KLA (KLAC) 53rd Annual JPMorgan Global Technology, Media and Communications Conference summary

Market environment and growth outlook

• Strong growth in wafer fab equipment (WFE) driven by leading-edge investments, especially at the 2-nanometer node and high-performance computing applications.

• Advanced packaging is a major new growth area, with revenues expected to rise from $500 million to $850 million, reflecting a 70% increase.

• WFE market is up mid-single digits year-over-year, with process control outpacing WFE and KLA's growth in the low double digits.

• Service business is growing at about 10% despite some access issues in China, providing a stable revenue stream.

• Gross margin is modeled at 62.5%, with operating margins at the higher end of the 40–50% leverage target.

Industry trends and drivers

• WFE intensity has structurally increased since the mid-2010s, supporting higher capital investment and less cyclicality.

• Introduction of EUV technology reignited scaling and design activity, especially in logic, driving process control intensity.

• Shift toward high-performance compute and integration with memory is creating new challenges and opportunities in process control and packaging.

• KLA's share of WFE has grown from the low 6% range to nearly 8%, reflecting increased relevance.

• Process control is expected to continue outgrowing WFE due to rising complexity and risk in advanced nodes.

Market share and competitive positioning

• KLA outgrew the process control market, gaining 30 basis points of share and maintaining a strong lead in five of six major subsegments.

• Significant share gains in electron beam (e-beam) inspection, doubling revenues and gaining 700 basis points of share.

• Optical inspection remains dominant, but e-beam is growing faster and is increasingly adopted for specific use cases.

• Advanced packaging and e-beam inspection are key areas for future share gains.

• KLA's portfolio approach and ability to address both process control and specialty semiconductor tools underpin its market strength.