Kathleen Bela, Director of Investor Relations Steve Newberry, President and Chief Executive Officer Martin Anstice, Chief Financial Officer

Bill Ong, American Technology Research Jay Deahna, JP Morgan Satya Kumar, Credit Suisse James Covello, Goldman Sachs CJ Muse, Lehman Brothers Timothy Arcuri, Citigroup Global Markets Brett Hodess, Merrill Lynch Steve O’Rourke, Deutsche Bank Securities Robert Maire, Needham & Company Michael Lucas Manish Goyal, TIA Steven Paleo, HSBC Patrick Ho, Stifel Nicolaus & Company Srini (Gary Hsueh), CIBC World Markets

Good afternoon, ladies and gentleman and welcome to the LAM Research September Quarter 2006 Financial Results Conference Call. At this time all participants are in a listen-only mode. Following today’s presentation, instructions will be given for the question and answer session. If anyone needs assistance at any time during the conference please press the * followed by the 0. As a reminder this conference is being recorded today, Wednesday, October 11, 2006. This call is scheduled to last one hour. I would now like to turn the conference over to Kathleen Bela, Director of Investor Relations, please go ahead ma’am. Kathleen Bela, Director of Investor Relations: Thank you, Marcia. Good afternoon and thank you for joining us to discuss the financial results for the quarter ending September 24, 2006, and the business outlook for the December 2006 quarter. By now you should have received a copy of today’s press release, which was distributed by Business Wire at approximately 1:10 p.m. We are webcasting a slide presentation in conjunction with today’s commentary. The presentation can be accessed through the IR section of our website at www.lamrc.com. Here today are Steve Newberry, President and Chief Executive Officer, and Martin Anstice, Chief Financial Officer. Except for historical information, the information LAM is about to provide and the questions LAM answers during this call may contain certain forward-looking statements including but not limited to statements that relate to the company’s future revenue, orders, shipments, margins, tax rates, and operating expenses, management’s plans and objectives for future operations and product development, the cost and impact of the acquisition of certain assets of Bullen Ultrasonics, management’s plans for continuing the company’s stock repurchase program, global economic conditions including consumer sentiment and customer spending, and the demand acceptance and competitiveness of the company’s products. These statements are subject to various risks, uncertainties, and changes in conditions, significance, value, and effect that could cause results to differ materially and in ways not readily foreseeable and which are detailed in the Company’s SEC reports. We encourage you to read those reports in their entirety. LAM would also like to disclaim any obligation to correct or update any of the information we are about to provide. Also, the presentation includes certain non-GAAP financial measures which the company believes are useful to analyzing ongoing business trends. A table presenting a reconciliation of ongoing performance to results under U.S. GAAP is posted on the Company’s website. This call is scheduled to last until 3 p.m. We ask that you please limit questions to one per firm. I will now turn the call to Martin for a review of the financial results. Martin Anstice, Chief Financial Officer: Thank you, Kathleen. This afternoon we will discuss our September 2006 Quarter financial results. Today’s reported earnings include record high performance on several dimensions, new orders of $725 million representing 13% sequential growth, higher than the up 5% to 10% guidance range -- revenues of $604 million, operating income as a percent of income of 32.2%, cash from operations of approximately $217 million or 36% of revenues. Our leading edge strength is illustrated by 300 mm applications representing approximately 89% of total systems new orders and applications at less than or equal to the 90 nanometer technology node representing 95%. As expected, the memory segments represented a large proportion of systems orders this quarter. In absolute dollars, North America, Korea, and Japan accounted for the sequential growth. Accordingly, systems new orders market segmentation for the quarter was: memory 75%, foundry 16%, and logic other at 9% of the total. Dedicated NAND applications represented 47% of the total memory orders. Revenue of $604 million slightly exceeded the high points of our guidance range. On increasing customer demand, shipments at $640 million, were up 18% sequentially, the ending unshipped backlog grew approximately 14% to $593 million. Our gross margins for the quarter are 51.8%, slightly exceeded our guidance – a function of continued installation and warranty cost improvements and a generally positive customer and product mix. Operating expenses for the company increased as planned by approximately $3 million due principally to equity expense and higher incentive base compensation on higher profit as well as discretionary investments targeted at etch and new product growth opportunities. Combined, these items deliver a record high operating income of 32.2% of revenues. The leveraged fall through was 45% from sequential operating income growth of 22% and revenue growth of 15%. We generated cash from operations of $217 million, which supports our revised 30% of revenue targets for the second half of calendar 2006. As we purchase material for an increasing billed plan, inventory performance essentially is held constant at slightly more than 6 terms; accounts receivable days sales outstanding was outstanding at 57 days. Our total net cash balance including restricted cash was $1.4 billion at the end of September. Deferred revenue and deferred profit continues to strengthen at $258 million and $153 million respectively. In addition, there is approximately $74 million of anticipated future revenue value for previously made shipments to Japanese customers. For more complete details on the geographic breakdown of orders and revenues please see today’s press release and our website for a reconciliation of new order shipments, revenues, deferred revenues, and backlogs. In the quarter, adjustments from backlog were a net negative 13 million and there were no order cancellations. Capital expenditures were at $13 million, depreciation and amortization was $6 million. As we invest in our organization to support our expanding etch market share and multi-product growth opportunities employment levels increased by about 100 to approximately 2500. Yesterday, we communicated our intentions to purchase the silicone growing and fabrication assets of Bullen Ultrasonic. Upon closing we will consolidate the financial impact of the purchase and subsequent earnings in the December 2006 quarter. Key financial aspects of the deal include a purchase price of $175 million cash representing a price-to-revenue multiple that is meaningfully less than the current standalone LAM Research equivalent, an estimated purchase price adjustment of less than $10 million or closing asset values including facilities and also transaction costs; a 12-month $17 million performance ESCROW, a preliminary purchase price allocation of 25% tangible assets and 75% intangible assets and goodwill, a targeted modestly accretive impact to ongoing earnings driven by favorable cost of sales due to the elimination of profits previously earned by Bullen as a supplier to LAM. Additional non-LAM customer revenues are not anticipated to be significant in the short term. Related to the activities of this transaction, the company self imposed a blackout on stock transactions. There was no stock repurchase activity this quarter and the annual equity focal grounds originally planned for August was delayed until the December 2006 quarter. The Company plans on resuming stock repurchase activities immediately, consistent with the plan currently authorized by the board of directors. In the September quarter, we removed two items from our ongoing results presentation. First, as characterized by the subsequent event disclosure in our fiscal 2006 10-K, the Company recorded a favorable legal judgment of $15.8 million in other income with a related tax expense of $6.1 million. Secondly, we successfully resolved certain foreign tax matters resulting in a net tax benefit of $10 million. The reconciliation of these items is included within our press release today. Now to Steve’s comments. Steve Newberry, President and Chief Executive Officer: Thank you, Martin, and thank you all for joining us today to discuss the results for the September quarter and the current outlook for the business. This afternoon I will comment on the following aspects of the business: our September quarter results and updates on our industry outlook, updates on our progress and new product introductions, and the acquisition of the silicone growing and fabrication assets of Bullen Ultrasonics. I will then move on to comments related to guidance for the December quarter. LAM continued to execute very well on all fronts in the quarter. We achieved records in new orders, revenue, operating margins, earnings, and cash from operations; all of this while continuing to grow etch market share. We also continued to make strong progress in the development and roll out of new products in markets adjacent to our core etch business. These accomplishments continued to strength LAM’s future and none of them could be achieved without the entrepreneurially spirited yet focused and disciplined employees throughout the Company who are making all of this happen. I want to commend all of our employees for their role in delivering the outstanding performance and results achieved this quarter year to date. On the industry front, order rates continued to grow at a steady pace as semiconductor factor utilization while softening in foundry still remains strong across the board. Memory in particular remains robust with continuing strong investment in capacity expansion with memory shipments from LAM in September up significantly from the June ’06 quarter. Bookings are expected to remain strong and shipments will continue to grow in December over September. Foundry orders were down slightly over three quarter rolling averages, but are expected to be up in the December quarter. Shipments into the foundries declined in September over June, but will increase again in the December quarter. Logic and other segment orders were down in September, but will increase significantly in December with shipments strong in September and then down in December and then back up again as we go forward into 2007. Overall, I expect order rates to stabilize and flatten out for the next few quarters as customers continue to attempt to keep their supply coming online in balance with demand. As a function of LAM’s high book to ship ratios in the past few quarters, we will be increasing our shipment levels for the next few quarters. On the new products front we have communicated our plans to introduce new products in markets adjacent to etch and in markets which leverage our core areas of expertise. Our current new markets expansion activities include products that address the following markets: wafer clean, fab clean, next-generation patterning, post implant strip and other integration strip applications, MEMS, and productivity enhancing software products for LAM tools. For the call today I’ll comment most specifically on clean. We are where we want to be in terms of beta systems performance in the field. Our intent has been to work closely with a group of customers that are leaders in their industry segments and have a strong commitment to work with our new system and determine with us its ability to provide enabling results on the wafer, do it cost effectively with high production worthiness. We are pleased with the moment the system is showing in terms of getting from an R&D environment to a pilot line environment. We have specific objectives for progress by the end of the year in terms of proving out the technology on a wide variety of backend of the line and front end of the line claims, proving our product performance for reliability, throughput, and cost. So, we are on plan to these objectives and I am pleased with our early feedback from our customers. We will continue to expand our customer base for development and evaluation systems in the first half of calendar year ’07 and we’ll ramp our shipment levels starting in the third quarter of calendar year ’07. We are making good progress in each of our other new product areas and are on track to deliver around $100 million in incremental revenue in calendar year ’07 from the combination of these products. Martin addressed the financials around our announcement to acquire silicone growing and fabrication assets of Bullen Ultrasonics. This transaction supports the competitive position and capability of primarily our dielectric etch products by providing access to and control of critical IP and manufacturing technology related to the production of silicone parts in our processing chambers. We’ve worked with the team at Bullen for many years and I am confident there will be a smooth integration of our two companies once the transaction closes. This is a great group of people, smart and customer focused, and we’re looking forward to working even closer with them as we go forward in the future. I will now move to guidance for the December quarter. We expect orders to be flat plus or minus 5%. Revenues are expected to be in the range of $605 million to $625 million, our shipments will increase approximately 4% to 5%, gross margins are expected to come in around 51%, and operating margins are again expected to be above 30% at the revenue guidance midpoint. This results in earnings per share guidance of $1.07 to $1.11 on an assumed share count of 145 million and a tax rate of 22%. From a directional standpoint, I expect March quarter shipments to be up an additional 5% to 10% over the December quarter shipments. With that, I will turn the call back over to Kathleen. Kathleen Bela, Director of Investor Relations: Thank you. Operator, we’ll now open the call for questions.

Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question please press the * followed by the 1 on your push button phone. If you would like to decline from the polling process press the * followed by the 2. You will hear a three-tone prompt acknowledging your selection and if you’re using speaker equipment you will need to lift the handset before pressing the numbers. Please limit your questions to one question only. One moment please for the first question, and our first question is from Bill Ong with American Technology Research, please go ahead. Bill Ong, American Technology Research: Congratulations on a nice quarter. I know that you’ve clearly demonstrated your market share gains in the memory market, but can offer some color on your competitive presence on the logic market because the etch segment is a little bit more competitive than the memory segment? Thanks. Steve Newberry, President and Chief Executive Officer: Thank you, Bill. We have done very well in the general purpose logic arena. We’ve picked up share this year. If we exclude microprocessor from the logic space and call those two different categories, our market share in the general purpose logic space is actually slightly higher than what it is for our overall product line in general. We’re very strong at a number of the major general purpose logic manufacturers around the world.

Thank you. Our next question is from Jay Deahna with JP Morgan, please go ahead. Jay Deahna, JP Morgan: Thank you. Good afternoon Steve, a couple of questions here for you. Next year, calendar 2007, which segment of the etch market do you expect to gain the most share in, silicone or dielectric? Then the second question is I believe you suggested in your opening comments that order strength looks like it can continue for the next couple of quarters, that’s a little bit different than what you said 90 days ago, I’m wondering where that’s coming from, and if that’s true there’s your capital spending outlook or wafer fab equipment spending outlook for next year, is that different than what it was 90 days ago? Steve Newberry, President and Chief Executive Officer: Okay, on etch market share, I think that when we look at what’s going to happen on the basis of the remaining decisions that are being made in the second half of 2006, which will largely manifest themselves in what kind of market share we see in ’07, I would expect that we will gain additional share in conductor but that will not be quite as significant as the fact that we will make more market share gains in dielectric, in terms of dielectric share gains in both memory and in foundry. Where we’re at now is at the 65 nanometer node with essentially 50% market share, and deliveries in ’07 are going to largely be 90 nanometer with a significant increase in 65 nanometer to the point where probably 65% of 65-nanometer type deliveries in ’07. So, I would expect that we will pick up 3-4 market share points in ’07 as a function of the fact that the mix moves in our direction favorably at 65. Just commenting within the context of market share, a lot of people are talking about 45, while there are a few customers that will make some 45 nanometer decisions in ’07, ’07 is largely going to be a positioning activity for 45 nanometer and I think that we may see some decisions later in the year, but most of the 45 nanometer decisions will be made in early ’08 and most of the shipments for 45 nanometer won’t really occur until late ’08/early ’09. So, we’re fundamentally in a very strong position as the 90-nanometer node continues to ship out and then the 65 nanometer node ramps up and I think we’re also very, very competitive in the evaluation activities that are going on a 45 nanometer. So relative to order strengths, you’re right, at this point in time last quarter I commented that I thought that the order environment would start to slow down beginning this quarter. We’re clearly seeing that for the most part memory makers are continuing to place orders, are continuing to want to add investment. Most of that now has actually shifted from a situation where NAND was approximately 45% of total memory, NAND is beginning to decline a little bit down to more like high 30s as a percent of overall memory, and we’re beginning to see DRAM investment pick up significantly, and this is both at the major players as well as some of the second tier players that have placed orders for memory. So my expectation is that this will continue for a couple of quarters and then we’ll see how the demand environment really plays itself out, because I think customers are still very tuned in to watching the demand environment and while order rates are certainly strong we’ve continued to see very strong unit growth and therefore the need for more wafer starts, and that’s true in particular memory but it’s also true in certain aspects of foundry where foundry continues to invest and while it’s not investing at an accelerated rate it’s investing at a very consistent rate, it’s investment levels in ’06 are still well below the peak investment that occurred in ’04. So, I still believe that overall the industry is behaving in a pretty rational way and the fact that orders are starting to level out, I view it as a healthy sign, I view it as a sign that semiconductor manufacturers are responding to the amount of capacity they’ve added to the market place, they’re trying to sink that up with demand, and I think we’re at a pretty healthy supply-demand situation right now.

Thank you. Our next question is from Satya Kumar with Credit Suisse, please go ahead. Satya Kumar, Credit Suisse: Hi, thanks Steve, a good quarter. A couple of questions, I’m wondering about this rationality question a little bit drilling down into the specifics of memory. Three months ago I guess you were sounding a lot more cautious in terms of demand for memory for NAND FLASH and clearly most of the orders strength is coming from memory, what specifically do you right now think about supply and demand for memory? Of course, we have our views but we’d like to hear what you guys think. The second part of the question is totally different; where exactly is your break even today and can you give us an update as to what you plan to do with the cash flow that you’re generating, and is it reasonable to expect that at some point down the road you guys might actually step up your share repurchase, and also if you can talk about whether you will take debt to buybacks at any point in the future? Steve Newberry, President and Chief Executive Officer: Martin will answer the financially related questions. In terms of the demand for memory, we’re clearly seeing that some of the big growth for NAND FLASH is beginning to slow down a little bit and the question is when does it pick up again as we really look at trying to model NAND FLASH going into a variety of current hard drive applications on PCs and when that will begin to start to manifest itself and then of course if we look at MP3 players and we look at other cellphone applications and what’s happening in the growth in terms of significant density requirements being present. So, I still think that NAND is going to be very robust, but it may fall off into the 170%, maybe even 150% bit growth, and so I think that we’re in a period of consolidation where the rapid rate of output relative to NAND will slow down a little bit, but it’s still going to very subsumative and then we’re likely to add the next wave sometime later in ’07 or early ’08 as new applications come online. With DRAM, more and more people are coming to the realization that 1 gigabyte RAM versus Vista and kind of the minimum need for 1 gigabyte and actually better optimized with 2 gigabyte is really going to create and is already creating a very strong demand for DRAMs in PC-related applications. We’re also beginning to see that as the number of applications for DRAM and other consumer-related types of products continues to grow, we’re seeing big growth in DRAM expand from what had been about 55% year-over-year big growth is now moving back up into the 65% to 70% range. So, we have a resurgence of DRAM-related demand and so when you still put these two together, I still think we’re still looking at 20% plus year as we go forward and the need to add capacity to support a very strong demand environment for memory. Martin Anstice, Chief Financial Officer: Satya, it’s a long time since someone has asked me a question on break even point, so just to give you that perspective, obviously it’s a long way from where we are today. We’ve historically articulated break even point for the Company at or about the $200 million revenue level and mathematically and without any significant restructuring activities in the Company that still is a reasonable place holder for break even point. The one other dimension to answering that question that’s important to kind of keep visible for everybody is we clearly do have a fair amount of variability in this cost structure. We are today and we talked at the last earnings call about our commitment to invest appropriately in etch and new products consistent with the opportunities and the timings of those opportunities with customers, and those things are quite difficult to answer when the question is so specific as a break even point, but mathematically the $200 million scenario is still within reach. From a cash perspective, you had a couple of dimensions to your question. Clearly, there is a statement of priority for use of cash in the Company and the first is to invest in the profitable growth of the Company, and yesterday’s announcement probably most illustrates the importance of making that a priority for the Company to the extent that we have cash that is excess to the requirements that we see in front of us then we’ve committed as the function of the share repurchase plan of record to return excess cash to shareholders via repurchase. We do spend a lot of time looking at the choices and the opportunities as an executive team and also at the board of director level. We do have $330 million still remaining in the current authorization and so until we get to a point where that is fully used, we likely won’t be in the public domain announcing a change.

Thank you, our next question is from Jim Covello with Goldman Sachs, please go ahead. James Covello, Goldman Sachs: Good afternoon guys, thanks so much and congratulations on terrific results this quarter. I just have two quick questions. First, Steve, some of the third parties for NAND are now suggesting, including IDC and iSupply are now suggesting as 30% or 40% excess capacity situation or excess supply situation of NAND FLASH next year. I guess how comfortable you feel with continued strong levels of NAND investment, I know you’re saying it might moderate a little bit, but why wouldn’t it moderate a little more in the face of 30% or 40% excess supply? And then second on DRAM, to the extent we’re going to go to 2 gigs per box, that’s going to violate the historical rules of the cogs as a percentage of total system cost and do you think that it’s likely that you’re going to violate the rule just for incremental DRAM that may or may not be necessary? Thanks so much and congratulations again. Steve Newberry, President and Chief Executive Officer: Thanks Jim, I appreciate the congratulations. If we end up 30% or 40% excess NAND supply, I mean I think clearly we would see a slow down in the rate of expansion. I kind of expect that, and while we’re not really specifically yet commenting on how we size 2007 because we want to kind of watch this thing play itself out for the next two or three months at least, it’s not going to be surprising if the overall investment in NAND declines next year. It will still be a significant amount of investment around $10 billion in CapEx or so, but I think that clearly with a lot of the major NAND suppliers also producing DRAM, they view that as a big advantage because they’ll just basically convert some of their wafer starts to DRAM activity and I think we’re already seeing that occur where some of the planned capacity adds that were targeted to go into a NAND line have now been converted to a DRAM line. So we’ll watch that carefully, but I think in terms of overall memory it’s beginning to look like there’s some degree of consolidation, some degree of slowing of the rate of overall investment, but it’s still overall for memory as a whole; I expect in ’07 it will still be a greater amount of capital spend or certainly a greater amount of wafer fab equipment spent for memory wafer starts in ’07 versus ’06. In terms of PC content on the high end, you’re likely to have the DRAMs…so if you have a 2-gig content, it looks like you’re going to end up where you’re at 6% to 7% of the cogs. I don’t know, you’re more familiar with the rule of violation of memory content, but I think that what we’re hearing from the major memory suppliers is that they’re seeing a very strong demand to put that kind of memory into the PC and we’ll see what that does to pricing, because clearly if we get the DRAM volume up we know we’ll get some of the pricing to drop, but that will just increase the overall demand, which will ultimately end up creating a situation where we’re going to have to add more wafer starts. So, I think we’ll have to see how that plays itself out, but I think there’s a pretty strong move to put 2-gig into these PCs.

Thank you. Our next question is from CJ Muse with Lehman Brothers, please go ahead. CJ Muse, Lehman Brothers: Good afternoon, I had a quick question for you Steve. On the last call you suggested that foundry spending would remain pretty steady and it would be steady investors on CapEx, and I guess this quarter was pretty weak and now you’re forecasting an uptake in the fourth quarter, can you sort of characterize what evolved over the last three months and what gives you sort of the confidence on the fourth quarter strength and then whether that’s sustainable? Then two quick followups to that; can you tell us what the shipment level were in September and whether or not you shipped your first fab clean tool? Thank you. Steve Newberry, President and Chief Executive Officer: So relative to foundry, foundry wasn’t really all that weak. It was just below the three quarter average. So, our orders last quarter foundry was 26% for us and it dropped to 16%, but a lot of that had to do with the fact that memory in total for us was up significantly this quarter. So, it dropped the percent down to 16% of our orders but it was only slightly below a rolling three quarter average that you would expect to see for orders. You always have lumpiness in these orders and I expect that we will continue to see. So, when we look at the next quarter, this quarter in December I expect foundry orders will be higher, I expect overall orders that the foundry companies place with the company will be higher, but not substantially. And when we look at shipments, we basically have an offset when orders are up in a given quarter and the shipments will follow, and shipments tend to be a lot smoother than orders because we can smooth out with the use of a factory loading and build plan and so the shipment activity at foundry was a little bit lower in September and it will be about 10% to 12% in December, and then I think it potentially will hover in that vicinity. So, we kind of have a situation where there’s a pretty steady overall output of shipments into the foundry industry that ultimately comes out to about 16% or 17% of the total investment that’s being spent on wafer fab is going into foundry, and that’s a very healthy number relative to their role in the industry. We have begun the process of putting fab clean systems out into the field. These are evaluation units so they won’t show up in any of the shipment numbers, they won’t show up in any bookings or revenue numbers until ultimately they turn for booking and revenue, which we would not expect for a number of quarters from now, but we’ve been successful at doing the integration of the hardware onto the 2300 platform, getting the software integrated in, and so we’re beginning the process of putting those products out in the field and doing extensive evaluation and qualification work with customers.

Thank you. Our next question is from Timothy Arcuri with Citigroup, please go ahead. Timothy Arcuri, Citigroup Global Markets: Hi guys, actually I had two things. Number one, Steve, I had in my model that the midrange of the shipment guidance was like 665, so it looks like the shipments came in a little bit late, and I’m wondering a) why that would be and then b) you guys do a lot of work on capital intensity and things like that, and I’m wondering what your view is right now of capital intensity in the memory stage, because according to my numbers in 2006 from a CapEx-to-sales point of view we’re going to be close to 50% and that’s about 10% higher than we’ve ever been in the past 10 years and we’re in the face of what could be a slow down in NAND demand, things like that, so I’m what your view is there. Martin Anstice, Chief Financial Officer: I’ll take the shipment piece of that. To your point, we guided 20% to 25% for the September quarter and came in at 18% and honestly the story is identical to last quarter, anticipating and getting perfectly correct the ship dates for any one week or any one quarter is a fairly challenging task and just like we shared with you in the June quarter when a number of systems that we had originally scheduled to ship in June ended up shipping in early July, the same thing has happened in September and October. So, there really is no fundamental message there worthy of any comments, it’s really simply a scheduling issue in days and a couple of weeks at the outside. Steve Newberry, President and Chief Executive Officer: So, let’s talk about CapEx intensity and CapEx versus revenues for the memory group in particular. When I go back and look at the two biggest overspending periods, memory in 1996 with the Korean expansion really got CapEx as a percent of revenue way out of whack, it was actually 70%. And then in 2001 when again we saw a significant amount of over investment, it was 60%. So today, we show in 2006 that memory CapEx as a percent of revenue is about 40.5%. On a historical basis that’s certainly well below the big excess spending periods that occurred in 1996 and 2001, it’s slightly higher than the runrate that memory had been running at from 2002 to 2004 and we saw memory run for three years at about 37%, and then in 2005 it jumped up to 40%, and part of the reason for that is we have had a lot of unit growth and we’ve had a lot of demand for wafer starts, but more importantly we’ve had a big conversion of 200 mm output that has had to be converted to 300 mm, because it was not cost effective. So that added probably 10% additional CapEx, which would take you from about 36% of percent of revenue to 40% of revenues, so I still believe that even in memory we’re in an area of spending that still makes sense relative to the output required and relative to the past history of memory and CapEx investment.

Thank you. Our next question is from Brett Hodess with Merrill Lynch, please go ahead. Brett Hodess, Merrill Lynch: Hi Steve, I’d like to just follow up quickly on the ratio you just gave for 1996 and 2001. In those periods you had two DRAM oversupply and the average selling prices fell absolutely dramatically, so the sales of the memory companies dropped dramatically as they hadn’t anticipated that of course which boosted those ratios that you just gave. They certainly didn’t plan on spending at those levels, isn’t that correct and therefore we’re in a very different situation right now because pricing really on DRAM has been very stable at this point? Steve Newberry, President and Chief Executive Officer: Well, Brett I think you’re exactly right, there were a couple of things going on back then too, is that we think back on who the memory players were in 1996 you have a lot of companies that were chasing after the opportunities that were present in memory. You still had a lot of that present in 2000 and 2001. Today, you fundamentally have really five major memory players, maybe six or seven depending upon where you want to draw the line and you end up in situation where you really have a lot more visibility, or the memory companies have a lot more visibility as to how capacity additions are coming online and how they’re likely to impact the overall imbalance of supply and demand. So you’re right, pricing is much more stable and what we don’t see is that you suddenly got this huge amount of excess capacity that’s going to drive the overall pricing in memory off the charts like it did back in those two timeframes. One other point was that as a function of all that volume you had 60% decline in the cost per bit and you had about 35% decline that’s expected in 2007, but that’s pretty typical to the normal price declines that you expect year over year. So, I don’t know if what we just talked about was helpful, but I just don’t see memory investment as being way out of line to demand.

Thank you. Our next question is from Steve O’Rourke with Deutsche Bank, please go ahead. Steve O’Rourke, Deutsche Bank Securities: Hi, good afternoon, just a couple of questions. Historically your orders don’t seem to stay steady in this industry for very long. So when you think about a flat orders environment for several quarters, how much would you attribute to ongoing share gain versus underlying industry strength? Then a second question, what are the lead times now and now that you’re cycling the supply chain do you see any need to adjust your outsourcing strategy? Steve Newberry, President and Chief Executive Officer: I don’t know if that was luck but it tends to occur when acceleration and demand begins to slow down and the ability of the industry to bring on supply in pretty predictable ways is able to match up predictable demand growth. And one of the things that we’ve seen is that the industry with concentrations in foundries, concentrations of memory companies, and with fundamentally about 65% of the investment coming from memory and foundries, there’s a lot more ability to really have those companies stay in better tune to supply and demand types of imbalances that used to occur in the past. The big problems in the past were you had a lot of logic companies who at the time were competing on 200 mm. Today, most of those companies have either gone to the foundries or they’re making very small investments that fundamentally don’t swing the bookings environment to any significant degree. So, I think we’ve got fundamental changes in the number of number of customer ordering and the markets that they’re ordering into. I think that when we at it look longer term we ought to see an environment where we’ll have an opportunity to see our shipments be expanded at LAM relative to a potentially declining bookings environment for fundamentally three reasons -- one is as a revenue on acceptance company, we have $258 million of deferred revenue, we have $74 million of systems that are shipped to Japan that have not yet revenued, and in addition to that we will expect that as a function of our market share gains, which this year were at least 8% and may very well end up the year at 47% which would represent 10%, are fundamentally contributed in 2006 to about $300 million to $350 million in additional shipments, and I would expect that even in a down year if 2007 turns out to be a down year that we’ll still see spending in the etch area well over $3 billion, and if we pick up three or four market share points in ’07 I would expect that to give us $100 million of extra revenue from that, and then the third factor being when you look at what we expect to have brought to revenue from our new product activity which we targeted at $100 million we really have quite a bit of additional revenue that we can bring to our PNL in the face of a slow down in orders and requests for shipments.

Thank you. Our next question is from Robert Maire with Needham & Company, please go ahead. Robert Maire, Needham & Company: Two questions; first, congratulations on some really nice numbers. Earlier in the year there was some concern that the second half of the year would fall off and now it’s proven that the second half of the year is up and your guidance seems to indicate flattish for the next two quarters. It sounds as if the guidance that you’re giving is even if the industry itself is flat in ’07 you’re going to be up above that, perhaps a number of 10%, could you give us a little more qualitative view? We’ve heard some others in the industry say that ’07 will be up over ’06, but could you lay that out a little bit further and maybe the first half of the year versus the second half of the year? Second question on Bullen, your previous strategy had been to obviously outsource and you’ve done a super job of that, is the primary reason to bring Bullen inside one of capturing more margin or is it containing the IT or is it really equal measures of both? Steve Newberry, President and Chief Executive Officer: In terms of first half and second half…and by the way thank you for your kind words Robert…one, we’re not going to comment on what we see as a whole scenario for ’07. We’re going to do that in January. Clearly, if you take my guidance for shipments in December and the directionality that our shipments would be up in March, given that there’s about a three-month lag for us between shipments and revenue, I’ve kind of given you some visibility to what you could expect the revenue to be for December and March and to some degree even June, and so that would suggest certainly that the first half of ’07 for LAM is going to be pretty good and as you suggested it’s going to be potentially better than what the industry might be because of market share, because we have a strong book to ship ratio and we have a high ship to revenue ratio, so we have to play that through so that will be favorable for us in the first half of ’07. And what the second half is going to be, we’ll try to comment on that a little bit in the January call, but I would characterize the current environment as somewhat frappe in terms of we’ve got movement of customers wanting to pull in orders and deliveries, we’ve got some who are talking about pushing things out a couple of months to a quarter. Overall, we still have an environment that’s favorable in terms of pulling in versus pushing out, but it’s getting a little bit choppy and we’ll try to provide more color to the extent that we can when we talk about our shipments and our revenue orientation in ’07. Relative to Bullen, I’ll just make one comment and then have Martin add his comments, is that when we look at what has been our strategy and still is, core capability is either retained inside the company or if it’s present in a supplier, then our ability to establish very strong and close working relationships both from a contractual standpoint and second from a mutual trust and respect standpoint are very important. We’ve had that kind of relation with Bullen Ultrasonics and as a function of their desire to really change some directions in terms of where they wanted to go with the future of the business, we decided that we wanted to make sure that as their situation changed that our ability to maintain control of the IP, maintain control of the technology and therefore have the beneficial use of that technology on an ongoing basis was a very important part of our decision making process in acquiring the assets. From a financial standpoint, I’ll have Martin comment about what the opportunities are there relative to your question on margins. Martin Anstice, Chief Financial Officer: To the specifics of your question Robert is it motivated by an earnings and cost play or strategic? I think the answer to Steve’s commentary a second ago was really strategic. Our focus is clearly on long-term competitive positioning. We talked about the dielectric tool and we talked a lot about market share. Preserving a supply chain of high-quality, low-cost silicone parts is a very strategic component of that roadmap. To the financial side of your question, there really is a reason why we characterize the accretion statement as essentially neutral in fiscal ’07 and modestly accretive ongoing. There clearly will be opportunities through an integration process to realize opportunities to reduce cost. We clearly have eliminated what used to be a profit margin for a suppler in the context of our supply chain. The other side of an acquisition obviously is depreciation and amortization costs on intangible assets that we’ve acquired, and if you remember my earlier commentary about 25% of the purchase price is a tangible asset and about 75% intangible and about half of that intangible is kind of goodwill and the rest of it certainly identified. So that’s the mix, clearly strategic exceeds earnings in the short term relative to our motivation.

Thank you. Our next question is from Michael Lucas.

Hello, just to actually quantify the statements because I think there’s a lot of information out there from third parties, what are your thoughts on the 2007 memory market for yourself or for NAND in general? Steve Newberry, President and Chief Executive Officer: We’re not going to detail out what we think is going to happen in 2007 until our January call, but relative to what we are seeing up in clearly our September quarter 75% of our orders were for memory and 47% of the memory orders were for NAND. We’re expecting another strong quarter of memory orders in the December quarter, although it will drop from 75% of our order book to probably somewhere around 60% to 65%, but still a very strong order situation for memory, and I expect that we will see that kind of environment be in place perhaps for the next quarter as well but totally unpredictable what memory companies will do once you get outside of the current quarter that we’re in. Our market share is over 50% in memory as a whole and I would expect that that will continue to be the case throughout 2007.

Thank you. Our next question is from Manish Goyal with TIA, please go ahead. Manish Goyal, TIA: My question has been answered, thank you.

Thank you, and our next question is from Steven Paleo with HSBC, please go ahead. Steven Paleo, HSBC: A couple of questions here, first of all on the cash, you guys are talking about a goal of 30% of revenue from operating cash flow, I think that’s about $600 million or $700 million this year. You’ve got $1.4 billion in cash on the balance sheet. That’s an incredible asset turn metrics, very low break even, to talk about an authorization of $330 million almost seems kind of ridiculous, it seems like you really need to be doing quite a bit more especially since you’re trading at a discount for your peers out there. Actually cash is now greater than equity, can you help me understand the timing and the magnitude of what your stock repurchase plan is, what is the board really thinking here, is there some other strategic reason that we’re holding on to this so much? My other question is, why this kind of flattish revenue guidance if shipments were quite a bit higher this quarter and guided up next quarter? And then if you exclude all the one times, I think your kind of ongoing tax rate was down a bit this quarter, am I right there? Martin Anstice, Chief Financial Officer: I’ll pick two of them, I’ll deal with the easiest one first, the tax question. The tax rate actually was almost kind of flat sequentially as an operating tax rate where we came in at 21.7 operating. We did actually guide at the 25% assumption, so guidance sequentially was pretty similar and I would expect this to be in this range at least for the remainder of the fiscal year, and we will kind of get to the next fiscal and figure things out from there. Relative to your cash question, I guess ridiculous or not, that’s the plan. We are very, very disciplined about the stall process in the decision inside of the company and the timing of those announcements outside of the company, and the reality is we are generating cash that exceeds at least operational needs. Just to be very clear about the guidance that we’ve articulated in the targets for the year, we actually targeted 25% of the revenues for the year, the second half of the target we modified to the 30% level, none of that really kind of changes the essence of your question. It gets a lot of time and attention inside of the company and you’ll be the first to know along with everybody else when we change the plan. Steve Newberry, President and Chief Executive Officer: So relative to your question, Steven, about shipments or revenue, we’re basically in a situation where we kind of have a U-shaped shipment profile between September and December. We had customer demand for a lot of shipments early in September quarter in the July and August timeframe. Many of those we were able to ship and turn and receive acceptances. We then had requests for lower shipments in September and October, and then recently we had a bunch of customers come in and ask us for accelerated shipments in November and December, which we will be able to accommodate those shipment levels but not be able to turn them around fast enough to finish the installation and get acceptance, so that’s why you see our revenue numbers not really moving up as high as you might expect given how much the shipment numbers have increased, but I think you’ll see that situation improve itself as we go forward with our shipments, our expectations in March, and I think we’d have some strong revenue expectations as we get out of that U-shaped shipment curve that I just described. Kathleen Bela, Director of Investor Relations: We are running out of time but we do have time for one or two more questions.

Thank you, our next question is from Patrick Ho with Stifel Nicolaus, please go ahead. Patrick Ho, Stifel Nicolaus & Company: Thanks a lot and congratulations on another nice quarter. Most of my questions have been answered, but just one in terms of the market share gains you guys talked about earlier, Steve, you mentioned that conductor and dielectric is where you see the potential gains in 2007, would it be fair to characterize that Japan is the area where you can see most of those incremental gains? Steve Newberry, President and Chief Executive Officer: I’m not sure if I would say it that way. Certainly, I would agree that we’ve had very significant market share gains in Japan in 2006; we’ve probably gained 5 or 6 market share points in Japan. We’ve had a very strong year in Taiwan, we’re probably up 7 or 8 points there, we were up in China, and certainly we were up in Korea but not to that same 6% to 8% that we’re seeing in Japan and Taiwan. But, we’re very pleased with the process that we’ve made in Japan, we’re certainly enjoying significant market share at the largest capital spender in Japan, and we’re very proud of our team in Japan. They’ve done a great job in building relationships and supporting our customers in Japan.

Thank you. The next question is from Gary Hsueh with CIBC World Markets, please go ahead. Srini, CIBIC World Markets: Hi, this is Srini calling for Gary Hsueh. I have a couple of quick questions. Could you please comment on the order and distribution in the March ’07 quarter for the foundry, logic, and memory sectors? Steve Newberry, President and Chief Executive Officer: I’m not going to do that because we’re not currently talking about orders in the March timeframe. Our order distribution in the December timeframe we talked about, but we’re not going to be talking about orders as we go forward in ’07 but we’ll be happy to talk about the specifics of shipments and revenue as we go forward in the January call. Kathleen Bela, Director of Investor Relations: Okay, thank you operator and that is all the time we have this afternoon. We’d like to thank everyone again for dialing into today’s call. We appreciate to your interest and look forward to speaking with you next quarter.

Thank you. Ladies and gentlemen this concludes the LAM Research September Quarter 2006 Financial Results Conference call, you may now disconnect.