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KLA CORP

KLAC
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Business Summary

KLA Corporation operates in the semiconductor capital equipment industry, supplying advanced process control and process-enabling solutions for manufacturing wafers, reticles/masks, chemicals/materials, integrated circuits, packaged ICs, and printed circuit boards. The industry is cyclical and highly competitive, with competition based on brand recognition, product quality, price, and innovation. KLA's services business accounted for approximately 23% of total revenues in fiscal 2026, providing maintenance and other services to maximize uptime, productivity, and tool life for customers.

Primary competitors are not named in the filing. The company's competitive advantages include its suite of advanced products coupled with unique process control software and services that help customers achieve technology advancement and high-volume production goals by improving yields while reducing waste, risks, and costs, thereby improving customers' overall profitability and return on investment.

KLA generates revenue through the sale of equipment and services across three reportable segments: Semiconductor Process Control, Specialty Semiconductor Process, and PCB and Component Inspection. The services business, which accounted for approximately 23% of total revenues in fiscal 2026, provides maintenance and other services to maximize uptime, productivity, and tool life for customers. Revenue is derived from product sales and service contracts, with a mix of transactional equipment sales and recurring service income.

The Semiconductor Process Control segment provides a comprehensive portfolio of inspection, metrology, and software products, as well as related services, to help IC, wafer, reticle/mask, and chemical/materials manufacturers achieve target yields throughout the entire fabrication process, from R&D to final volume production. This segment generated revenue of $7,281 million in fiscal 2026, compared to $7,156 million in fiscal 2025 and $6,108 million in fiscal 2024. The Specialty Semiconductor Process segment develops and sells advanced vacuum deposition and etching process tools used by manufacturers of microelectromechanical systems, radio frequency communication semiconductors, and power semiconductors for automotive and industrial applications. This segment reported revenue of $1,003 million in fiscal 2026, compared to $1,088 million in fiscal 2025 and $1,049 million in fiscal 2024. The PCB and Component Inspection segment generated revenue of $1,059 million in fiscal 2026, compared to $1,031 million in fiscal 2025 and $1,019 million in fiscal 2024.

The Semiconductor Process Control segment's products and services are designed to provide comprehensive solutions to help customers accelerate development and production ramp cycles, achieve higher and more stable product yields, and improve their overall profitability. The Specialty Semiconductor Process segment's advanced vacuum deposition and etching process tools serve a broad range of specialty semiconductor customers. The PCB and Component Inspection segment provides inspection solutions for printed circuit boards and components.

During fiscal 2026, KLA repurchased 7,706,000 shares of its common stock for $5,500 million . The company also paid cash dividends of $1,200 million to stockholders. In February 2024, KLA issued $500 million of 5.250% Senior Notes due 2034 and $500 million of 5.500% Senior Notes due 2052. In November 2024, KLA repaid $500 million of 3.300% Senior Notes due 2024. The company maintains a Revolving Credit Facility with a capacity of $1,500 million , of which no amounts were outstanding as of June 30, 2026.

Total revenues for fiscal 2026 were $9,343 million , compared to $9,275 million in fiscal 2025 and $8,176 million in fiscal 2024. Net income was $2,793 million in fiscal 2026, compared to $2,786 million in fiscal 2025 and $2,405 million in fiscal 2024. Diluted earnings per share were $20.64 in fiscal 2026, compared to $20.18 in fiscal 2025 and $17.33 in fiscal 2024. Gross margin was 60.0% in fiscal 2026, compared to 60.1% in fiscal 2025 and 59.8% in fiscal 2024. Cash provided by operations was $3,419 million in fiscal 2026.

Business Outlook

KLA's growth is driven by investments by customers in advanced technologies and new materials, as well as technological trends in the semiconductor industry. The company focuses on developing new products and product features to address changes in the industry, including artificial intelligence related developments and changes in semiconductor manufacturing processes. The company's future product offerings and product features are expected to support customer investment patterns and end-market demand.

The company's growth is also supported by its services business, which provides maintenance and other services to maximize uptime, productivity, and tool life for customers, generating recurring revenue. KLA's international operations, particularly in China, Taiwan, Korea, Japan, Europe, and Israel, represent significant growth vectors, with China accounting for 44% of total revenues in fiscal 2026, compared to 42% in fiscal 2025 and 43% in fiscal 2024.

Management expects future gross margins to be influenced by product mix, volume, and cost structure. Research and development expenses were $1,447 million in fiscal 2026, compared to $1,393 million in fiscal 2025 and $1,247 million in fiscal 2024. Selling, general and administrative expenses were $1,025 million in fiscal 2026, compared to $1,016 million in fiscal 2025 and $942 million in fiscal 2024.

KLA's operational outlook includes reliance on third-party service providers and critical information systems, including its enterprise resource planning system for daily operations. The company faces risks related to disruptions and delays at third-party service providers and cybersecurity threats affecting its and its business partners' systems and networks. The company's manufacturing capacity and supply chain are subject to availability and cost of components, materials, or subassemblies, including due to limited-source suppliers, the availability of rare earth elements, or DRAM chip shortages.

Research and development spending was $1,447 million in fiscal 2026. Capital expenditure plans are not explicitly quantified in the filing beyond the context of property, plant, and equipment. The company repurchased 7,706,000 shares for $5,500 million in fiscal 2026 and paid cash dividends of $1,200 million . The company maintains a Revolving Credit Facility of $1,500 million with no outstanding borrowings as of June 30, 2026.

Headwinds include the cyclicality of the semiconductor industry, vulnerability to a weakening in the condition of financial markets and the global economy, and risks related to international operations. Evolving Bureau of Industry and Security rules and regulations from the U.S. Department of Commerce impact the company's ability to sell products to and provide services to certain customers in China. Tariffs, retaliatory trade measures, and other trade restrictions, as well as uncertainty regarding tariff authority, implementation, and refund process, represent significant constraints.

Additional constraints include costly intellectual property disputes that could result in inability to sell or use challenged technology, risks related to the legal, regulatory, and tax environments, and differing stakeholder expectations regarding environmental, social, and governance matters. The company also faces risks from climate change, natural disasters, public health crises, terrorism, acts of war, and other catastrophic events, including the war between Ukraine and Russia and the armed conflict in the Middle East.

Risk Factors

KLA faces material risks from evolving Bureau of Industry and Security rules impacting sales to certain customers in China, which accounted for 44% of total revenues in fiscal 2026. The cyclicality of the semiconductor capital equipment industry creates vulnerability to downturns in customer investment patterns and end-market demand. The company relies on a highly concentrated customer base, with the largest customer representing a significant portion of revenue. Tariffs, retaliatory trade measures, and other trade restrictions, including uncertainty regarding tariff authority and implementation, pose direct risks to the company's supply chain and international operations. Additionally, the company depends on limited-source suppliers for components, materials, and subassemblies, including rare earth elements and DRAM chips, and any disruption could materially affect production and revenue.

Management Priorities

Management's message emphasizes the company's role as a supplier of industry-leading equipment and services enabling innovation throughout the electronics industry. Key themes include the importance of advanced process control and process-enabling solutions for manufacturing wafers, reticles/masks, chemicals/materials, integrated circuits, packaged ICs, and printed circuit boards. Strategic priorities include helping customers achieve technology advancement and high-volume production goals by improving yields while reducing waste, risks, and costs, thereby improving customers' overall profitability and return on investment. Management also focuses on the services business, which accounted for approximately 23% of total revenues in fiscal 2026, to maximize uptime, productivity, and tool life for customers. Forward-looking statements include forecasts of future results of operations, including profitability, orders for products and capital equipment, sales of semiconductors, investments by customers in advanced technologies and new materials, and growth of revenue in the semiconductor industry and the company's business.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Segment Information
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  8. [8] Item 1, Business — Segment Information
  9. [9] Item 1, Business — Segment Information
  10. [10] Item 5, Market for Registrant’s Common Equity — Issuer Purchases of Equity Securities
  11. [11] Item 5, Market for Registrant’s Common Equity — Issuer Purchases of Equity Securities
  12. [12] Item 8, Note 14 — Earnings Per Share and Dividends
  13. [13] Item 8, Note 8 — Debt
  14. [14] Item 8, Note 8 — Debt
  15. [15] Item 8, Note 8 — Debt
  16. [16] Item 8, Note 8 — Debt
  17. [17] Item 8, Consolidated Statements of Operations
  18. [18] Item 8, Consolidated Statements of Operations
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  26. [26] Item 7, MD&A — Consolidated Results
  27. [27] Item 7, MD&A — Consolidated Results
  28. [28] Item 7, MD&A — Consolidated Results
  29. [29] Item 8, Consolidated Statements of Cash Flows
  30. [30] Item 1, Business — Geographic Information
  31. [31] Item 1, Business — Geographic Information
  32. [32] Item 1, Business — Geographic Information
  33. [33] Item 8, Consolidated Statements of Operations
  34. [34] Item 8, Consolidated Statements of Operations
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  37. [37] Item 8, Consolidated Statements of Operations
  38. [38] Item 8, Consolidated Statements of Operations
  39. [39] Item 8, Consolidated Statements of Operations
  40. [40] Item 5, Market for Registrant’s Common Equity — Issuer Purchases of Equity Securities
  41. [41] Item 5, Market for Registrant’s Common Equity — Issuer Purchases of Equity Securities
  42. [42] Item 8, Note 14 — Earnings Per Share and Dividends
  43. [43] Item 8, Note 8 — Debt
  44. [44] Item 1, Business — Geographic Information
  45. [45] Item 8, Consolidated Statements of Operations
  46. [46] Item 8, Consolidated Statements of Operations
  47. [47] Item 8, Consolidated Statements of Operations
  48. [48] Item 8, Consolidated Statements of Operations
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  50. [50] Item 8, Consolidated Statements of Operations
  51. [51] Item 8, Consolidated Statements of Operations
  52. [52] Item 8, Consolidated Statements of Operations
  53. [53] Item 8, Consolidated Statements of Operations
  54. [54] Item 7, MD&A — Consolidated Results
  55. [55] Item 7, MD&A — Consolidated Results
  56. [56] Item 7, MD&A — Consolidated Results
  57. [57] Item 8, Consolidated Statements of Operations
  58. [58] Item 8, Consolidated Statements of Operations
  59. [59] Item 8, Consolidated Statements of Operations
  60. [60] Item 8, Consolidated Statements of Cash Flows
  61. [61] Item 8, Consolidated Balance Sheets
  62. [62] Item 8, Consolidated Balance Sheets
  63. [63] Item 1, Business — Segment Information
  64. [64] Item 1, Business — Segment Information
  65. [65] Item 1, Business — Segment Information

Analysis on 8/6/2026