97825dddb4e6ae06f565834e7f98b2a4ab8d7c58a1bada4c2677ce7b4cb475f4

c73c0f0c5169874ec7746ee07d815e4afd61758fc29ba42843133674c045fa7a

KLA Corporation is a leading supplier of process control and yield management solutions for the semiconductor and related electronics industries **[0000319201-24-000021_klac-20240630.htm:6]**. The company provides a range of inspection, metrology, and software products, along with services that help manufacturers optimize their production processes **[0000319201-24-000027_klac-20240930.htm:45]**. KLA is organized into three main segments: Semiconductor Process Control, Specialty Semiconductor Process, and PCB and Component Inspection **[0000319201-24-000021_klac-20240630.htm:6]**. Additionally, KLA's service business is a significant part of their operations, driven by long-term subscription contracts **[KLAC_3410568_4]**.

1. **Semiconductor Process Control** - Offers a comprehensive portfolio of inspection, metrology, and software products, as well as related services, to help manufacturers achieve target yields throughout the fabrication process **[0000319201-24-000027_klac-20240930.htm:45]**.
2. **Specialty Semiconductor Process** - Focuses on advanced vacuum deposition and etch process tools used by manufacturers of microelectromechanical systems (MEMS), radio frequency (RF) communication semiconductors, and power semiconductors for automotive and industrial applications **[0000319201-24-000027_klac-20240930.htm:45]**.
3. **PCB and Component Inspection** - Provides products and services for inspecting, testing, and measuring PCBs, IC substrates, and packaged ICs **[0000319201-24-000027_klac-20240930.htm:45]**.

a40519d8377a30f79ce6fdce8121408c7453d131932a08d69f15fceb14d09430

Adjustments for Non-Cash Items [USD, Thousands]

Stock-Based Compensation [USD, Thousands]

Changes in Working Capital [USD, Thousands]

Capital Expenditures (CapEx) [USD, Thousands]

Proceeds from / Repayments of Debt [USD, Thousands]

Share Repurchases [USD, Thousands]

Dividend Payments [USD, Thousands]

Net Change in Cash [USD, Thousands]

a190ae8cef95fb88161546858ee7f92a40db407fdd3a20bd0927871e3a4c5a8c

| Metric (USD Thousands) | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
|------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Semiconductor Process Control** | **2,575,151**  **[0000319201-24-000027_klac-20240930.htm:44]**  | **2,307,994**  **[0000319201-24-000018_exhibit991earningsrelease7.htm:6]**  | **2,096,005**  **[0000319201-24-000012_klac-20240331.htm:50]**  | **2,194,079**  **[0000319201-24-000006_klac-20231231.htm:48]**  | **2,135,478**  **[0000319201-23-000039_klac-20230930.htm:45]**  | N/A | **2,171,557**  **[0000319201-23-000020_klac-20230331.htm:49]**  | **2,657,395**  **[0000319201-23-000010_klac-20221231.htm:51]**  |
| **Specialty Semiconductor Process** | **128,334**  **[0000319201-24-000027_klac-20240930.htm:44]**  | **121,268**  **[0000319201-24-000018_exhibit991earningsrelease7.htm:6]**  | **130,649**  **[0000319201-24-000012_klac-20240331.htm:50]**  | **150,065**  **[0000319201-24-000006_klac-20231231.htm:48]**  | **126,719**  **[0000319201-23-000039_klac-20230930.htm:45]**  | N/A | **128,438**  **[0000319201-23-000020_klac-20230331.htm:49]**  | **158,085**  **[0000319201-23-000010_klac-20221231.htm:51]**  |
| **PCB and Component Inspection** | **137,983**  **[0000319201-24-000027_klac-20240930.htm:44]**  | **140,017**  **[0000319201-24-000018_exhibit991earningsrelease7.htm:6]**  | **133,399**  **[0000319201-24-000012_klac-20240331.htm:50]**  | **143,032**  **[0000319201-24-000006_klac-20231231.htm:48]**  | **136,043**  **[0000319201-23-000039_klac-20230930.htm:45]**  | N/A | **131,923**  **[0000319201-23-000020_klac-20230331.htm:49]**  | **169,959**  **[0000319201-23-000010_klac-20221231.htm:51]**  |
| **Total Revenue** | **2,841,468**  **[0000319201-24-000027_klac-20240930.htm:44]**  | **2,569,279**  **[0000319201-24-000018_exhibit991earningsrelease7.htm:6]**  | **2,360,053**  **[0000319201-24-000012_klac-20240331.htm:50]**  | **2,487,176**  **[0000319201-24-000006_klac-20231231.htm:48]**  | **2,398,240**  **[0000319201-23-000039_klac-20230930.htm:45]**  | N/A | **2,431,918**  **[0000319201-23-000020_klac-20230331.htm:49]**  | **2,985,439**  **[0000319201-23-000010_klac-20221231.htm:51]**  |

fc64ca73e99edd476a139c3dfbdd7558f960358ee11149858e74671292a2f38e

1. **Given that your gross margin is forecasted to decline to 61.5% plus or minus 1% in the September quarter**  **[KLAC_3394149_2]** , can you elaborate on the **weaker anticipated product mix** and whether you expect further margin pressure in the coming quarters?
2. **Your 12-month shippable RPO decreased by about $70 million quarter on quarter**, remaining flattish compared to last quarter  **[KLAC_3394149_24]** ; what factors contributed to this decline, and how confident are you in bookings increasing over the next few quarters?
3. With **China revenues expected to remain relatively flat**  **[KLAC_3394149_14]** , while peers indicate that **China mature nodes are in a digesting mode and calendar Q1 was the peak**  **[KLAC_3394149_14]** , are you anticipating any slowdown in China sales into next year, and how might this impact your overall growth?
4. **The revenue guidance range for the September quarter has widened to plus or minus $150 million from the usual $125 million**  **[KLAC_3394149_11]** ; does this reflect increased uncertainty or volatility in your business, and can you provide more color on the factors influencing this wider range?
5. **Advanced packaging revenue run rate has increased to $500 million from $400 million three months ago**  **[KLAC_3394149_15]** ; is this growth primarily due to market expansion, or are you gaining share in new markets like macro inspection where competitors have traditionally been stronger, and how sustainable is this growth?

b5de6b62697f42a603bbf1c6ac18741d0a836e52318a376b75086f7d1610fe0a

c57ae12f457decdc7322b3cd4324f5c74cc842154e9f86ef1243e5e06909afde

1320a44af21df21db2e545baaeaef2b124a3216463f232688c5f80c47bc758cf

- Applied Materials, Inc. - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers  **[0000319201-24-000021_klac-20240630.htm:17]** .
- ASML Holding N.V. - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers  **[0000319201-24-000021_klac-20240630.htm:17]** .
- Hitachi High-Technologies Corporation - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers  **[0000319201-24-000021_klac-20240630.htm:17]** .
- Onto Innovation, Inc. - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers  **[0000319201-24-000021_klac-20240630.htm:17]** .
- Lasertec, Inc. - Competitors in technologically advanced process control, process-enabling and yield management solutions used by semiconductor and electronics manufacturers  **[0000319201-24-000021_klac-20240630.htm:17]** .

f9480f18dfd403abecd471a3a2ca557c4701380738f0c0c11ef286e1d27c063c

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: Q1 2025
- **Guidance**:
  - **Total Revenue**: $2.75 billion, plus or minus $150 million  **[KLAC_3394149_2]** .
  - **Foundry/Logic Revenue**: Approximately 80% of semiconductor process control systems revenue  **[KLAC_3394149_2]** .
  - **Memory Revenue**: Approximately 20% of semiconductor process control systems revenue, with DRAM making up about 83% of the segment mix and NAND the remaining 17%  **[KLAC_3394149_2]** .
  - **Gross Margin**: 61.5%, plus or minus 1 percentage point  **[KLAC_3394149_2]** .
  - **Operating Expenses**: Approximately $565 million  **[KLAC_3394149_2]** .
  - **Other Income and Expense Net**: $34 million expense  **[KLAC_3394149_3]** .
  - **GAAP Diluted EPS**: $6.69, plus or minus $0.60  **[KLAC_3394149_3]** .
  - **Non-GAAP Diluted EPS**: $7, plus or minus $0.60  **[KLAC_3394149_3]** .
  - **Fully Diluted Share Count**: Approximately 135 million shares  **[KLAC_3394149_3]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: June quarter of 2024
- **Guidance**:
  - **Revenue**: $2.5 billion, plus or minus $125 million  **[KLAC_3380803_2]** .
  - **Foundry/Logic Revenue**: Approximately 82% of semiconductor process control systems revenue  **[KLAC_3380803_2]** .
  - **Memory Revenue**: 18% of semiconductor process control systems revenue, with DRAM making up about 78% of the segment mix and NAND the remaining 22%  **[KLAC_3380803_2]** .
  - **Non-GAAP Gross Margin**: 61.5%, plus or minus 1 percentage point  **[KLAC_3380803_3]** .
  - **Non-GAAP Operating Expenses**: Approximately $550 million  **[KLAC_3380803_3]** .
  - **Non-GAAP Other Income and Expense**: Net of $38 million expense  **[KLAC_3380803_3]** .
  - **GAAP Diluted EPS**: $5.66, plus or minus $0.60  **[KLAC_3380803_3]** .
  - **Non-GAAP Diluted EPS**: $6.07, plus or minus $0.60  **[KLAC_3380803_3]** .
  - **Fully Diluted Share Count**: Approximately 135.4 million shares  **[KLAC_3380803_3]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: March quarter of 2024
- **Guidance**:
  - **Revenue**: $2.3 billion, plus or minus $125 million  **[KLAC_3370953_3]** .
  - **Revenue Mix**:
    - Foundry/logic: Approximately 60% of Semi Process Control systems revenue.
    - Memory: 40% of Semi Process Control systems revenue, with DRAM making up about 85% of the segment mix and NAND the remaining 15%  **[KLAC_3370953_3]** .
  - **Non-GAAP Gross Margin**: 61.5%, plus or minus 1 percentage point  **[KLAC_3370953_3]** .
  - **Operating Expenses**: Approximately $545 million, with an expected incremental growth of $5 million to $10 million per quarter beyond the March quarter  **[KLAC_3370953_3]** .
  - **Tax Rate**: 13.5% effective rate for modeling purposes  **[KLAC_3370953_3]** .
  - **Other Income and Expense, Net**: $45 million  **[KLAC_3370953_3]** .
  - **GAAP Diluted EPS**: $4.93, plus or minus $0.60  **[KLAC_3370953_3]** .
  - **Non-GAAP Diluted EPS**: $5.26, plus or minus $0.60  **[KLAC_3370953_3]** .
  - **Fully Diluted Share Count**: Approximately 135.6 million shares  **[KLAC_3370953_3]** .

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: N/A
- **Guidance**: The documents do not provide specific guidance from KLA's Q1 2025 earnings call. However, they include guidance for the September quarter of 2024, which is as follows:
  - **Total Revenue**: $2.75 billion, plus or minus $150 million  **[KLAC_3394149_2]** .
  - **Gross Margin**: 61.5%, plus or minus 1 percentage point  **[KLAC_3394149_2]** .
  - **Operating Expenses**: Approximately $565 million  **[KLAC_3394149_2]** .
  - **Other Income and Expense Net**: $34 million expense  **[KLAC_3394149_3]** .
  - **GAAP Diluted EPS**: $6.69, plus or minus $0.60  **[KLAC_3394149_3]** .
  - **Non-GAAP Diluted EPS**: $7, plus or minus $0.60  **[KLAC_3394149_3]** .
  - **Fully Diluted Share Count**: Approximately 135 million shares  **[KLAC_3394149_3]** .

Note: The guidance for Q1 2025 is not explicitly detailed in the documents, and the period for which guidance was provided in the Q1 2025 earnings call is not available.

593d17c527bff3c97268dacebab1b7cf418ecc38e38b559d9200dc0fe581e144

- Total Revenue: $3,076.851 million (+24% YoY)  **[0000319201-25-000004_exhibit991earningsrelease1.htm:7]**   
- Semiconductor Process Control: $2,755.743 million (+26% YoY)  **[0000319201-25-000004_exhibit991earningsrelease1.htm:7]**   
- Specialty Semiconductor Process: $160.407 million (+7% YoY)  **[0000319201-25-000004_exhibit991earningsrelease1.htm:7]**   
- PCB, Display and Component Inspection: $161.080 million (+13% YoY)  **[0000319201-25-000004_exhibit991earningsrelease1.htm:7]**   
- Services: $667.389 million (+18% YoY)  **[0000319201-25-000004_exhibit991earningsrelease1.htm:5]**   
- Operating Income: $1,054.7 million (**+79% YoY**)  **[0000319201-25-000004_exhibit991earningsrelease1.htm:8]**   
- Net Income: $824.527 million (+42% YoY)  **[0000319201-25-000004_exhibit991earningsrelease1.htm:8]**   
- Diluted EPS: $6.16 (+44% YoY)  **[0000319201-25-000004_exhibit991earningsrelease1.htm:8]**   

4b1247265ce8ef1baada8983c88e6caff97f24c779878df267ecb8df52684c2b

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

| Name                  | Position                                                                 | Start Date          | Short Bio                                                                                                                                                                                                                                                                                                                                                      |
|-----------------------|--------------------------------------------------------------------------|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Richard Wallace       | President and Chief Executive Officer                                    | January 2006        | Richard Wallace has been serving as the **President and Chief Executive Officer** of KLA Corporation since **January 2006**. He began his career at KLA Instruments in **1988** as an applications engineer and has held various general management positions throughout his tenure. Wallace has been with the company for **36 years** as of 2024  **[0001193125-24-224794_d849367ddef14a.htm:22]** **[0001193125-23-239572_d538596ddef14a.htm:23]** .             |
| Bren Higgins          | Executive Vice President and Chief Financial Officer                     | August 2013         | Bren Higgins has served as **KLA's Executive Vice President and Chief Financial Officer since August 2013**. He oversees the company's finance operations, global manufacturing operations, and investor relations. He has held various financial and investor relations positions since he began his tenure at the company in 1999  **[0001193125-24-224794_d849367ddef14a.htm:38]** .                                |
| Ahmad Khan            | President, Semiconductor Process Control, Electronics, Packaging, and Components, and KLA Instruments | July 2024           | Ahmad Khan has been serving as **President, Semiconductor Process Control, Electronics, Packaging and Components, and KLA Instruments** at KLA since **July 2024**. He joined KLA in 2003 and has held various strategic management positions. Prior to KLA, he spent nine years at Applied Materials  **[0001193125-24-224794_d849367ddef14a.htm:38]** **[0001193125-23-239572_d538596ddef14a.htm:39]** .                                                   |
| Oreste Donzella       | Executive Vice President and Chief Strategy Officer                       | July 2024           | Oreste Donzella has been with KLA since **1999** and has held various positions. He currently serves as the Executive Vice President and Chief Strategy Officer, a role he has held since **July 2024**. He has over 34 years of experience in the semiconductor industry  **[0001193125-24-224794_d849367ddef14a.htm:39]** **[0001193125-24-224794_d849367ddef14a.htm:38]** .                                                                                 |
| Mary Beth Wilkinson   | Executive Vice President, Chief Legal Officer, and Corporate Secretary    | September 2020      | Mary Beth Wilkinson has served as the **Executive Vice President, Chief Legal Officer, and Corporate Secretary** of KLA Corporation since **September 2020**. She is responsible for advising on legal, compliance, and corporate governance matters and oversees cybersecurity for the company  **[0001193125-24-224794_d849367ddef14a.htm:40]** **[0001193125-23-239572_d538596ddef14a.htm:40]** .                                                          |
| Brian Lorig           | Executive Vice President, Global Support and Services                     | August 2019         | Brian Lorig has served as **Executive Vice President, Global Support and Services** at KLA since **August 2019**. He joined the company in 1998 and has held various leadership roles, including Senior Vice President and General Manager of the Global Support and Services organization  **[0001193125-24-224794_d849367ddef14a.htm:40]** **[0001193125-23-239572_d538596ddef14a.htm:40]** .                                                               |
| Virendra Kirloskar    | Senior Vice President and Chief Accounting Officer                        | March 2008          | Virendra Kirloskar has served as the **Senior Vice President and Chief Accounting Officer** of KLA Corporation since **March 2008**. He rejoined the company as Vice President and Corporate Controller in May 2003 and has held various finance positions within KLA from 1993 to 1999  **[0001193125-24-224794_d849367ddef14a.htm:40]** **[0001193125-23-239572_d538596ddef14a.htm:41]** .                                                                  |
| Oreste Donzella       | Part-time Senior Advisor                                                 | April 14, 2025      | Oreste Donzella will transition to a part-time Senior Advisor role starting **April 14, 2025**, and will continue in this capacity until **August 16, 2026**. He has extensive experience in the semiconductor industry, with over 34 years in the field, including positions at Texas Instruments and Micron Technology before joining KLA  **[0001193125-24-259842_d845718d8k.htm:1]** .                      |

48ef2402b82bf35420d34c030e433367e7be8b864aa7abc45244d933f245179b

| Program Details          | Program 1          |
|--------------------------|--------------------|
| Approval Date            | **Q1 Fiscal 2024**  **[0000319201-24-000027_klac-20240930.htm:24]** **[0000319201-24-000027_klac-20240930.htm:98]**  |
| End Date/Duration        | **No expiration date**  **[0000319201-24-000027_klac-20240930.htm:24]** **[0000319201-24-000027_klac-20240930.htm:98]**  |
| Total additional amount  | **$2.00 billion**  **[0000319201-24-000027_klac-20240930.htm:24]** **[0000319201-24-000027_klac-20240930.htm:98]**  |
| Remaining authorization  | **$1.61 billion**  **[0000319201-24-000027_klac-20240930.htm:24]** **[0000319201-24-000027_klac-20240930.htm:98]**  |
| Details                  | Mitigates dilutive impact of equity plans and returns excess cash to stockholders  **[0000319201-24-000012_klac-20240331.htm:28]** **[0000319201-24-000006_klac-20231231.htm:27]** **[0000319201-24-000027_klac-20240930.htm:24]** **[0000319201-23-000039_klac-20230930.htm:25]** **[0000319201-22-000023_klac-20220630.htm:149]** **[0000319201-23-000031_klac-20230630.htm:144]** **[0000319201-24-000021_klac-20240630.htm:141]** **[0000319201-23-000020_klac-20230331.htm:28]** **[0000319201-23-000010_klac-20221231.htm:28]** **[0000319201-23-000031_klac-20230630.htm:87]**  |

4834ff6148eb5b323d16818aa7727a3b85794f3c8735605f144bdb177643d29c

**Quarterly guidance for Q1 2025:**
- **Total Revenue**: $2.75 billion ± $150 million  **[KLAC_3394149_2]**  (no change from prior guidance $2.75 billion ± $150 million  **[KLAC_3394149_3]** )  
- **Gross Margin**: 61.5% ± 1 percentage point  **[KLAC_3394149_2]**  (no change from prior guidance 61.5% ± 1 percentage point  **[KLAC_3394149_3]** )  
- **Operating Expenses**: $565 million  **[KLAC_3394149_2]**  (no change from prior guidance $565 million  **[KLAC_3394149_3]** )  
- **Other Income and Expense Net**: $34 million expense  **[KLAC_3394149_2]**  (no change from prior guidance $34 million expense  **[KLAC_3394149_3]** )  
- **GAAP Diluted EPS**: $6.69 ± $0.60  **[KLAC_3394149_2]**  (no change from prior guidance $6.69 ± $0.60  **[KLAC_3394149_3]** )  
- **Non-GAAP Diluted EPS**: $7 ± $0.60  **[KLAC_3394149_2]**  (no change from prior guidance $7 ± $0.60  **[KLAC_3394149_3]** )  
- **Fully Diluted Share Count**: Approximately 135 million shares  **[KLAC_3394149_2]**  (no change from prior guidance 135 million shares  **[KLAC_3394149_3]** )  

1e6fb93d61103ea14f958e5a95ed6af309822d5275de0863dd443c5dadf16ecd

- KLA Corporation is experiencing **strong growth in process control intensity** at advanced nodes like **2-nanometer and high-bandwidth memory (HBM)**, which is driving **market share gains** and outperformance relative to the wafer fabrication equipment (WFE) market.  **[KLAC_3413881_10]**
- The company has a **strong market position** in key product areas such as **optical pattern inspection, e-beam inspection, and advanced packaging**, leading to increased demand for its solutions and contributing to growth.  **[KLAC_3413881_10]** **[KLAC_3413881_8]** **[KLAC_3413881_6]**
- KLA expects to maintain **high gross margins between 60% to 65%** as revenue accelerates, benefiting from operating leverage without needing significant incremental investments, which supports strong profitability and shareholder value.  **[KLAC_3413881_19]**

af0b888e487b34bd9ef2d71d023c86a8fe3eaa4ebdd117379dcacae371cbebdd

- **Revenue decline from China due to export controls**: KLAC expects the impact on revenue in calendar 2025 from recent export controls in China to be approximately **$500 million**.  **[KLAC_3413881_4]**  This represents a decline of about **20%** in their overall China business  **[KLAC_3413881_14]** , with roughly **70% of the impact affecting their systems business**.  **[KLAC_3413881_4]**
- **High customer concentration risk**: KLAC's business is heavily reliant on their top foundry customer at the leading-edge nodes. There are concerns about the company's exposure if other foundries are not expanding capacity aggressively, as "the dynamics have shifted much more towards the leader who's further ahead now than they've been in quite a while".  **[KLAC_3413881_27]**
- **Potential slowdown in Services growth**: The new export controls and losing access to certain fabs in China may negatively impact KLAC's high-margin Services business. Growth for Services is expected to be in the **high single digits** for 2025, which is below the long-term model.  **[KLAC_3413881_10]**  Additionally, KLAC faces inefficiencies as they need to move resources around due to staffing impacts from the export controls.  **[KLAC_3413881_10]**

e195b415f2f459fc50e839697c792b5aa6303b34ef2571bfba58b2010c5222af

1. **China Sales Impact**  
   **Q:** How will China export controls affect your sales?  
   **A:** We expect our China business to decline by around **20%** year-over-year due to export restrictions, reducing China's share of our revenue from **41%** to about **29%** in 2025. This includes a **$500 million** impact from new regulations.  **[KLAC_3413881_14]** 

2. **Process Control Growth**  
   **Q:** Will your process control business outgrow WFE again in 2025?  
   **A:** While we don't guide for the year, we're confident in our position. Factors like increased scaling at leading-edge nodes and higher process control intensity in advanced DRAM and HBM should drive our process control growth, potentially outpacing WFE growth as we've done historically.  **[KLAC_3413881_8]** 

3. **Revenue Stability**  
   **Q:** Should we expect revenue to be stable at $3 billion per quarter?  
   **A:** We anticipate revenue to hover around **$3 billion** per quarter, plus or minus, at least for the first half of the year. We'll see how the second half unfolds.  **[KLAC_3413881_6]** 

4. **Advanced Packaging Growth**  
   **Q:** Can you explain the 60% growth in advanced packaging?  
   **A:** Our advanced packaging business is expected to grow by **60%** this year, driven mainly by inspection and metrology solutions for 2.5D packaging technologies like CoWoS and HBM. The mix is about **65-70%** semiconductor process control versus process. We're also positioned well for future 3D architectures, which are increasing in complexity.  **[KLAC_3413881_9]** 

5. **Services Impact from China**  
   **Q:** How are China export controls affecting your services business?  
   **A:** The export controls lead to immediate headwinds in our services as we lose access to fabs. We expect services growth to be in the **high single digits** this year, below our long-term model. However, over time, capacity added elsewhere could offset this impact.  **[KLAC_3413881_10]** 

6. **Gross Margin Outlook**  
   **Q:** What is your gross margin expectation moving forward?  
   **A:** We expect gross margins to remain around **62%**, plus or minus 50 basis points. As revenue accelerates, we anticipate maintaining margins within the **60% to 65%** range, benefiting from a richer revenue mix despite some product mix considerations.  **[KLAC_3413881_19]** 

7. **NAND and DRAM Demand**  
   **Q:** Are you seeing improvements in NAND and DRAM markets?  
   **A:** In NAND, we've seen a slight uptick and expect modest growth off low levels, but not significant in 2025. For DRAM, demand driven by AI infrastructure is growing, and we're in discussions with customers about capacity, but no short-term changes in spending plans.  **[KLAC_3413881_16]** 

8. **Foundry/Logic Mix**  
   **Q:** Why is Foundry/Logic revenue mix declining in guidance?  
   **A:** The mix shifts slightly due to memory being a higher percentage in 2025 than in 2024. Some non-N2, N3 customers contributed in December but aren't expected in the upcoming quarter, affecting the Foundry/Logic percentage.  **[KLAC_3413881_20]** 

9. **Process Control Intensity at N2**  
   **Q:** How does process control intensity change from N3 to N2?  
   **A:** At the N2 node, we're seeing higher process control intensity and increased share of WFE compared to N3. We believe our share has improved by approximately **90 to 100 basis points**, trending positively.  **[KLAC_3413881_21]** 

10. **Deferred Revenue Decline**  
    **Q:** Why did RPO decline by $900 million this quarter?  
    **A:** RPO decreased by about **$900 million**; half was due to de-bookings from December 2 regulations affecting China, and the other half resulted from higher shipment levels in the quarter.  **[KLAC_3413881_12]** 

11. **EPC Business Outlook**  
    **Q:** What is the outlook for your EPC business this year?  
    **A:** EPC is expected to grow by mid-single digits. We're winding down our flat panel display business, which impacts revenue, but growth in semiconductor products like SPTS driven by advanced packaging remains strong.  **[KLAC_3413881_12]** 

12. **China Revenue Contribution**  
    **Q:** What is the expected China revenue share in the March quarter?  
    **A:** We expect China's revenue contribution to decrease to the high **20%** range, possibly up to **30%**, down from **35%** due to export restrictions and revenue recognition policies.  **[KLAC_3413881_24]** 

13. **Resilience in China Sales**  
    **Q:** Why are your China sales more resilient than peers?  
    **A:** Our consistent investment in process control helps maintain steady sales in China. We're essential in qualifying processes and aiding yield learning, leading to continuous adoption even when capacity-centric peers see fluctuations.  **[KLAC_3413881_15]** 

14. **Licenses as a Swing Factor**  
    **Q:** Could licenses mitigate second-half revenue impact?  
    **A:** While not built into our plan, potential licenses could reduce the impact of export controls, representing a swing factor that might support second-half growth if approved.  **[KLAC_3413881_24]** 

39ad24bc685fbc600bb8d8380dc7371e429e64980bcb09dcb1b210da74084969

KLAC sees a $500M China revenue hit (-20%) in 2025 but expects to outgrow WFE on strong process control demand at 2nm & HBM. Management guides ~$3B/quarter revenue, eyeing 60–65% gross margins. Advanced packaging & e-beam highlight resilience.

1d0603f9ff5b1dfcdd071b070eec79ccc2688cc5c7a9f163ed1550663f9e8bef

**Quarterly guidance for Q3 2025:**  
- **Revenue**: $3 billion, plus or minus $150 million  **[KLAC_3413881_4]**  (raised from $2.95 billion, plus or minus $150 million  **[KLAC_3404758_2]** )  
- **Non-GAAP Gross Margin**: 62%, plus or minus 1 percentage point  **[KLAC_3413881_4]**  (raised from 61.5%, plus or minus 1 percentage point  **[KLAC_3404758_2]** )  
- **Non-GAAP Operating Expenses**: $585 million  **[KLAC_3413881_4]**  (raised from $580 million  **[KLAC_3404758_2]** )  
- **Non-GAAP Other Income and Expense (Net)**: $36 million expense  **[KLAC_3413881_4]**  (raised from $33 million expense  **[KLAC_3404758_3]** )  
- **GAAP Diluted EPS**: $7.77, plus or minus $0.60  **[KLAC_3413881_4]**  (raised from $7.45, plus or minus $0.60  **[KLAC_3404758_3]** )  
- **Non-GAAP Diluted EPS**: $8.05, plus or minus $0.60  **[KLAC_3413881_4]**  (raised from $7.75, plus or minus $0.60  **[KLAC_3404758_3]** )  
- **Fully Diluted Share Count**: 133.3 million shares  **[KLAC_3413881_4]**  (lowered from 134 million shares  **[KLAC_3404758_3]** )  
- **Tax Rate**: 13.5%  **[KLAC_3413881_4]**  (no prior guidance)  
- **Revenue Mix**:  
  - Foundry/Logic: 73%  **[KLAC_3413881_4]**  (lowered from 76%  **[KLAC_3404758_2]** )  
  - Memory: 27%  **[KLAC_3413881_4]**  (raised from 24%  **[KLAC_3404758_2]** )  
    - DRAM: 75% of Memory  **[KLAC_3413881_4]**  (lowered from 76%  **[KLAC_3404758_2]** )  
    - NAND: 25% of Memory  **[KLAC_3413881_4]**  (raised from 24%  **[KLAC_3404758_2]** )  
- **Sequential Operating Expense Increases**: +$15 million per quarter  **[KLAC_3413881_4]**  (no prior guidance)  

0a7d2beb4090f598e63a05684727aab87274dff20f250850d2e837eede67e998

5dc99859a60ccbaa8fc3937f8b91ce88a618844f99175bf941546aa54f0b8090

8300254a4b20d6143236b69a1be1fd90b5c511971b66491bb7dd285651fdc1a6

| Name                        | Start Date | End Date | Reason for Change |
|-----------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP | 1977  **[0000319201-24-000021_klac-20240630.htm:163]**    | Present  | Current auditor   |

610223dbc412324ba0fff4638dac29744946e90c32b32d2ce1ba58508c33f4c0

45e6edb7f41a66bca53d6fd81aadb9949edd46490f8882af702cede046e2e300

380e96e4dc7941ecef96d788a7afa419247bc1a167cc98406615e5df4cabd506

- Total Revenue: $2,841.54M (+19% YoY)  **[0000319201-24-000027_klac-20240930.htm:43]** **[0000319201-23-000039_klac-20230930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:45]** **[0000319201-23-000039_klac-20230930.htm:37]**   
- Semiconductor Process Control: $2,575.15M (+21% YoY)  **[0000319201-24-000027_klac-20240930.htm:34]** **[0000319201-23-000039_klac-20230930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:45]** **[0000319201-23-000039_klac-20230930.htm:37]**   
  • Wafer Inspection: $1,368.94M (**+36% YoY**)  **[0000319201-24-000027_klac-20240930.htm:45]** **[0000319201-23-000039_klac-20230930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:45]** **[0000319201-23-000039_klac-20230930.htm:37]**   
  • Patterning: $576.41M (+6% YoY)  **[0000319201-24-000027_klac-20240930.htm:45]** **[0000319201-23-000039_klac-20230930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:45]** **[0000319201-23-000039_klac-20230930.htm:37]**   
  • Other: $66.33M (-34% YoY)  **[0000319201-24-000027_klac-20240930.htm:45]** **[0000319201-23-000039_klac-20230930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:45]** **[0000319201-23-000039_klac-20230930.htm:37]**   
- By Geography:  
  • North America: $500.9M (**+100% YoY**)  **[0000319201-24-000027_klac-20240930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:36]** **[0000319201-23-000039_klac-20230930.htm:45]**   
  • China: $1,198.3M (+17% YoY)  **[0000319201-24-000027_klac-20240930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:36]** **[0000319201-23-000039_klac-20230930.htm:45]**   
  • Taiwan: $462.0M (+14% YoY)  **[0000319201-24-000027_klac-20240930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:36]** **[0000319201-23-000039_klac-20230930.htm:45]**   
  • Korea: $238.7M (+9% YoY)  **[0000319201-24-000027_klac-20240930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:36]** **[0000319201-23-000039_klac-20230930.htm:45]**   
  • Japan: $188.6M (-17% YoY)  **[0000319201-24-000027_klac-20240930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:36]** **[0000319201-23-000039_klac-20230930.htm:45]**   
  • Europe & Israel: $144.8M (-14% YoY)  **[0000319201-24-000027_klac-20240930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:36]** **[0000319201-23-000039_klac-20230930.htm:45]**   
  • Rest of Asia: $108.2M (+9% YoY)  **[0000319201-24-000027_klac-20240930.htm:44]** **[0000319201-23-000039_klac-20230930.htm:36]** **[0000319201-23-000039_klac-20230930.htm:45]**   
- Operating Income (EBIT): $996.52M (+24% YoY)  **[0000319201-24-000027_klac-20240930.htm:2]** **[0000319201-24-000027_klac-20240930.htm:20]** **[0000319201-24-000027_klac-20240930.htm:3]** **[0000319201-24-000027_klac-20240930.htm:31]** **[0000319201-24-000027_klac-20240930.htm:4]** **[0000319201-24-000027_klac-20240930.htm:35]**  vs. $804.22M  **[0000319201-23-000039_klac-20230930.htm:3]** **[0000319201-23-000039_klac-20230930.htm:2]** **[0000319201-23-000039_klac-20230930.htm:17]** **[0000319201-23-000039_klac-20230930.htm:32]** **[0000319201-23-000039_klac-20230930.htm:5]** **[0000319201-23-000039_klac-20230930.htm:11]** **[0000319201-23-000039_klac-20230930.htm:21]** **[0000319201-23-000039_klac-20230930.htm:35]**   
- Net Income: $945.85M (+28% YoY)  **[0000319201-24-000027_klac-20240930.htm:2]** **[0000319201-24-000027_klac-20240930.htm:20]** **[0000319201-24-000027_klac-20240930.htm:3]** **[0000319201-24-000027_klac-20240930.htm:31]** **[0000319201-24-000027_klac-20240930.htm:4]** **[0000319201-24-000027_klac-20240930.htm:35]**  vs. $741.38M  **[0000319201-23-000039_klac-20230930.htm:3]** **[0000319201-23-000039_klac-20230930.htm:2]** **[0000319201-23-000039_klac-20230930.htm:17]** **[0000319201-23-000039_klac-20230930.htm:32]** **[0000319201-23-000039_klac-20230930.htm:5]** **[0000319201-23-000039_klac-20230930.htm:11]** **[0000319201-23-000039_klac-20230930.htm:21]** **[0000319201-23-000039_klac-20230930.htm:35]**   
- Diluted EPS: $7.01 (+30% YoY)  **[0000319201-24-000027_klac-20240930.htm:2]** **[0000319201-24-000027_klac-20240930.htm:20]** **[0000319201-24-000027_klac-20240930.htm:3]** **[0000319201-24-000027_klac-20240930.htm:31]** **[0000319201-24-000027_klac-20240930.htm:4]** **[0000319201-24-000027_klac-20240930.htm:35]**  vs. $5.41  **[0000319201-23-000039_klac-20230930.htm:3]** **[0000319201-23-000039_klac-20230930.htm:2]** **[0000319201-23-000039_klac-20230930.htm:17]** **[0000319201-23-000039_klac-20230930.htm:32]** **[0000319201-23-000039_klac-20230930.htm:5]** **[0000319201-23-000039_klac-20230930.htm:11]** **[0000319201-23-000039_klac-20230930.htm:21]** **[0000319201-23-000039_klac-20230930.htm:35]**   

3f1ca72ec277891672dd3f6cf05c399cdbc27ca1a3c192f72907b1e0a8e4a255

5d7d527241be9200aec74105f7e77f67e7fcf8bd9f523cc7ee195dd855e64c5e

6e2625e8fee36681818aa5151b262907d24452391c9b51fbdeefe57f70bf4f58

64ec759df4afc74e399ffb2bad2b066eb37fe6b67779e5d996eeeb05e5481451

| Year | Amount Due (in billions) | Debt Type               | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|-----------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2029     | 0.8                          | Fixed-rate Senior Notes     | 4.100                | 13.4% = (0.8 / 5.95) * 100 **[0000319201-25-000006_klac-20241231.htm:23]** **[0000319201-25-000006_klac-20241231.htm:101]**                                       |
| 2032     | 1.0                          | Fixed-rate Senior Notes     | 4.650                | 16.8% = (1.0 / 5.95) * 100 **[0000319201-25-000006_klac-20241231.htm:23]** **[0000319201-25-000006_klac-20241231.htm:101]**                                       |
| 2034     | 0.5                          | Fixed-rate Senior Notes     | 4.700                | 8.4% = (0.5 / 5.95) * 100 **[0000319201-25-000006_klac-20241231.htm:23]** **[0000319201-25-000006_klac-20241231.htm:101]**                                        |
| 2034     | 0.25                         | Fixed-rate Senior Notes     | 5.650                | 4.2% = (0.25 / 5.95) * 100 **[0000319201-25-000006_klac-20241231.htm:23]** **[0000319201-25-000006_klac-20241231.htm:101]**                                       |
| 2049     | 0.4                          | Fixed-rate Senior Notes     | 5.000                | 6.7% = (0.4 / 5.95) * 100 **[0000319201-25-000006_klac-20241231.htm:23]** **[0000319201-25-000006_klac-20241231.htm:101]**                                        |
| 2050     | 0.75                         | Fixed-rate Senior Notes     | 3.300                | 12.6% = (0.75 / 5.95) * 100 **[0000319201-25-000006_klac-20241231.htm:23]** **[0000319201-25-000006_klac-20241231.htm:101]**                                      |
| 2052     | 1.45                         | Fixed-rate Senior Notes     | 4.950                | 24.4% = (1.45 / 5.95) * 100 **[0000319201-25-000006_klac-20241231.htm:23]** **[0000319201-25-000006_klac-20241231.htm:101]**                                      |
| 2062     | 0.8                          | Fixed-rate Senior Notes     | 5.250                | 13.4% = (0.8 / 5.95) * 100 **[0000319201-25-000006_klac-20241231.htm:23]** **[0000319201-25-000006_klac-20241231.htm:101]**                                       |

3b34d75eb25e107e187bf3863c7738b46b671b5695bf0874d1fa846482d718e9

- KLA **expects sequential revenue growth in the December quarter** and continues to be **incrementally more bullish** about opportunities in **2025**, driven by an improving industry environment and strong customer demand at the leading edge.  **[KLAC_3394149_8]**
- The company has **increased its estimate of annualized revenue from advanced packaging solutions to more than $500 million**, up from approximately $400 million three months prior, reflecting accelerated investment and significant growth in this market driven by AI and packaging shortages.  **[KLAC_3394149_15]**
- KLA is **well-positioned for outperformance** due to its strong presence in **leading-edge foundry and logic investments**, particularly as advanced technologies like **N3 and N2 nodes** ramp up, and as **high-bandwidth memory (HBM)** adoption increases process control intensity in DRAM manufacturing.  **[KLAC_3394149_27]** **[KLAC_3394149_7]**

25ff9b31bb1e5b907be82d3f5239b32523f4b1742adb5d16abaa0dd8ab521d4d

- **Strong customer demand for advanced technologies**: KLAC is experiencing increased customer engagement and demand in leading-edge logic and memory, particularly for advanced nodes like **2-nanometer** technologies. Customers are discussing tool availability and preparing for ramp-up, indicating positive growth prospects for KLAC's products.  **[KLAC_3380803_4]**
- **Significant growth in advanced packaging business**: KLAC expects its advanced packaging business to generate approximately **$400 million** in 2024, representing a growth rate of over **25%** compared to 2023. This segment is anticipated to achieve growth rates meaningfully above the growth rate of WFE going forward.  **[KLAC_3380803_11]**
- **Strong momentum in services business**: KLAC continues to see **very strong momentum** in its services business, with improving utilization rates, a **95% conversion rate** for tools coming off warranty, and customers extending the lives of systems, supporting positive long-term service growth prospects.  **[KLAC_3380803_5]**

b73c1bca36cc5f99686616d5824866b2542040cf7bdad6ef0b3e3d0e4925ccc2

- **All leading-edge customers are bullish about 2025**, expecting growth as advanced logic ramps up, indicating potential for **significant growth for KLA in 2025**.  **[KLAC_3370953_13]**
- KLA is **confident about future growth** due to **increased customer engagements, design starts, and plans for leading-edge technology ramps**, expecting improvements toward the end of the year and into next year.  **[KLAC_3370953_17]**
- KLA has a **significant backlog of orders beyond 12 months**, tied to customers' planned projects opening in 2025, indicating customers' commitment to future capital investments and potential for **future revenue growth**.  **[KLAC_3370953_20]**

fcc5ad93523124b53db50d0be6f88f07194e412c3e4baa9d42e6bc18873ffb1a

1. **Revenue Pushout**  
   **Q:** How did the $200 million project delay affect revenue?  
   **A:** A customer project worth **$200 million** was delayed by about **12 months**, impacting March quarter revenue.  **[KLAC_3370953_4]**  This shipment shift affected Q1 but gives confidence for sequential growth into June  **[KLAC_3370953_4]** ,.  **[KLAC_3370953_6]** 

2. **Second Half Growth**  
   **Q:** Will revenue improve in the second half of 2024?  
   **A:** Despite a weaker first half, we expect sequential growth in the second half of 2024, driven by improvements in leading-edge investments and a balanced contribution from DRAM and foundry  **[KLAC_3370953_6]** ,  **[KLAC_3370953_8]** ,.  **[KLAC_3370953_11]** 

3. **Process Control Intensity**  
   **Q:** Will process control systems outgrow WFE this year?  
   **A:** We expect process control intensity to be roughly **flat** in 2024, aligning with WFE's marginal growth  **[KLAC_3370953_5]** ,.  **[KLAC_3370953_11]**  Our performance should match the overall market.

4. **China Revenue Outlook**  
   **Q:** How will China revenue perform this year?  
   **A:** China revenue is expected to be **flattish year-over-year**  **[KLAC_3370953_8]** ,.  **[KLAC_3370953_10]**  Infrastructure investments may decline, but other segments, such as memory, will offset this.

5. **Display Business Divestiture**  
   **Q:** What are your plans for the display business?  
   **A:** We're considering strategic alternatives for our display business, which accounts for about **1.5%** of revenue but less than **1.5%** of profitability  **[KLAC_3370953_16]** ,.  **[KLAC_3370953_23]**  The sector faces structural profitability challenges.

6. **High NA EUV Impact**  
   **Q:** How will High NA EUV adoption affect your business?  
   **A:** Increased EUV adoption is positive for KLA, enhancing process control intensity.  **[KLAC_3370953_22]**  High NA EUV is progressing as planned, and we're encouraged by its development.

7. **Memory Utilization Trends**  
   **Q:** Has memory utilization changed, and how does it affect services?  
   **A:** Memory utilization remains low but shows signs of improvement.  **[KLAC_3370953_15]**  Service revenue stays strong as customers maintain high utilization of our equipment.  **[KLAC_3370953_15]** 

8. **Book-to-Bill and RPO Dynamics**  
   **Q:** Why is book-to-bill below one, and what's the RPO outlook?  
   **A:** Book-to-bill remains below one due to orders tied to future projects beyond 12 months.  **[KLAC_3370953_20]**  RPO is about **$10.6 billion**, with **45–50%** slated for shipment beyond 12 months.  **[KLAC_3370953_6]** 

9. **Equipment Reuse Impact**  
   **Q:** Will customers reusing equipment impact growth?  
   **A:** Equipment reuse is less impactful due to technology upgrades needed for advanced nodes like **3nm** and **2nm**.  **[KLAC_3370953_19]**  We expect consistent demand for new tools.

10. **Optical Inspection Lead Times**  
    **Q:** What are current optical inspection lead times?  
    **A:** Gen 4 lead times are still over **12 months**, but we expect supply to increase this year.  **[KLAC_3370953_10]**  Gen 5 lead times have normalized between **7 and 9 months**.  **[KLAC_3370953_10]** 

5833a17776ecc5d3c0733dc6f4c58e7b8dcec1e14b8d2b87df09c7f36b0d3550

- **Long lead times for key products**: KLA's Gen 4 systems have **lead times of 18 to 24 months**, making it challenging to meet customer demand and potentially impacting revenues.  **[KLAC_3380803_24]**
- **Declining gross margins due to product mix**: Non-GAAP gross margins are forecasted to be **61.5% plus or minus 1 percentage point**, down **90 basis points** quarter-over-quarter, primarily due to product mix and the dilutive effect of services.  **[KLAC_3380803_9]**
- **Delayed customer investments impacting revenues**: Significant investments from key customers are not expected until **2025**, with memory customers improving profitability but **no significant investments expected for the rest of the year**, leading to potential revenue shortfalls.  **[KLAC_3380803_21]** **[KLAC_3380803_16]**

03c2803da114692d72d999096655ec69fe7af30e3a851414204c7239b1ed6a31

1. **Advanced Node Demand**  
   **Q:** How is customer outlook for advanced technology in 2025 shaping up?  
   **A:** Management notes that they are having different discussions with leading-edge logic and memory customers, who are preparing for ramps and increasing demand. Customers are focused on tool availability and resource scheduling to avoid delays. While stability with rising demand is seen through the year, the real build-out is expected in **'25 and beyond**, with positive indicators like design starts and advanced node discussions. **[KLAC_3380803_4]**

2. **Advanced Packaging Growth**  
   **Q:** What is the growth outlook for advanced packaging revenue?  
   **A:** Advanced packaging revenue is expected to exceed **$400 million** in calendar '24, representing growth greater than **25%** over the previous year. This growth is driven by accelerated customer efforts in packaging, especially for leading-edge technologies tied to AI applications. Management believes this segment will outgrow WFE and has potential to go well beyond, depending on technology adoption. **[KLAC_3380803_9]**

3. **China Revenue Expectations**  
   **Q:** How is China revenue expected to perform for the rest of the year?  
   **A:** China revenue is expected to be **flattish** over the course of the year, with the second half similar to the first half. The mix is changing in terms of end-market, but as a percentage of total revenue, China is expected to **come down** due to most growth coming from non-China customers. **[KLAC_3380803_8]**

4. **Memory Market Outlook**  
   **Q:** What is the outlook for the memory market into 2025?  
   **A:** While profitability and cash flow in the memory sector are starting to improve, significant investments are not expected through the rest of the year. Management anticipates potential improvement in **non-China memory** in 2025, driven by the leading edge of DRAM and high-bandwidth memory demand, as customers' businesses improve. ** **[KLAC_3380803_6]** ,  **[KLAC_3380803_16]** **

5. **Services Business Growth**  
   **Q:** Has the outlook for services growth improved since last call?  
   **A:** Services business continues to show strong momentum with improving utilization rates. A record number of tools are coming off warranty, with a **95% conversion rate** into service contracts. Customers are extending system lifespans, supporting long-term service growth. Management feels confident about being closer to the **upper end** of the **12% to 14%** target growth range. **[KLAC_3380803_5]**

6. **Gross Margin Outlook**  
   **Q:** What factors are impacting gross margins going forward?  
   **A:** Gross margin decline is mainly due to **product mix** across the portfolio, not specifically tied to China. Service growth, which is dilutive to gross margin but accretive to operating margin, also affects margins. The guidance range remains appropriate, and margins can fluctuate based on product mix and revenue timing. **[KLAC_3380803_8]**

7. **N2 (2nm) Ramp Timing**  
   **Q:** When will N2 node ramp impact your business?  
   **A:** Customers are accelerating discussions around **2-nanometer** technology, with significant activity expected in **'25 and beyond**. KLAC is already seeing increased engagement, with orders anticipated toward the end of **'24** as customers prepare for ramps driven by AI demand and power efficiency needs. ** **[KLAC_3380803_4]** ,  **[KLAC_3380803_12]** **

8. **U.S. Greenfield Projects**  
   **Q:** How do U.S. chips announcements affect your outlook?  
   **A:** While numerous U.S. greenfield projects have been announced, their timing is quite a ways out. Customers build capacity based on market demand, so these projects don't significantly affect near-term capacity investments. The business environment remains relatively independent of investment locations. **[KLAC_3380803_9]**

9. **Product Mix Shift**  
   **Q:** What drives the shift from memory to logic in mix?  
   **A:** The shift is due to a focus on logic/foundry, expected to remain around **70%** of the business mix, similar to 2023. China memory is more first-half heavy, with no significant investments expected in the second half. Slight uptick may occur in non-China memory, but overall mix remains consistent. **[KLAC_3380803_6]**

10. **Revenue Growth Drivers**  
    **Q:** Main drivers for revenue acceleration in second half?  
    **A:** Drivers include early investment in **2nm**, **3nm** build-outs, and investments in Arizona, benefiting the logic/foundry segment. Second half revenue is expected to be **high single digits** higher than the first half. Improvements are expected in the EPC segment and continued growth in services. **[KLAC_3380803_7]**

11. **RPO Levels**  
    **Q:** What are current Remaining Performance Obligations?  
    **A:** RPO stands at approximately **$9.9 billion**, down about **$750 million** quarter-over-quarter. Deposits are about **$677 million**. **[KLAC_3380803_18]**

12. **Lead Times for Key Products**  
    **Q:** Have lead times for Gen4/Gen5 products changed?  
    **A:** Lead times for Gen4 products remain in the **18- to 24-month** range due to strong demand. For Gen5 products, lead times are in the **7 to 9 months** range, consistent with previous quarters. **[KLAC_3380803_24]**

bc8202a28a1ef77e0917057c820cfc3849f6d4648b46ba5c53b63255cd1e11b2

- **KLAC experienced a significant customer project delay**, with a **$200 million** revenue pushout from the March quarter to potentially beyond 12 months, impacting short-term growth expectations.  **[KLAC_3370953_4]**
- The company's **book-to-bill ratio remained below 1 for the fifth consecutive quarter**, at **0.9**, indicating weaker order intake relative to revenue, and has a **$5 billion backlog beyond 12 months**, reflecting reduced near-term visibility.  **[KLAC_3370953_20]**
- **KLAC's display business, though 1.5% of revenue, contributes less than 1.5% to profitability** and faces structural challenges, leading the company to consider strategic alternatives, which could impact future profitability.  **[KLAC_3370953_23]** **[KLAC_3370953_16]**

5011883d963811871ba5620f6d2dc0cb423405222dfcf98f1c4c12de60f19ad8

1. **China Revenue Outlook**  
   **Q:** How will China revenue change next year?  
   **A:** Management expects China's revenue contribution to decrease from about **low 40%** of sales in 2024 to around **30%** plus or minus a couple of points next year, due to expected digestion and reduced investment in greenfield projects.  **[KLAC_3404758_5]** 

2. **Leading-Edge Demand Growth**  
   **Q:** Is the excitement about leading-edge spending broad-based?  
   **A:** Yes, demand for leading-edge nodes is driven by customers across multiple players, not just one foundry. Significant demand for **2-nanometer** and additional demand for **3-nanometer** technologies are leading to robust forecasts into 2025, fueled by growth in AI for both training and inference chips.  **[KLAC_3404758_4]** 

3. **Offsetting China Downshift**  
   **Q:** Will lower China revenue be offset by other spending?  
   **A:** Management believes the reduction in China revenue will be offset by increased spending in advanced foundry, logic, and memory, driven by leading-edge demand. Overall views on 2025 remain unchanged, with expectations of growth despite the China downshift.  **[KLAC_3404758_6]** 

4. **Process Control Intensity at 2nm**  
   **Q:** Is process control intensity higher at 2-nanometer nodes?  
   **A:** Yes, **2-nanometer** nodes are expected to have higher process control intensity than **3-nanometer**, with more inspection points and higher sampling rates due to tighter process windows and increased design variability, driving the need for more capacity and advanced metrology.  **[KLAC_3404758_8]** 

5. **Growth in Patterning and Metrology**  
   **Q:** Will patterning and metrology see growth next year?  
   **A:** Management anticipates growth in metrology and reticle inspection next year, driven by increased intensity in advanced nodes like gate-all-around transistors, backside power distribution, and advanced memory, as well as expectations for new design starts.  **[KLAC_3404758_7]** 

6. **Gross Margin Outlook**  
   **Q:** How should we think about gross margins moving forward?  
   **A:** Gross margins are expected to operate around **61.5%**, with potential to be higher as current run rates continue. Mix variability can cause fluctuations, but over longer periods, margins tend to align closely with the incremental margin model of **60% to 65%**.  **[KLAC_3404758_11]** 

7. **DRAM Investment Outlook**  
   **Q:** What is the outlook for DRAM investment next year?  
   **A:** Management expects incremental investment in DRAM next year, especially in advanced DRAM and high-bandwidth memory, coming off a very low base. Improved utilization rates and financial performance of customers are factors contributing to this expectation.  **[KLAC_3404758_12]** 

8. **Advanced Packaging Opportunities**  
   **Q:** Are there opportunities in advanced packaging?  
   **A:** Yes, growth in advanced packaging, particularly with high-bandwidth memory (HBM) devices, is driving increased process control opportunities due to higher reliability requirements and the cost of failure, leading to a need for higher-level inspection capabilities.  **[KLAC_3404758_13]** 

9. **Export Controls Impact**  
   **Q:** What is the impact of potential export controls?  
   **A:** Management does not want to speculate on hypotheticals regarding export controls. They have been receiving questions on this topic for over a year and will assess the impact once there is clarity and share more information then.  **[KLAC_3404758_5]** 

10. **NAND Market Outlook**  
    **Q:** What is the outlook for the NAND market next year?  
    **A:** Investment in NAND is expected to increase slightly next year from a very low base, driven by improved utilization rates and better financial performance of customers. However, no significant growth in absolute dollar terms is anticipated.  **[KLAC_3404758_12]** 

2d549a6e3db57b07b9db13dcb92ea4fa964f499afabc7140a2d4a54d0883e850

- **Reliance on China revenue may decline**: KLA's China demand was elevated in the September quarter due to backfilling shipments, but management expects it to **"drop somewhat in Q4"**.  **[KLAC_3361893_9]**  This suggests potential decreases in China-related revenues moving forward.
- **Uncertainty about 2024 outlook**: Management stated they **"don't know what '24 is going to look like"** and that customers are uncertain as well.  **[KLAC_3361893_15]**  This lack of visibility could impact KLA's ability to predict future performance.
- **High inventory levels pose risks**: Inventory has increased by **$500 million over the past 6 months**, reaching almost **300 days**.  **[KLAC_3361893_17]**  This build-up, due to prior commitments based on expected growth that didn't materialize, could be a risk if demand remains weak.

947e95ea393382f9fa3b212c5bc9b308b7e117fe1429c797f6b340ea47a433ce

- **Gross margin is forecasted to decrease to 61.5%** in the September quarter, down from 62.5% in the previous quarter, due to weaker anticipated product mix.  **[KLAC_3394149_2]** **[KLAC_3394149_14]**
- **Revenue guidance range widened to plus or minus $150 million**, larger than usual, possibly indicating higher uncertainty in revenue projections.  **[KLAC_3394149_11]**
- **Book-to-bill ratio has been below 1 for seven consecutive quarters**, suggesting that orders have been consistently lower than shipments, which may impact future revenue growth.  **[KLAC_3394149_28]**

8f2fe263e7e257febf571553c1bdbbf13b40edb01dd1794c9e6f242ef052372e

- **KLA's services business is expected to accelerate growth to their target range of 12%-14% next year**, driven by a high attach rate of tools coming off warranty and moving into service contracts, as well as stabilizing and increasing utilization rates in certain parts of their business.  **[KLAC_3361893_6]** **[KLAC_3361893_22]**
- **KLA anticipates sustained demand from China**, with over **$800 million in deposits** for shipments, as infrastructure investments in legacy nodes, wafer, and reticle manufacturing continue, supporting industries like EV where China seeks self-sufficiency.  **[KLAC_3361893_9]** **[KLAC_3361893_25]** **[KLAC_3361893_24]**
- **KLA's product portfolio is well-positioned to benefit from upcoming technology transitions**, such as **high-NA EUV adoption**, **gate-all-around transistors**, and **advanced packaging architectures**, which are expected to drive higher process control intensity and demand for their advanced inspection and metrology tools.  **[KLAC_3361893_7]** **[KLAC_3361893_23]** **[KLAC_3361893_14]**

783eac82663b42c35df7c24fe8853cf4f74dc68dee26112e73fb682b377a219c

1. **Memory Growth Outlook**  
   **Q:** Thoughts on memory growth in 2025, DRAM vs. NAND?  
   **A:** KLA expects memory growth to pick up in **2025**, driven mainly by **DRAM and HBM**.  **[KLAC_3394149_6]**  Customers' financial performance is improving with significant price increases this year, translating into investment next year.  **[KLAC_3394149_6]**  NAND (flash) recovery is less certain, but overall, both DRAM and flash are expected to recover, led by DRAM.  **[KLAC_3394149_6]** 

2. **Memory Process Control Intensity**  
   **Q:** Where is memory process control intensity trending?  
   **A:** Memory process control intensity has increased from historical **10%** to over **11%** today.  **[KLAC_3394149_9]**  With advancements like EUV adoption in DRAM and challenges in NAND bonding technology, KLA sees opportunities to increase intensity further in the coming years.  **[KLAC_3394149_9]** 

3. **Advanced Packaging Growth**  
   **Q:** Is the $500M advanced packaging forecast for full year?  
   **A:** Yes, KLA expects **$500 million** in advanced packaging revenue for **2024**, up from around **$300 million** last year—a **mid-60% growth rate**.  **[KLAC_3394149_5]**  About **60%** is from process control, with the remaining **40%** from specialty process and chemical process control.  **[KLAC_3394149_5]**  Strong demand is driven by AI and customers seeking front-end capabilities in packaging.  **[KLAC_3394149_5]** 

4. **Sequential Growth and 2025 Outlook**  
   **Q:** Do you anticipate sequential growth in December quarter?  
   **A:** Yes, KLA expects sequential growth in the December quarter, continuing the trend throughout the year.  **[KLAC_3394149_8]**  The company is incrementally more bullish on opportunities into **2025**, with a strengthened funnel supporting this outlook.  **[KLAC_3394149_8]** 

5. **China Revenue Outlook**  
   **Q:** Is China revenue expected to remain flat?  
   **A:** China revenue is expected to be about **flat** in the second half compared to the first half.  **[KLAC_3394149_12]**  Business levels next year are anticipated to be consistent with this year, supported by the order funnel, backlog, and deposits.  **[KLAC_3394149_14]** 

6. **Gate-All-Around Impact**  
   **Q:** How does GAA affect process control intensity?  
   **A:** Gate-All-Around technology creates new integration challenges, increasing metrology intensity and the need for voltage threshold control.  **[KLAC_3394149_10]**  KLA anticipates increased process control intensity, consistent with their 2026 plan, and is bullish on opportunities created by additional critical layers and scaling dynamics.  **[KLAC_3394149_10]** 

7. **Impact of High NA on Process Control**  
   **Q:** What's the impact of high NA on process control timing?  
   **A:** High NA leads to smaller defects and new reticle qualification challenges.  **[KLAC_3394149_13]**  KLA doesn't see acceleration in high-volume manufacturing timing for high NA; if anything, there's potential for **delay**.  **[KLAC_3394149_13]**  Customers may extend existing technologies before moving to high NA.  **[KLAC_3394149_13]** 

8. **Revenue Guidance Range Widening**  
   **Q:** Why is the revenue guidance range wider?  
   **A:** The wider guidance range is due to **higher revenues**, which necessitate adjusting the range.  **[KLAC_3394149_11]**  Larger systems can vary significantly in value, impacting overall numbers.  **[KLAC_3394149_11]** 

9. **Gross Margin Outlook**  
   **Q:** Is gross margin down slightly in September quarter?  
   **A:** Gross margin variability is mainly due to **product mix**.  **[KLAC_3394149_14]**  While the June quarter outperformed, adjustments in the September quarter are expected.  **[KLAC_3394149_14]**  KLA anticipates gross margins in the mid **61%** range this year, moving toward around **65%** incremental gross margin into '25.  **[KLAC_3394149_14]** 

10. **Advanced Nodes Outlook**  
    **Q:** Does TSMC's 2nm outlook affect KLA's WFE share?  
    **A:** Increased activity in reticle inspection due to more design starts, particularly as **2nm** ramps into **2025** and **2026**, supports KLA's goal to increase its share of WFE.  **[KLAC_3394149_4]**  Unexpected strength in **M3** also contributes to the positive outlook.  **[KLAC_3394149_4]**  Larger die sizes in advanced AI chips drive more inspection needs.  **[KLAC_3394149_4]** 

4ec2561a9ecc512d15cc4412c2e147c8e2c2b834b202aa09ce51e61ae0adf1e6

KLA Corp (KLAC)

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