Kla Corporation · NASDAQ:KLAC

Kla — Investor Day (June 2022)

142 slides from Kla's investor day presentation, Jun 16, 2022

  1. Slide 1: 2022 KLA Investor Day

    2022 KLA Investor Day New York City • June 16, 2022 1

  2. Slide 2: Welcome and Opening Remarks

    Welcome and Opening Remarks Kevin Kessel VP, Investor Relations and Market Analytics

  3. Slide 3: Today's Agenda – June 16, 2022

    Today’s Agenda – June 16, 2022 8:30 am Welcome and Agenda Overview 10:05 am Growing a Durable Revenue Stream Through Kevin Kessel Best-in-Class Services Business VP, Investor Relations and Market Analytics Brian Lorig EVP, Services 8:35 am Sustainable Outperformance 10:30 am 10 Min Break Rick Wallac

  4. Slide 4: Disclaimer

    Disclaimer Statements in this presentation other than historical facts, including but not limited to: (i) future trend of digitization, semiconductor and EPC industry growth and evolution; (ii) geographic breakdowns of future global semiconductor production; (iii) our results of operations and finan

  5. Slide 5: Reaffirming June Quarter 2022 Guidance

    Reaffirming June Quarter 2022 Guidance (Originally published April 28, 2022) June 2022 Quarter Macro Assumptions  Semi PC Revenue By End Revenue $2,300M to $2,550M Market  Foundry/Logic: 56% Non-GAAP  Memory: 44% 61.50% to 63.50% Gross Margin* Model Assumptions  Non-GAAP Operating GAAP Diluted E

  6. Slide 6: Sustainable Outperformance

    Sustainable Outperformance Rick Wallace President and CEO

  7. Slide 7: Today's Key Themes

    Today’s Key Themes The semiconductor industry has become essential to a large number of industries 1 and geographies and is expected to grow and change in ways that benefit KLA Our portfolio of innovative solutions positions the company for sustained 2 outperformance as Process Control becomes more

  8. Slide 8: Reflecting on Our September 2019 Investor Day

    Reflecting on Our September 2019 Investor Day  Resilient business model positions us well to capture expanding growth opportunities What We Knew What’s New Semi demand was accelerating across a broad base New design starts accelerated on diversified end markets  The introduction of EUV enables the

  9. Slide 9: Digitization of Everything Driving Strong Industry Revenue Growth

    Digitization of Everything Driving Strong Industry Revenue Growth Semiconductor Revenue Estimated to Exceed $1T by 2030 – CAGR ~7% 1,000 More industries designing at the leading-edge than ever before 800 Ecosystems Driving Leading Edge Growth Semiconductor Revenue $B 600 Data 400 PCs Drove Industry

  10. Slide 10: Scaling Resumed at 7nm with EUV and Moore's Law Pace is Just Right

    Catalyst for Return to Growth Scaling Resumed at 7nm with EUV and Moore’s Law Pace is Just Right 100% Cost/Transistor vs. 90nm 90nm  28nm 28nm  10nm 10nm  2nm ~22% CAGR Decrease ~13% CAGR Decrease ~23% CAGR Decrease 10% EUV 90nm 65nm 45nm 28nm 20nm 16nm 10nm 7nm+ 5nm 3nm* 2nm* 1% Moore’s Law Driv

  11. Slide 11: Rapid Growth of Design Starts is Fueling Growth

    Rapid Growth of Design Starts is Fueling Growth >50% Increase in Design Starts and WSPM 1 at 7nm 2 Design Starts have become 3 rd Year After Introduction WSPM more affordable driven by:  Foundry ecosystem  Massive design libraries  AI driven design tools Design starts  Incentive programs for sta

  12. Slide 12: Supply Chain Regionalization is Driving Significant Investments

    Supply Chain Regionalization is Driving Significant Investments Asia: China 14th 5-Year Plan Korea K-Belt Percentage of Initiative Japan, Singapore Semi Production* EU Digital & Malaysia Compass & Govt. Subsidies Country Investments U.S. Fabs 4 53% 50% Act and 48 70% 80% CHIPS Act 10 19% 20% 13% 28%

  13. Slide 13: KLA is a Diversified Leader in the Electronics Value Chain

    KLA is a Diversified Leader in the Electronics Value Chain KLA at a Glance (NASDAQ: KLAC) Founded in Headquarters in 19 1976 Milpitas, CA Countries ~13,200 $8.2B >65% PhD/Master’s among Employees (CY21) CY21 Revenue professional roles 13

  14. Slide 14: Proven Leadership Team Utilizing the KLA Operating Model

    Proven Leadership Team Utilizing the KLA Operating Model to Drive Collaboration, Innovation, and Execution Rick Wallace Bren Higgins Ahmad Khan Oreste Donzella Brian Lorig CEO & EVP, CFO & President, Semiconductor EVP, Electronics, Packaging EVP, President Global Operations Process Control and Compo

  15. Slide 15: ESG at KLA

    ESG at KLA Environmental  Began annual reporting of global climate emissions in 2021  100% renewable electricity commitment by 2030  $1.5B sustainability-linked revolving credit facility Social  First inclusion and diversity (I&D) disclosure in 2020  Driving cultural change to benefit from I&D

  16. Slide 16: KLA Strategic Planning Process Drives Targets to Meet Objectives

    KLA Strategic Planning Process Drives Targets to Meet Objectives  Market size, trends, drivers KLA Strategic Planning Environment  Governance of the annual plan  Opportunities  Check in and update market Priorities  Corporate priorities and financial objectives drivers & environment  Identify

  17. Slide 17: The KLA Operating Model Guides Our Strategy and Differentiation

    The KLA Operating Model Guides Our Strategy and Differentiation Consistent Strategy and Execution  Application of common processes and discipline  Cascades throughout the organization  Strong focus on talent development Management by Metrics  Culture of performance and accountability  Expectati

  18. Slide 18: The KLA Operating Model Guides Our Strategy and Differentiation

    The KLA Operating Model Guides Our Strategy and Differentiation KLA Operating Model at Work  Common language across multiple divisions  BKMs implemented across acquired companies  Operational rigor to prioritize performance  Scorecard measurement against progress Scorecard Example by Business Gr

  19. Slide 19: How We Approach Product Development with the KLA Operating Model

    How We Approach Product Development with the KLA Operating Model Collaboration  Work closely with customers in early process technology development  Work closely with suppliers' early technology development  Work across KLA to reuse applicable technology Innovation  Invest heavily in core techno

  20. Slide 20: Hybrid R&D Structure for Strong Customer Focus

    Hybrid R&D Structure for Strong Customer Focus Semi PC EPC Services Product Specific Technology and Engineering Engineering Group Pro Engineering ~2,100 design engineers ~400 design engineers ~90 design engineers Central + distributed R&D produces differentiated products Long Range, Highly Different

  21. Slide 21: Innovation on Core Technologies Across Multiple Product Lines

    Innovation on Core Technologies Across Multiple Product Lines Laser Illumination Image Sensors, Cameras DUV/UV, Visible, IR, Precision Stages, e-Beam, X-ray Optics Motion Control, Robotics High-Speed Data Processing, Broadband Plasma High-Performance Computing Illumination AI, Algorithms, Machine Le

  22. Slide 22: Semi PC Continues to Lead the Industry

    Semi PC Continues to Lead the Industry 6,000 Semi PC System Revenue 5,000  Innovative and differentiated 4,000 process control portfolio $M 3,000  Deep customer relationships 2,000 to deliver right products at 1,000 the right time 0 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21  Sig

  23. Slide 23: EPC Represents an Attractive Growth Vector for KLA

    EPC Represents an Attractive Growth Vector for KLA EPC Systems Revenue ~15% CAGR $M 6,000-10,000 semiconductors per vehicle 1 CY19 CY20 CY21 CY22E Automotive: zero defect, new materials EPC Operating Income ~40% CAGR $M CY19 1 CY20 CY21 CY22E Advanced packaging: semi roadmap enabler Demonstrated the

  24. Slide 24: Our Services Business Provides Visibility and Resiliency

    Our Services Business Provides Visibility and Resiliency KLA Services Revenue 1 Highest percentage of pure service revenue 2,000 in the industry 1,500 Resilient and predictable revenue stream $M 1,000 500 Funds R&D, M&A, Dividends 0 Exponential revenue growth: $1B in 40 years, $2B in 4 years Service

  25. Slide 25: KLA's Revenue Growth is Accelerating into the Digitization Era

    KLA’s Revenue Growth is Accelerating into the Digitization Era Digitization Era  Diversified semi markets  Datacenter and cloud expansion PC + Mobile Era  Automotive electrification 12,000  Reduced cyclicality  COVID-19 accelerated digitization 10,000  Emergence of foundry  AI & 5G PC Era  C

  26. Slide 26: Track Record of Revenue Growth and Free Cash Flow Generation

    Track Record of Revenue Growth and Free Cash Flow Generation Revenue Free Cash Flow 1 10,000 3,500 9,000 3,000 8,000 7,000 2,500 6,000 2,000 $M $M 5,000 1,500 4,000 3,000 1,000 2,000 500 1,000 0 0 2 2 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22E CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY2

  27. Slide 27: Product Differentiation and Operational Excellence Drive Success

    Product Differentiation and Operational Excellence Drive Success Product Differentiation Operational Excellence Measured by Gross Margin 1 Measured by Operating Margin 1 50% 70% KLAC 40% KLAC 60% 30% 50% 20% 40% 10% 30% 0% CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY11 CY12 CY13 CY14 CY

  28. Slide 28: Sustainable Outperformance Drives Strong Results & Achievements

    Sustainable Outperformance Drives Strong Results & Achievements Collaboration, Innovation and Execution are critical to our success 2019 Commitments for 2023E Targets Results New 2026E Targets Based on 2021 Growth 7-9% revenue growth  9-11% revenue growth CAGR from 2021 – 2026E 6-7% revenue CAGR an

  29. Slide 29: The Future is Bright

    The Future is Bright Sustainable outperformance driven by KLA Operating Model $14B $38 2026E Target Model powered by collaboration, innovation, +/- $500M +/- $1.50 and execution Target 2026E Target 2026E Revenue Diluted EPS* Optimizing total shareholder return with a focus on assertive capital alloc

  30. Slide 30: Key Takeaways

    Key Takeaways 1 2 3 4 5 The semiconductor Our portfolio of We have a history of We demonstrated Our resilient business industry has become innovative solutions enabling innovations the strength of our model powered by essential to a large positions the and we continue to Operating Model by our portf

  31. Slide 31: Semi PC – Outperformance Roadmap

    Semi PC – Outperformance Roadmap Ahmad Khan President, Semiconductor Process Control

  32. Slide 32: Key Messages | Semi PC

    Key Messages | Semi PC Semi PC enables chip manufacturing success with the broadest portfolio of 1 highly differentiated inspection, metrology and software products Our customers use our systems to solve technology inflections in R&D, and 2 we also see increased adoption in HVM1 as they strive to im

  33. Slide 33: Semi PC at a Glance

    Semi PC at a Glance $5.44B 19% 65%+ 54.4% 2 #1 100% ~6,500 WFE 15.8% including Semi PC service1 4x nearest competitor in 7 out of 9 markets ~1.6x increase from CY19 served3 % of Major Revenue Revenue CAGR Gross Margin Market Share Breadth of Portfolio Semiconductor Employees (CY21) (CY18 – CY21) Cus

  34. Slide 34: Semi PC | CY18 – CY21 Revenue Bridge

    Semi PC | CY18 – CY21 Revenue Bridge 19% $425M $5.4B ~$1.8B >$1B HVM driven Semi PC CAGR CY18 - CY21 Core $3.2B growth  15.8% industry WFE CAGR  Semi PC outperformed by 3.2%  Gained share during the same period  Grew from 5.7% of WFE to 6.2%  Outperformance driven by HVM growth  Outperformed 2

  35. Slide 35: Semi PC Continues to Lead the Industry

    Semi PC Continues to Lead the Industry 54.4% Process Control Market Share 60% 54.4% KLA Process Control KLA Share in 2021 50% 40% Up 3.3% from 2018 >4X Nearest Competitor 30% Achieved target from 2019 20% Investor Day of 53.5% two years in advance Comp A 10% Comp B Comp C Key share gains in optical

  36. Slide 36: Inflections in Every Segment Driven by Device Performance and Cost

    Inflections in Every Segment Driven by Device Performance and Cost GAA 1 Transistor Wafer Backside Power Memory Packaging EUV Architecture Distribution Logic in HVM Transistor density Scalable power routing Vertical scaling High speed data communication Ramping in DRAM Process Control Challenges  B

  37. Slide 37: Transition to GAA Architecture Brings Additional Process Complexity

    Transition to GAA Architecture Brings Additional Process Complexity number of inspection steps Gen4 Process Control Portfolio Gen4 50% Refresh Driven by increase in number of Industry Technology Gen5 critical inspection layers Gen5 Inflections  Gen4 refresh leveraging Gen5 GAA technology FinFET  M

  38. Slide 38: Process Control Now Required in All Chip Manufacturing Stages

    Process Control Now Required in All Chip Manufacturing Stages R&D Ramp HVM  Traditionally, most investments Output 𝑓𝑓(Capacity, Yield) were made in R&D; as customers ramped into HVM, Faster Defect Discovery Actionable Line process control did not scale and Sourcing Monitoring  Customer HVM…

  39. Slide 39: Consistent R&D and Increasing HVM Investment

    Consistent R&D and Increasing HVM Investment Revenue Spend 1 by Top 5 Customers for R&D and HVM  Customers investing more in R&D and even more in HVM  Customer R&D intensity increasing due to complexity  Customer HVM intensity increasing due to smaller process margins and growing $M design starts

  40. Slide 40: Customer Challenges in R&D and HVM

    Customer Challenges in R&D and HVM Sensitivity Speed detect <10nm defects full wafer coverage 5nm 15 billion 8.5 trillion transistor transistors transistors gate length per chip per 300mm wafer Semi PC collaborates closely with customers to meet their sensitivity and speed requirements Note: Transis

  41. Slide 41: Optical Inspection Delivers Unique Value

    Optical Inspection Delivers Unique Value Sensitivity Coverage  Yield enhancement requires wafer level signature analysis  Gen4/Gen5 provides the widest wavelength range to find all defect  Full wafer inspection is critically important as defects can occur types and sizes anywhere Broadband platfo

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  43. Slide 43: Highly Extendible Optical Inspection Platform

    Highly Extendible Optical Inspection Platform light source mechanics optics sensor image processing broadband plasma precision stage objectives TDI1 high speed data processing wavelength bands motion control lenses HPC robotics filters AI | ML | algorithms polarizers 10+ year roadmap for all key com

  44. Slide 44: Optical Inspection Success Summary

    Optical Inspection Success Summary >$5B >400 >100 10 31% Optical inspection revenue Gen4 systems shipped since Gen5 systems shipped since New optical inspection products Optical Inspection CAGR since 2019 Investor Day release (end of CY22) release (end of CY22) introduced since 2019 CY18 – CY21 Enab

  45. Slide 45: e-Beam Market Overview

    e-Beam Market Overview Optical Inspection vs. e-Beam 1 Optical Inspection vs. e-Beam Inspection 2 3,000 100% 3,000 100% 2,400 80% 2,400 80%  Three e-beam segments – 1,800 60% 1,800 60% inspection, metrology and $M $M 1,200 40% 1,200 40% review – all targeted towards 600 20% 600 20% optical assist 0

  46. Slide 46: KLA e-Beam Platform Innovation

    KLA e-Beam Platform Innovation e-Beam Platform with Unique Architectural Elements Multiple e-beam systems support inspection, review and metrology applications Industry-Unique Industry’s Widest Industry-Unique Industry-Unique Industry-First High Beam Current Density Wide Optics Range Simul-6™ Yellow

  47. Slide 47: Case Study: Optical Inspection + e-Beam Assist

    Case Study: Optical Inspection + e-Beam Assist Gen5 eDRX1™ Critical Metal Layer BBP optical inspection e-beam review defect results Mixed Nuisance high capture of critical defects accurate nuisance filtering Critical defect Critical defect at full wafer coverage at high review speed Standard New Tec

  48. Slide 48: Case Study: Optical Overlay Metrology + e-Beam Assist

    Case Study: Optical Overlay Metrology + e-Beam Assist Overlay Measurements Archer™ SEMREG™ E200 Overlay Inaccuracy through the Life of One Lot imaging-based overlay e-beam overlay Number of Overlay Measurements 4.5x reduction in nm optical overlay inaccuracy with e-beam calibration high throughput o

  49. Slide 49: R&D Investment Results in Differentiated Products

    R&D Investment Results in Differentiated Products Semi PC R&D Investment Innovation In Core Technologies 800 600 light optics sensors sources $M 400 200 image processing software mechanics AI, DL, ML data 0 analytics CY15 CY16 CY17 CY18 CY19 CY20 CY21 Continued investment in innovative technologies

  50. Slide 50: R&D Investment to Optimize Reticle Inspection Product Portfolio

    R&D Investment to Optimize Reticle Inspection Product Portfolio R&D Investment for Current and Next Generation Reticle Products  Optical technology continues 100% to be the workhorse for all advanced reticle inspection applications Percent R&D Investment by System Type 75%  Majority of advanced re

  51. Slide 51: Reticle Quality Control Market Overview

    Reticle Quality Control Market Overview Established  Reticle inspection market has  Well understood; $1B+ two segments  Growing  Established segment: 25 years  Evolutionary improvements based on optical inspection workhorse  Patterned reticle inspection  Reticle IC re-qual  Reticle blank ins

  52. Slide 52: EUV and Reticle Inspection Landscape

    EUV and Reticle Inspection Landscape >4xnm  Semi PC mission: release the best cost of ownership solution by leveraging the portfolio 4xnm  Optical reticle inspection is the Minimum Pitch Optical Extension workhorse of today’s EUV in 90% HVM Pitch Relaxation 3xnm  Multiple 8xx e-beam systems 10% s

  53. Slide 53: Advanced Reticle Inspection Tools: Progress to Date

    Advanced Reticle Inspection Tools: Progress to Date 8xx 7xx Unique Die-to-Database Inspection On Schedule for High NA EUV  Multiple 8xx e-beam systems shipped to address gap layers  Actinic EUV tool in development, intersecting with High NA EUV  All reticle inspectors come with KLA’s industry-sta

  54. Slide 54: Complete EUV Reticle Quality Solution

    ALA i Complete EUV Reticle Quality Solution optical reticle e-beam reticle optical reticle optical wafer mask shop IC fab

  55. Slide 55: Semi PC EUV Reticle Inspection Summary

    Semi PC EUV Reticle Inspection Summary >$2.2B >30 >50 >85% >300 Cumulative KLA EUV reticle Teron™ 640e systems shipped Teron™ SL670e systems + Gen5 Percent of EUV reticles Die-to-database systems qualification revenue (mask shop) Print Check systems shipped inspected by KLA in HVM installed worldwid

  56. Slide 56: Process Control Software Solutions Is a Significant Growth Area

    Process Control Software Solutions Is a Significant Growth Area Petabytes of Data Analytics | AI Actionable Information Fab Data Solutions for Accurate  Petabytes of data generated Process Control  Semi PC collects, organizes and leverages all data types  Experts developing algorithms to develop

  57. Slide 57: Semi PC | Driving Sustainable Outperformance

    Semi PC | Driving Sustainable Outperformance CY21 – CY26E ~$1.2B ~$9.0B ~$2.4B  Technology inflections 7-8%  HVM growth WFE Industry $5.4B CAGR  Portfolio strength  Digitization  Supply chain resilience 10-11% KLA Semi PC CAGR Achieving our CY26 targets through continued HVM adoption 57

  58. Slide 58: Semi PC | Key Takeaways

    Semi PC | Key Takeaways 1 2 3 4 Semi PC enables chip Our customers use our We create deep We expect sustainable manufacturing success systems to solve customer relationships outperformance driven with the broadest technology inflections to understand key by Semi PC R&D portfolio of highly in R&D, an

  59. Slide 59: Semi PC Summary

    Semi PC Summary 10-11% 54.4% ~6,500 1 Semi PC CAGR ~$9.0B process control CY21 – CY26E CY26E revenue market share employees >400 Gen4 systems shipped $5B >100 Gen5 systems shipped since release optical inspection revenue since 2019 Investor Day since release >$700M Semi PC R&D CY21 1Gartner April 20

  60. Slide 60: EPC Business Expansion

    EPC Business Expansion Oreste Donzella EVP, Electronics, Packaging and Components

  61. Slide 61: Key Messages | EPC Business Expansion

    Key Messages | EPC Business Expansion Successful implementation of KLA’s Operating Model to expand presence in the 1 electronic ecosystem, strengthen market leadership and improve operation efficiency Continued focus on customer success within all the served markets, collaborating 2 with our custome

  62. Slide 62: EPC Represents an Attractive Growth Vector for KLA

    EPC Represents an Attractive Growth Vector for KLA EPC Systems Revenue ~15% CAGR $M 6,000-10,000 semiconductors per vehicle 1 CY19 CY20 CY21 CY22E Automotive: zero defect, new materials EPC Operating Income ~40% CAGR $M CY19 1 CY20 CY21 CY22E Advanced packaging: semiconductor roadmap enabler Demonst

  63. Slide 63: The EPC Journey

    The EPC Journey Strategic Benefit Strategic Benefit  Extended technology and market reach  Established portfolio of etch, PVD and within electronics value chain CVD wafer processing  Diversified revenue base and increased  Diversified revenue base and increased TAM in PCB and FPD markets TAM in

  64. Slide 64: EPC at a Glance

    EPC at a Glance $0.95B 15% +400 bps 40% ~2,500 Revenue1 Revenue CAGR Gross Margin Operating Margin CAGR Employees (CY21) (CY192 – CY22E) Expansion (CY19 – CY22E) (CY19 – CY22E) 2021 Revenue 1 Mix Comprehensive portfolio of process and process control solutions for specialty semiconductor, packaging,

  65. Slide 65: EPC Presence in Electronics Ecosystem

    EPC Presence in Electronics Ecosystem Automotive Printed Circuit Substrates Board Connected Chips Wafer-Level Components Devices Packaging Mobile Flat Panel Devices Reticles Display 5G Business Units Infrastructure KLA Services Semiconductor Process Control (Semi PC) Electronics, Packaging And Compo

  66. Slide 66: EPC Touches Every Component in Smartphones and Smart Vehicles

    EPC Touches Every Component in Smartphones and Smart Vehicles Auto Electronics Flat panel Printed circuit display Packaged component board >100 Printed circuit Specialty connected electronics board semiconductor control units (ECU) Packaged component 6,000-10,000 semiconductors Specialty per vehicle

  67. Slide 67: EPC Revenue Breakdown by End Markets

    EPC Revenue Breakdown by End Markets Artificial Virtual High Performance 5G Connectivity Mobile Data Center Automotive Intelligence Interaction Computing Specialty Semiconductor 1 Components 1 Printed Circuit Board 1 Flat Panel Display 1 100% 100% 100% 100% 80% 80% 80% 80% 60% 60% 60% 60% 40% 40% 40

  68. Slide 68: Successfully Implementing the KLA Operating Model Across EPC

    Successfully Implementing the KLA Operating Model Across EPC Collaboration  Extending key customer collaboration to newly acquired companies  Engaging earlier with the entire ecosystem, anticipating market’s needs  Collaborating with our customers to provide differentiated solutions Innovation 

  69. Slide 69: Successfully Implementing the KLA Operating Model Across EPC

    Successfully Implementing the KLA Operating Model Across EPC Collaboration  Extending key customer collaboration to newly acquired companies  Engaging earlier with the entire ecosystem, anticipating market’s needs  Collaborating with our customers to provide differentiated solutions Innovation 

  70. Slide 70: Multi-Year Collaborations Drive Significant Opportunities in Auto

    Multi-Year Collaborations Drive Significant Opportunities in Auto Automotive Zero-Defect Policy Good Die Low Reliability Bad Die 1 Partnering with automotive KLA Systems Revenue in Automotive industry to eliminate latent reliability defects Semi PC Systems Semi Specialty (SPTS) Silicon Carbide SPTS

  71. Slide 71: Advanced Packaging: Crucial to Semiconductor Technology Roadmap

    Advanced Packaging: Crucial to Semiconductor Technology Roadmap Improved Boost in power New high-end Custom form Increased overall bandwidth performance applications factors Si area From device protection to performance differentiation 71

  72. Slide 72: High Performance Computing Drives Package Complexity

    High Performance Computing Drives Package Complexity HPC (High Performance Compute) Package Evolution CPU / GPU / FPGA 2009 2014 2020 2021+ Flip chip BGA Flip chip BGA 2.5/3D 2.5/3D New performance requirements bring increased package complexity and drive massive Heterogeneous Smaller 2D and 3D inve

  73. Slide 73: Hybrid Bonding Exposes Packaging to Front End-Like Challenges

    Hybrid Bonding Exposes Packaging to Front End-Like Challenges Integration Schemes Thermo-Compression (Bump) Bonding Void Sources  Surface defectivity  Bonding film deposition  Dicing profile defectivity Hybrid (Bumpless)  Edge profile and defectivity Bonding Non-Uniformity Sources  CMP profile

  74. Slide 74: Developing Strong Collaborations to Enable Packaging Roadmap

    Developing Strong Collaborations to Enable Packaging Roadmap Integration and Design Fabs’ Collaborations Collaborations Process Flow Stackup Design Stacking Defectivity Data Reduction Metrology Integration Automation Product Portfolio Product Portfolio (wafer-level packaging) (IC substrates) 30+ joi

  75. Slide 75: Case Study: ICOS Component (Final Package) Inspection

    Case Study: ICOS Component (Final Package) Inspection Problem Results Increased defect sensitivity and  Complexity and cost driving 100% inspection of accurate 3D metrology final multi-die components  Large form factor, complex architecture and shrinking geometry require advanced inspection Multi-

  76. Slide 76: Case Study: SPTS Plasma Dicing for Advanced Packaging

    Case Study: SPTS Plasma Dicing for Advanced Packaging Problem Results Plasma dicing results in smooth  Wafer singulation is usually done with blade and/or profile and low defectivity laser, which creates particles and cracks  Defects can lead to failures of entire multi-die package, causing huge e

  77. Slide 77: Innovation Does Not Happen Without Collaboration

    Innovation Does Not Happen Without Collaboration Mosaic™ system for plasma dicing of framed 300mm wafers Presented by Lord Lieutenant of Gwent on behalf of the Queen 24 th May 2022 77

  78. Slide 78: Successfully Implementing the KLA Operating Model Across EPC

    Successfully Implementing the KLA Operating Model Across EPC Collaboration  Extending key customer collaboration to newly acquired companies  Engaging earlier with the entire ecosystem, anticipating market’s needs  Collaborating with our customers to provide differentiated solutions Innovation 

  79. Slide 79: Long History of KLA Technology Innovation

    Long History of KLA Technology Innovation <1990s Continuous innovation in subsystem technologies Today First wafer 39xx high-res inspector invented BBP First reticle Teron™ 640e inspector invented Dual-imaging First laser scattering Voyager® 1015 wafer inspector DUV Platform First inline overlay Arc

  80. Slide 80: Case Study: PCB AOI Fine for Advanced IC Substrates

    Case Study: PCB AOI1 Fine for Advanced IC Substrates Problem Results  Suppliers facing challenges to scale capability, Improved contrast and resolution capacity and yield  Smaller feature sizes driving more advanced panel-based inspection capability Current New IC substrates are key enablers  Cur

  81. Slide 81: Successfully Implementing the KLA Operating Model Across EPC

    Successfully Implementing the KLA Operating Model Across EPC Collaboration  Extending key customer collaboration to newly acquired companies  Engaging earlier with the entire ecosystem, anticipating market’s needs  Collaborating with our customers to provide differentiated solutions Innovation 

  82. Slide 82: Case Study: KLA Operating Model Implementation

    Case Study: KLA Operating Model Implementation Cumulative Synergies Achieved $100 ~$92M Highlights $80  Extended key customer collaboration $60 $50M to new divisions $M $40  Widened KLA brand awareness $20 outside core semi $0  Developed a new organization to Deal Thesis CY19 CY20 CY21 CY22E refl

  83. Slide 83: Case Study: Advanced Packaging Revenue Growth

    Case Study: Advanced Packaging Revenue Growth Execute On time program delivery, on-site support Innovate New technologies, products and methods $M Collaborate Top 5 semi customers, OSATs, ICSs CY16 CY17 CY18 CY19 CY20 CY21 CY22E 1 2023 F …... 2024 F 2025 F CY26E 1 Wafer Level Packaging Assembly and

  84. Slide 84: EPC | Driving Sustainable Outperformance

    EPC | Driving Sustainable Outperformance 1 EPC Revenue ~$90M ~$1.65B ~$240M ~$80M ~$290M $0.95B $0.75B $0.8B CY21 – CY26E 2021 – 2026E Revenue Growth Drivers 11-12% KLA EPC CAGR 2 3 4 Double digit revenue growth; 40-50% incremental operating income from CY21 1 Systems only 2 Pro Forma 3Company Data

  85. Slide 85: EPC | Key Takeaways

    EPC | Key Takeaways 1 2 3 4 Successful Continued focus on Differentiated product Sustainable profitable implementation of KLA’s customer success within portfolio developed for growth at double digit Operating Model to all the served markets, the unique needs of our top line revenue growth expand pre

  86. Slide 86: EPC Summary

    EPC Summary 13% ~$1.65B 24% ~2,500 EPC Revenue1 Packaging + ICS Revenue CY192-CY21 CAGR CY26E Revenue1 CY192 – CY26 CAGR employees 40-50% +420 bps Incremental Operating CY21 Gross Margin expansion since CY19 Margin CY21 – CY26 +1,070 bps CY21 Operating Margin expansion since CY19 1 Systems only 2CY1

  87. Slide 87: Growing a Durable Revenue Stream Through Best-in-Class Services Business

    Growing a Durable Revenue Stream Through Best-in-Class Services Business Brian Lorig EVP, Global Services

  88. Slide 88: Key Messages | Services

    Key Messages | Services Strong customer value proposition: partner with customers to maximize the 1 value of their Fab Uniquely positioned to support High Complexity, High Mix, Lower Volume, 2 Long-Lived installed base Evolving data and analytics platform: moving Services’ delivery from reactive 3 t

  89. Slide 89: KLA Services at a Glance

    KLA Services at a Glance 1 ~$1.8B >99% >75% >95% >3 yr 4.5x Revenue Purity of Reported Subscription-Like Renewal Rate Length of Revenue Growth Services Revenue2 Service Contracts Service Contract Over Install Base Growth Rate 1 year ahead of 2019 plan New from 2019 Up from 70% in 2019 Up from 90% in

  90. Slide 90: Well Aligned to Benefit from Industry Megatrends

    Well Aligned to Benefit from Industry Megatrends Artificial Virtual High Performance 5G Connectivity Mobile Data Center Automotive Intelligence Interaction Computing Market Type Customer Goal KLA Strategy Results Develop, ramp & transfer New product introduction & Customers accelerate Leading-Edge D

  91. Slide 91: Power of KLA Portfolio: High Mix, High Complexity, Lower Volume

    Power of KLA Portfolio: High Mix, High Complexity, Lower Volume High Mix High Complexity Lower Volume 1000s BBP RAPID e-Beam LS chambers per fab SWIFT Surfscan ADE FaST 100s tools per fab OMD SensArray Instruments PCB SPTS ICOS FPD Frontline Creates high barrier to entry for service 91

  92. Slide 92: Longevity of Installed Base Enhances Customer Productivity

    Longevity of Installed Base Enhances Customer Productivity Semi PC and EPC Installed Base 50,000 Highlights 45,000  >50% of our installed base is older than 18 years old 40,000 35,000  Average peak installed base per class year is achieved in ~12 years Installed base units 30,000 25,000  >80% of

  93. Slide 93: Successfully Implementing the KLA Operating Model Across Services

    Successfully Implementing the KLA Operating Model Across Services Collaboration  KLA Services teams embedded with customers, supporting achievement of customer goals  Deep supplier relationships ensure supply continuity and higher quality  Closely coordinated with KLA design and manufacturing ope

  94. Slide 94: Successfully Implementing the KLA Operating Model Across Services

    Successfully Implementing the KLA Operating Model Across Services Collaboration  KLA Services teams embedded with customers, supporting achievement of customer goals  Deep supplier relationships ensure supply continuity and higher quality  Closely coordinated with KLA design and manufacturing ope

  95. Slide 95: Contract Services Adoption Rate Continues Increasing

    Contract Services Adoption Rate Continues Increasing Highlights Semi PC Revenue  Increasing complexity of manufacturing process and 100% KLA equipment  Record-level factory utilization % of service revenue  Customers geographic footprint expanding  Inter-Fab technology transfers  Renewed emphas

  96. Slide 96: Case Study: Legacy Node Customer Spend With KLA Services

    Case Study: Legacy Node1 Customer Spend With KLA Services Environment Results  2013 – 2018: Factory utilization 70-80%, stable manufacturing processes, and less stringent end-customer requirements Legacy node customer spend with KLA Services*  Customer Approach: Harvesting parts from older tools,

  97. Slide 97: Successfully Implementing the KLA Operating Model Across Services

    Successfully Implementing the KLA Operating Model Across Services Collaboration  KLA Services teams embedded with customers, supporting achievement of customer goals  Deep supplier relationships ensure supply continuity and higher quality  Closely coordinated with KLA design and manufacturing ope

  98. Slide 98: Multi-Faceted Services Innovation Strategy

    Multi-Faceted Services Innovation Strategy Human Capital  Attract and retain innovative talent  Onboarding new skill sets and capabilities Mixed Reality Support Developing augmented reality-based Expedited Delivery solutions for remote services that allow for Augmented localized teams to allow for

  99. Slide 99: Service Innovation Drives Customer Value

    Service Innovation Drives Customer Value Evolution of KLA Digital Twin  Third generation of complex parametric and configuration data gathering  Analyze parameters for install validation, customer matching requirements, and recipe development, driving faster time-to-scale and frictionless integrat

  100. Slide 100: KLA Services Roadmap Improving Customer Value

    KLA Services Roadmap Improving Customer Value Continuous Real-time Feedback Global Fab Loop Analytics Self Advanced Calibration & CSE Assisted Customer-selected Service Level Repair System Actionable Insights Resourcing Smart Order Insights and Dispatch Driven by KLA In-Fab Real-time Network Cloud-b

  101. Slide 101: Successfully Implementing the KLA Operating Model Across Services

    Successfully Implementing the KLA Operating Model Across Services Collaboration  KLA Services teams embedded with customers, supporting achievement of customer goals  Deep supplier relationships ensure supply continuity and higher quality  Closely coordinated with KLA design, manufacturing and op

  102. Slide 102: Talent & Culture Underpin KLA Services Execution

    Talent & Culture Underpin KLA Services Execution Technical Training Regionalized Parts and Customized Service Install & Support Engineering Services Customer Experience Logistics Outcome Services Foundation Depth Experience Education >3,000 Services employees Comprehensive 9-18 month training proces

  103. Slide 103: Case Study: Integrating Services from Acquired Businesses

    Case Study: Integrating Services from Acquired Businesses Environment Pre-Acquisition Results  Primary focus is on new tool penetration and adoption  Limited investment in inventory to support just-in-time delivery of spare parts Services revenue per EPC service revenue  Significant incremental i

  104. Slide 104: Revenue Increasing at Faster Pace: Exceeding $3B by 2026

    Revenue Increasing at Faster Pace: Exceeding $3B by 2026 KLA Services Revenue 1 Highest percentage 3,000 of pure service revenue 3,500 in the industry 2,000 3,000 $M 1,000 2,500 12%-14 % CAGR Resilient and predictable 0 2,000 40 Years to +4 years +4 years $M Achieve 1,500 1,000 Strong generator of F

  105. Slide 105: Services | Driving Sustainable Outperformance

    Services | Driving Sustainable Outperformance ~$0.2B ~$3.3B ~$1.3B $1.8B CY21 Semi Process Electronics, Packaging CY26CY26E Estimate Control & Components 105

  106. Slide 106: Services | Key Takeaways

    Services | Key Takeaways 1 2 3 4 5 Strong customer Uniquely positioned Evolving data and Proven Operating Industry-leading value proposition: to support High analytics program: Model powers scale, service model with partner with Complexity, High Mix, moving Services’ efficiency, and >75% of revenue

  107. Slide 107: Long-Term Target Model & Capital Return Strategy

    Long-Term Target Model & Capital Return Strategy Bren Higgins EVP and CFO

  108. Slide 108: Key Messages | Long-Term Target Model & Capital Return Strategy

    Key Messages | Long-Term Target Model & Capital Return Strategy Delivering sustainable market outperformance guided by the KLA Operating 1 Model which supports collaboration, innovation, and execution Portfolio strategy drives differentiation and competitive advantage, leading to 2 strong operating

  109. Slide 109: Significant Progress Since 2019 Investor Day

    Significant Progress Since 2019 Investor Day Where We Were Where We Are Where We Are Going 2019 Investor Day 2022 Investor Day 2026 Target Model  Targeted 7-9% revenue growth CAGR  Achieved 300+bps of market share and  Optimizing business through technology from 2019 – 2023E intensity gains leade

  110. Slide 110: Sustainable Revenue Growth and Diversification

    Sustainable Revenue Growth and Diversification ~$14B Key Characteristics of Target Revenue Mix  Leading edge investment driving ~11% continued foundry/logic node CAGR progression & increased design starts  EUV adoption in DRAM & higher layer counts in NAND drive increasing process control requirem

  111. Slide 111: Track Record of Strong Profitability

    Track Record of Strong Profitability Gross Margin 1 Operating Margin 1 Diluted EPS 1 FCF Margin 1 64% 63% 63% 60% 61% $22.86 31% 42% 42% 30% 29% 30% 40% 36% $18.50 33% 23% $11.47 $9.14 $8.73 2 2 2 2 CY18 CY19 CY20 CY21 CY22E CY18 CY19 CY20 CY21 CY22E CY18 CY19 CY20 CY21 CY22E CY18 CY19 CY20 CY21 CY2

  112. Slide 112: History of Best-in-Class Margins Versus Leading Peers

    History of Best-in-Class Margins Versus Leading Peers Gross Margin 1 Operating Margin 1 80% 45% 40% 70% 35% 60% 30% 50% 25% 40% 20% 30% 15% 20% 10% 10% 5% 0% 0% CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 2 2 KLAC Semi Cap Peers KLAC

  113. Slide 113: A Pattern of Excellence – 10 Year View Versus the SOX Index

    A Pattern of Excellence – 10 Year View Versus the SOX Index Gross Margin 1 : 61% Operating Margin 1 : 34% FCF Margin 1 : 27% 97th 90th 86th Percentile Percentile Percentile Ranked Ranked Ranked #2 of 30 #4 of 30 #5 of 30 Non-GAAP Gross Margin % Non-GAAP Operating Margin % Free Cash Flow Margin % Cap

  114. Slide 114: Technical Investments are Essential to Our Portfolio Strategy

    Technical Investments are Essential to Our Portfolio Strategy R&D and Applications 1 Support Investment New Products 1800 80% Timeline CY19 CY22 1600 70% Inspection: 11 BBP 1400 LS/Macro 60% Unpatterned 1200 e-Beam 50% 1000 Patterning: 9 $M 40% Reticle Overlay 800 CD/Shape 30% Monitor 600 EPC: 10 20

  115. Slide 115: The KLA Operating Model Guides Our Strategy and Differentiation

    The KLA Operating Model Guides Our Strategy and Differentiation Collaboration  Work closely with customers in early process technology development  Work closely with suppliers' early technology development  Work across KLA to reuse applicable technology Innovation  Invest heavily in core technol

  116. Slide 116: Case Study: Strategic Supply Chain Sourcing

    Case Study: Strategic Supply Chain Sourcing Revenue Growth Versus Semi Cap Peers Indexed to CY21-Q1 Component Types Parts Category % Low volume, sole Optics CY21-Q1 CY21-Q2 CY21-Q3 CY21-Q4 CY22-Q1 CY22-Q2E sourced highly Sensors KLAC Semi Cap Peers 1 complex components Lasers Source: FactSet, Consen

  117. Slide 117: Case Study: Supply Chain Management

    Case Study: Supply Chain Management 4,000 Visibility Purchase Commitments 3,000 Long-term, strategic  Long term forecast partnership with the $M commitments drive supplier investment 2,000 supply chain & availability 1,000  Decades-long relationships with 96%+ of key suppliers under Inventory CY20

  118. Slide 118: Case Study: Measured Pace of Moore's Law Enables Platform Extendibility

    Case Study: Measured Pace of Moore’s Law Enables Platform Extendibility and Lower R&D Intensity 25% 20% ~0.8x vs 15% CY11-CY16 10% CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 R&D % of Semi PC Revenue 8x 6x ~1.4x vs CY11-CY16 4x 2x x CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 C

  119. Slide 119: Case Study: Gen4 Extendibility Enables Gross Margin Improvements

    Case Study: Gen4 Extendibility Enables Gross Margin Improvements and Platform Scalability GM % Improvement +180bps +620bps +630bps +980bps Patterned Optical Inspection Market 1 2019 TAM: $1.35B 2021 TAM: $2.88B CAGR: 46% $200 $1,200 $180 $1,000 $160 $140 $800 $120 $600 $100 $80 $400 $60 $40 $200 $20

  120. Slide 120: Case Study: SpectraShape Extendibility Enables Gross Margin Improvements

    Case Study: SpectraShape™ Extendibility Enables Gross Margin Improvements and Platform Scalability GM % Improvement +540bps +690bps +750bps Optical Metrology Market 1 $200 2019 TAM: $0.8B $180 $1,000 2021 TAM: $1.5B $160 CAGR: 37% $140 $120 $100 $500 $80 $60 $40 $20 $0 $0 CY11 CY12 CY13 CY14 CY15 CY

  121. Slide 121: Case Study: Semi PC Service Incremental Margin

    Case Study: Semi PC Service Incremental Margin Semi PC Service Revenue and Incremental Gross Margin 1,800 ~15% 80% 1,600 CAGR 1,400 60% 1,200 1,000 40% 800 600 20% 400 200 $M - 0% CY16 CY17 CY18 CY19 CY20 CY21 CY22E Semi PC Service Revenue Incremental Service GM% Linear ( Incremental Service GM% ) S

  122. Slide 122: FCF Generation Fuels Consistent Capital Returns to Shareholders

    FCF Generation Fuels Consistent Capital Returns to Shareholders Free Cash Flow 1 and FCF Margin 2 Investment Market Market inInvestment Growth Leadership Leadership andand 2.7 in Growth and andProducts New New Differentiated Differentiated 2.5 Products Solutions Solutions Value 1.8 Creation $B 1.3 1

  123. Slide 123: Investment Grade Balance Sheet Supports Capital Structure

    Investment Grade Balance Sheet Supports Capital Structure Balance Sheet Summary 1 ($B) Target Today’s Capital Structure Announcements Total Cash2 $2.6 $2.5B - $3B Share Repurchases Revolver1 $1.0 $1.5B  $6B Share Repurchase Authorization Working Capital $3.8  $3B Accelerated Share Repurchase (ASR)

  124. Slide 124: Returns to Shareholders Across Share Repurchases and Dividends

    Returns to Shareholders Across Share Repurchases and Dividends Share Repurchases 1 Track Record of Dividend Increases June 2022: New $6B June 2022: Announced 13th consecutive annual dividend repurchase authorization increase to $1.30/share quarterly from $1.05 (24% increase) 5.20 4.70 ~3,000 ~3,000

  125. Slide 125: Consistent and Disciplined Capital Allocation Priorities

    Consistent and Disciplined Capital Allocation Priorities Primary Capital Priorities 2019-2021 2022E-2026E  Fund significant R&D investments for innovation 12% 7%  Invest in working capital to support 12% 7% 19% customers and enable business model 19%  Enable inorganic strategic growth 22% $14B ~$

  126. Slide 126: 2026E Target Model: Semiconductors Now Growing Faster Than GDP

    2026E Target Model: Semiconductors Now Growing Faster Than GDP Industry driven by PCs and Mobile Digitization Semi Revenues CY04 – CY16 CY16 - CY22E driving growth What Has Changed? 0.8% CAGR 4.7% 12.1%  Scaling resumed  Increased performance & 0.7% cost benefits Semiconductor Revenues as % of GDP

  127. Slide 127: 2026E Target Model: Scaling Resumed at 7nm EUV

    2026E Target Model: Scaling Resumed at 7nm EUV and Drove Significant Investments Design Starts Have Become More Affordable Resumption of Scaling Drove Increased Investments >50% increase in design starts and WSPM 1 at 7nm Logic/Foundry WFE 70 WSPM1 60 50 40 Design Starts $B 30 CAGR: -3.8% 20 10 0 28

  128. Slide 128: 2026E Target Model: Capex Intensity Rising

    2026E Target Model: Capex Intensity Rising as Market Opportunities, Technology Complexity and Competition Increase 180 40% Drivers of Capex Intensity 160 Decline (from 2000-2013) 35%  200 mm to 300 mm 140 30% wafer transition 120 Capital Expenditures $B 25%  Industry consolidation Capex Intensity

  129. Slide 129: Making the Case for Increased Foundry/Logic WFE Intensity

    Making the Case for Increased Foundry/Logic WFE Intensity WFE/EBITDA Ratio Provides Perspective into Spend 1 40% 30% 20% 10% Highlights 0% CY02 CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21  Record revenues and profits  Strong long-term industry 40,

  130. Slide 130: Long-Term Target Revenue Growth Model Update

    Long-Term Target Revenue Growth Model Update 2023E Model 2026E Model Growth Drivers (presented 9/17/19) (from 2021) Industry Growth 10%  Diversification of end markets 10%  Modestly rising capital intensity ~1% ~9-11%  New markets and applications ~1% - 2% Intensity Improvement / Share Gain ~2% ~

  131. Slide 131: KLA 2026 Target Model | Driving Sustainable Outperformance

    KLA 2026 Target Model | Driving Sustainable Outperformance ~$1.5B ~$0.25B ~$14B ~$0.7B ~$3.6B $8.2B Double-digit revenue growth across Semi PC, EPC, and Services drive a ~9-11% CAGR from 2021 to 2026E 131

  132. Slide 132: Introducing 2026E Target Model

    Introducing 2026E Target Model Prior 2023E New 2026E Ongoing Financial Target Model Target Model Framework Macro Assumptions Revenue $7.0B - $7.5B $14B +/- $500M ~9% - 11% CAGR  CY21-CY26E semiconductor industry CAGR of ~6-7%  WFE grows faster than Semi revs Gross Margin%1 61%+ ~63%  ~55-60% foun

  133. Slide 133: Key Takeaways

    Key Takeaways 1 2 3 4 5 Delivering Portfolio strategy Collaborative supply Pace of Moore’s Law Leveraging our strong sustainable market drives differentiation chain strategy helps and trends of end investment-grade outperformance and competitive drive execution, market demand balance sheet to guided

  134. Slide 134: Rick Wallace

    Rick Wallace President and CEO

  135. Slide 135: Closing Remarks

    Closing Remarks The semiconductor industry has become essential to large number of industries 1 and geographies and is expected to grow and change in ways that benefit KLA Our portfolio of innovative solutions positions the company for sustained 2 outperformance as Process Control becomes more broad

  136. Slide 136: Thank You

    KL/\ Investor Day Thank You a = j Fi E al | i Hh - | =," = : ei 1 a. coll : | 1 Oh Pisses 1 ai

  137. Slide 137: Appendix

    Appendix Reconciliation of Non-GAAP Financial Measures

  138. Slide 138: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 138

  139. Slide 139: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 139

  140. Slide 140: Reconciliation of Free Cash Flow and Related Metrics

    Reconciliation of Free Cash Flow and Related Metrics 140

  141. Slide 141: Reconciliation of Guidance

    Reconciliation of Guidance Q4 FY2022 Guidance Range: Note Regarding Reconciliations of Long-term Forecasts: 141

  142. Slide 142: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures 142

KLA — Investor Day (June 2022) on 6ix