KLA CORP files 10-K: annual report (10-K)
EXECUTIVE SUMMARY
We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries. Our broad portfolio of inspection and metrology products, along with related services, software and other offerings, supports R&D and manufacturing of ICs, wafers and reticles. Our products, services and expertise enable our customers to measure, detect, analyze and resolve critical nanometer-scale product defects, helping them to address manufacturing challenges and achieve higher yields at lower cost.
We also offer advanced technology solutions across a range of adjacent markets, including PCBs, advanced packaging, specialty semiconductors (such as LEDs, power devices and compound semiconductors), data storage and general materials research. In addition, our services business has grown consistently year over year and accounted for approximately 23% of our total revenues in fiscal 2026. Our services revenue, which is generated largely from recurring “subscription-like” contracts, provides maintenance and other services to maximize uptime, productivity and tool life for our customers, supported in part by continued demand from legacy semiconductor markets.
We are organized into three reportable segments, as follows:
• Semiconductor Process Control: a comprehensive portfolio of inspection, metrology and data analytics products, as well as related service offerings that help IC manufacturers achieve target yields throughout the semiconductor fabrication process, from R&D through volume production.
• Specialty Semiconductor Process: advanced vacuum deposition and etching process tools used by a broad range of specialty semiconductor customers.
• PCB and Component Inspection: a range of inspection, testing and measurement, and direct imaging for patterning products used by manufacturers of PCBs, advanced packaging, MEMS and other electronic components.
The semiconductor industry continues to experience market expansion and diversification. HPC and data centers, supported by increasing adoption of AI, are contributing to industry growth and these trends are expected to continue to influence industry investment into fiscal year 2027. AI represents a key technology inflection point driving innovation and demand at the leading edge, and our portfolio of products is well positioned to support leading-edge demand and the ongoing AI infrastructure buildout. Our semiconductor customers generally operate in one or both major semiconductor device manufacturing markets: memory and foundry/logic. Long-term demand drivers include continued adoption of EUV in HVM for logic and DRAM (including high-bandwidth memory), which are increasing process control requirements and expanding our served market.
Demand for advanced semiconductor technologies, particularly at leading-edge nodes such as 2-nanometer, is increasing process complexity and process control intensity, which in turn is driving incremental demand for our solutions. Increasing complexity and value of semiconductor packages, particularly for AI and HPC applications, is also driving significant growth in our advanced packaging business. Broader industry trends, including digitization, communication improvements, healthcare innovation, industrial applications, and increasing semiconductor content in automobiles and intelligent systems, are supporting continued investment in legacy and mature-node capacity, where long product lifecycles and expanding end-market demand require ongoing manufacturing investments.
While we continue to invest in technological innovation, demand for our products may be affected by the timing of customer adoption decisions and changes in delivery schedules, which can result in variability in our operating results. In addition, geopolitical factors, including government regulations and tariffs, have impacted our results of operations and may continue to do so. We have also increased our purchase commitments, in part to secure the supply of key components, which may affect the timing and magnitude of our costs and working capital requirements. Despite these dynamics, we delivered higher revenue and net income in fiscal year 2026 compared to fiscal year 2025, driven by increased sales volume and disciplined cost management. Looking ahead to fiscal year 2027, we expect continued revenue growth as customer engagement and demand signals continue to strengthen.
We are continuously assessing the aggregate potential impact of government regulations, tariffs and other geopolitical risks on our financial results and operations. See Part I Item 1A “Risk Factors” for more information regarding how such actions by the U.S. government or another country could significantly impact our ability to provide our products and services to existing and potential customers, especially in China, and adversely affect our business, financial condition and results of operations.
The following table sets forth some of our key consolidated financial information for each of our last three fiscal years:
We continue to focus on returning cash to our investors, making $2.29 billion in share repurchases and paying $1.06 billion in dividends in the year ended June 30, 2026. Our Board of Directors has authorized a program that permits us to repurchase our common stock, including an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026. As of June 30, 2026, we had $9.74 billion of repurchase authority remaining. We also announced an increase in the dividend level in the third quarter of fiscal 2026 to $0.230 per share per quarter, which was our 17th consecutive annual dividend increase. Refer to the “Liquidity and Capital Resources” section below for more information on our strong cash flow generation and strategy of returning excess cash to our stockholders.