KLA Corp: Yielding Results in Semiconductors

January 2025

Disclosure: I own shares in KLA Corp. At the time of writing, my portfolio consists of Applied Materials, ATOSS Software, Cadence Design Systems, Constellation Software, Fair Isaac, Fortinet, KLA Corp, Mastercard, Microsoft, MSCI, NVIDIA and Visa.

Summary

KLA Corp. (NASDAQ:KLAC) is a tech company that manufactures equipment for the semiconductor industry. Their niche is process control and yield management. Given its role at the cutting-edge of semiconductor design, KLA can be seen as a critical enabler of innovation in sectors like artificial intelligence, 5G, and automotive electronics.

How does KLA fit into the semiconductor supply chain?

KLA clients are the semiconductor manufacturers, including TSMC and Samsung.

The problem: The manufacturing of a semiconductor involves hundreds of steps executed with atomic precision. Undetected defects, including during the early stages, ultimately will propagate through to the later stages. Even the tiniest of defects can be detrimental to the functioning of the chip, and lead to it having reduced performance or being a complete failure. Without the ability to detect and fix the cause, a manufacturer would see a drop in its yield of functioning chips, which costs both time and resource.