Shanye Hudson - Director of Investor Relations Ernest E. Maddock - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Head of Silfex Incorporated Martin B. Anstice - Chief Executive Officer, President, Chief Operating Officer and Director

Satya Kumar - Crédit Suisse AG, Research Division James Covello - Goldman Sachs Group Inc., Research Division Stephen Chin - UBS Investment Bank, Research Division Vishal Shah - Deutsche Bank AG, Research Division Christopher J. Muse - Barclays Capital, Research Division Christopher Blansett - JP Morgan Chase & Co, Research Division Terence R. Whalen - Citigroup Inc, Research Division Edwin Mok - Needham & Company, LLC, Research Division Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division Mark Heller - Credit Agricole Securities (USA) Inc., Research Division Krish Sankar - BofA Merrill Lynch, Research Division Jagadish K. Iyer - Piper Jaffray Companies, Research Division Benedict Pang - Caris & Company, Inc., Research Division Weston Twigg - Pacific Crest Securities, Inc., Research Division

Good day, ladies and gentlemen. Thank you for standing by. Welcome to that Lam Research Corporation March 2012 Quarterly Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Ms. Shanye Hudson, Director of Investor Relations. Please go ahead, ma'am.

Thank you, Camille. Good afternoon, everyone, and welcome to Lam Research Corporation's quarterly conference call. With me today are Martin Anstice, President and Chief Executive Officer; and Ernie Maddock, Senior Vice President and Chief Financial Officer. Shortly, Ernie will discuss financial results for the March 2012 quarter. Martin will then share Lam's business outlook for the June 2012 quarter before opening up the call for Q&A. The press release detailing our financial results was distributed over the wire services shortly after 1 p.m. this afternoon and is also available on our website at lamresearch.com. Today's call contains certain forward-looking statements, including those related to our expectations for the global macroeconomic environment of market size; wafer fab equipment spending; market share changes; consumer demand, customer spending and behavior and the factors that will influence those expectations, as well as our spending projections; our investment plans; our business strategies; our aspirations of the benefits of our planned merger with Novellus; our intentions for research and development activities; our contemplated tax rate and our forecast of market share, shipments, revenues, expenses, margins, operating profit, share repurchase activities, earnings per share and cash generation on both a GAAP and a non-GAAP basis, as well as other statements of the company's expectations, beliefs and plans. There are important factors that could cause actual results to differ materially from those described in these forward-looking statements, and a list of those factors can be found in the slide package accompanying this conference call and on our most recent Form 10-K filed with the Securities and Exchange Commission. All forward-looking statements are based on current information, and the company assumes no obligation to update any of them. This call is scheduled to last until 3:00 p.m. [Operator Instructions] With that, I'll turn the call over to you, Ernie. Ernest E. Maddock: Thank you, Shanye, and good afternoon, everyone. Thanks for joining the call. The March quarter represented a solid start to the calendar year as Lam shipments, revenue, gross margin, operating margin and EPS results met or exceeded the midpoint of our guidance ranges. Relative to these specifics, shipments for the quarter were approximately $713 million, up 27% from the December quarter and indicative of improving customer demand across all product lines and most notably, in the foundry space. The breakdown by application and market segment was as follows. Applications for the 4x technology node and below represented 91% of overall system shipments, and the memory segment accounted for 40% of all systems shipments, with NAND at 30% and DRAM at 10%. Foundry accounted for 53% of overall system shipments, while logic and other constituted the balance of 7%. March quarter revenues came in at the high end of our guidance range at $659 million, up 13% over the prior quarter. Non-GAAP gross margin was at 40.9%, up sequentially from 40.1% and is consistent with our expectations of customer concentration and mix, offsetting improvements in factory utilization from the increased business levels. As planned, non-GAAP operating expenses for the quarter increased to approximately $197 million versus $180 million in the December quarter. More than 70% of this incremental spend was focused on next-generation R&D and the customer-facing activity that surround and support it. The balance of the operating expense change was attributable to higher variable compensation expenses associated with higher profit levels, as well as expenses related to market appreciation of deferred compensation plan assets. Lam intends to mitigate overall exposure relative to market fluctuations impacting these plans, and this quarter is no exception. The increased operating expenses related to these plans were substantively offset by increased income in other income and expense. As we indicated on our last call, we remain committed to keeping Lam standalone operating expenses at or below $200 million per quarter. Non-GAAP operating income was $73 million versus $54 million in the December quarter and resulted in a non-GAAP operating margin of 11.1%, slightly better than the midpoint of our guidance range. Our non-GAAP tax rate for the March quarter was 20.4% compared to 21.8% in the prior quarter. On a Lam standalone basis, we estimate the June quarter tax rate to be in the mid-teen, bringing our fiscal year non-GAAP tax rate to around 20%. This rate would be favorably impacted by approximately 2% should Congress extend the federal R&D tax credit prior to the end of our fiscal year. Based on a share count of approximately 121 million shares, March quarter non-GAAP earnings per share were $0.50, exceeding the midpoint of our guidance range for the quarter by $0.06. Our EPS results were impacted primarily by the favorable operating results. On a GAAP basis, our earnings per share were $0.38. The GAAP results this quarter include both acquisition and integration costs associated with the Novellus transaction, as well as costs resulting from a customer bankruptcy filing. As has been our practice, the amortization of convertible note discounts are also included. A complete reconciliation of our GAAP to non-GAAP results can be found in today's press release. Our balance sheet remains strong with cash and short-term investments, including restricted cash and investments, of $2.6 billion versus $2.4 billion last quarter. During the quarter, we settled a structured share repurchase agreement and received $79 million in cash, and we also delivered cash from operations of $146 million in the March quarter versus $169 million in the December quarter. DSO for the quarter were 65 days, down from 72 days in the prior quarter, and inventory turns of 4.2 represented an improvement from the prior quarter end performance of 3.7 turns. Our deferred revenue this quarter grew by $54 million, to end March at $246 million, excluding approximately $19 million in shipments to Japanese customers that will revenue in future quarters. Noncash expenses include, among other items, $16 million per equity compensation and $23 million for depreciation and amortization. Capital expenditures were $28 million, and we exited the quarter with approximately 3,900 regular full-time employees. In closing and similar to the December quarter, our ability to buy back shares this quarter was very limited due to restrictions relating to the pending Novellus transaction. We've repurchased approximately 300,000 shares of our common stock for about $12.5 million and look forward to resuming more substantive share repurchases shortly after the May 10 Novellus shareholder vote. With that, I'll now turn it over to Martin for his perspective on the quarter. Martin B. Anstice: Thank you, Ernie. As we just articulated, Lam successfully delivered on its financial commitments for the March quarter. We achieved this performance while also executing key milestones towards our most important strategic objectives. Specifically, this includes significant momentum on the integration planning with Novellus and progress demonstrating results from continued investments designed to extend our technical differentiation and advance longer-term growth. The solid performance and execution, we believe, illustrate a high level of focus throughout the organization, and I would like to recognize and thank employees and the management teams of both companies for this extraordinary achievement and for laying the foundation for what we believe will be a very important year for the combined company. I will share more with you on each of these subjects shortly, but first, would like to refresh our views on the industry environments. Our view of wafer fabrication equipment spending has not materially changed since our last earnings call. We still expect spending within a range of $30 billion to $32 billion in 2012, and based on the plans our customers are communicating to us today, we would look for spending to be relatively balanced between the first and second half of the calendar year, with less customer concentration beyond the June quarter. Demand for leading-edge logic capacity continues to strengthen as IBM and fabless companies compete to supply power efficiency in the high performance devices for the mobile market. For the foundries, given the strong demand environments, we now project they will add between 85,000 and 90,000 new wafer starts per month of 32-, 28-nanometer capacity this year, which would translate into ending 2012 with capacity at this node of 220,000 to 240,000 wafer starts per month. Using 65-nanometer as a baseline, foundries will have added between 250,000 and 300,000 wafer starts per month of capacity throughout the life cycle of that node. Associated with IBM's transitioning more of their leading-edge capacity to foundries since the 45-nanometer node and the broader demand profile for consumer devices, we would expect total lifetime capacity added for the 28-nanometer node will exceed the historical range. Turning to the DRAM segments. Our view of the demand drivers has not changed considerably. We still anticipate muted PC unit growth, reflecting the hard disk drive shortages, a cautious corporate refresh cycle and subdued content growth. Consistent with our prior commentary, DRAM, WFE spending will be comprised almost entirely from capacity conversions in 2012. Considering this, we would expect that bit growth for 2012 is in the lower 30% range versus our prior view of the mid to upper 30% range. Needless to say, should PC volumes expand later in the year, supply shortages will likely lead to DRAM price increases and the manufacturers will typically begin adding new capacity at that time. This could occur towards the end of the year. For NAND, we continue to forecast bit growth in the range of 65% in 2012, with a higher proportion of capacity conversions versus new capacity additions relative to 2011. As a result, we are still projecting a modest decline in NAND's WFE spend year-over-year, which reflects our customers' plans to maintain a healthy balance of supply and demand. Combined, this supports a relatively stable total WFE spending outlook. This is the result of several factors, including the broadening of semiconductor demand drivers, consolidation among the customer base, cycle time improvements from the equipment companies and the prudent management to spending plans by the customer to align with the demand outlook. As a result, cycles are potentially shaped less by industry-induced supply, demand imbalances and more by changes in the macroeconomic environment and consumer confidence. At this point, the current economic outlook for 2013 suggests a more likely slightly positive macro environment relative to 2012, supporting the potential for stability and growth in our markets. Given that Lam's market share is relatively balanced across each of the market segments, with one exception, our continued execution would have us stand to benefit should the upside scenarios play out. Collectively, this is positive news. However, while the top-down view of WFE spending is characterized by relative stability there's quite a bit of change going on beneath the surface. For our customers, the mounting cost challenges we've described previously are driven in large parts by the levels of device complexity required to deliver lower power, longer battery life and increased functionality demanded by the consumer markets. For equipment suppliers, these trends present both opportunities and challenges, whereby success is predicated on the ability to partner with customers to quickly sell these increasingly complex technical and productivity challenges. Customer trust and partnership is ever more important. As we have talked about for most of the past year, now is a critical time for us to leverage our strength in developing solutions that address our customers' most critical technical challenges. We continue to see opportunities in each of our core product areas that should position us to execute against our 3- to 5-year market share objectives of a 3 to 5 percentage point gain in etch and 5 to 10 percentage points gain in single-wafer clean. In etch, we have held the leading position in the conductor space for more than a decade and believe that we are well positioned for future opportunities with the expansion of patenting techniques and the transition to FinFET structures. In each of these areas, the ability to tightly control feature dimensions and depth uniformity across the wafer is crucial for device performance, and we believe Lam is currently the market leader for critical patterning, gates and isolation applications across both memory and foundry segments. In dielectric etch, we are focused on strengthening our product and process capabilities to expand share over the next several years. Accordingly, in memory, we continue to focus on the next generation of high aspect ratio structures. We're leveraging our demonstrated strengths to position the company for growth opportunities as NAND's manufacturers plan to transition to the 3D structures. In Foundry/Logic, we are targeting growth in back-end-of-line interconnect applications by advancing our capabilities to deliver solutions for both performance and productivity. In single-wafer clean, our ability to tightly control the cleaning process has led to technical differentiation in a few key application areas. As a result, we currently hold leading positions in the areas of wafer backside and bevel cleaning and the back-end-of-line. We are developing capabilities necessary to expand our share in the front-end-of-line by translating some of our process tuning capabilities in etch and applying them to clean processing. We're also focused on enhancing the productivity of our clean systems to more effectively compete for a broader range of applications and expect to deliver differentiated process results to support accelerated market share momentum moving through the sub-20-nanometer node. Our product strategy remains focused on delivering best-of-breed technology and productivity solutions to our customers. This objective is core to our market share expansion strategy. As we pursue these opportunities, we have communicated to you our commitments to keeping quarterly operating expenses below $200 million for this calendar year. We are pleased to have delivered that in the March quarter and are reiterating that commitment relative to Lam's standalone business as we move forward. I'll share with you now our outlook for the June quarter: shipments of $725 million, plus or minus $25 million; revenues of $710 million, plus or minus $20 million; gross margin at 41.5%, plus or minus 1%; operating profit at 13.5%, plus or minus 1%; and earnings per share of $0.67, plus or minus $0.05. In anticipation of closing the transaction with Novellus, I would like to clearly state that the guidance I just provided represents projections for Lam as a standalone company. We expect to present our view for the combined company on our July conference call. Prior to opening this call for Q&A, I will provide a brief update on the status of the Novellus acquisition. As you may have read in our proxy statements, we have scheduled our Special Shareholder Meeting for May 10, and thus far, we have received regulatory approvals from all required countries with the exception of China. We continue to expect that the acquisition will close within the June quarter. At this point, integration planning is well underway and is progressing as planned. We've established an integration team comprised with executives and senior level employees from both companies and supplement facts, where valuable, with experienced external resources. We have completed an assessment of each company's culture, organizational structures and business processes in detail and determined there are more similarities than differences. We have made and communicated decisions relative to these subjects through both companies already. We have defined a set of objectives around prioritized areas of focus to begin immediately on day 1 following transaction closure, and as we've discussed in the past, ensuring this transaction is seamless for our customers remains a critical priority. We have validated our opportunity to achieve our target of $100 million in annualized costs synergies exiting 2013, which we plan to commence at some level immediately on closing and accelerate over the 6 quarter period. Through these activities, it is fair to say we are now more confident in the strategic rationale of this transaction and the value proposition we believe it brings our customers and shareholders. Given the expected timing for deal closure and our immediate focus on both integration and our customers, we have decided to hold our 2012 analyst event in the November time frame rather than during the SEMICON West conference this year. This move will give us the opportunity to present you a more comprehensive view of the combined company and our future growth plans. We are excited about the opportunities that this transaction presents for the combined company, and we look forward to keeping you updated over the second half of the calendar year on our progress. I would like to express once more my tremendous satisfaction for the company's accomplishments in the March quarter, a period which included a leadership transition, the start of significant integration planning for the single largest transaction in the company's history and an ever challenging industry environment. Our performance illustrates the strength of both our employee base and leadership team, which are obviously core to our success in the years to come. With that, Ernie and I will open the call for questions.

[Operator Instructions] Our first question is from the line of Satya Kumar with Credit Suisse. Satya Kumar - Crédit Suisse AG, Research Division: Martin, a couple of questions, firstly on what's happening in terms of the June quarter shipment outlook. It seems like related to your commentary a quarter ago, perhaps the June shipments are a little bit lower than I would've expected. Could you talk a little bit about the [indiscernible] you might have seen by the right segments in June, and specifically comment whether AFP demand is temporarily affected by potential bottlenecks in lithography [indiscernible] customers? Martin B. Anstice: I'm not sure I quite get the second part of your question, but certainly on the first part, as is always the case, the subtleties of the timing of requests by our customers, frankly, from one month to another and one week to another or one day to another is such that it's a little bit unhelpful sometimes trying to extract meaningful conclusions even from kind of quarterly progressions. And so I don't think there's a fundamental message for us to be communicating today relative to shipments momentum in the guidance that we've given for June. I do think that the shipments for Lam, certainly, as we're modeling that against the wafer fab outlook that we've communicated, we're expecting the shipments for Lam are approximately kind of equal first half and second half. And at a segment level, that would probably translate for us to have Foundry/Logic first half maybe in the mid-50s, a 55, 45 split approximately and memory maybe slightly in the opposite directions. So 47, 48 range for first half, 52 to 53 second half. So that's about the best that I can probably give you on the shipments at this time. Satya Kumar - Crédit Suisse AG, Research Division: That's helpful. And a quick follow-up you said that you're 32-nanometer, 28-nanometer capacity addition forecast by foundries has increased to 85 to 90k relative to 3 months ago. What were you thinking that they would add 3 months ago? And what exactly do you mean by modest decline in NAND CapEx. Could you quantify that? Martin B. Anstice: I think probably about 10,000 wafer starts is the estimate I give you an answer to the foundry outlook at this point compared to 3 months ago, and I missed the second part. Satya, sorry, what was that? Satya Kumar - Crédit Suisse AG, Research Division: Can you quantify what you mean by modest decline in NAND CapEx? Martin B. Anstice: Sure. Why don't we pick up the next question, and I'll look up that exact number for you and then, include them in the answer to the next question.

And our next question is from the line of Jim Covello with Goldman Sachs. James Covello - Goldman Sachs Group Inc., Research Division: Martin, Lam -- you guys in Lam have spoiled us over the years with tremendous incremental operating leverage. You've always had the best in the industry. And there is clearly operating leverage in the model, but not at the same rate that we've seen before. Is that strictly -- could we expect that kind of operating leverage, that same incremental drop-through to return as the customer base broadens out? Or are there other factors at work? Martin B. Anstice: So the answer to Satya's question is down about $1 million, so year-over-year that's modest statement. Relative to leverage, Jim, I think that there's clearly 2 things going on today. There's the conversation about leverage, and then, there's the conversation about customer concentration. And we worked really hard to deliver the same variability and cost structure today that we did last year, 2 years ago, 5 years ago, 10 years ago. The outsourcing initiative is still alive and well in our company. And to illustrate that point, when I look at the shipments momentum in the company, March over December, we had a pretty sizable increase in the shipments percentage of the company, and yet the underlying gross spending in the company associated with factory and field increased only by a single-digit percentage. So there's a very healthy statement of leverage in the kind of transactional base cost structure of the company. What is challenging for us and perhaps even more challenging for us in the midst of our peer equipment companies because of our kind of relative lack of position in certain segments is customer concentration. And we certainly were sitting here 3 months ago speaking to you about the fact that customer concentration was extraordinarily high in the March quarter. The outlook at that time had us conclude that by the time we got to June that would be kind of much more normalized, then we'd expect some pickup. And as I think everybody on the call knows that since that time, the public announcements that have been made by customers have actually kind of stretched the concentration into the June quarter. And that's why the message is, today what it is, I feel pretty good about the margin uptick for the company. I think when you look at kind of the sequential performance, March to June, that we've guided, the absolute dollars of revenue, that pickup is reasonable. But the headline still for the first half is customer concentration is still meaningfully above the average of last year. And when we look at the full year, I don't know that I would conclude that actually the full calendar year gets close to kind of the participation levels, broadly, that we saw in 2011. Meaning, that in spite of the fact that things get better, I don't think they get back to the same level of participation that we saw in 2011. And maybe just to frame that, our assumption on wafer fabrication equipment spending, so I kind of talked about an outlook of the year of 30 to 32. We're assuming the top 3 guys are in the $18 billion to $20 billion range combined.

And our next question is from the line of Stephen Chin with UBS. Stephen Chin - UBS Investment Bank, Research Division: Just a question, Martin, on the shipments to memory customers in the second half, I think you said being about 55% of the total. Is that kind of based on what the NAND customers are communicating to you now? And do you think there could be upside to that based on perhaps Windows 8 and maybe ultrabook releases in the second half of the year? And then, I have a follow-up question. Martin B. Anstice: Yes, I mean, just to be sure that you interpreted the numbers I stated a little earlier correctly, and you might well have done so I apologize here. But I was saying when I gave you some numbers on first half, second half memory that we were thinking about the 47, 48 level for memory first half and second half, 52, 53 range. And clearly, the outlook for the company is based on the complete sets of investments, DRAM and NAND. When we look at the memory segments, clearly DRAM is all about conversion and upgrades, and there's very little incremental capacity this year. I think, certainly, as we look at plants today, 20,000 wafer starts of addition in DRAM would probably on the optimistic side in outlook. So clearly when it comes to capacity adds, we're making an assumption today of about 130,000 wafer starts of additions, decent amount of upgrades. And in terms of upside, I would say there are some obvious moving parts. One of them is ultrabooks. And there appears to be, as best as I can tell, some pretty helpful AFP trajectories that might be timed well to be a catalyst for ultrabook demand around kind of back-to-school season. So I think we're sitting on the 800, 900 range and may be heading down to 800, 700 as a healthy catalyst. So there's plenty of room, clearly, for ultra books for SSD broadly as a percentage of mobile devices to gain momentum. But the price point is maybe still not quite where it needs to be. So we're assuming you have to be in the kind of $100 range to be a catalyst against the hard disk in solid state drives, and we're probably at about 140 to 110 depending on whether you take a commercial view of configurations versus the consumer. I think there is some upside in DRAM, but it's kind of too early to tell, frankly. And for me, feels much more about exactly what plays out second half in the hard disk space, how that plays out and impacts content because it appears like as kind of densities in hard disks have kind of contracted to manage the supply issues that it had a content consequence on DRAM as well. And I think there's some -- perhaps it can only get better, maybe that's my summary there. Stephen Chin - UBS Investment Bank, Research Division: Okay. And just a quick follow-up question. Does the June shipment guidance include customer pushouts or yield issues at the 28-nanometer node? And is that something that gives you some visibility in the second half of the year once customers exceeds yield issues? Martin B. Anstice: It's always a little hard to tell frankly, Stephen, because the customers are motivated not to make kind of yield-specific issues public as anybody. And so what we are communicating to you today is the full set of statements, the demand from customers for whatever purpose, either getting ahead of capacity needs or executing timely. I would say their motivations are today very much to add when they need it.

And our next question is from the line of Vishal Shah with Deutsche Bank. Vishal Shah - Deutsche Bank AG, Research Division: Martin, can you talk about your expectations for etch as a percentage of NAND WFE spending this year as you sort of think about some of the changing customer spending patterns? And also, how do you expect your performance to compare versus last year, especially now that customers -- larger customers is talking about spending less on equipment this year? Martin B. Anstice: I think to the first part of that question, the message today is very similar to the message that we communicated in the last earnings call. We do expect this to be a better year sequentially than last year around the proportion of wafer fab that is assigned to etch. Last year was about a 12% year, and we're assuming about 13%. And that's the byproduct of a bunch of things that we've talked about previously. So that I think in relative terms is a positive for the company. To your other point, there are some customer mix dynamics that I think are kind of net positive for us this year. And I would say a point or so of momentum is certainly not unrealistic to assume, at this point, around shipments market share related to that. And I think, secondarily, there are some emerging trends and many unanswered questions around, for example, which presents, perhaps not in this calendar year but in future calendar year, some opportunities for us.

Our next question is from the line of C.J. Muse with Barclays Capital. Christopher J. Muse - Barclays Capital, Research Division: I guess first question, Martin. I'm curious on your thoughts on the breadth of foundry spending today and kind of what you expect into the second half of calendar '12. And I guess, the context of the question is QUALCOMM, post close tonight, talking about shortages that they expect through the third quarter of the calendar year at 28-nanometer, not due to yield but due to capacity shortage. So curious what kind of impact that kind of comment is having on the breadth and I guess your change in what shipments have looked like for foundry in the second half versus, I guess, 1 month, 2 months, 3 months ago. Martin B. Anstice: Yes, I mean, I think, if you're breadth question is a question related to participation in the community of guys that could be adding capacity, I think it's the very broad level of investment today. And as I said a few months ago, we're assuming kind of a 55%, 56% first half; a 45%, 44% second half in terms of spending. And it's always extremely difficult, quite frankly, to separate capacity needs from yield needs because they're kind of one and the same thing. But we are assuming for the calendar year about 125,000 wafer starts of new capacity coming in, and a big part of that obviously is 28. And we're assuming that there's pretty healthy level of conversion by customers maybe up to the 40,000 to 50,000 wafer start level. So that's kind of the outlook we have right now for foundry. Christopher J. Muse - Barclays Capital, Research Division: Okay, very helpful. And as my follow up, you talked about the May 10 vote. And I guess, curious, how should we think about the timing of when you can get back into the market and repurchase -- start repurchasing shares. How does that fit in with the vote? Ernest E. Maddock: C.J., this is Ernie. Provided nothing unusual happens subsequent to the voting, by unusual I mean that if we go into the vote without China approval and it isn't obtained between the vote and 2 days after the vote, we expect to be in the market on Monday, May 14, I believe it is. If something unusual happens, i.e., China approves after the vote, it would delay it by a day or 2. But we're talking a matter of days after the vote that we would be in the market.

And our next question is from the line of Chris Blansett with JPMorgan. Christopher Blansett - JP Morgan Chase & Co, Research Division: Martin, I wanted to question you about the cost savings you see as you integrate the 2 companies. You had a lot of time now to really continue to work on the planning on that. What are your thoughts on confidence if the $100 million number's still valid or if there's actually more savings you're discovering? Martin B. Anstice: My confidence is pretty solid, frankly. And I mean, that's a very strong statement in the context of the reality, and the reality is we're not one company and so we still have something to learn, despite the fact that we have integration teams working together. I mean, we're certainly working through -- substantially working through concepts into very specific strategies and very detailed plans. That process will conclude in the next month or so. And certainly the areas of cost reduction that we had identified and previously communicated still appear to be valid. And until we communicate something different, then the presumption is the $100 million that we have stated is the plan and the commitment and one of confidence by the company. Christopher Blansett - JP Morgan Chase & Co, Research Division: Okay. And then the second question I had is related to your commentary about a very balanced year. It seems like you may be a little more positive about the second half than maybe you were on the prior earnings call. I wanted to get your feel. Have you seen -- is your confidence on the balance of the year improved since that timeframe, just to kind of get a relative comparison? Martin B. Anstice: I think in relative terms it's actually quite similar. And I don't think there's, in the full-year, a big story. But the big customer concentration story that we're communicating today is the fact that June didn't quite play out in the way that we anticipated 3 months ago due to the announcements that we're in the public domain. They kind of prolonged the concentration message. And I think for the calendar year, the outlook today is more or less the same in terms of mix of participating customers as it was 3 months ago.

Our next question is from the line of Terence Whalen with Citi. Terence R. Whalen - Citigroup Inc, Research Division: The first question is on longer-term discussions with your foundry customers. Specifically, how are your conversations with foundry customers around 20-nanometer evolving? And what's your expectation for the initial ramping of foundry 20-nanometer? Martin B. Anstice: Relative to conversations, I'm not sure the conversations we're having are that much different than the conversations that you're probably having reading public announcements. I mean, I think certainly the big guys are communicating emerging demand for them to kind of begin to install that capacity and kind of tape outs are certainly kind of imminent. The equipment selection decisions are right on us. I mean, they're on us, some of them are behind us, and some of them are ahead of us. So there's clearly an expectation that there is some 20-nanometer qualification activities towards the back of the calendar year. And I would expect kind of production to occur in the '13 time frame. But if there is a statement of momentum, my instinct is it's a fairly positive one at this point. Terence R. Whalen - Citigroup Inc, Research Division: Okay, great. That's helpful. Then my follow-up question is around single-wafer clean. Single-wafer clean, in recent market share data from Gartner, was actually one of the fastest-growing areas of equipment. I wanted to understand what you feel like the dynamics are regarding competition in single-wafer clean and your margin of that business as well. Martin B. Anstice: Well, this is one of the sad realities, is there's almost no segment -- or there is no segment in this industry which doesn't have a tough competitive dynamic, so we have tough competitive period. The rationale, obviously, for us having a plain clean is all about an adjacent strategy for the marketplace is considerably more fragmented than the etch marketplace. The competitive dynamic is tough. The growth, as you quite rightly pointed out in your question, is occurring at a pace that is faster than over all WFE growth. And that reflects to, a large extent, the transitions that have been occurring now for the last 2 or 3 years, particularly at the front end from batch- to single-wafer processing. That is a trend that is kind of reaching the end of its most obvious kind of transition. So I think maybe in the '13 or '14 timeline, we'll see a single-wafer clean segment that is much more in tune with the pace of growth as the rest of wafer fab. As I articulated in my prepared comments, I feel like we've got a very competitive product portfolio, and we have meaningful strength and presence in the backside bevel and back-end-of-line clean applications. The area of focus for us, which unfortunately coincides with significant amounts of this batch to single wafer transition, is we are addressing some gaps in terms of products capability that, I think, in the 20-nanometer or sub-20-nanometer nodes spending situations will give us a lot more upside. But front-end-of-line is clearly not the competitive strength for our company today that it needs to be, that this it isn't the competitive strength that our back-end-of-line segment in clean is.

And our next question is from the line of Edwin Mok with Needham & Company. Edwin Mok - Needham & Company, LLC, Research Division: So just to be clear in terms of your guidance between Foundry/Logic, DRAM and NAND, how do you see those customer -- how do you see, at least sequentially, directionally they're going change going forward? Martin B. Anstice: Well, relative to our shipment guidance, we didn't actually kind of provide a segmentation per se. But slightly more than 50% of the shipments guidance was in the foundry space. NAND is approximately at the 25% level, and DRAM is approximately at the 20% level. So that's kind of the segment story as it's reflected in the guidance today. And I think you're generally aware of kind of the recent inflection points and progressions. And clearly, the foundry is positive. Clearly, we've articulated a little bit more a cautious outlook in terms of bit growth and DRAM today than we did 3 months ago. So those were kind of 2 things I would call out in terms of changes. Edwin Mok - Needham & Company, LLC, Research Division: Okay, great. And now a follow-up question on gross margins. So you articulated that it's mostly due to this high-level customer concentration, if they continue into the June quarter. I was wondering is that a way for you to kind of think about -- as we get in the second half, the concentration would be updated, do you -- how do you kind of see your gross margin can trend assuming that you're likely running at the same amount of revenue and shipment level for the company? Martin B. Anstice: I can see it trending up. Does that help you? There's -- clearly, I try to watch for questions like that. It's always a byproduct of specific mix in products and in customers and one of that's fraught with risk and complexity as I was speaking to. But the obvious headline, I hope, for everybody is the single biggest influence over today's margins relative to those of, let's say, last year at similar levels of output is the customer concentration. So if I were you attempting to model an answer to that question, I'd be looking at the recent past, comparing it today and extracting that. The recent past is not an unreasonable data point for the second half of the year. Now I don't think calendar '12 overcomes the customer concentration that exists in the first half. I think we'll still have customer concentration in calendar '12 that's greater than '11, and that shouldn't be as right to everybody. I think we all know what happened in that space in the industry, and it's the reality that every equipment company is now wrestling with.

And our next question is from the line of Patrick Ho with Stifel, Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Martin, just going back to memory in the second half of the year. Are your thoughts still the same as it was last quarter where the tipping point is above the big growth assumptions that you have for DRAM in the 30% -- or the mid 30% range and for NAND at 65%? If it's above that, that's when they'll start looking at added capacity? Or do you need more significant differences between those bit growth rates for new capacity addition? Martin B. Anstice: I think, it's -- I mean, I think technically it's the same answer that I gave last quarter, although the number is slightly different. I mean, we -- I think I answered very specifically the last time. I think anything above the 40% bit growth drives capacity. I think today I'd say anything above 35% drives capacity. One of the interesting dynamics that I think we're all sensitive to is although we're looking at this thing called DRAM and saying bit growth of the 30% to 35% range, if you kind of get underneath that in each of the segments, PC DRAM bit growth this year is probably only about 15%. And then, you look at service work stations, cellphones and set-top boxes, each one of those has a bit growth expansion of more than 60, and the DRAM bit growth in tablets is above 100%, at least in terms of the modeling that we have. And so it's not going to take that much but something kind of needs to give clearly, and there's a mix of consumer dynamics with ultrabooks and a broader kind of notebook conversation. There's tablets and the broader notebook, and there's a supply uncertainty that makes it difficult to predict. But I would certainly say we would expect, based on what we know, that capacity additions occur on bit growth above or about 35%. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Great, that's helpful. And maybe moving on to EUV and the potential implications for Lam as a whole, have you seen any changes in terms of your customer base in terms of qualifying additional tool sets or their changes in recipes given the delays in EUV over, say, the last 3 to 6 months? Martin B. Anstice: No. I think we have not seen material changes because, clearly, as we've spoken to, I think, now for most of the last year, the level of uncertainty that exists not just in the area of EUV and resulting kind of patterning scheme decisions, but materials planar to 3D structures, and if you want to throw in a wafer side, throw in that as well. There's clearly a ton of uncertainty in the customers parallel processing, a whole range of things, including trying to manage the risks. They don't understand everything they need to understand on the economics of EUV compare and contrast it to what's happening and making sure they're prepared to deliver what their customers are asking for on time. So that hasn't kind of fundamentally changed in the last few months, and frankly, I don't expect it to for the rest of this year. I think that reality of uncertainty will be with us right until the end.

And our next question is from the line of Mark Heller with CLSA. Mark Heller - Credit Agricole Securities (USA) Inc., Research Division: Just had a question on -- looks like, at least according to Gartner, that silicon etch share, there was some share loss of there in 2011. How much of that was due to customer mix? And how much of that can be reversed, do you think, in 2012? And will it be entirely due to mix? Or will it be through share gains there? Martin B. Anstice: We're, obviously, as I think probably we've consistently messaged in the last 5 or maybe even 10 years, we're not a big fan of trying to explain someone else's presentation of market share data because there's so much complexity with the assumptions. But as it turns out, the kind of basic headline both in relative terms, not necessarily on an absolute basis, but it comes out of Dataquest this year, is not that different from our own. To answer your question very specifically, the majority of what shows up on that slide is a byproduct of customer mix. And as spending customer mix changes, then the effect is immediate. Mark Heller - Credit Agricole Securities (USA) Inc., Research Division: Okay. And is -- what's your view of -- looking to 2012, but beyond just customer mix, do you expect any share gains beyond just mix effects? Martin B. Anstice: Yes, I mean I have said in the prior call that we've had a great run over a 10-year period, frankly, of kind of picking up healthy chunks of market share. I think we're in a more modest year. And I still believe that the plans of record for the company targeting 3 to 5 percentage points of share gain in etch over 3 to 5 years is as valid today as it did the first time we talked about it. So we're very focused as the byproduct to the investments we're making in establishing competitive differentiation in technology turns and productivity turns. And I do expect that we will gain some share in the transition from end to end plus one.

Our next question is from the line of Krish Sankar with Bank of America Merrill Lynch. Krish Sankar - BofA Merrill Lynch, Research Division: Martin, not to harp on the customer concentration point, but just wondering if in the second half the memory guys do not come back to place orders, is it fair to assume that June customer concentration continues into the back half. Martin B. Anstice: Well, if the customer mix in the back half of the year is the same as June, then probably yes is the answer to that. That's not what we expect. That's not what our customers are telling us. That's not what they're telling you, as best as I can tell in terms of the public announcements. But technically, if the mix in the second half of the year is the same as the mix that we see in June and the March quarter, then mathematically, it plays out in the same way. Now we're going to work our butt off dealing with cost structures, should that play out, to try and minimize the effects. But frankly, that's not what we're seeing today as an outlook. Krish Sankar - BofA Merrill Lynch, Research Division: Got it. And then on the NAND side, it seems like eventually many of the NAND guys have started moving to the 3D structures. Have you guys quantified what is the incremental opportunity for you when you go into NAND for both the etch and the clean product? Martin B. Anstice: Yes. I mean, we have a view that etch and clean both stand to benefit from the transition, and that's a process time commentary, as well as a process steps commentary for 3D devices, and it's always incredibly difficult to try and speak to a consequence in terms of size of a marketplace. And the first thing that we can do, which is maybe the only thing I can speak to today, is to communicate how we believe the amount of process time will modify going from a plainar to 3D structure in NAND. And we believe that in etch and in single-wafer clean, process times could increase by 15% or so on the device integration schemes that we're working with customers on today. Now whether that translates itself into 15% increase in the TAM really is a byproduct of what happens to other segments and their process times. And it's a byproduct of the pricing on the systems that are sold to satisfy those capacity needs. But at a very basic process commentary, all things being equal, we think it's beneficial, and we think it's beneficial to the tune of about 15%.

And our next question is from the line of Jagadish Iyer with Piper Jaffrey. Jagadish K. Iyer - Piper Jaffray Companies, Research Division: Two questions, Martin and Ernie. First one, this morning, ASML was very cautious on NAND spending for the remainder of 2012. Clearly, the NAND makers have had a free bit pricing environment. What gives you the conviction that NAND makers would spend in the second half? And if so, are you seeing spending by all the 4 major NAND spenders? And I have a follow-up. Martin B. Anstice: Yes. It's a little difficult to kind of compare and contrast the commentary from one company or another because we know our own assumptions on spending. We don't necessarily know ASML's. We're confident about our own because we dialogue with customers. And the segment bit growth for cellphones is pretty solid. It's probably above 100%, and the tablet bit growth is probably about the 60% level. And you've got some nice momentum in solid state drives as well, with probably about slightly in excess of 100% bit growth in that area as well. So I think there's kind of meaningful catalysts on the demand side of the equation. And I think the technical answer to your question is everybody participating, is yes. And whether they are participating more or less than their perfect plans or their plans I think to be determined. There's a lot of unanswered questions ahead of us in terms of economics. But to your point, it's a pretty healthy pricing in the cost environment today, and people are making money and long may that continue. Jagadish K. Iyer - Piper Jaffray Companies, Research Division: The second question is you talked about 13 application wins, I think, in your last quarter commentary. I just wanted to find out on the foundry side, how much of that would likely translate into some share -- meaningful share gains this year? Or is it likely going to be next year? Martin B. Anstice: This year -- as I said a few moments ago, this year is a pretty kind of modest year for us in terms of share expansion. There's a lot of uncertainty in the marketplace and a lot of questions getting answered towards the back end of the year. Market share headline, for me, is very simple. We're still absolutely committed to the 3 to 5 objective for etch and the 5 to 10 objective for clean over the next 3 to 5 years. So the previously communicated objectives we still believe about it. And I think we get some modest traction on customer mix this year. But we're focused on getting differentiated more in the future than in the past and gaining share.

Our next question is from the line of Ben Pang with Caris & Company. Benedict Pang - Caris & Company, Inc., Research Division: Two questions. One on the 20-nanometer foundry applications. You commented that there's still some design wins to add. What area in terms of etch applications do you think you had the biggest opportunity in terms of incremental design wins? Martin B. Anstice: I think by virtue of the market share strength of the company, the incremental opportunity is, no doubt, going to be in dielectric. So we're still focused on gaining share in conductor, and we're blessed at some level by the weighting of conductor against dielectric kind of biasing the natural strength of the company. But kind of back-end-of-line dielectric is clearly the focus area for the company instead of the market share expansion. And the reality is a meaningful proportion of 20-nanometer positions have been made at least in terms of their DTOR selections and how much of those selections are ultimately influenceable and the transition into a fab is anyone's guess at this point. Benedict Pang - Caris & Company, Inc., Research Division: And my follow-up is we seem to be seeing some acceleration in the node of option for the foundries. And you had earlier commented on your run rate for your OpEx. Do you see any change beyond 2012 or fiscal '13, either way, in terms of your R&D to accommodate the fact that it looks like these foundries are more aggressive in transitioning technology nodes? Ernest E. Maddock: It's way too early to tell. Benedict Pang - Caris & Company, Inc., Research Division: Okay. But what's the non-GAAP R&D for this quarter? Ernest E. Maddock: Non-GAAP R&D? I'll have to get back to you on that, Ben.

And our final question is from the line of Weston Twigg with Pacific Crest Securities. Weston Twigg - Pacific Crest Securities, Inc., Research Division: Just real quickly. You gave us a 3- to 5-year share gain view for etch market share. I'm just curious. In that same time frame, what do you view the single biggest driver of an increase in etch demand in terms of new process technologies, which is [indiscernible] or FinFET or double patterning? Martin B. Anstice: The biggest? I mean, I think the 3D scheme that we touched on at least already in terms of the VNAND structure, obviously the FinFET, has a very similar profile, honestly, of kind of process expansion in the marketplace. I'd probably pick those 2. And I think patenting generally as an opportunity for the company, given the statements that the participate in. And a large part of that particularly in the QPT space is kind of still ahead of us. So there's almost kind of nothing of substance at least in the LELE scheme today in the marketplace, so I'd pick 3D transition, frankly, as the biggest catalyst. Weston Twigg - Pacific Crest Securities, Inc., Research Division: Okay. By 3D are you referring to 3D NAND -- vertical NAND structures? Or are you sort of bucketing... Martin B. Anstice: I'm referring to that, yes, yes and the plainar to FinFET transition for logic.

And that does conclude the question-and-answer session. I would now like to turn the call back over to management for closing remarks.

I'd like to thank you all for joining us today. I'll remind you that an audio replay of our call today will be available on our website later this afternoon. And with that, I'll conclude the call.

Ladies and gentlemen, this concludes the Lam Research Corporation March 2012 Quarterly Results Conference Call. You may now disconnect. Thank you for using AT&T Conferencing.