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KLA Corporation (KLAC) J.P. Morgan 52nd Annual Global Technology, Media and Communications Conference (Transcript)
KLACKLA(KLAC)2024-05-21 17:16

Industry and Company Overview * Industry: Semiconductor equipment spending environment, wafer equipment (WFE), process control, and specialty segments. * Company: KLA Corporation (NASDAQ: KLAC), a leading provider of process control and inspection solutions for the semiconductor industry. * Key Participants: Bren Higgins, Executive Vice President and CFO of KLA, and Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst at J.P. Morgan. Key Points and Arguments * 2024 Industry Outlook: The semiconductor industry is expected to experience a transitional year in 2024, following a strong 2023. WFE spending is projected to remain flat to slightly up, with a total of approximately 90billionin2023andasimilaroutlookfor2024.∗∗∗KLA′sGrowthOutlook∗∗:KLAexpectssequentialgrowththroughout2024,withhighsingle−digitgrowthinthesecondhalfcomparedtothefirsthalf.Thecompany′sservicebusinessisexpectedtogrowbetween90 billion in 2023 and a similar outlook for 2024. * **KLA's Growth Outlook**: KLA expects sequential growth throughout 2024, with high single-digit growth in the second half compared to the first half. The company's service business is expected to grow between 250 million and 300million,whiletheEPCbusinessisprojectedtogrowmodestlyinthemidtohighsingledigits.∗∗∗ProcessControl∗∗:KLA′sprocesscontrolbusinessisexpectedtogrowastheindustrytransitionstomoreadvancednodesandtechnologies.Thecompany′sstrongpositioninopticalinspectionandotherkeyareaspositionsitwellforgrowth.∗∗∗AdvancedPackaging∗∗:KLAhasastrongpositioninadvancedpackaging,witha300 million, while the EPC business is projected to grow modestly in the mid to high single digits. * **Process Control**: KLA's process control business is expected to grow as the industry transitions to more advanced nodes and technologies. The company's strong position in optical inspection and other key areas positions it well for growth. * **Advanced Packaging**: KLA has a strong position in advanced packaging, with a 400 million annualized revenue run rate. The company expects this market to grow significantly over the next few years, driven by increasing complexity and demand for higher-value solutions. * Services: KLA's services business has been a key driver of resilience during downturns. The company expects this business to reaccelerate to its long-term growth target of 12% to 14% CAGR over the next few years. * Financial Targets: KLA remains confident in its financial targets for 2026, including 14billioninrevenues,6314 billion in revenues, 63% gross margins, and 38 in earnings power. Additional Important Points * Supply Chain: KLA has faced supply chain challenges, particularly in optical pattern inspection, but is working to improve capacity and meet demand. * China: KLA has faced market access restrictions in China, but remains confident in its position and ability to win business. * Competitive Landscape: KLA maintains a strong market share position in process control, with a significant lead over its competitors. The company expects this position to continue to strengthen as it invests in R&D and product innovation. * Investment in R&D: KLA continues to invest heavily in R&D, focusing on new technologies and solutions to meet the evolving needs of the semiconductor industry.