KLA Corporation (KLAC) BofA Securities 2024 Global Technology Conference (Transcript)

KLA Corporation Conference Call Summary Company Overview - Company: KLA Corporation (NASDAQ: KLAC) - Industry: Semiconductor Equipment Key Points and Arguments Financial Targets and Growth Expectations - KLA set a target of 9% to 11% topline growth, aiming for $14 billion in sales and$ 38 in earnings by 2026 [2][11] - Semiconductor revenue growth is projected at approximately 6% to 7%, with expectations of a $1 trillion semiconductor revenue market by 2030 [3][4] - The company anticipates a growth rate of 7% to 8% in the wafer fab equipment (WFE) market, driven by rising capital intensity [3] Market Dynamics and Investment Trends - The mix of logic/foundry WFE is expected to exceed 60%, which is crucial for KLA due to the higher process control intensity in this segment compared to memory [5][6] - KLA's position in process control is significantly stronger than competitors, with a market share approximately five to six times larger than the nearest competitor [6] - The company expects its systems business to grow around 10%, with service business growth updated to 12% to 14% through the cycle [7][12] Service Business Insights - KLA's service revenue is less correlated to WFE and more aligned with semiconductor revenue, providing a predictable revenue stream [14][18] - The service business has shown resilience, growing every year except for 2009, with a mid-high single-digit growth last year despite lower utilization rates in the industry [18][21] Market Outlook and Demand - The second half of 2024 is expected to show sequential growth, with mid-high single-digit growth anticipated in the WFE market [23][24] - Leading-edge investments are a significant driver for KLA, with expectations for growth in the 2-nanometer node and strong demand from high-performance computing (HPC) and AI sectors [25][26] - Memory market dynamics are improving, with signs of better financial performance and inventory management among memory customers [26] Advanced Packaging and Market Position - KLA's advanced packaging business is projected to grow from$ 400 million to potentially $450 million to$ 500 million, driven by AI market improvements [37][38] - The company participates in various advanced packaging processes, including plasma dicing and TSV formation, and is well-positioned to capitalize on increasing complexity in semiconductor packaging [39][41] Supply Chain and Capacity Management - KLA has invested in its supply chain to ensure capacity for future demand, with lead times for products generally around nine months [50][51] - The company is prepared for strong demand in 2025, particularly in foundry/logic investments and improving memory dynamics [52] Additional Important Insights - KLA's service contracts are primarily subscription-based, contributing to predictable revenue streams [7][12] - The company has made strategic decisions to exit less profitable segments, such as the flat-panel business, to focus on higher-growth areas [9] - KLA's gross margins are expected to remain strong, with a target of 63% plus as the company scales its operations [11]