Question · Q2 2026
Joe Quattrocki sought to understand the impact of supply constraints on KLA's first-half growth potential, asking if it was primarily due to DRAM or other components like optics, and how much growth was being left on the table. He also asked about the trajectory of gross margin, specifically if March would be the bottom, and the ability to pass through higher component costs or reprice backlog.
Answer
CEO Rick Wallace identified optical components as the biggest long lead-time aspect, affecting first-half shipments based on decisions made in mid-2025. He stated KLA is not missing business but lead times are extending, and customers are also constrained by fab readiness. CFO Bren Higgins added that March is likely the low point for gross margins, trending north thereafter. He explained that KLA's pricing model is value-oriented, not cost-driven, and they prioritize securing supply. He also noted that the tariff burden is expected to diminish over 2026.
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