How Does KLA Company Work?

Operations combine physics modeling, proprietary optics/e-beam IP, and AI-driven analytics; supply chain mixes precision subsystems with in-house integration and rigorous calibration for production reliability.

• Direct distribution and co-development with leading fabs (TSMC, Samsung, Intel, SK hynix, Micron) and IDMs.
• Fleet-wide learning compounds value: rapid recipe development and higher yields reduce cost per wafer.
• Precision subsystems include optics, stages, high-vacuum and plasma sources plus software automation for throughput optimization.
• Services and parts/upgrade revenue contribute to recurring revenue streams and support long-term customer relationships.

Key FY2024 figures and levers that explain how KLA works and how KLA Corporation makes money.

• Systems accounted for about ~65% of total revenue on KLA’s roughly $10.6–10.9 billion FY2024 revenue due to logic and HBM-led intensity.
• Services and spares represented approximately mid-30% of revenue, providing recurring, cycle-dampening cash flow tied to the installed base.
• Software and analytics remain a smaller but fast-growing component; AI-driven yield-management and fleet optimization expand subscription revenue.
• Adjacent inspection (PCB/display/components) contributes high-single to low-double-digit percent, diversifying end markets beyond wafers.
• Monetization strategies include multi-year service agreements, premium pricing for node-leading tools, performance-based upgrades, and cross-selling across nodes and modules.
• Regional mix: Taiwan ~25–30%, Korea ~15–25%, China ~15–20% (subject to export controls), remainder in U.S., Japan, Europe.
• Services’ share has trended upward over time as installed base growth increases lifetime value and smooths revenue cyclicality.
• References and deeper strategy context available in Growth Strategy of KLA.

KLA mitigated challenges — component shortages, export controls to China, and node shifts to GAA/high-NA EUV — through supply-chain de-risking, product segmentation, and co-development with leading customers, preserving market access and R&D momentum.

• Dominant market share in patterned wafer inspection and overlay/CD metrology: KLA regularly reports >50% share in key inspection/metrology segments, underpinning pricing and install base advantages.
• Cumulative data and IP moat: Broad installed base yields proprietary datasets that improve ML-driven algorithms and defect classifiers, increasing tool effectiveness over time.
• High switching costs: Fab recipes, process integrations, and qualification cycles embed KLA tools deeply into production flows, raising barriers for competitors.
• Scale economies in R&D and service: Large R&D spend and a global service network lower per-wafer cost of ownership and accelerate product roadmaps; KLA allocated over $900M to R&D and SG&A in recent fiscal years (2023–2024 combined).

KLA is expanding service capacity and software/AI analytics while advancing inspection platforms to capture next‑generation node and packaging demand. These moves aim to preserve market share and recurring revenue against competitive and geopolitical pressures.

• Next‑gen BBP/e‑beam platforms targeting N2 and beyond to secure inspection intensity
• Expanded EUV/high‑NA reticle and mask inspection for high‑NA adoption
• Advanced packaging and 3DIC metrology to address HBM and chiplet trends
• Software, AI analytics, and service scale to increase recurring revenue and margin resilience