KLAC - Earnings call transcript Q4 2021

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Operator

Good afternoon. My name is Britney, and I will be your conference operator today. At this time, I would like to welcome everyone to the KLA Corporation June Quarter 2021 Earnings Conference Call and Webcast. All participant lines have been placed in a listen-only mode to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator turn Investor over Relations. now Vice Kevin President of the will to call Kessel, I Please ahead. go

Kevin Kessel

Thank you. the Financial our And With our quarterly the earnings Chief welcome for Officer. me to KLA's to outlook and is the fiscal on discuss Executive today's results Rick September Officer; Chief of the June call and call quarter quarter. QX Wallace, XXXX Higgins, Bren

results referring market for presented we Released posted A this detailed you the to specified, a on of ended non-GAAP KLA basis financial reconciliation and During of discuss call, press is XXXX. after GAAP make will unless is materials IR Today's June slide infographic the a this find quarterly whenever to earnings to in afternoon letter, the otherwise deck, close, are calendar discussion references we can results XX, section shareholder on website. on years. non-GAAP period we release, our and website. our the year,

IR filings, as information, our XX-K reports XX-Q. presentations, Forms to events, and recent links also corporate SEC as well on contains Our our report and governance most and annual quarterly future including investor website

subject risk true. those SEC are KLA come guarantee and today comments to risks the subject in those will make in filings. those statements the and call cannot risks Our on reflected factor Any uncertainties we forward-looking to forward-looking including our disclosure statements, today, are

differ significantly results may projected our statements. Our those actual in forward-looking from

over Rick Rick? Wallace. the Let Officer, me now to our call Executive Chief turn

Rick Wallace

and against We and momentum objectives. us showed delivered our and KLA. long-term today. for thank The progressed joining strategic goals June continued Hello, top and on bottom-line our quarter you strength for XXXX

model. and XX% operating strong markets XX% compared per to KLA prior $X.XX grew These revenue in in $X.XX, representing Non-GAAP year. the our year-over-year leverage growth earnings to and and XX% growth quarterly the growth momentum results sequential core Specifically, demonstrate X% the share was billion. sequentially

demand to across This range each of major our continue growth trends, product semiconductor is applications. markets of increased across broad We see industry customer secular demand driving demand groups. ongoing and to related a

their CapEx and constantly is growth strong to teams, our to are markets in evolving are purpose the talented persistent and the efforts. strong these in Our industry position business. led Against demand challenge the environment. creating and customer shareholders. investments Still, We're strategic view to we marketplace. drivers backdrop, creating for and supply value customers, growth the I are R&D the leading-edge needs KLA precision, navigating by quickly of customers expectations to will increasing rising our partners, This opportunities challenges. their global industry chain demand and operating the to relative continues and and focusing on and for investing momentum our a continuing outperform great above by our of beyond, execution that go summarize address

our As move wafer a to for result, outlook fab continues equipment industry the higher.

a have sustain to the positive a from base basis. This into calendar XXXX. With expect of industry stated semiconductor to strong low increased growth trends low mid-XXs XXXX. from our $XX mid-XXs continuing, we to calendar on to is last We dynamics in percentage approximately demand billion estimate secular quarter

our leading and to and As this benefits in regional portfolio solve our optimization, development, our leading-edge products demand customer's from fab KLA business of expansion, challenges. are investing increased customers a also offers

in to our levels customers. are We of indispensable continue ensure improving high invest we remaining and to constantly to R&D

in benefits adoption, market and investment levels the and laser, lower in high process technologies product and defects machine investment variability, critical best-in-class from identify helps artificial performance, advanced of and in to deliver competition. differentiates service against for applications. ever-increasing to and capabilities offerings precision leadership unique deliver our of and cost ownership optics, long-standing these intelligence and to ML and customers. the prioritizing process our metrology we investment learning. leveraging offerings KLA KLA's sensor, AI capabilities service product yields, production higher our technologies leverage drive in reduce in Specifically, This market, are our time data that help KLA analytics improve and

and position large greater happening is Our Research contributions nearest -- Electronics market in the times augmented our our control growing by Gartner process as as KLA's the R&D control within services of the sustained ecosystem and investment the businesses, in performance intensity KLA's of by is Packaging is Components XXXX. business. broader control competitor, through increasing, and process market reported leadership X remains electronics when April of growing EPC process a or than

point long-time of is execution, we're expectations. and on essential to leadership backdrop With ahead execution of targets new of KLA's company's favorable a out differentiated strong consistent and KLA investors, to and strategy. market financial it's our the our our this XXXX well focused achieve result For track

our top recent for move now the most to quarter. along Let's highlights

continues broader expectations. investments of KLA First, In breadth simultaneous forecast. our continue and our memory, across investment increase and customer multiple and spread logic, to see is well we We and execute outperform set foundry customers demand encouraged remain consistency to strong base. of nodes the and across In customers. demand a across by

patterned development the mitigate solutions. to improving manufacturing and device help the aimed in-line automotive products of announced our value semiconductors we semiconductor in identify targeting driving early reliability wafer KLA's market, and the reliability test potential four unpartnered manufacturing is solution significant inspection process, customers. automotive defects and quarter, the in including customers During and automotive new and for

pattern helped for semiconductor XXXX. segment process in control optical growth market has our strong relative inspection wafer KLA's to strong Second, in drive leadership

among optical overall year. segments and factor for industry XXXX. growth inspection to by revenue pattern X in WFE fact, XXXX, product the outpace to is times is of a This wafer of fastest-growing follows in of the In be over billion segments growth $X this poised outperformance forecasted similar and

a leadership growing year for on business Third, in pace XXXX, the and than is faster record KLA's position. flagship our growing reticle market inspection

nearly we that reticles KLA that, of are estimate by at today systems. all inspected the proof As X-nanometer

below. EBM-based segment applications the utilization for the from recurring at total of next-generation XX% strong quarter quarter our Xxx X-nanometer by the of year is inspection opportunities customer more is than services June platform subscription-based for in long-term contracts. double-digit service Services or revenue in highest group. our target. our the of and begun growth circuit sales, our of qualification growth in higher business shipped the in was and driven process semiconductor printed increasing expansion has installed expanding of services growth, and business track Fourth, subscription control million Our in board revenue XX% and [ph] our $XXX mask revenue well last and XX% rates We The another model believe are edge among is these service on industry. rates, trailing EPC above services base,

of installed faster in Our innovation semiconductor the customers initiatives of to of times has the always continues collaboration our rate with approximately business the process business growth through the grow than close faster service working new for advantage growth. and control X.X from driving XXXX base, service and revenue XXXX. KLA partners,

XX% shareholders, KLA's inception at to strong to Board the This of $X.XX dividend our returns a XX% consecutive our annual of approved increase XXXX. since per increase company's with a and rate in in $X.XX our to annual has commitment capital keeping dividend we that is compounded XXth the level, quarterly today, in predictable share. deliver level grown announce in Directors from Finally, which

delivering targeted we capital offers track and We of $X investment returns KLA's share addition, over XX authorization, believe billion value shareholders. KLA to thesis strong new and In months. the of record for a announced repurchase a for next component is compelling key creation our predictable execution XX the

to allocation. resiliency KLA's to demonstrate nature and of comprehensive value of is broadening well-positioned in driven our of customer more Before to the interest operating impact in the report, highlights, the weeks. commitment our requirements semiconductor sensitivity enabling that, KLA's and demanding electronics a released The will constantly moving at balance into meet And briefly of digital with lives, capital and to technology I'll summarize June forward by results with quarter customer model on an and throughput. look portfolio enduring products the be innovation update let's and coming pass our our products critical the we're which corporate the exceptionally We few KLA Bren. edge. the global stewardship. key changing, ever in than delivers through the landscape ESG are KLA before that productive transformation financial also our a points. leading vision KLA services call commitment to seeing sharing over

Bren Higgins

results Thank our and 'XX Rick. the strategies. KLA's highlight quarter strength of you, ongoing soundness June

is for $XXX and maintaining Non-GAAP June operating heart applications gross This The leadership, generating our million, million EPS engineering of Non-GAAP and guided compensation of at were our $X.XX KLA, environment of and range. growing SG&A. allocation. towards primarily meet adjustments strong our to quarter. the demonstrate $X.XX. We needs XX%. product the expense strong total $X.XX Total GAAP to technology R&D at quarter a fundamental and and expenses customer due cash application strategy combination to margin strategy expense for is variable XX%. the turn $X.XX, market flow, XX%, support midpoint of billion was sustain R&D included free in range in expenses of timing Non-GAAP help At end million and our the expanding than in strategy the XX% was in EPS materials continue Non-GAAP was SG&A differentiated the was innovation KLA productive operating our element in the while of represents of guided customers range to focused differentiation. KLA about at about in leadership. was portfolio income profits, is $XX operating expected of our to to of revenue to operating market operating XX% very capital solutions. technical quarter on included programs. a higher Non-GAAP above of $X.XX. the expenses. robust remains total $XXX go-to-market long-term was $X $XXX demand R&D the driving million million top guided ability technical key

the Given revenue to of due investment in for global quarter. overall second development $XXX our half expectations requirements, infrastructure the business be ongoing engagement we regionalization product 'XX, higher non-GAAP in approximately September expect customer to volume, and million expenses resources, of operating increased additional

Going quarter income model revenue a supplier of rate margin the will in on horizon. planning continue the $XX per Other XX.X%. to operating reflecting that growth initial offering. investment XX% strategic recently incremental size which company share based gain our multi-quarter of over on to the $X.XX delivers expense a forward, XX% company's This and gain on million, completed tax public earnings was represented its the in an net at we leverage operating target June

a service You net cash weighted XX% model segment $X.XXX million, diluted million. in to memory, of also the Non-GAAP average should as well income Packaging, net by by mostly NAND year-over-year in was net million demand from automotive. with quarterly line PCB, foundry and our adjusted the mobile control and the was prior of sequential quarter. over and In the also outstanding in strength from inspection. driven was and income and $X.X total in and to infrastructure, business from was highlighted April applications, deposition Group The strong $XXX was process period. by record was semiconductor position XG approximately customer ended semiconductor as and driving advanced KLA supported up of data quarter XX%. had of associated in see was ratings was the strength for we and investment-grade its a inspection $XXX logic record benefit as and almost per million, free by down million, approximately process the hit and and million, GAAP process in leading bond up semiconductor to this Demand XX% total process's packaging and in approximate power $XXX expense cash with million cash, pleased also in financial and tax have and of Revenue our center forecast bookings. attractive sequentially in billion other were roughly products. year. $X.X million, semiconductor balance $XX component the control XX% a profile PCB debt a XX% AX adjustments Specialty Components all the rising in The Moody's revenue More where was quarterly maturity reflecting The compared business We continue sequentially $XX upgrade X% for effective the of up sustainability flow the last XX% billion, Electronics, business performance. increase favorable income from edge X% revenue rate our was agencies. including growth quarter-end. at X% was our further of continued early was specialty second semiconductor company recognized straight billion, XX% DRAM. was year. XX.X%, specifically, XXX split driven mix segment generated the quarter with automotive the $XXX three in our strength shares at sheet operations to June BaaX, display performance segment, of memory debt June up audit $XXX underscoring rating and Revenue quarter segment flow flexible and

split returns and executing returns that repurchases, approach to cash to are have dividends of confidence and our long-term free long-term tremendous of business at XX% We shareholders, flow run the long cash generated. balanced strategy a between share least the targeting committed in over

of XXth record share authorization the Our and are predictable consecutive deployment. and strong repurchase capital of increase and annual announcement productive explicit dividend today in track approach of our our additional representative

dividends returned months, million Over billion shareholders, $XXX repurchases. share $XXX in million KLA in to and $X.X paid the last XX including

capital circumstances a cash of margins business free free returns change, flow of current economic While KLA our free cash conditions. strong expected and expectation all flow. our flow can conversion, cash has XX% exceed the calendar flow will across history that generation, 'XX cycle remains of free high phases and cash for consistent

million flow and while cash common of stock, paying dividends. $XXX in $XXX quarter, million free repurchased $XXX we of generated the million During also

a year, Our overall low At the of expected continues to characterized year. and from we increase market growth in semiconductor outlook demand views be this the in WFE the start earlier WFE the our of we the to further improvement basis low teens revised a the a and with to few expect percentage to see the Today, view to In plus on the points. upside. April, bias minus or percentage that mid-XXs at in position market process strong year, multiple the groups. to grow to across growth demand approximately mid-XXs market segments. driven across leadership this our in reflects XXXX of broad-based by and in customer to deliver all the calendar KLA control semiconductor marketplace to in midpoint calendar strengthening from in the product relative is EPC the both billion momentum billion platforms, $XX low strong WFE and in This $XX 'XX. the approximately we

encouraged remain of our we ahead, profile. the Looking current sustainability by demand

we to to total result, revenue quarter-to-quarter expect remainder continue of improve sequentially a the As company throughout the calendar year.

control on percentage half second current strong mid-teens control point high-XXs process demand. to calendar in our calendar shipment systems to meaningful semiconductor our half in in low-XXs systems capacity business growth equipment the in This 'XX. process second manufacturing strong 'XX. of backdrop 'XX supports online comes the expect also of the expectations semiconductor of calendar versus for year-over-year the We expectations to growth to grow the system percentage Furthermore, basis as our support a half, customer first of the more

to overall in As believe to 'XX we to WFE market. that positioned continue relative the is outperform result, business this a

principally mix. segment gross XX.X% We this to of as $XXX due is of mix. midpoint, expected expected of to points September plus or guidance At quarter billion, is the customers. XX%, control in memory million. revenue be XX% forecasted XX.X%. to semiconductor basis to semiconductor systems expected margin revenue product a range logic quarter be in is to June forecast be is follows. be a XX% range Our Within about to the XX approximately Foundry above Total is and DRAM $X.XX the is to process approximately minus be memory, non-GAAP level to

our products the margin of affect gross any across tax an business Other XX.X%. and will are effective expense results, approximately trends non-GAAP in rate and model product the sustainable of business segments operating compelling million, forward. adjusted our given and going positioning approximately million, include terms income $XXX of for While remain product in of of and structural both assumptions $XX September expenses cost, approximately efficiency, quarter, mix manufacturing other tailwinds and

In $X.XX Finally, diluted of a in based of in GAAP non-GAAP $X.XX. to $X.XX is The range the EPS multiple a on dynamics a count to customer remain industry be simultaneous fully nodes. with approximately of the and EPS diluted compelling, $X.XX investments shares. driving guidance share investments closing, technology and in semiconductors diluted WFE broad-based XXX.X EPS is demand and expected range million across

are the next our We for of the encouraged funnel visibility sales quarters. and by indicators leading including over our business, backlog couple

point They is to flow of The our financial model increasingly to that competitive outperform service underpin our call with, to offering. ahead investment exceed track Our excellence, technology deep expectations. and well performance, objectives And strategic targets capital leadership, and back KLA plans us to well also guides future. shareholders. the and These fuel important positions and our our continues well cash stability now demand customer's record sustained track of KLA long-standing generation execute over XXXX the in to across differentiation to the I'll product and on multiyear growth, operating diverse turn operational an strong free financial the Q&A. return Kevin of also to moat, and begin objectives.

Kevin Kessel

please Thanks, Britney, for can you up Bren. queue questions?

Operator

our take will we first And JPMorgan. Instructions] Sur from with question Harlan [Operator

open. is line Your now

Harlan Sur

inspection, job your exposure mid-XX% doesn't expected to afternoon look know business, your that the here proxy. mask overall entire your business control EUV positive results. mask are continues you EUV your a strong optical good wafer inspection, systems, at in well inspection and but also above leadership strong to have process process of range. for sort go the But good and it's quarterly control I you your printed. inspection I on execution but represent and via strong. Do guiding this year. Litho and guys adoption grow EUV Hi, the this And great outlook like if systems a

EUV the have, or what So, the you into strength sustainability And the of are you importantly, first about are are three how next the dynamics guys of that two overall momentum with visibility that half second-half the adoption? year? the driving above calendar more feeling

Rick Wallace

for it's the Thanks Rick. question. Hey Harlan,

You're right.

I think strength we are control a of driven. portfolio seeing lot process the in

a is, As I between uptake really X. and the wafer on mix good Gen prepared about at inspection and remarks, interesting that. pretty look of that X seeing a optical we mentioned Gen it's What's in lot

across more Gen exposed, Gen And continue seeing the proliferation So, advanced the expected one number is people board, but also not as EUV just it's X and both of seeing but memory; complexity foundry, of of the year areas as that's really to area. also to we're reticles say add the it in the -- designs I really would continue. EUV the also We more we're with mentioned memory, X that strong a of we dynamic, advanced having capability. logic, in rising

just also provide we So, both that process year. of why to but into you we're we're want indicated, about across intensity related to so color? feel Bren strength control Bren, the seeing looking increased more XXXX entire as the to EUV, strongly continue. That's portfolio. remainder for really And the

Bren Higgins

Yes.

remarks. So, we half in as are the businesses Rick we said, market this both prepared growing said as second I than think those through the year, faster continue as of

markets the inspection that In not if optical the business fact, fastest. of WFE, I would in is one all fastest-growing think the of

shrinks other also rules EUV of leveraging dynamics is shrinks the of in years patterning in of have our all that. the process Also creating reticle changed environment. also reticle after platforms business opportunity business, inspection the design offering validating number but wasn't you market the in around increasing So, EUV, both complexity double quality. But driving a an also where that optical for of the much X-nanometer are reticle And and driving there's that that for complexity. introduction inflections or lot reticle in part in a

EUV, offering strong to reticle getting in changing complexity move offering we dramatically. our that And we're a more technical customer is As product. interest is and

here we as tailwinds year the rest through sustainable this and there's think of move I 'XX. into So,

Harlan Sur

also market your costs gross slight the the have front, our pay looks weighted then help appreciate some just margins to assuming fees some negative expedite rising, gross the and I I'm It on more the into September in bias margin are parts that. you has gross would quarter. I team think understand on us margins. for upticking if And component like mix would is which towards end memory, could

team margin understand of us drivers great higher, of driving the just help it's profile the So, the to see some that? but

Rick Wallace

impact margin our margin Customer all segments the profile. same have products profile, mix doesn't our across

is increase higher that service carry So, margins it quarter-to-quarter XX quarter-to-quarter, really business. and than Most growth business control is have. from is our we basis the coming systems obviously a of driving semi-process those mix dynamic the or EPC point

So, that's been the bigger driver.

numbers maybe we're through time bit certainly little benefit those challenges chain like constantly those our next over quarters. pressures way of costs manage to level else over everybody supply as it But into a trying that embedded. get and are the from alleviate, have that expecting future. have Freight to the we'll we and our We couple that of higher, those. are some in at of And remain

On pressure on there for raw there specifically, the our the steel is component frames for is components, of materials frames side, tools. and on pressure

as are have I we see So, well. expect we with Labor with factories move that. that would world, some the locations we're also we'll pressure. different forward, we're but different dealing in around as dealing pressures

So, the volume. far it's strength been offset of by the

has with components. But volume worked to pressure our do be I products see been we upside on suppliers way we tends The So, favorable. expect we'll value-centric. some the and price

a through. pricing that we're not to as model, deal model. value with cost-based a have have going But certainly comes to We it

COGS. our these XX points margin moving the provided that's future, probably revenue some forward. the we terms XX to in looking the into I think on type time guidance our levels would of inflationary basis over of But in contemplated at With pressures of from impact expectations we're

Harlan Sur

you. Great insights. Thank

Operator

Pitzer next take will Suisse. our Credit we question John with from And

is now Your line open.

John Pitzer

can wanted quarter. your in the you're Bren. the strong back differ theirs? some Rick, investments AI that I you to us prepared talked Thanks in and -- curious How investments go your big might making how Yes. peers you clearly, ML. mean about question. be area. I'd understand incompetency me if on think Rick, incremental of about Thanks, is way you your for that Congratulation letting comments you do have to from upper you you the think as help outstanding ask to this I already there here. about and think hand an actually revenue SAM [ph] capability Or is a as And this, maintain gives share? you bring this maybe influence to the -- out? margin? could is gross mainly margin IP, assuming to would the on be software it be And accretive? what Bren, I'm which this gross seem margin; gross maybe

Rick Wallace

information John, question. now what our AI in because we the working system, ML having look been system that optical And with data. called signal more for out time. just enables manage What in what that handle data been to years has ML for data for thanks so of we've a the in -- also We've systems, much extracting course, but of along for is, data that is and been and that long wafer on AI machine in especially reticle and a enables learning now.

So, continue we upgrades. capability on to have to form as continue or across we AI our products most work proliferated in our another to but has it, manage more add now some of

with to more leveraging existing to example out wavelengths And for we about think squeeze to can is shift one algorithms capability in of work. the past, I the that do way AI where capability, algorithm. have we the in it [ph] answer get So, needed we question, to by may generations your can think more

in So, through the But the for advanced years that why one it capability large ML prior out was share, limitations of node the that few that through brought wafer to thesis additional optical actually optics capability, was take of a we've of example, our created the questions been a systems. AI past was optical EBM and the and the up going and inspection was, ago. of had maybe

do we're other capability capability some some our expanded that metrology it. the now X products, first life are of that other your but in traditionally segments lengthened out the in as applying are wafer also answer it's longer expand So, that's and reticle. of trailing that, expanding more our work of I why But squeezing really question, we that part products, for both is, capability we other driving think lower-end another the has and the we've into lifetime the leveraging is edge of it of way us also [ph]. leverage at those To a inspection into systems Gen opportunities

it's we're by have We're because investment. do But really you're you're So, leverage on, broad far accretive as -- it. -- investment we very across have a getting you if our peers of across products no among going a question leveraging portfolio. it the such because the kind overall we most doing right, we're pretty multiple that we are And amortize the can to way volume, business it's board. the the -- engineering make do, large it's we

speak to how So, that P&L. the can Bren drives

Bren Higgins

biggest think is an in Yes, is extendability or it. Platform of R&D the John. intensity one way another much statement about operating to it's those platforms. more reduction margin over time processes. higher And decisions investment we means I making a a that we make our can dollars. in we on on and get choices return engineering extend We're It product of lifecycle

So we is bringing go to and don't drives which one, the cost as have developing market. product model develop a you're new next what to of significant the

leverage our the extending margins. So, it, in we operating by see

are content terms Now, businesses. have where of in semi-process offerings increasing within just gross company or software whole we the margin, not control, across software

our analytics, selling capabilities, but meaningful more data software point providing value computational inspectors design-based and the KLA get have it to we we're that we're starting we where directly help also other are revenue of that offerings. levels, Now methods, have to in capabilities there, and to simulation the and out get business EPC

more these So, driving dynamics of for complicated, us leverage get roadmaps that are terms also as there solving time. and that think is more good I then a in problems some there margin are of but few technology operating over

John Pitzer

you much. very Thank

Rick Wallace

John. Thanks,

Operator

we And take with Muse from next CJ Evercore. our question will

Your open. now line is

CJ Muse

question. for afternoon. Thanks good the Yes, taking

$XXX about for of implied like As And based million you on, new you're coming control. capabilities guide revenue that that your bringing on it online. think like December, manufacturing sounds about it's it looks is process

impact your the times time that Or what's curious, 'XX? that will demand? lead satisfy So all And pent-up still to margins frame? at extended gross heading will into calendar be

Rick Wallace

Yes, question. CJ. great a It's

as think go, holding I far flat. are times As times lead lead pretty

hoped the to in bit, of that we demand to a had we'd see pull and but challenges continued start those has One increase.

seeing either. a not semi-process comments, they're mix. so a do work things doing that's you in into but in control in December to stronger necessarily Yes, our we're of -- quarter, ramp we're have add extending a demand richer pulling So our and are equipment based lot capacity, the out, on

I'm not carry those richer December a product of products margin quarter going that's next to revenue related but nature you that shipments dynamics this will profile, to come will transitions gross and the shipping. we're capacity the facilities that's given new has recognition that a That So, if pushing are that happening that happen of guide online, quarter. should some

sequential questions? we're So, answer Did the that's also your the part into I growth seeing that quarter. December of higher

CJ Muse

that's sneak If Yes, second in. just could a I great. one

thinking in to be about foundry your lagging-edge, than whether adoption, was logic continued leading-edge, different for anything could wise strength, about you DRAM the about speak and that I think XXXX outlook any could be XXXX? portfolio changes should little you you perhaps we see As EUV you hoping a landscape that talked

Rick Wallace

invest we of And as that statements I made consistent continue terms Yes. edge public think go we there, year. seeing. see to pretty to sustainability, the given what we're with into Really, leading think I have been the overall that's expect just next would in

levels more these coming in side, into addressing customers in that and the other some of also all On edge from and that customers meaningful are past challenges. number funnel the of much industrial, trailing and invested we and haven't more of seeing orders the are some are a trailing that but much backlog, edge automotive of these

mostly to that XXXX. So, a into China. view, P&L actually we we'll shipment this I native start as year, the point and from would to of been think China come revenue move logic-centric business see has

activity would see probably area a China. sustainability visibility think growth growth. plays memory much that in with we And I of through think bit into levels I think Certainly, the year that the but to in to terms have don't out terms how as -- little there there. as is that's next have we we'll I next so, And one more I business in see expect this have year of been logic probably year elevating move

So, and I the those dynamics think planned. are how they're

terms maintain think the to momentum in I of those continue and NAND, been would that through 'XX. to expect seeing we've DRAM I

Bren Higgins

confidence business 'XX. mean, one a We're now 'XX. to we're revenue I CJ, that that's lot our in part filled is for of 'XX. But out add, mean just I of in the booking thing

hasn't up so, know then part the that's our investment we're yet. numbers of are shown the some of And what that to of regain seeing. really And a who lot trying revenue players lead, you in

CJ Muse

you. Thank helpful. Very

Operator

Cowen question next take And Krish we will Sankar & from our with Company.

Your line is now open.

Krish Sankar

for thanks had congrats my on strong and them. of Hi, taking two I question the results.

should you a your grow for mid-teens said Rick is do a I semi-process one half half this XX% different quarter control way, or and Bren. First have December growth. or to question year, want the

if component in decent quarter not give take. impact look industry? around I shortages looks had are at is your And any for the that's affecting the $X.X follow-up. or Is a of proxy December that like So, from friends that, you any some of December And billion, I it then seeing revenues? a

Rick Wallace

Yes.

'XXs control to some that was growth is XX do statement. to to guide What December on perspective you year, not we're going high I'm for trying give specifically. equipment for of semiconductor expectations our the low the So process

We statement about half, another and growing half also well. to that mid-teens company there was talked the so as total

to don't managing I you details to a we we put can provided. daily we with able have teams, get are a parts there the suppliers hopefully, guide challenge, there but the of managing out Components revenue that in be our need. are across across deliver the terms point to factories, So, want our our

investments intrinsic long us into been supply or and lead we commitments to those make provide to that for to Some we've components for move times to that make we us have and are to so, for suppliers that as have to able making be make term, 'XX. decisions decisions

than what So, and our more on more for chain it's with been certainly, it. spending a supply it. with dealing way what we're on to making expect ever it, time we And guidance way happen. I'm today. contemplates years so, best I'm It's we XXXX; context we since We're provided through and CFO I through I've time our a the XX expectations -- spending as our have. and based KLA challenge, we're working know

Krish Sankar

a And strong from actually Got if question sales there also I are follow-up, on ex-China China. it. players to mostly domestic had be helpful. I of you curious, back I'm so try color quarter. out, just And kind kind sales got said of Thanks, players of is to you. a MNCs can your June. Bren. any on June long China? tail kind Or and smaller between had as many And equipment? logic, March a And Obviously, regards in with give your the logic China then, just really declined split do to there you Thank sales in of and China you is would that this very buying foundry any

Rick Wallace

Yes.

You when of have to mix the EPC. business just that company, that's total that includes remember about our so we talk

I like percentage So, China believe, was our XX%.

you process looked about our semiconductor segment, of XX%. percent investment at it's If as a native the control

opportunity of you like China obviously, and to So, logic-centric of that a can specific when number is are different conclusions. targeting around sensors, projects are image that a and extrapolating industrial. the and that in are markets small you're lead those kinds automotive IoT numbers, projects bunch of There

a be there. I lot in online of to coming are which new there going think over cases But activity is lot of time. a So, projects there are

there yes, are. So,

Krish Sankar

very much. you it. Got Thank

Operator

from will Morgan our with Joseph we Stanley. question next take Moore And

is line now open. Your

Joseph Moore

products are older Great, thinking for new you foundry thank -- talk the could if mentioned you how sort sector. you. the about going I looks having see automotive wonder about of it's you And this, like you nodes, for just seeing kind be nodes? you to target foundry a the that in activity you while. have? bit sustainable are actually older more you a business directly a Can what generally, of of And little source than strength

Rick Wallace

Yes. the coming suppliers. a with while us even Sure, automotive help asking them Joseph. really and semiconductors of broadened, course are the years. is, to automotive That's leading been We've actually that been -- customers to recognizing a with it's customers the of engaged to the now few number us What's quite happened going some their contributed shortage of on for that. automotive of for

those we've they're terms of So, where of say, adaptations that cases know, helping have, additional are products would is for I in been reliability, how support we're looking they're whereas of some developing there more automotive, existing traceability provide products in capability fabs. driving that you

an their Obviously, that's us customers automotive was dismay, it now on. outlined for Day in rough yes, but a Analyst start of a lot to their and our was shut to those about, area growth believe talked So, XXXX we down where where we for that plants to XXXX a we area semiconductor are it back continues be.

we're just and to we broaden. products, we is more will the so, players to with those strong that the do a have continue in for will customers, demand that, grow that that there and And see automotive think sustainable and think that's engaging we and of as continue value

the it's SPTS area we So, there. also business that some that Orbotech, that process our also we have through, a on got segment capability works we're and and where of work a focused

than So, us inspection, just it's for broader it's than that. more

a the that exciting. continue we'll to several good pretty progress next and over see It's area think one growth quarters. it's So, it's I

Joseph Moore

Thank very you much.

Operator

Wells from And with we will Quatrochi Fargo. Joe take our next question

Your is now open. line

Joe Quatrochi

your the advanced packaging. question. taking for thanks on Yes, Curious

like in was two you the You differentiation front-end. capital maybe And recently of increasing maybe that contrast packaging? talked know, you the about packaging how curious and position terms on maybe compare for the I your then can how intensity. you drive just front-end touch would in becoming more

Rick Wallace

focused of differentiation couple differentiation more gap, a either of more source on packaging One there the maintaining or as is Joe, I a larger because think player. players And is, with we're there's a as them closing of things. big with more KLA. investment are best a to of know put think at their and seats getting KLA that knowledge and proven the behind table their engagements their I frankly, desire players of

the we capability. So, have

We lower growth of is the it than rate that, the some rate product products. moving. The some there adaptations technology but doing is developments, of but some control We're the course very process support in edge, product significantly in process growth of is have intensity control. leading is of fast, of the

bring I would us execute an it of abundance there capabilities. to have say, new So, to opportunities will on, require but we

in accelerate their can so, customers And end to engaging for there And as you, front that. much we're capabilities roadmap. I are in we're with our we the pool tell customers getting try as as

control, as we growth not strong in is equipment our also SPTS have area some once control as process all well that seeing increase the of in we're as intensity process and just So, we and inspection again leveraged with PCB business, process isn't it's measurement. being which the

we growth. Investor We a consistent Day. lot potential do laid of we at So, out strong see XXXX our with plans in see the

Bren Higgins

You so on a us to We're that also for market. to have board the new moving package IC the integration forward. address good and that's PCB driver substrate better of the working into capability

finished growth Probably very as ICOS. is ICOS' today an is that We're component fastest-growing driving inspection strong the also complexity inflection also that We well. seeing EPC in is in part business the that packages, -- market is inspecting the so market. through of

dependent opportunities us it's lot and there's have are of positions of do relationship different as of market. we think customers some to bringing I a new there. to the So, us But across capability with different trying more leverage to certainly, said trying number a applications, leverage Rick to on the

Rick Wallace

Yes. And do developments with the can number of some contemplating. that we and more million a than on ahead just that, plan put we said to we're it, We're of in $XXX XXXX. beat

encouraged more. we're we to do we're that seeing these now customers. I by we've signs engaging that And the So, with and think and getting the got can perform products to

Joe Quatrochi

helpful. you. Super Thank

Operator

We will take our Ho with next from Stifel. question Patrick

line now is open. Your

Patrick Ho

kind quarter long-term picture, the customers. or congrats and and for and few nice control will I are the off, board working outlook. the outlook positioning it probably you gate-all-around maybe your on first becoming big much be is very of know And years. in the [ph] coming next industry on you with Thank your Rick, process

go only you opportunities How gate-all-around industry materials as benefit new when you in where you You've to transistors. see do incremental that transistor FinFET incremental but seeing to are got materials the more an transitions area. the not

Rick Wallace

thing you as ramped. control, that our process for get transitions, present And process figure with any question. great know, out customers first these of how the our a need technology business, it's the Yes, all is to inflections because opportunity to

the is detect that important some we're in It's lower So, and the what that for also great ways inspection advanced very X wafer rates seeing Gen really case the adoption we important indicators X I for but adaptation the of be to additional than matters, does. Gen defectivity in Gen of X Gen contrast. X need capability. that's is more the to smaller portfolio for the going because gate-all-around, think to where

been And doing with of customers tune our capability. so, that our to we've the some for development has been advanced products transistor

work it XX time inflections, that's it you'll doing. that and outgrows why from to logic see increase is that but is a is we The result But provided it new So, that I see a of on long think it a support the as control which that's of up a blended what adds we'll process if what in point the the on between relatively of way have effect we control modeled those a products creep over continued the over memory. up term think aggregate, intensity and the process we going you'll cumulative to see half we've the order is modest of XX.X percentage been intensity. we're course, it, depending WFE lot

So, we feel support like we're really do our good to that. to position customers

Patrick Ho

my years? question may meet expanding you, And growing growing business you tends are is What not systems, than that investments base Services you're installed penetrated. you bringing also well. the at. some to of and helpful. the Bren, investments, trend picking investments We but target as talked grows, semi given up in near on are make do and also that's next few a looking about Great, look service-intensive is some of only board shipments. rapidly increased you've given making. services term that for follow-up service the faster your CAGR capacity, over of very be people that, terms at need types they growth it's mentioned are to the quite the the How marketplaces secular signs growing of the in services showing both marketplace as to be more PCB that you And

Bren Higgins

more investment their these smaller infrastructure the the just when of That's trying look Acquired business given to And the service has thesis a a of footprint. a component service great we to businesses KLA -- get transactions. out of of acquired one question. of parts And the is leverage size at to kinds companies have been our time certainly of companies. the key trying for nature support be have hard to able a broad

our now infrastructure to engage able being how So, we is different. the with go-to-market leverage those different, customers is

that. we infrastructure we the investments So, the is Certainly, to We leveraging a the is back scale business China is us the great think to XXXX now support build seeing make. and made we're to a that infrastructure I we big XXXX on for have cost I element. in up new see China help We so if out to investments, bring of there and because for dynamics think to and made part big need great we those With some that. of are some the our opportunities to fabs places. bring of do customers us facilities have build regionalization in kinds there, capability that and are those us capability up, that popping think help we on them to new our rely

in lot the whenever KLA. new teams diagnosis problems so, our for depending more We're creates on from a tool here or happening. from a diagnostic, diagnostics, remote fab big do back opportunity so development working geography, we from these they're factory a capabilities, what's a on And can remote new it building

challenges the of COVID getting in people situation. we when escalation have been an out has and obviously, One in

them the it's view. that lifetime strength a just the from think utilization areas customers but of I the lengthening the a those WFE, are and growth point are how in of and using also So, for of of kinds we're the of investing given terms us tools on opportunity great

Rick Wallace

support is And now biggest then, in investment right the really Yes. the that. workforce to

we're Bren mentioned, working on as that. so, And

as growth is continued out talent know, hiring, that for we demand well a think the is there training, done we've there. on-boarding I anticipate with. But as area you an big

and to So, we keep it, keep hiring doing training. that on have

So, that's going workforce. probably the over to biggest be area the investment, time of that's

Patrick Ho

thank you. Great,

Operator

our take UBS. from will Arcuri Timothy with we And next question

now is open. line Your

Timothy Arcuri

had question. I clarifications, Hi, Bren. thanks. And I then had a real two

a The clarifications comment. you are, the that first revenue two comment made half-on-half, XX% corporate about was

was the a systems your Somebody year. attach comment. I that comment but up think revenue comment to I half-on-half mid-XX, That control corporate process a was think to like XX% high-XXs -- don't Correct? for systems, process control

Bren Higgins

of I aggregate first questions. attempted earlier That's the mid-teens. yes, to correct, That's versus that right. second But company in total half, clarify And yes. revenue the you're one expectation half

Timothy Arcuri

systems revenue. the that domestic it's you of of Perfect. Because clarification, say control And WFE, like did is then total second WFE. XX% XX% your China process

Bren Higgins

quarter completed. that the we just In

Timothy Arcuri

Yes.

Okay, got it.

Okay.

So for guess. my real I question,

So about you actinic. to big microprocessor EUV. for wanted more pushing And that's now to and ask NA maker you on high it's really use I always Otherwise, the been NA. Tier aggressively the Xxx now high have

accelerate going timeline actinic? you are your development for to So,

Rick Wallace

NA. a the the Yes. capability high it Tim, it's question. needed for is great confident have we we We need will when that feel

is, will and So, is particular, when feel the actually that for we're Xxx, that the we question high with what I the capability in the in we with believe market continued the Xxx we be products understand NA. seeing your there needed have, that we

Bren Higgins

on clarify also China statement. to just Tim, the Hey,

quarter. segment, So, XX% which the that's revenue control It of the in the service. semiconductor the includes process was June of

Timothy Arcuri

service. see, including I

you much. Bren. Okay, so Thank

Operator

take Bank And we will next with America. Vivek question Arya of from our

Your open. line is now

Vivek Arya

hypothetically, a I'm different are right XXX how next the online say bring my I much for are year, from Or planning guess let's billion next asking to of XX is year? your additional prepared you taking way capacity that if perspective? you Thanks WFE or curious support is, question. billion question to capacity

Rick Wallace

run And make is for given the for I good these long interesting demand the expectations expectations forward to multi-year Yes Vivek, we that feel we're incremental our over that's I ramp in to an are trying us support move what up we question. WFE. have as right customer growth now. for to now, investments And do have. like capacity

rising market intensity few the of of given at investments next end in I talking strength we least in capital to that semiconductor the than WFE that. would the we're over think with revenue with grow faster probably some drivers about, years, WFE the line that expect see

we're these So, that very a tools are from terms technology of to of have given just demand of our moving we're make to statement. that our how platforms and sure that our able time for demand. in lifetime to being investments important respond of to cycle of a the to a to over that continuing support investments be customer are through point able shipping environment kind we sort of and But extendability terms flexibility the broad to these environment of invest in the view, forward us

we've what of half statements of as at the in see any terms seen 'XX terms our look in in that. we strong expectations, me -- terms for see that's as to I make the the right don't I of second of it managing much least we're I So, as in half terms in to beyond backlog year, what in how how funnel -- and it's first think at the hard of it. of in now want

Bren Higgins

to would I have and thing can everything you've one we But customers' contemplated size numbers of plans. get about, the are more capability talked think is, the to it. in desire sooner I our we our add we're cognizant we doing

Vivek Arya

point to tell capacity That have a because you on that can. more that just shipping all not at follow-up now the do utilization track foundries of what that levels you Maybe players of the usage quite on scrambling whatever headlines it's you crunch, I to At you to own. customers -- trying you high the ship? and right sense your if what the what's is Like, demand dashboard there are add of what capacity. become that a quick the are that around you're who pull-forward their equipment do is

Rick Wallace

Yes.

to all the a the mechanism looking say mean and the a everyone bit I which And has could equipment when ability track self-governing usage. that back that's little industry all to up of I it, actually would if at time. metric right from them demand. they companies take a But talk would is we in to shipments we're course, that Of the more sooner. ramp I the get you think now, the they customers,

'XX. ASML a is And there you've about EUV talk heard, through natural governance. So, sure I'm

So, it's governed that. naturally by

think good place this point. sustained So, I don't -- a for run I we're in at a

Kevin Kessel

Thanks time, for that. last one like Britney, looks have question. for it we

Operator

final our with And we take from question Deutsche will Bank. Ho Sidney

Your line is now open.

Sidney Ho

my question. taking for Thanks Great.

there -- speaking new of is obviously, start this start about, investment you multiyear So, plans do there months. fabs the those do expect a lot of And revenue you new coming in? those that past investment being when expect just announced for talked to to in seeing fab When you? generating orders few you

Rick Wallace

deliveries already think into Well, be some the orders, customers the products, for And in of a I we're lot seeing from cases, XX now. deliveries. queue are So, that in could getting right? months

are for across to facilities. planning types trying different absolutely as it's customers of their commitments of happening lot Obviously, and those plan they they're equipment. So, a make

And bit. a move cycles so, planning around those little tend to

on and they also business Sometimes and on. ramps dependent so are winning product

infrastructure in the course, little happen just in absolutely that construction with and demand of But try the then a always there's that generally the certainly always sales and seeing of something, backlog And overall. to build associated timing. funnel. we're you and variability there's delays around bit can So, yes, pull-ins as

Sidney Ho

of with can auto process great. side talk side Maybe the Thanks. about things. the Okay, you of and a for questions still on in the on assumption growth And display this is given realistic the it's but, without semi strength business, XX% EPC year control maybe or my lot XG? a follow-up;

Rick Wallace

Including display, high for that business. teens the Yes. we're in

seeing I think that's of tied we're strength is mobility little to expected about strength. and Obviously, So, mentioned is we're moving is we XG. as strength, Especially, very a about seeing component plan seeing there. PCB earlier semiconductor so along. bit and also I ahead it's inspection. Display

that up out terms So, group. that expectations pick product seeing growth in yes, for of of we're

Sidney Ho

Okay, Thanks. great.

Operator

I would Kessel, now Kesseler over like to or any turn additional the apologize to -- Kevin I back closing program remarks. for

Kevin Kessel

And much. and their for everybody thank interest, Thank their to time, their wanted you questions. very

be We care. will touch. Take in

Operator

have a June This post wonderful disconnect and concludes your XXXX time call. line at quarter today's earnings KLA Please day. Corporation this

KLA (KLAC) 30 Jul 212021 Q4 Earnings call transcript