KLA's Q2 2025 Earnings Call: Key Contradictions on China Revenue, Process Control, and Growth Outlook

These are the key contradictions discussed in KLA's latest 2025Q2 earnings call, specifically including: China Revenue Impact and Export Control Clarity, Process Control Intensity Expectations, and Process Control's Growth Outlook:



Revenue Growth and Market Share Increase:
- KLA Corporation reported revenue of $3.08 billion for the December quarter, exceeding the previous quarter and reaching a new record.
- Growth was driven by increased market share, particularly in Process Control, where revenue grew by over 12%, and strong demand in leading-edge logic and advanced packaging segments.

Process Control and WFE Market Outperformance:
- KLA's Process Control business grew 15% year-over-year, outperforming the mid-single-digit growth rate of the overall WFE market.
- This outperformance is attributed to increased process control intensity at advanced nodes like N2, higher value wafers, and larger die sizes, all of which require more inspection and management.

Advanced Packaging and Service Growth:
- KLA's advanced packaging portfolio revenue grew to approximately $500 million in 2024, and is expected to exceed $800 million in 2025.
- The increased demand for more complex heterogeneous chip integration and the value of process control in the chip package are driving growth in this segment.

Export Control Challenges and Impact:
- KLA expects the impact of recent U.S. export controls on its revenue in 2025 to be approximately $500 million.
- The majority of this impact will affect the systems business, with a cautious view on the potential for partial mitigation through licensing opportunities.

Financial Performance and Capital Returns:
- KLA's free cash flow for 2024 was $3.4 billion, with total capital returns of $2.9 billion.
- The strong financial performance is driven by consistent and healthy capital returns, which are prioritized as fundamental to delivering value for shareholders.