KLAC
KLA Corporation
Semiconductors
★ Quality 84/100Price today
$185.60
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A monopoly position
This company has a competitive advantage so strong that its rivals find it practically impossible to replicate.
What this business is made of
Where does the value come from?
5-year cycle
Money made year by year
This business has cycles — good years and bad years. That's why we don't use just the last year.
We use the average of those 5 years as the base for the math — not the good year, not the bad year. That way the value reflects what the company makes steadily.
The business
KLA is the quality control that sees the invisible defects in the chip.
KLA dominates process control in semiconductor manufacturing: inspection, metrology, and defect detection on wafers. It sells capital equipment to the fabs (TSMC, Samsung, Intel) and then charges recurring maintenance services on the installed base. In FY2025 it billed $12.2B with a 61% gross margin.
It controls more than 50% of the process control market, a category where a nanometer error costs millions in lost wafers. The fab doesn't switch suppliers on a whim: there are decades of calibrated data and accumulated software. The services business grows with every tool sold and is hard to displace.
Revenue history
From $6.9B to $12.2B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $13.6B · FY2026
Of every $100 in sales, $64 goes to costs and operations; $36 is left as net profit (36% margin).
Catalysts and risks
The transition to advanced nodes (2nm, gate-all-around) demands more inspection steps per wafer, increasing process control intensity.
Fab construction funded by the CHIPS Act and global expansion through 2027 widens the installed base.
Recurring services business growing double digits, already over $2.5B annually, smooths out the cycle.
It's Semi-Cyclical: when fabs cut capex, equipment orders drop fast and hard.
Export restrictions to China can close off a market that has accounted for 25-40% of revenue.
Debt of $5.9B against cash of $2.1B — manageable, but demands discipline if the cycle turns.
Charlie's note
“It sells the picks and shovels for the most expensive mine in the world, and then charges a toll to keep them sharp. The cycle will give you the scare; the moat pays you to hold through it.”
Analysis · June 2026
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