4.30.25
Total sales in FQ3 were $3.075B, down slightly from the prior quarter, which generated $3.1B of total revenue. Guidance for the current quarter (FQ4) is for $3.075B in total sales. For KLA, the semiconductor equipment market is going sideways. Demand from leading edge logic and HBM to support AI demand continues to be the headline for the company. While the company has seen no changes in demand from their customers, they are postponing their investor day – originally scheduled for June 18th – to the first part of 2026, in response to the unprecedented uncertainty in the global trade environment. In addition to continued HBM investment, the company also sees an improving supply/demand environment in memory. They said this “should lead” to increased memory investment in 2025. Their outlook for total WFE sales in 2025 is unchanged from January: mid-single-digit percent growth from approximately $99B to $100B produced in calendar 2024. China demand will be lower in 2025 compared to 2024. In fact, China was displaced by Taiwan as the highest revenue region this quarter. Total revenue from China was $796M in the most recent quarter, vs. $1,108M in the prior quarter. New export controls put in place recently are a factor in this decline. Memory customer will account for 31% of semiconductor process control systems sales. DRAM will be 75% of this and NAND will comprise the remaining 24%.
Sales to DRAM customers increased sequentially by 7%, reaching their highest level since the sales surge stimulated by pending export controls before the end of calendar 2023. The total revenue from DRAM customers was similar this quarter to what was seen at the end of the last DRAM upturn, in the second calendar quarter of 2022. This level of investment from DRAM customers is consistent with a memory upturn, but is not high enough to call it overheated. The level of capital investment by NAND customers this quarter is surprising to me, totaling $191M. That is almost double the prior quarter. The pre-export-restriction surge was $106M in calendar Q4 of 2024, so this quarter was well above that level. One has to go back to the end of calendar 2022, when KLA’s sales to NAND customers were $376M, to find a period with higher NAND sales than the most recent one. To summarize the segment trends, DRAM spending is solidly in an upturn and has been trending up for the last four quarters. NAND stepped up this period, following almost two full years of anemic investment, but spending has not returned to the levels seen in the last upturn.
In NAND, they are seeing investment in technology upgrades. The activity there is “fairly limited.” Most of what is driving their business in memory is HBM. There was little commentary about the memory markets during the conference call.
– S. Hughes (short MU)