-on-year basis, the way we will manage and run the spending of the company will be to try to allow that to grow and still keep the discipline around the financial model in total, and by so doing, get more efficient in SG&A. Patrick Ho - Stifel, Nicolaus & Co., Inc.: Great. Thank you.

Thanks, Patrick.

Our next question today comes from Tom Diffely with D.A. Davidson. Thomas Robert Diffely - D. A. Davidson & Co.: Yeah, good afternoon. I have a question on the service side of the business. Is the strength that you're seeing there, is that also a reflection of 200-millimeter strength in the industry, or is that not a big part of that equation?

Well, it's part of the equation. Obviously, and I'd extend maybe that comment beyond the wafer size statement and kind of talk about the non-leading-edge investments of our customers as well. This is a year where, again, the investment levels in 28-nanometer and above for example are significant. And so, in the kind of so-called trailing-edge technology nodes and even 200-millimeter wafer fabs, as Doug said, we're engaged with a lot of fabs around the world, hundreds of fabs around the world. And we're engaged in every active wafer size and technology node, and certainly in the scheme of IoT road maps particularly in the broad set of systems integration that is now kind of the reality for the semiconductor industry that the full spectrum of devices, the full spectrum of wafer sizes continues to be the focus for, as I said before, truly optimizing the value we deliver to customers and truly optimizing the value we create for our shareholders. That's another kind of version frankly of harnessing full value from the company and natural technology extension, bringing kind of expertise and wisdom that we've developed in 300 mm and making it available wherever we can.

Yeah, and Tom, just to add on, as IoT takes off and these analog-y sense-y kind of devices proliferate, the trailing edge is going to be more and more important over time. So, not necessarily just 200 mm as Martin pointed out, but trailing edge capacity between 200 mm and 300 mm is something we're certainly very focused on. Thomas Robert Diffely - D. A. Davidson & Co.: Okay. Great. And then a follow-up, we're starting to hear a little bit more about some domestic OEM semi-cap players as well. Is there anything that changes the landscape as far as the competitive front goes?

I'm not sure I understood the question, Tom, domestic OEM... Thomas Robert Diffely - D. A. Davidson & Co.: Just some Chinese domestic players.

Oh, it's China.

I don't think there's a headline of significance. We obviously respect everybody that we get to compete with, and with rare exceptions, the players that exist in China today have been players that have been there for some years. And we wish them well, but we do our best to excel in the markets worldwide including China. So, nothing new to articulate today.

Yeah. We're pretty good at doing what we do, Tom. We spend $1 billion in R&D. So it's hard to compete with that level of scale. Not that, as Martin pointed out, we're not paying attention to everybody and paranoid about everybody, but it's hard to do the stuff that we're doing. Thomas Robert Diffely - D. A. Davidson & Co.: Okay. Thank you.

Our next question today comes from Craig Ellis with B. Riley. Craig A. Ellis - B. Riley & Co. LLC: Oh, thanks for taking the question. The first was just an operational question, Martin, to follow up on a point that you made that the company is getting to a $10 billion in annual shipment level, and congratulations on that milestone. The growth from $5 billion to $10 billion has been very fast, and the company's managed that very efficiently. As you look at the next leg of growth for Lam, what are the biggest challenges to maintaining the same level efficiency that you've had from $5 billion to $10 billion to whether it's $12 billion or $14 billion in shipments?

Well, the gray hair transition for me is done. So, now it's about losing hair, I guess, for the next transition. Craig A. Ellis - B. Riley & Co. LLC: So, you get a little lighter.

And I'm taking care of that for you, Martin.

So, frankly speaking, I appreciate your recognition, number one, and your statement about efficiency, it's really hard to scale the company at the pace we are over a multiple year period. And I'll speak again to the employees and the suppliers and the customers quite frankly doing partnership kind of make all of this possible. We take pride in the business model. It's a business model that has been in place for as long as I've been in the company, which is now 16 years I think. And business model flexibility in investing to create kind of capability and capacity to respond to uncertainty in the industry holistically is kind of what our focus is. And the three elements of that you've really got to kind of deal with in terms of variability are kind of factory, supply chain, and service. And what you do in parallel is make sure you never compromise your investment in fundamental research and never compromise your investment in concept and feasibility and product pipeline because that must kind of exist under any conditions if you're going to take seriously owning kind of long-term success to your company. Craig A. Ellis - B. Riley & Co. LLC: Thanks for that color. The follow-up is for Doug. Doug, you mentioned that you'll be working through the ASR, what are the priorities for cash and cash return beyond share repurchase under the existing program?

Yeah. So, what I said maybe not very clearly is we're about 70% through the current buyback authorization. We authorized $1 billion and announced it at our Analyst Day back in November. And I'll remind you at that point, we meaningfully grew the dividend as well. I mean, I would expect to give you a more definitive update when we get to that November Analyst Day. We're going to keep chugging along the current authorization, and it likely will be close to completion in the November timeframe probably, and at that point, I'll be ready to give you a more definitive future what the next leg of this looks like, but it's likely going to be a continued commitment to a meaningful return of capital to shareholders, how and what, in what amount, I'm going to save for November. Craig A. Ellis - B. Riley & Co. LLC: Got it. Thanks, guys.

Thanks, Craig.

Our next question today comes from Atif Malik with Citi.

Hi. Thanks for taking my question. Martin, if I look at your guidance here, you're probably around like $41 billion WFE run rate, couple of your peers at Semicon talked about $40 billion to $45 billion as kind of the new baseline for wafer fab equipment spending, understand you guys are positive on next year, would love to get your thoughts if $40 billion is kind of the new baseline for the next three years?

Well, I think as kind of Doug said in a conference kind of mid-quarter, we don't kind of not align to the types of statements being made broadly in the industry. We don't have kind of rationale to deliver you a different message. So, a number beginning with 4 is a reasonable kind of proxy. I think at the end of the day, sustainability is defined by two things. It's defined by the legitimacy and sustainability of demand, and we see a world of tremendous innovation in software and applications, which is enabled by silicon. And something really special happened in the last several years, and the special was the world of connectivity in cloud and advanced computation kind of showed up at the same time. And so, there's, I mean, a tremendous amount of excitement around that opportunity. And it's much more difficult for us sort of forecast because it's not one device now, it's many. And it's not a unit conversation, it's a content conversation, but that's kind of the nature of the beast. So, when we look at the most fundamental part of answering your question demand, we feel very good about it, very excited about that opportunity. The second part of this is all about kind of discipline and balance between supply and demand, and every indicator we have, whether it's supply and demand, statements from a modeling point of view, whether it's ASPs, whether it's inventory levels, whether it's reuse strategies, whatever it is. I mean, the datapoints that we look to continue to suggest much more discipline than not. And so, in the context of what I just described, with the assumption about stable units, an assumption about kind of continued content expansion, an assumption about the legitimacy of our China investments, we feel like there's sustainability to the types of spending levels that we're seeing right now. So, our view is, this is not an aberration. I'm sure it goes up and down along this journey, and we've all got a lot to learn, but it feels quite fundamental from the seats that we have in the semiconductor ecosystem.

Okay. Very helpful, and as a follow-up, in the past, you guys have provided 3D NAND shipped wafer capacity, can you tell us a number for exiting this year?

I'm not going to tell you a precise number, because I don't think it's that much different than what we said before. It's clearly a little higher. But the fundamental headline, which is the one that I really care about, is the opportunity for sustainability of investment that comes from content, and there's some great content messages. And by the end of this year, to the best of our knowledge, about half of the installed base will be 3D device capable in various forms. So there's kind of three or four forms of 3D capacity, and there's a great technology road map with demand, and so that the opportunity is kind of a multiple year opportunity.

Thank you.

Thanks, Atif.

Our next question comes from Amit Daryanani with RBC Capital Markets.

Thanks. I have two questions as well, I guess. Maybe just starting on the NAND side, and understand the secular growth narrative that you guys have, I totally get that part. But I'm curious, as you think about the next few quarters there with all the 3D NAND supply that's getting on board, do you see a pause that occurs there, especially in the early part of next year as some of those capacity gets digested? And if 2018 is more conversions, less greenfield, does that have any ramification for Lam?

Well, on the last part of the question, the kind of greenfield versus conversion, there's almost no implications for Lam. We articulated a reasonably agnostic view of that in our Analyst Meeting. Relative to pauses, I think the industry now collectively, the actions of our customers and the action of their supply chain is now sufficiently fast. But the disconnects are kind of sometimes not even noticeable, and they're much faster than they ever were. So, are there going to be ebbs and flows of investments? Always, but I think much less wild swings than was through in our history. And I guess that's the kind of variability versus cyclicality conversations that we've had a number of times. So maybe there's pauses and accelerations, but the customers will do the right thing. They'll make investment when they have demands to support, and as a supply chain, we're running cycle times today that are fast enough that were collectively responding pretty well to their needs.

Got it. And I guess, if I can just follow up, at the Analyst Day, I think you guys laid out a financial model that talked about – I don't know – 25%, 26% op margins, $10 to $11 EPS power, 2019-2020 timeframe, right? So far in 2017, at the end of this year, so you seem to be closer to $12 EPS run rate. So, should we think of Lam fundamentally during the high 20% operating margin and potentially higher if the WFE momentum sustains? If not, why should we think of margins coming down towards the mid 20%?

Yeah. The first thing I'd tell you is we'll give you new model when we get to the November Analyst Day, we're going to think through kind of investment levels and what that all looks like. If I were you trying to correlate those models to where we are today, I'd essentially run rate the previous model to level of spend you think is occurring this year. And when I do that back of the envelope map, we're probably, I don't know, a half to maybe a full percentage point on an op income above where those models would suggest, and whether we choose to spend a little bit more as we start looking at the numbers, I think we'll decide that as we go through it. But that's generally how I'd be thinking about it if I was you, Amit.

Perfect. Thank you for your time, guys.

Yeah. Thank you.

That concludes today's question-and-answer session. Mr. Martin Anstice, at this time, I'd like to turn the conference back over to you for any additional or closing remarks.

Yeah. Thank you very much. So, I'd just like to say a couple of things in closing of today's call. The first thing is to say thank you to those of you that were complementary about the performance of the company and kind of recognized the journey and the accomplishments, because a lot of people worked really hard to achieve that, which is my second comment. And I recognize I made this in prepared comments, but I'd like to do it again now. None of this would be possible without the commitment and support of all of our employees in every function, in every location around the world, and people are working extremely hard to scale the company in the way that we are, and I extend that thanks also to the supply chain community that makes this possible. And last but not least, to the really important stakeholder, the customer, because without the customer's partnership and support, we wouldn't be telling the story that we are. So, in closing, a big thank you to a lot of people, it's a privilege to be part of this company, and a privilege to have an opportunity to tell the story that we do. Thank you for your time, attention, and interest in Lam Research.

That concludes today's conference. Thank you for your participation. You may now disconnect.