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Economic Moat




KLA Closes Fiscal 2020 on a High Note with Foundry Demand Set to Persist; Raising FVE to $190

Abhinav Davuluri, CFA Sector Strategist

Analyst Note

| Abhinav Davuluri, CFA |

KLA reported fiscal fourth-quarter results in line with management’s guidance, led by continued strength in the foundry and logic segments. In contrast, memory spending has remained weaker during the first half of calendar 2020, but we anticipate a recovery beginning sometime in the December quarter and continuing into 2021. KLA’s leading position in process diagnostic and control has served it well more recently, as the firm is highly leveraged to the strategic R&D investments by customers for leading-edge process technologies across all chip types. Ongoing technology transitions and the implementation of EUV lithography both require advanced inspection tools from KLA, giving us confidence in the firm’s growth trajectory. We are raising our fair value estimate for wide-moat KLA to $190 per share from $160 as we incorporate a stronger growth outlook.

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Company Profile

Business Description

KLA Corp designs and manufactures yield-management and process-monitoring and control systems for the semiconductor industry. The systems are used to analyze the manufacturing process at various steps in a product's development. The firm's laser-scanning products are used for wafer qualification, process monitoring, and equipment monitoring. KLA also provides inspection tools and systems for optical metrology and e-beam metrology.

One Technology Drive
Milpitas, CA, 95035
T +1 408 875-3000
Sector Technology
Industry Semiconductor Equipment & Materials
Most Recent Earnings Jun 30, 2020
Fiscal Year End Jun 30, 2021
Stock Type Cyclical
Employees 10,600