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What changed in KLA Corporation's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of KLA Corporation's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+366 added−389 removedSource: 10-K (2025-08-08) vs 10-K (2024-08-05)

Top changes in KLA Corporation's 2025 10-K

366 paragraphs added · 389 removed · 271 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

83 edited+25 added−52 removed46 unchanged
Biggest changeIn addition, our executives conduct regular quarterly webcasts that enable all employees to engage with senior leaders and ask questions in an open Q&A session. As we emerged from the global pandemic, many employees continued to seek connections. Through our Employee Engagement Survey, we continued to identify the top priorities in a post-pandemic world.
Biggest changeWe created initiatives including global manager communications, individual and team coaching and a training course titled “Engaging with Engagement” to enable continuous improvement in employee engagement. In addition, our executives conduct regular quarterly webcasts that enable all employees to engage with senior leaders and ask questions in an open Q&A session.
Our products and services for chip, wafer, reticle, packaging, solar, hard disk drive, original equipment manufacturer (“OEM”) and chemical/materials manufacturing are designed to provide comprehensive solutions that help our customers accelerate development and production ramp cycles, achieve higher and more stable product yields and improve their overall profitability.
Our products and services for chip, wafer, reticle, packaging, solar, hard disk drive, original equipment manufacturer and chemical/materials manufacturing are designed to provide comprehensive solutions that help our customers accelerate development and production ramp cycles, achieve higher and more stable product yields and improve their overall profitability.
Klarity ® product family, 5D Analyzer ® , OVALiS, aiSIGHT™, Anchor product family, RDC, FabVision ® Series, ProDATA™, PROLITH™, I-PAT ®, SPOT ® . KLA Pro Systems: Certified and Remanufactured Products Inspection and metrology systems support manufacture of larger design node chips and ≤200mm wafer manufacturing. Surfscan ® Series, 2835, 2367, ASET-F5x Pro, Archer™ Series.
Klarity ® product family, 5D Analyzer ® , OVALiS, aiSIGHT™, Anchor product family, RDC, FabVision ® Series, ProDATA™, PROLITH™, I-PAT ®, SPOT ® . KLA Pro Systems: Certified and Remanufactured Products Inspection and metrology systems support the manufacture of larger design node chips and ≤200mm wafer manufacturing. Surfscan ® Series, 2835, 2367 Pro, ASET-F5x Pro, Archer™ Series.
Through coaching and mentorship programs, our employees are inspired to push the boundaries of their comfort zones and seek creative solutions. If our employees pursue external learning opportunities and education, we support that too, through tuition reimbursement.
Through coaching and mentorship programs, our employees are inspired to push the boundaries of their comfort zones and seek creative solutions. If our employees pursue external learning opportunities and education, we have tuition reimbursement programs that support that too.
Whether a manufacturing site is producing wafers, reticles, ICs, FPD or PCB products, our highly trained service teams collaborate with customers to determine the best products and services to meet technology and business requirements.
Whether a manufacturing site is producing wafers, reticles, ICs or PCB products, our highly trained service teams collaborate with customers to determine the best products and services to meet technology and business requirements.
To remain competitive, we use significant financial resources to offer a broad range of products, to maintain customer service and support centers worldwide, and to invest in product R&D.
To remain competitive, we use significant financial resources to offer a broad range of products, to maintain customer service and support centers worldwide, and to invest significantly in product R&D.
Within the Semiconductor Process Control segment, our comprehensive portfolio of inspection, metrology and software products, as well as related services, help IC, wafer, reticle/mask and chemical/materials manufacturers achieve target yields throughout the entire fabrication process, from R&D to high volume production.
Within the Semiconductor Process Control segment, our comprehensive portfolio of inspection, metrology and software products, as well as related services, help IC, wafer, reticle/mask and chemical/materials manufacturers achieve target yields throughout the entire fabrication process, from R&D to final volume production.
Within the Specialty Semiconductor Process segment, we develop and sell advanced vacuum deposition and etch process tools, which are used by a broad range of specialty semiconductor customers, including manufacturers of microelectromechanical systems (“MEMS”), radio frequency (“RF”) communication semiconductors, and power semiconductors for automotive and industrial applications.
Within the Specialty Semiconductor Process segment, we develop and sell advanced vacuum deposition and etching process tools, which are used by a broad range of specialty semiconductor customers, including manufacturers of microelectromechanical systems (“MEMS”), radio frequency (“RF”) communication semiconductors, and power semiconductors for automotive and industrial applications.
For the fiscal years ended June 30, 2024, 2023 and 2022, the following customers each accounted for more than 10% of total revenues, primarily in the Semiconductor Process Control segment: Fiscal Year Ended June 30, 2024 2023 2022 Taiwan Semiconductor Manufacturing Company Limited Taiwan Semiconductor Manufacturing Company Limited Taiwan Semiconductor Manufacturing Company Limited Samsung Electronics Co., Ltd.
For the fiscal years ended June 30, 2025, 2024 and 2023, the following customers each accounted for more than 10% of total revenues, primarily in the Semiconductor Process Control segment: Fiscal Year Ended June 30, 2025 2024 2023 Taiwan Semiconductor Manufacturing Company Limited Taiwan Semiconductor Manufacturing Company Limited Taiwan Semiconductor Manufacturing Company Limited Samsung Electronics Co., Ltd.
In March 2024, we made the decision to exit our business of manufacturing flat and flexible panel displays (“Display”) by announcing the end of manufacturing of most Display products by December 31, 2024, but we will continue to provide services to the installed base of Display products for existing customers.
In March 2024, we made the decision to exit our business of manufacturing flat and flexible panel displays (“Display”) by announcing the end of manufacturing of most Display products, but we will continue to provide services to the installed base of Display products for existing customers.
For more information on ESG, see KLA’s 2022 Global Impact Report on our website; however, this citation is provided solely for informational purposes and the content of KLA’s 2022 Global Impact Report is expressly not incorporated by reference into this filing.
For more information on ESG, see KLA’s 2023 Global Impact Report on our website; however, this citation is provided solely for informational purposes and the content of KLA’s 2023 Global Impact Report is expressly not incorporated by reference into this filing.
Chip Manufacturing: In Situ Process Management Wired and wireless sensor wafers and reticles provide comprehensive data used to visualize, diagnose and control process conditions in the equipment used to manufacture chips and reticles. Additional wafer diagnostic solutions help troubleshoot and monitor materials handling to help detect and predict mechanical behaviors that may cause wafer damage. SensArray ® product family.
Chip Manufacturing: In Situ Process Management Wired and wireless sensor wafers and reticles provide comprehensive data used to visualize, diagnose and control process conditions in the equipment used to manufacture chips and reticles. Additional wafer diagnostic solutions help troubleshoot and monitor materials handling to help detect and predict mechanical behaviors that may cause wafer damage.
Additional information regarding our revenues from foreign operations for our last three fiscal years can be found in Note 19 “Segment Reporting and Geographic Information” to our Consolidated Financial Statements.
Additional information regarding our revenues from foreign operations for our last three fiscal years can be found in Note 18 “Segment Reporting and Geographic Information” to our Consolidated Financial Statements.
Within the PCB and Component Inspection segment, we sell products and services that enable electronic device manufacturers to inspect, test and measure PCBs, IC substrates and packaged ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. Additional information about KLA is available at www.kla.com.
Within the PCB and Component Inspection segment, we enable electronic device manufacturers to inspect, test and measure PCBs, IC substrates and packaged ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces. Additional information about KLA is available at www.kla.com.
The Company KLA Corporation and its majority-owned subsidiaries (“KLA” or the “Company” and also referred to as “we,” “our,” “us” or similar references) are suppliers of industry-leading equipment and services that enables innovation throughout the electronics industry.
ITEM 1. BUSINESS The Company KLA Corporation and its majority-owned subsidiaries (“KLA” or the “Company” and also referred to as “we,” “our,” “us” or similar references) are suppliers of industry-leading equipment and services that enables innovation throughout the electronics industry.
The PCB and Component Inspection segment offers a variety of solutions and products, including: Segment Technologies Products PCB and Component Inspection PCB Direct imaging, inspection, optical shaping, inkjet and additive printing, UV laser drilling as well as computer-aided manufacturing and engineering solutions for the PCB and IC substrate market.
The PCB and Component Inspection segment offers a variety of solutions and products, including: Segment Technologies Products PCB and Component Inspection PCB Direct imaging, inspection, optical shaping, inkjet and additive printing as well as computer-aided manufacturing and engineering solutions for the PCB and IC substrate market.
We include details in our 2022 Global Impact Report that are not included in this Form 10-K because we seek to be responsive to various areas of interest of our stakeholders; however, such information generally does not, and is not expected to, have a material effect on our capital expenditures, financial condition, results of operations or competitive position.
We include details in our 2023 Global Impact Report and other similar disclosures that are not included in this Form 10-K because we seek to be responsive to various areas of interest of our stakeholders; however, such information generally does not, and is not expected to, have a material effect on our capital expenditures, financial condition, results of operations or competitive position.
For information about risks related to government regulations, see “Backlog — Export restrictions” above and Item 1A “Risk Factors” in this Annual Report on Form 10-K. Environmental, Social and Governance Initiatives KLA strives to proactively manage and address the ESG topics most important to our stakeholders.
For information about risks related to government regulations, see Item 1A “Risk Factors” in this Annual Report on Form 10-K. Environmental, Social and Governance Initiatives KLA strives to proactively manage and address the ESG topics most important to our stakeholders.
KLA is committed to protecting and respecting our environment and energy resources throughout our operations for future generations, and follows the recommendations of the Task Force on Climate-Related Financial Disclosures, transparently reporting climate-related governance, strategy, risk management, metrics and targets to our stakeholders.
KLA recognizes the importance of protecting and respecting our environment and energy resources throughout our operations for future generations, and follows the recommendations of the Task Force on Climate-Related Financial Disclosures, transparently reporting climate-related governance, strategy, risk management, metrics and targets to our stakeholders.
The Specialty Semiconductor Process segment offers a variety of solutions and products, including: Segment Technologies Products Specialty Semiconductor Process Specialty Semiconductor Manufacturing Etch, plasma dicing, deposition and other wafer processing technologies and solutions for the semiconductor and microelectronics industry.
The Specialty Semiconductor Process segment offers a variety of solutions and products, including: 5 Table of Contents Segment Technologies Products Specialty Semiconductor Process Specialty Semiconductor Manufacturing Etch, plasma dicing, deposition and other wafer processing technologies and solutions for the semiconductor and microelectronics industry.
Our performance management process includes performance feedback against goals, a review of key competencies that are needed to be successful at KLA and career development discussions. 10 Table of Contents We emphasize frequent 1-on-1 meetings between managers and employees and regular coaching and feedback sessions.
Our performance management process includes performance feedback against goals and a review of key competencies that are needed to be successful at KLA and career development discussions. We emphasize frequent one-on-one meetings between managers and employees and regular coaching and feedback sessions.
Kronos™ Series, CIRCL™-AP, irArcher ® Series, PWG5™ with XT Option, QualiSurf ® Series, Quali-Fill ® Libra ® Series, QualiLab Elite ® Series, Quali-Dose ® , SensArray ® product family. Semiconductor Software Solutions Software solutions centralize and analyze the data produced by inspection, metrology and process systems for chip, wafer, reticle and packaging manufacturing.
Kronos™ Series, Micro-SR™, CIRCL™-AP, irArcher ® Series, PWG5™ with XT Option, eDR7380™, QualiSurf ® Series, Quali-Line ® Prima ® , Quali-Fill ® Libra ® Series, QualiLab Elite ® Series, SensArray ® product family. Semiconductor Software Solutions Software solutions centralize and analyze the data produced by inspection, metrology and process systems for chip, wafer, reticle and packaging manufacturing.
The timing of revenue recognition of our RPO is evaluated quarterly and is largely driven by multiple variables, many of which are beyond our control, such as: the readiness of customer fabs, end market needs for capacity, changes in the estimated versus actual start time of customers’ projects, timing of delivery and installation dates, supply chain constraints and changes in regulations.
The amount of backlog and timing of revenue recognition is driven by multiple variables, many of which are beyond our control, such as: changes in government regulations, the readiness of customer fabs, end market needs for capacity, changes in the estimated versus actual start time of customers’ projects, timing of delivery and installation dates and supply chain constraints.
General Purpose/Lab Application Specialty Semiconductor Manufacturing, Benchtop Metrology, Surface Characterization, Material Strength Characterization and Electrical Property Measurement. Candela ® Series, HRP ® -260, Zeta™ Series, Tencor ® P Series, Nano Indenter ® Series, Alpha-Step ® Series, Filmetrics ® F Series, Filmetrics ® R Series, iMicro, iNano ® , Filmetrics ® Profilm3D ® Series, T150 UTM, NanoFlip, InSEM ® HT.
General Purpose/Lab Application Specialty Semiconductor Manufacturing, Benchtop Metrology, Surface Characterization, Material Strength Characterization and Electrical Property Measurement. HRP ® -260, Zeta™ Series, Tencor ® P Series, Nano Indenter ® G200X, Alpha-Step ® Series, Filmetrics ® F Series, Filmetrics ® R Series, iMicro, iNano ® , Filmetrics ® Profilm3D ® Series, NanoFlip.
Orbotech Corus™ Series, Orbotech Infinitum™ Series, Orbotech Nuvogo™ Fine/ Nuvogo™ Series, Orbotech Diamond™ Series, Orbotech Ultra Dimension™ Series, Orbotech Ultra Fusion™/ Fusion™ Series, Orbotech Discovery™ II Series, Orbotech Precise™ Series, Orbotech Ultra PerFix™/ PerFix™ Series, Orbotech Neos™ Series, Orbotech Sprint™ Series, Orbotech Magna™ Series, Orbotech Jetext™ Series, Orbotech Apeiron™ Series, Frontline product family.
Serena™, Orbotech Corus™ Series, Orbotech Infinitum™ Series, Orbotech Nuvogo™ Fine/ Nuvogo™ Series, Orbotech Diamond™ Series, Lumina™, Orbotech Ultra Dimension™ Series, Orbotech Ultra Fusion™/ Fusion™ Series, Orbotech Discovery™ II Series, Orbotech Precise™ Series, Orbotech Ultra PerFix™/ PerFix™ Series, Orbotech Neos™ Series, Orbotech Sprint™ Series, Orbotech Magna™ Series, Frontline product family.
Our principal manufacturing activities occur in the U.S., Singapore, Israel, Germany, United Kingdom, Italy and China.
Our principal manufacturing activities occur in the U.S., Singapore, Israel, Germany, U. K., Italy and China.
Our Workforce As of June 30, 2024, we had approximately 15,000 regular full-time employees and approximately 230 part-time and temporary employees in facilities located in 18 regions.
Our Workforce As of June 30, 2025, we had approximately 15,000 regular full-time employees and approximately 200 part-time and temporary employees in facilities located in 18 major regions.
The Semiconductor Process Control segment offers a variety of solutions and products, including: Segment Technologies Products Semiconductor Process Control Chip Manufacturing: Defect Inspection and Review Inspection and review tools are used to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers. 39xx Series, 29xx Series, C30x Series, eSL10™, Voyager ® Series, 8 Series, Puma™ Series, CIRCL™ Series, Surfscan ® Series, Surfscan ® SP Ax Series, eDR ® Series.
The Semiconductor Process Control segment offers a variety of solutions and products, including: Segment Technologies Products Semiconductor Process Control Chip Manufacturing: Defect Inspection and Review Inspection and review tools are used to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers. 39xx Series, 29xx Series, C30x Series, eSi50™, Voyager ® Series, 8 Series, Puma™ Series, Micro-SR™, CIRCL™ Series, Castor™, Surfscan ® Series, eDR7380™ Series, eDRX™ Series.
Wafer Manufacturing: Defect Inspection and Review, Metrology, and In Situ Process Management Wafer defect inspection, review and metrology systems are used to help wafer/substrate manufacturers manage quality throughout the wafer fabrication process by detecting defects, characterizing surface quality and assessing wafer geometry.
SensArray ® product family. 4 Table of Contents Wafer Manufacturing: Defect Inspection and Review, Metrology, and In Situ Process Management Wafer defect inspection, review and metrology systems are used to help wafer/substrate manufacturers manage quality throughout the wafer fabrication process by detecting defects, characterizing surface quality and assessing wafer geometry.
Products and Services KLA develops industry-leading process control and yield management solutions and services that enable innovation throughout the semiconductor and related electronics industries. We provide advanced process control and process-enabling 3 Table of Contents solutions for manufacturing wafers, reticles, ICs, packaging, PCBs, IC substrates and flat and flexible panel displays.
Products and Services KLA develops industry-leading process control and yield management solutions and services that enable innovation throughout the semiconductor and related electronics industries. We provide advanced process control and process-enabling solutions for manufacturing wafers, reticles, ICs, packaging, PCBs and IC substrates.
Approximately 31% of our regular full-time employees are located in the U.S., 21% in Europe and Middle Eastern countries and 48% in Asia Pacific and Japan, with approximately 20% engaged in manufacturing, 27% in R&D, 28% in customer service, 5% in sales and marketing and 20% in other roles.
Approximately 32% of our regular full-time employees are located in the U.S., 19% in Europe and Middle Eastern countries and 49% in Asia, with approximately 20% engaged in manufacturing, 27% in R&D, 28% in customer service, 5% in sales and marketing and 20% in other roles.
Surfscan ® Series, Surfscan ® SP Ax Series, eDR ® Series, WaferSight™ Series, MicroSense ® wafer geometry product family, SensArray ® product family, Candela ® Series, QualiSurf ® Series. 4 Table of Contents Reticle Manufacturing: Defect Inspection, Metrology and In Situ Process Management Reticle inspection and metrology systems help reticle blank, patterned optical reticle, patterned EUV reticle, and chip manufacturers identify defects, pattern placement errors, and process issues during reticle manufacturing.
Surfscan ® Series, eDR7380™ Series, eDRX™ Series, WaferSight™ Series, MicroSense ® wafer geometry product family, SensArray ® product family, Candela ® Series. Reticle Manufacturing: Defect Inspection, Metrology and In Situ Process Management Reticle inspection and metrology systems help reticle blank, patterned optical reticle, patterned EUV reticle, and chip manufacturers identify defects, pattern placement errors, and process issues during reticle manufacturing.
We are committed to providing a safe and healthy workplace for all employees. We accomplish this through strict compliance with applicable laws and regulations regarding workplace safety, including recognition and control of workplace hazards, tracking injury and illness rates, utilizing a global travel health program and maintaining detailed emergency and disaster recovery plans.
We accomplish this through promoting strict compliance with applicable laws and regulations regarding workplace safety, including recognition and control of workplace hazards, tracking injury and illness rates, utilizing a global travel health program and maintaining detailed emergency and disaster recovery plans.
Research and Development The market for semiconductor and electronics industries is characterized by rapid technological development and product innovation. These technical innovations are inherently complex and require long development cycles and appropriate professional staffing. We make significant investments in product R&D for the timely development of new products and enhancements necessary to maintain our competitive position.
These technical innovations are inherently complex and require long development cycles and appropriate professional staffing. We make significant investments in product R&D for the timely development of new products and enhancements necessary to maintain our competitive position.
Changes in environmental laws and regulations could require us to invest in potentially costly pollution control equipment, alter our manufacturing processes or use substitute materials. Our failure to comply with laws, rules and regulations could subject us to future liabilities.
Changes in environmental laws and regulations could require us to invest in potentially costly pollution control equipment, alter our manufacturing processes or use substitute materials. Our failure to comply with laws, rules and regulations could subject us to future liabilities. The recent imposition of tariffs by the U.S. government (“U.S.
The semiconductor capital equipment industry has been experiencing multiple growth drivers bolstered by demand for semiconductors from leading-edge foundry and logic manufacturers to support computational power and connectivity for markets such as artificial intelligence (“AI”) and 5G wireless technology and increasing investment by our customers in legacy nodes.
The semiconductor capital equipment industry has been experiencing multiple growth drivers bolstered by demand for semiconductors from leading-edge foundry and logic manufacturers to support computational power and connectivity and continued investment by our customers in legacy nodes.
Accordingly, we devote a significant portion of our human and financial resources to R&D programs and seek to maintain close relationships with customers to remain responsive to their needs. 2 Table of Contents Our key R&D activities during the fiscal year ended June 30, 2024 involved the development of process control and process-enabling solutions for a broad range of industries including semiconductors and PCBs.
Accordingly, we devote a significant portion of our human and financial resources to R&D programs and seek to maintain close relationships with customers to remain responsive to their needs. Our key R&D activities during the fiscal year ended June 30, 2025 involved the development of process control and process-enabling solutions for front end semiconductors and advanced packaging.
Our excellent safety record, which is less than half of the semiconductor industry average, is a tribute to our employees’ efforts, the breadth and depth of our training programs and our dedication to safety policy management.
In addition, our service technicians are required to achieve and maintain role-specific safety training certifications. Our excellent safety record, which is less than half of the semiconductor industry average, is a tribute to our employees’ efforts, the breadth and depth of our training programs and our dedication to safety policy management.
International sales and operations may be adversely affected by the imposition of governmental controls, restrictions on export technology, political instability, trade restrictions, changes in tariffs and the difficulties associated with staffing and managing international operations. In addition, international sales may be adversely affected by the economic conditions in each country and by fluctuations in currency exchange rates.
International sales and operations may be adversely affected by the imposition of governmental controls, restrictions on 3 Table of Contents export technology, political instability, trade restrictions, changes in tariffs and the difficulties associated with staffing and managing international operations.
In addition, no assurance can be given that our ESG initiatives will have the intended results or be able to be completed as currently envisioned, whether due to cost, feasibility or other constraints. Our 2023 Global Impact Report is expected to be published in the first quarter of fiscal 2025.
In addition, no assurance can be given that our ESG initiatives will have the intended results or be able to be completed as currently envisioned, whether due to cost, feasibility or other constraints.
For information regarding our R&D expenses during the last three fiscal years, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
Our primary R&D centers are located in the U.S., United Kingdom (“U.K.”), India, China, Singapore and Israel. For information regarding our R&D expenses during the last three fiscal years, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
SPTS Omega ® Series, SPTS Sigma ® Series, SPTS Delta™ Series, Primaxx ® Series, Xactix ® Series, SPTS Mosaic™ Series, MVD Series. 5 Table of Contents The PCB and Component Inspection segment enables electronic device manufacturers to inspect, test and measure PCBs, IC substrates, flat panel displays (“FPD”) and packaged ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces.
The PCB and Component Inspection segment enables electronic device manufacturers to inspect, test and measure PCBs, IC substrates and packaged ICs to verify their quality, pattern the desired electronic circuitry on the relevant substrate and perform three-dimensional shaping of metalized circuits on multiple surfaces.
ICOS™ F26x, ICOS™ Tx Series, Zeta™-5xx/6xx. Services Our service programs enable our customers in all business sectors to maintain the high performance and productivity of our products through a flexible array of service options.
Component Inspection and metrology systems for quality control and yield improvement in advanced and traditional semiconductor packaging markets. ICOS™ F26x, ICOS™ Tx Series, Zeta™-5xx/6xx. Services Our service programs enable our customers in all business sectors to maintain the high performance and productivity of our products through a flexible array of service options.
We offer a long-term benefit program to a broad base of employees to share in our success through restricted stock units (“RSU”) and an Employee Stock Purchase Plan (“ESPP”). We also provide incentive bonus or profit sharing to employees.
A broad base of our employees is eligible for our long-term benefit program, to share in our success, through restricted stock units (“RSU”) and an Employee Stock Purchase Plan (“ESPP”). We also provide incentive bonus or profit sharing to employees. In addition to providing our employees with competitive compensation packages, we provide a range of benefits to support employee well-being.
We have filed and obtained a number of patents in the U.S. and abroad and intend to continue pursuing the legal protection of our technology through IP laws.
Patents and Other Proprietary Rights We protect our proprietary technology through reliance on a variety of IP laws, including patent, copyright and trade secret. We have filed and obtained a number of patents in the U.S. and abroad and intend to continue pursuing the legal protection of our technology through IP laws.
We made a commitment to globalize our ISO 45001 (the internationally recognized standard for Occupational Health & Safety (“OHS”) Management Systems) certification and expand our ISO 14001 (the internationally recognized standard for Environmental Management Systems (“EMS”)) certification beyond our larger sites.
We made a commitment to globalize our ISO 45001 (the internationally recognized standard for Occupational Health & Safety Management Systems) certification and expand our ISO 14001 (the internationally recognized standard for Environmental Management Systems) certification beyond our larger sites. In calendar-year 2024, we achieved the certification for ISO 14001 and ISO 45001 across our main production and R&D facilities.
We expect to recognize approximately 59% to 64% of these performance obligations as revenue in the next 12 months, 29% to 34% in the subsequent 12 months and the remainder thereafter, but this estimate is subject to constant change.
We expect to recognize approximately 71% to 76% of this amount as revenue in the next 12 months, 20% to 25% in the subsequent 12 months and the remainder thereafter, but this estimate is subject to constant change.
As customers try to balance the evolution of their technological, production or market needs with the timing and content of orders placed with us, there is increased risk of order modifications, pushouts or cancellations.
As customers try to balance the evolution of their technological, production or market needs with the timing and content of orders placed with us, there is increased risk of order modifications, pushouts or cancellations. Our backlog on any particular date does not provide meaningful information about the timing of future revenue recognition.
Our supply chain strategy incorporates considerations for ethical labor practices, responsible minerals sourcing, and Responsible Business Alliance and SEMI guidelines, and there are increasing regulatory expectations on the environmental, social and/or geographic provenance of materials or components that may at times require us to incorporate further such considerations to our supply chain strategy.
Our supply chain strategy incorporates considerations for ethical labor practices, responsible minerals sourcing, and Responsible Business Alliance and SEMI guidelines, and there are increasing regulatory expectations on the environmental, social and/or geographic provenance of materials or components that may at times require us to incorporate further such considerations to our supply chain strategy. 6 Table of Contents Some critical parts, components and subassemblies (collectively, “parts”) that we use are designed by us and manufactured by suppliers in accordance with our specifications, while other parts are standard commercial products.
Our ability to compete in this area depends upon the continuation of favorable trading relationships between countries in the region and the U.S., and our continuing ability to maintain satisfactory relationships with leading semiconductor companies in the region. Refer to “Backlog” section below for information regarding export licenses now required for certain products and services sold to China.
Our ability to compete in this area depends upon the continuation of favorable trading relationships between countries in the region and the U.S., and our continuing ability to maintain satisfactory relationships with leading semiconductor companies in the region.
Government Regulations We are subject to a variety of federal, state and local governmental laws and regulations worldwide, including, but not limited to, laws, rules and regulations related to anti-corruption, antitrust, data privacy requirements, employment, environmental, foreign exchange controls, health and safety requirements, immigration, import/export requirements, IP and tax.
In addition, there can be no assurance that we will be able to protect our technology or that competitors will not be able to independently develop similar or functionally competitive technology. 7 Table of Contents Government Regulations We are subject to a variety of federal, state and local governmental laws and regulations worldwide, including, but not limited to, laws, rules and regulations related to anti-corruption, antitrust, data privacy requirements, employment, environmental, foreign exchange controls, health and safety requirements, immigration, import/export requirements, IP and tax.
Device performance characteristics (namely speed, capacity or power management) also become more sensitive to parameters such as linewidth and film thickness variation. New process materials require extensive characterization before they can be used in the manufacturing process. Moving several of these advanced technologies into production at once only adds to the risks that chipmakers face.
As design rules decrease, yields become more sensitive to the size and density of defects. Device performance characteristics (namely speed, capacity or power management) also become more sensitive to parameters such as linewidth and film thickness variation. New process materials require extensive characterization before they can be used in the manufacturing process.
We focus on providing comprehensive resources for the full breadth of process control, process-enabling and yield management solutions for manufacturing and testing wafers and reticles, a wide variety of ICs, PCBs, IC substrates and packaging as well as general materials research. Our revenues are derived primarily from product sales and related service contracts, mostly through our direct sales force.
Sales, Service and Marketing Our sales, service and marketing efforts aim to build deep long-term relationships with our customers. We focus on providing comprehensive resources for the full breadth of process control, process-enabling and yield management solutions for manufacturing and testing wafers and reticles, a wide variety of ICs, PCBs, IC substrates and packaging as well as general materials research.
Such fluctuations may negatively impact our ability to compete on price with local providers or the value of revenues we generate from our international business. Although we attempt to manage some of the currency risk inherent in non-U.S. dollar product sales through hedging activities, there can be no assurance that such efforts will be adequate.
Although we attempt to manage some of the currency risk inherent in non-U.S. dollar product sales through hedging activities, there can be no assurance that such efforts will be adequate.
Our employees have access to a wide range of programs, workshops, classes and resources to help them excel in their careers and share what they know with others.
We emphasize stretch assignments, on-the-job development, as well as classroom and online training. Our employees have access to a wide range of programs, workshops, 9 Table of Contents classes and resources to help them excel in their careers and share what they know with others.
We are committed to reducing safety risks across business units and at corporate sites worldwide. We revised our approach to risk assessments to “risk rank” our own operations. We are utilizing this system not only to measure our own performance, but also to help improve the performance of our supply chain and customers.
We revised our approach to risk assessments to “risk rank” our own operations. We are utilizing this system not only to measure our own performance, but also to help improve the performance of our supply chain and customers. All new hires are required to complete a health and safety training program.
Downturns in the semiconductor or other industries in which we operate, or slowdowns in the worldwide economy as well as customer consolidation, could have a material adverse effect on our future business and financial results. Companies anticipating future market demands by developing and advancing new technologies and manufacturing processes are better positioned to lead in the semiconductor market.
Downturns in the semiconductor or other industries in which we operate, slowdowns in the worldwide economy, customer consolidation as well as recent political and regulatory changes could have a material adverse effect on our future business and financial results.
We continue to monitor various climate-related risks even if some are not currently expected to have a material impact on KLA’s business or financial condition for assessed time horizons. Advancing Opportunity : Our goal is to work together to harness the untapped human potential of a more just and inclusive world.
We continue to monitor various risks, including climate-related and other ESG-related risks, even if some are not currently expected to have a material impact on KLA’s business or financial condition for assessed time horizons.
Except for our employees in Belgium (where a trade union delegation has been recognized) and our employees in the German operations of our MIE and Laser Imaging Systems business units (who are represented by employee works councils), none of our employees are represented by a labor union.
None of our employees are represented by a labor union; however, there is a trade union delegation for our employees in Belgium and our employees in the German operations of our MIE and Laser Imaging Systems business units are represented by employee works councils. We have not experienced work stoppages and believe that our employee relations are good.
We believe that the size and location of our field sales, service engineering, applications engineering, and marketing organizations represent a competitive advantage in our served markets. We have direct sales forces in Asia, the U.S. and Europe. We maintain an export compliance program designed to meet the requirements of Commerce and the U.S.
Our revenues are derived primarily from product sales and related service contracts, mostly through our direct sales force. We believe that the size and location of our field sales, service engineering, applications engineering, and marketing organizations represent a competitive advantage in our served markets. We have direct sales forces in Asia, the U.S. and Europe.
Department of State and the trade regulations of the international jurisdictions in which we operate. In addition to sales and service offices in the U.S., we conduct sales, marketing and services out of subsidiaries or branches in many regions; some of the largest include China, Germany, Israel, Japan, Korea, Singapore, Taiwan and the United Kingdom.
In addition to sales and service offices in the U.S., we conduct sales, marketing and services out of subsidiaries or branches in many regions; some of the largest include China, Germany, Israel, Japan, Korea, Singapore, Taiwan and the U.K. We believe sales outside the U.S. will continue to be a significant percentage of our total revenues.
Employee Engagement We conduct regular employee surveys to check in with our global workforce and obtain input on several topics. The feedback we receive from these surveys helps us assess employee sentiment, identify areas of improvement and guides our decision-making as it relates to people management.
The feedback we receive from these surveys helps us assess employee sentiment, identify areas of improvement and guides our decision-making as it relates to people management. We created action plans and involved our workforce in developing potential solutions to address these top concerns.
Although we make reasonable efforts to ensure that these parts and raw materials are available from multiple suppliers, this is not always possible. Certain parts and raw materials included in our systems may be obtained only from a single supplier or a limited group of suppliers.
Certain parts and raw materials included in our systems may be obtained only from a single supplier or a limited group of suppliers.
Leading semiconductor manufacturers invest in simultaneous production integration of multiple new process technologies, some requiring new substrate and film materials, new geometries, new transistor architectures, new power distribution schemes, advanced multi-patterning optical and extreme ultraviolet (“EUV”) lithography, and advanced packaging techniques. As design rules decrease, yields become more sensitive to the size and density of defects.
Ramping to high-volume production ahead of competitors can dramatically increase IC manufacturers’ revenue and profit for a given product. Leading semiconductor manufacturers invest in simultaneous production integration of multiple new process technologies, some requiring new substrate and film materials, new geometries, new transistor architectures, new power distribution schemes, advanced multi-patterning optical and extreme ultraviolet (“EUV”) lithography, and advanced packaging techniques.
As part of our drive to be better, we have established environmental sustainability goals. Our goals include using 100% renewable electricity across our global operations by 2030, reducing our Scope 1 and 2 emissions from our 2021 baseline by 50% by 2030 and achieving net zero Scope 1 and 2 emissions by 2050.
Our targets include using 100% renewable electricity across our global operations by 2030, reducing our Scope 1 and 2 emissions by 50% by 2030 and achieving net zero Scope 1 and 2 emissions by 2050. These targets covering Scope 1 and 2 emissions utilize a 2021 baseline.
In addition, chipmakers are demanding increased productivity and higher returns from their manufacturing equipment and are also seeking ways to extend the performance of their existing equipment.
Construction of an advanced IC fabrication facility today can cost well above $10 billion, substantially more than previous-generation facilities. In addition, chipmakers are demanding increased productivity and higher returns from their manufacturing equipment and are also seeking ways to extend the performance of their existing equipment.
Although China is currently seen as an important long-term growth region for the semiconductor capital equipment sector, Commerce has added certain China-based entities to the U.S. Entity List (a list of parties that are generally ineligible to receive U.S. regulated items without prior licensing from BIS), restricting our ability to provide products and services to such entities without a license.
Entity List (a list of parties that are generally ineligible to receive U.S. regulated items without prior licensing from Commerce), restricting our ability to provide products and services to such entities without an export license. In addition, Commerce has imposed export licensing requirements on China-based customers that are military end users or engaged in military end uses.
In 2023, we established a global waste and water policy to guide our efforts in 8 Table of Contents these spaces as well.
Our company-wide Environmental Management Policy underscores complying with applicable environmental laws and standards across company locations globally. In 2023, we established a global waste and water policy to guide our efforts in these spaces as well.
We implemented a global standard for our incidents to ensure consistency across our regions, and continually outperform industry averages for injury rates.
Our goal is always zero accidents across our facilities, and to achieve that, we conduct proactive risk assessments and audits to constantly improve our efforts. We implemented a global standard for our incidents to promote consistency across our regions, and continually outperform industry averages for injury rates.
We believe sales outside the U.S. will continue to be a significant percentage of our total revenues. International revenues accounted for approximately 89%, 88% and 90% of our total revenues in the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
International revenues accounted for approximately 89% of our total revenues in both of the fiscal years ended June 30, 2025 and 2024 and 88% of our total revenues in the fiscal year ended June 30, 2023.
Our talent development programs focus on developing the whole person through comprehensive training offerings, employee engagement programs and health and wellness activities. We embrace our responsibility to lead through exceptional training programs and professional development and through enabling our employees to be safe, secure, healthy and feel included and empowered to bring their whole self to work.
We also aim to support employees’ personal and professional growth. Our talent development programs focus on developing the whole person through comprehensive training offerings, employee engagement programs and health and wellness activities.
Additionally, our Values in Action training, which was also targeted at the director level and above, provided further guidance on our values, business ethics and inclusion and diversity. Most of our employees are also required to take annual training courses and regular certifications related to their work, including those pertaining to the environment, data privacy and workplace health and safety.
Most of our employees are also required to take annual training courses and regular certifications related to their work, including those pertaining to the environment, data privacy and workplace health and safety. Employee Engagement We conduct regular employee surveys to check in with our global workforce and obtain input on several topics.
We believe it is critical to attract, motivate and retain a dedicated, talented, and innovative team of employees who exhibit our core values. As talent and retention continue to be a challenging issue for many companies, we strive to work proactively to address these concerns. We also aim to support employees’ personal and professional growth.
We recognize that our competitive advantage is our people and the technology they develop. We believe it is critical to anticipate, attract, grow and inspire talent that exhibits our core values. As talent and retention continue to be a challenging issue for many companies, we strive to work proactively to address these concerns.
The continuing evolution of semiconductors to smaller geometries and more complex multi-level circuitry has significantly increased the performance and cost requirements of the capital equipment used to manufacture these devices. Construction of an advanced IC fabrication facility today can cost well above $10 billion, substantially more than previous-generation facilities.
Moving several of these advanced technologies into production at once only adds to the risks that chipmakers face. The continuing evolution of semiconductors to smaller geometries and more complex multi-level circuitry has significantly increased the performance and cost requirements of the capital equipment used to manufacture these devices.
For more information on Human Capital, see KLA’s 2022 Global Impact Report on our website; however, this citation is provided solely for informational purposes, and the content of KLA’s 2022 Global Impact Report is expressly not incorporated by reference into this filing. 11 Table of Contents Glossary This section provides definitions for certain industry and technical terms commonly used in our business, that are used elsewhere in this Annual Report on Form 10-K: compound semiconductor A semiconductor formed from chemical elements in two or more different groups in the periodic table (ex.
For more information on Human Capital, see KLA’s 2023 Global Impact Report on our website; however, this citation is provided solely for informational purposes, and the content of KLA’s 2023 Global Impact Report is expressly not incorporated by reference into this filing.
We value our employees as individuals and aim to recognize and support their needs so they can bring their best selves to work every day. We engage with our employees about what they need to be successful in and out of the workplace.
In fiscal year 2025, our overall employee voluntary turnover rate was under 3.8%. Compensation and Benefits At KLA, our talent is the heartbeat of our organization. We value our employees as individuals and aim to recognize and support their needs so they can bring their best selves to work every day.
In addition, Commerce has imposed export licensing requirements on China-based customers that are military end users or engaged in military end uses. It also requires our customers to obtain an export license when they use certain semiconductor capital equipment based on U.S. technology to manufacture products connected to certain entities on the U.S. Entity List.
It also requires our customers to obtain an export license when they use certain semiconductor capital equipment based on U.S. technology to manufacture products connected to certain entities on the U.S. Entity List. 2 Table of Contents Research and Development The market for semiconductor and electronics industries is characterized by rapid technological development and product innovation.
The growth of virtual engagement and the pace of digitization has been driven by COVID-19 related travel restrictions, work from home activities, and advances in healthcare and industrial applications. These factors, together with the increasing adoption of electric vehicles and intelligence in automobiles, are powering leading-edge design node technology investments and capacity expansions.
The digitization of all industries, including 5G markets and advances in healthcare and industrial applications, together with the increasing adoption of electric vehicles and intelligence in automobiles, are powering leading-edge design node technology investments and capacity expansions. Regionalization of semiconductors has become a trend as access to semiconductors is viewed from the lens of national security.
Our ESG initiatives are another way KLA seeks to deliver long-term value for our stockholders and exemplify our core values. For more information on our core values, refer to the “Human Capital Management” section of this Item 1.
Our ESG initiatives are another way KLA seeks to deliver long-term value for our stockholders and draw on our core values. We work across our global footprint to shape a more sustainable future in collaboration with our customers and suppliers.
Benefits are inclusive of leave programs (e.g., paid time off, parental leave and bereavement leave), health coverage, contributions to retirement savings and access to employee assistance and work-life programs. We offer programs and opportunities to employees to help improve their health and well-being. KLA’s virtual and in-person well-being course offerings span physical, financial, and mental health.
Our benefits are designed to meet the needs of employees and their families and may include leave programs (e.g., paid time off, parental leave and bereavement leave), health coverage, income replacement programs, retirement savings schemes and access to employee assistance and work-life programs, based on local needs and practices.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware generally shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or employee 34 Table of Contents of the Company to the Company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, our Certificate of Incorporation or Bylaws or (iv) any other action asserting a claim arising under, in connection with, and governed by the internal affairs doctrine.
Biggest changeOur Bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain actions and proceedings, which could limit the ability of our stockholders to obtain a judicial forum of their choice for disputes with the Company or its directors, officers or employees. 31 Table of Contents Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware generally shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or employee of the Company to the Company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware, our Certificate of Incorporation or Bylaws or (iv) any other action asserting a claim arising under, in connection with, and governed by the internal affairs doctrine.
This includes an issuance in February 2024 of $750.0 million aggregate principal amount of senior, unsecured notes, consisting of $500.0 million of 4.700% senior, unsecured notes due February 1, 2034 and an additional $250.0 million of 4.950% senior, unsecured notes due July 15, 2052 which was originally issued in June 2022.
This aggregate principal amount of senior, unsecured notes includes an issuance in February 2024 of $750.0 million aggregate principal amount of senior, unsecured notes, consisting of $500.0 million of 4.700% senior, unsecured notes due February 1, 2034 and an additional $250.0 million of 4.950% senior, unsecured notes due July 15, 2052 which was originally issued in June 2022.
Business Model and Capital Structure Risks • We may not be able to maintain our technology advantage or protect our proprietary rights; • We may not be able to compete with new products introduced by our competitors; • We may not receive components necessary to build our products in a timely manner; • We may fail to operate our business in a manner consistent with our business plan; • We may fail to comply with the covenants in our Revolving Credit Facility (defined below) and Senior Notes (defined below), which could impair our ability to borrow needed funds, or require us to repay debt sooner than we planned; • We may not have sufficient financial resources to repay our indebtedness when it becomes due, and our leveraged capital structure may divert resources from operations and other corporate uses; 14 Table of Contents • We may not be able to declare cash dividends at all or in any particular amounts; • Risks related to our commercial terms and conditions, including our indemnification of third parties, as well as the performance of our products; • Our government funding for R&D is subject to termination, audit and any further penalties; • We may incur significant restructuring charges or other asset impairment charges or inventory write-offs; • We are subject to risks related to receivables factoring arrangements, and compliance risk of certain settlement agreements with the government; and • Our Amended and Restated Bylaws (“Bylaws”) designate the Court of Chancery of the State of Delaware as the sole forum for certain actions, which may discourage claims against the Company.
Business Model and Capital Structure Risks • We may not be able to maintain our technology advantage or protect our proprietary rights; • We may not be able to compete with new products introduced by our competitors; • We may not receive components necessary to build our products in a timely manner; • We may fail to operate our business in a manner consistent with our business plan; • We may fail to comply with the covenants in our Revolving Credit Facility (defined below) and Senior Notes (defined below), which could impair our ability to borrow needed funds, or require us to repay debt sooner than we planned; • We may not have sufficient financial resources to repay our indebtedness when it becomes due, and our leveraged capital structure may divert resources from operations and other corporate uses; • We may not be able to declare cash dividends at all or in any particular amounts; • Risks related to our commercial terms and conditions, including our indemnification of third parties, as well as the performance of our products; 11 Table of Contents • Our government funding for R&D is subject to termination, audit and any further penalties; • We may incur significant restructuring charges or other asset impairment charges or inventory write-offs; • We are subject to risks related to receivables factoring arrangements, and compliance risk of certain settlement agreements with the government; and • Our Amended and Restated Bylaws (“Bylaws”) designate the Court of Chancery of the State of Delaware as the sole forum for certain actions, which may discourage claims against the Company.
In addition, we may face other risks associated with acquisition transactions that may lead to a material adverse effect on our business and financial results, including: • We may have to devote unanticipated financial and management resources to acquired businesses; 21 Table of Contents • The combination of businesses may result in the loss of key personnel or an interruption of, or loss of momentum in, the activities of our Company and/or the acquired business; • We may not be able to realize expected operating efficiencies or product integration benefits from our acquisitions; • We may experience challenges in entering into new market segments for which we have not previously manufactured and sold products; • We may face difficulties in coordinating geographically separated organizations, systems and facilities; • The customers, distributors, suppliers, employees and others with whom the companies we acquire have business dealings may have a potentially adverse reaction to the acquisition; • We may have difficulty implementing a cohesive framework of controls, procedures and policies appropriate for a larger, U.S.-based public company at companies that, prior to acquisition, may not have as robust controls, procedures and policies, particularly with respect to the effectiveness of cyber and information security practices and incident response plans, compliance with data privacy and protection and other laws and regulations, and compliance with U.S.-based economic policies and sanctions that may not have previously been applicable to the acquired company’s operations; • We may have to write off goodwill or other intangible assets; and • We may incur unforeseen obligations or liabilities in connection with acquisitions including, but not limited to, cybersecurity risks associated with integrating our networks or systems with those of acquired entities.
In addition, we may face other risks associated with acquisition transactions that may lead to a material adverse effect on our business and financial results, including: • We may have to devote unanticipated financial and management resources to acquired businesses; • The combination of businesses may result in the loss of key personnel or an interruption of, or loss of momentum in, the activities of our Company and/or the acquired business; • We may not be able to realize expected operating efficiencies or product integration benefits from our acquisitions; • We may experience challenges in entering into new market segments for which we have not previously manufactured and sold products; • We may face difficulties in coordinating geographically separated organizations, systems and facilities; • The customers, distributors, suppliers, employees and others with whom the companies we acquire have business dealings may have a potentially adverse reaction to the acquisition; • We may have difficulty implementing a cohesive framework of controls, procedures and policies appropriate for a larger, U.S.-based public company at companies that, prior to acquisition, may not have as robust controls, procedures and policies, particularly with respect to the effectiveness of cyber and information security practices and incident response plans, compliance with data privacy and protection and other laws and regulations, and compliance with U.S.-based economic policies and sanctions that may not have previously been applicable to the acquired company’s operations; • We may have to write off goodwill or other intangible assets; and • We may incur unforeseen obligations or liabilities in connection with acquisitions including, but not limited to, cybersecurity risks associated with integrating our networks or systems with those of acquired entities.
This data includes confidential information, transactional information and IP belonging to us, our customers and our business partners, as well as personal information of individuals (collectively, “Confidential Information”). We also integrate and use third-party services and products, including software, in our IT Systems, and such third-party products, services and systems are beyond our control.
This data includes confidential information, transactional information and IP belonging to us, our customers and our business partners, as well as personal information of individuals (collectively, “Confidential Information”). We also integrate and use certain third-party services and products, including software, in our IT Systems, and such third-party products, services and systems are beyond our control.
The interest rate under our Revolving Credit Facility is also subject to (i) an adjustment in conjunction with our credit rating downgrades or upgrades and (ii) an adjustment based on our performance against certain sustainability key performance indicators (“KPI”) related to GHG emissions and renewable electricity usage.
The interest rate under our Revolving Credit Facility is also subject to (i) an adjustment in conjunction with our credit rating downgrades or upgrades and (ii) an adjustment based on our performance against certain sustainability key performance indicators related to GHG emissions and renewable electricity usage.
A change in our effective tax rate can materially and adversely impact our results from operations. In addition, recent changes to U.S. tax laws will significantly impact how U.S. multinational corporations are taxed on foreign earnings.
A change in our effective tax rate can materially and adversely impact our results from operations. In addition, changes to U.S. tax laws will significantly impact how U.S. multinational corporations are taxed on U.S. and foreign earnings.
We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as diverse attack vectors, such as computer viruses, bugs, ransomware and other malware, technological errors and known and unknown vulnerabilities in our software and systems and those of third parties, cyber-related security breaches and similar disruptions from unauthorized intrusions, tampering, misuse or criminal acts made directly against our systems or networks, or through our third-party providers or the supply chain, including social engineering, phishing, or other events or developments that we may be unable to anticipate or fail to mitigate, including, but not limited to, financial fraud, including check fraud, vulnerabilities or misconfigurations in our IT Systems.
We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as diverse attack vectors, such as computer viruses, bugs, ransomware and other malware, technological errors and known and 17 Table of Contents unknown vulnerabilities in our software and systems and those of third parties, cyber-related security breaches and similar disruptions from unauthorized intrusions, tampering, misuse or criminal acts made directly against our systems or networks, or through our third-party providers or the supply chain, including social engineering, phishing, or other events or developments that we may be unable to anticipate or fail to mitigate, including, but not limited to, financial fraud, including check fraud, vulnerabilities or misconfigurations in our IT Systems.
Certain investors, capital providers, shareholder advocacy groups, other market participants, customers and other stakeholder groups have focused increasingly on companies’ ESG initiatives, including those regarding climate change, human rights and inclusion and diversity, among others.
Certain investors, capital providers, shareholder advocacy groups, other market participants, customers and other stakeholder groups have focused on companies’ ESG initiatives, including those regarding climate change, human rights and inclusion and diversity, among others.
Entity List (a list of parties that are generally ineligible to receive U.S.-regulated items without prior licensing from BIS), and the creation of new licensing requirements that apply to the export, re-export, and transfer of certain foreign-made items that are the direct product of U.S. origin technology or produced by a plant or major component of a plant that itself is the direct product of U.S. origin technology and which are destined to Huawei or its affiliates and other specified companies on the U.S.
Entity List (a list of parties that are generally ineligible to receive U.S.-regulated items without prior licensing from Commerce), and the creation of new licensing requirements that apply to the export, re-export, and transfer of certain foreign-made items that are the direct product of U.S. origin technology or produced by a plant or major component of a plant that itself is the direct product of U.S. origin technology and which are destined to Huawei or its affiliates and other specified companies on the U.S.
Many of the risks associated with operating in these industries are comparable to the risks faced by all technology companies, such as the uncertainty of future growth rates in the industries that we serve, pricing trends in the end-markets for consumer electronics and other products (which place a growing emphasis on our customers’ cost of ownership), rising inflation in the supply chain and interest rates, changes in our customers’ capital spending patterns and, in general, an environment of constant change and development, including decreasing product and component dimensions, use of new materials, and increasingly complex device 25 Table of Contents structures, applications and process steps.
Many of the risks associated with operating in these industries are comparable to the risks faced by all technology companies, such as the uncertainty of future growth rates in the industries that we serve, pricing trends in the end-markets for consumer electronics and other products (which place a growing emphasis on our customers’ cost of ownership), rising inflation in the supply chain and interest rates, changes in our customers’ capital spending patterns and, in general, an environment of constant change and development, including decreasing product and component dimensions, use of new materials, and increasingly complex device structures, applications and process steps.
Any disruptions or difficulties that may occur in connection with our ERP system or other systems (whether in connection with the regular operation, periodic enhancements, modifications or upgrades of such systems or the integration of our acquired businesses into such systems, or due to cybersecurity events such as ransomware attacks, including attacks on the information systems of our business partners and other third parties) could adversely affect our ability to complete important business processes, such as the evaluation of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
Any disruptions or 18 Table of Contents difficulties that may occur in connection with our ERP system or other systems (whether in connection with the regular operation, periodic enhancements, modifications or upgrades of such systems or the integration of our acquired businesses into such systems, or due to cybersecurity events such as ransomware attacks, including attacks on the information systems of our business partners and other third parties) could adversely affect our ability to complete important business processes, such as the evaluation of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
Further, the 2022 BIS Rules impose restrictions on the activities of U.S. persons with respect to certain items that are not subject to the Export Administration Regulations (“EAR”), which departs from BIS’ typical practice of controlling items that are subject to the EAR, and could further restrict our ability to conduct business in China.
Further, the 2022 BIS Rules impose restrictions on the activities of U.S. persons with respect to certain items that are not subject to the Export Administration Regulations (“EAR”), which departs from Commerce’s typical practice of controlling items that are subject to the EAR, and could further restrict our ability to conduct business in China.
Managing global operations and sites located throughout the world presents a number of challenges, including, but not limited to: • Global trade issues and changes in and uncertainties with respect to trade policies, including the ability to obtain required import and export licenses, trade sanctions, tariffs and international trade disputes; • Political and social attitudes, laws, rules, regulations and policies within countries that favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors; • Ineffective or inadequate legal protection of IP rights in certain countries; • Managing cultural diversity and organizational alignment; • Exposure to the unique characteristics of each region in the global market, which can cause capital equipment investment patterns to vary significantly from period to period; • Periodic local or international economic downturns; • Potential adverse tax consequences, including withholding tax rules that may limit the repatriation of our earnings, and higher effective income tax rates in foreign countries where we do business; • Compliance with customs regulations in the countries in which we do business; 15 Table of Contents • Existing and potentially new tariffs or other trade restrictions and barriers (including those applied to our products, spare parts and services, or to parts and supplies that we purchase); • Political instability, geopolitical tensions, natural disasters, legal or regulatory changes, acts of war such as the wars between Russia and Ukraine or Israel and Hamas and further escalation thereof, or terrorism in regions where we, our customers or our suppliers have operations or where we or they do business; • Rising inflation and fluctuations in interest and currency exchange rates may adversely impact our ability to compete on price with local providers or the value of revenues we generate from our international business.
Managing global operations and sites located throughout the world presents a number of challenges, including, but not limited to: • Global trade issues and changes in and uncertainties with respect to trade policies, including the ability to obtain required import and export licenses, trade sanctions, tariffs and international trade disputes; • Political and social attitudes, laws, rules, regulations and policies within countries that favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors; • Ineffective or inadequate legal protection of IP rights in certain countries; • Managing cultural diversity and organizational alignment; • Exposure to the unique characteristics of each region in the global market, which can cause capital equipment investment patterns to vary significantly from period to period; • Periodic local or international economic downturns; • Potential adverse tax consequences, including withholding tax rules that may limit the repatriation of our earnings, and higher effective income tax rates in foreign countries where we do business; • Compliance with customs regulations in the countries in which we do business; • Existing and potentially new tariffs or other trade restrictions and barriers (including those applied to our products, spare parts and services, or to parts and supplies that we purchase); 12 Table of Contents • Political instability, geopolitical tensions, natural disasters, legal or regulatory changes, acts of war such as the wars between Russia and Ukraine and the military conflicts in the Middle East and further escalation thereof, or terrorism in regions where we, our customers or our suppliers have operations or where we or they do business; • Rising inflation and fluctuations in interest and currency exchange rates may adversely impact our ability to compete on price with local providers or the value of revenues we generate from our international business.
Any of the factors above could have a significant negative impact on our business and results of operations. Over the past several years, there have been a variety of rules and regulations issued by BIS that have had an impact on our ability to sell certain products and provide certain services to certain customers in China.
Any of the factors above could have a significant negative impact on our business and results of operations. Over the past several years, there have been a variety of rules and regulations issued by Commerce that have had an impact on our ability to sell certain products and provide certain services to certain customers in China.
We prioritize the remediation of identified security vulnerabilities based on known and anticipated risks, and we aim to patch vulnerabilities within reasonable timeframes.
We strive to prioritize the remediation of identified security vulnerabilities based on known and anticipated risks, and we aim to patch vulnerabilities within reasonable timeframes.
The implementation of AI can be costly and there is no guarantee that our use of artificial intelligence will enhance our technologies, benefit our business operations or produce products and services that are preferred by our customers. Our competitors may be more successful in their artificial intelligence strategy and develop superior products and services with the aid of AI.
The implementation of AI can be costly and there is no guarantee that our use of AI will enhance our technologies, benefit our business operations or produce products and services that are preferred by our customers. Our competitors may be more successful in their AI strategy and develop superior products and services with the aid of AI.
In addition, notwithstanding the provisions related to limitations on our liability that we seek to include in our business agreements, the counterparties to such agreements may dispute our interpretation or application of such provisions, and a court of law may not interpret or apply such provisions in our favor, any of which could result in an obligation for us to pay material damages to third parties and engage in costly legal proceedings.
In addition, notwithstanding the provisions related to limitations on our liability that we seek to include in our business agreements, the counterparties to such agreements may dispute our interpretation or 29 Table of Contents application of such provisions, and a court of law may not interpret or apply such provisions in our favor, any of which could result in an obligation for us to pay material damages to third parties and engage in costly legal proceedings.
Operations at our manufacturing facilities and our assembly subcontractors and those of our suppliers, as well as our other operations and those of our customers, are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, public health crises such as the COVID-19 pandemic, fire, earthquake, volcanic eruptions, drought, storms, extreme temperatures, energy shortages, spikes in energy demand or power blackouts, disruptions in the availability of water necessary for our operations (including, but not limited to, in areas of relatively high water stress), flooding or other natural disasters.
Operations at our manufacturing facilities and our assembly subcontractors and those of our suppliers, as well as our other operations and those of our customers, are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, public health crises, fire, earthquake, volcanic eruptions, drought, storms, extreme temperatures, energy shortages, spikes in energy demand or power blackouts, disruptions in the availability of water necessary for our operations (including, but not limited to, in areas of relatively high water stress), flooding or other natural disasters.
Substantial R&D costs 28 Table of Contents typically are incurred before we confirm the technical feasibility and commercial viability of a new product, and not all development activities result in commercially viable products. There can be no assurance that revenues from future products or product enhancements will be sufficient to recover the development costs associated with such products or enhancements.
Substantial R&D costs typically are incurred before we confirm the technical feasibility and commercial viability of a new product, and not all development activities result in commercially viable products. There can be no assurance that revenues from future products or product enhancements will be sufficient to recover the development costs associated with such products or enhancements.
Furthermore, because our process control and yield 26 Table of Contents management products are configured to each customer’s specifications, any changes, delays or cancellations of orders may result in significant, non-recoverable costs; • As a result of this consolidation, the customers that survive the consolidation represent a greater portion of our sales and, consequently, have greater commercial negotiating leverage.
Furthermore, because our process control and yield management products are configured to each customer’s specifications, any changes, delays or cancellations of orders may result in significant, non-recoverable costs; • As a result of this consolidation, the customers that survive the consolidation represent a greater portion of our sales and, consequently, have greater commercial negotiating leverage.
This has increased, and may in the future continue to increase, certain of our 18 Table of Contents compliance and disclosure costs, and may also result in further impacts on our business, financial condition or results of operations, including changes in demand for certain types of products. From time to time, we create and publish voluntary disclosures regarding ESG matters.
This has increased, and may in the future continue to increase, certain of our compliance and disclosure costs, and may also result in further impacts on our business, financial condition or results of operations, including changes in demand for certain types of products. From time to time, we create and publish voluntary disclosures regarding ESG matters.
We face competition from companies whose strategy is to provide a broad array of products and services, some of which compete with the products and services we 29 Table of Contents offer. These competitors may bundle their products in a manner that may discourage customers from purchasing our products, including pricing such competitive tools significantly below our product offerings.
We face competition from companies whose strategy is to provide a broad array of products and services, some of which compete with the products and services we offer. These competitors may bundle their products in a manner that may discourage customers from purchasing our products, including pricing such competitive tools significantly below our product offerings.
The historically cyclical nature of the semiconductor industry in which we primarily operate is largely a function of our customers’ capital spending patterns and need for expanded manufacturing capacity, which, in turn, are affected by factors such as capacity utilization, consumer demand for products, inventory levels and our customers’ access to capital.
The historically cyclical nature of the semiconductor industry in which we primarily operate is largely a function of our customers’ capital spending patterns and need for expanded manufacturing capacity, which, in turn, are affected by factors such as capacity 24 Table of Contents utilization, consumer demand for products, inventory levels and our customers’ access to capital.
We self-insure certain risks including earthquake risk. If one or more of the uninsured events occurs, we could suffer major financial loss. We purchase insurance to help mitigate the economic impact of certain insurable risks; however, certain risks are uninsurable, are insurable only at significant cost or cannot be mitigated with insurance.
We self-insure certain risks including earthquake risk. If one or more of the uninsured events occurs, we could suffer major financial loss. 20 Table of Contents We purchase insurance to help mitigate the economic impact of certain insurable risks; however, certain risks are uninsurable, are insurable only at significant cost or cannot be mitigated with insurance.
If one or more of the uninsured events occurs, we could suffer major financial loss. 23 Table of Contents We are exposed to foreign currency exchange rate fluctuations. Although we hedge certain currency risks, we may still be adversely affected by changes in foreign currency exchange rates or declining economic conditions in these countries.
If one or more of the uninsured events occurs, we could suffer major financial loss. We are exposed to foreign currency exchange rate fluctuations. Although we hedge certain currency risks, we may still be adversely affected by changes in foreign currency exchange rates or declining economic conditions in these countries.
Workforce changes can also temporarily reduce workforce 33 Table of Contents productivity, which could be disruptive to our business and adversely affect our results of operations. In addition, we may not achieve or sustain the expected cost savings or other benefits of our restructuring plans, or do so within the expected time frame.
Workforce changes can also temporarily reduce workforce productivity, which could be disruptive to our business and adversely affect our results of operations. In addition, we may not achieve or sustain the expected cost savings or other benefits of our restructuring plans, or do so within the expected time frame.
These attacks crafted with AI tools could directly attack our IT Systems with greater speed and/or efficiency than a human threat actor or create more effective phishing emails.
These attacks crafted with AI tools could directly attack our IT Systems or Confidential Information with greater speed and/or efficiency than a human threat actor or create more effective phishing emails.
If we do not successfully manage the risks resulting from any of these or other potential changes in our industries, our business, financial condition and operating results could be adversely impacted. We are exposed to risks associated with a highly concentrated customer base.
If we do not successfully manage the risks resulting from any of these or other potential changes in our industries, our business, financial condition and operating results could be adversely impacted. 23 Table of Contents We are exposed to risks associated with a highly concentrated customer base.
We earn profits in, and are therefore potentially subject to taxes in, the U.S. and numerous foreign jurisdictions, including Singapore and Israel, the countries in which we earn the majority of our non-U.S. profits. Due to economic, political or other conditions, tax rates in those jurisdictions may be subject to significant change.
We earn profits in, and are therefore potentially subject to taxes in, the U.S. and numerous foreign jurisdictions, including Singapore and Israel, the countries in which we earn the majority of our non-U.S. profits. Due to economic, political or other 21 Table of Contents conditions, tax rates in those jurisdictions may be subject to significant change.
Any of these factors could negatively impact our business, operating results and financial condition. 27 Table of Contents When cyclical fluctuations result in lower than expected revenue levels, operating results may be adversely affected and cost reduction measures may be necessary for us to remain competitive and financially sound.
Any of these factors could negatively impact our business, operating results and financial condition. When cyclical fluctuations result in lower than expected revenue levels, operating results may be adversely affected and cost reduction measures may be necessary for us to remain competitive and financially sound.
By contrast, any failure, or perceived failure, to conform to such policies could have an adverse impact on our reputation and business activities. Our performance may be subject to greater scrutiny as a result of our announcement of any goals or policies and the publication of our performance against the same.
By contrast, any failure, or perceived 16 Table of Contents failure, to conform to such policies could have an adverse impact on our reputation and business activities. Our performance may be subject to greater scrutiny as a result of our announcement of any goals or policies and the publication of our performance against the same.
It is difficult to determine the maximum potential amount of liability under any indemnification obligations, whether or not asserted, due to our 32 Table of Contents limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in any particular claim.
It is difficult to determine the maximum potential amount of liability under any indemnification obligations, whether or not asserted, due to our limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in any particular claim.
In addition, changes in environmental laws and regulations (including any relating to climate change and greenhouse gas (“GHG”) emissions) could require us, or others in our value chain, to install additional equipment, alter operations to incorporate new technologies or processes, or revise process inputs, among other things, which may cause us to incur significant costs or otherwise adversely impact our business performance.
In addition, changes in environmental laws and regulations (including any relating to climate change and GHG emissions) could require us, or others in our value chain, to install additional equipment, alter operations to incorporate new technologies or processes, or revise process inputs, among other things, which may cause us to incur significant costs or otherwise adversely impact our business performance.
In addition, one or more of our insurance providers may be unable or unwilling to continue to provide certain coverage in the future or pay a claim. Losses not covered by insurance may be large, which could harm our results of 22 Table of Contents operations and financial condition.
In addition, one or more of our insurance providers may be unable or unwilling to continue to provide certain coverage in the future or pay a claim. Losses not covered by insurance may be large, which could harm our results of operations and financial condition.
In October 2023, BIS issued the 2023 BIS Rules (the “2023 BIS Rules”) designed to update export controls on advanced computing semiconductors and semiconductor manufacturing equipment, as well as items that support supercomputing applications and end-uses, to certain D1, D4 and/or D5 countries in Supplement No. 1 of Part 740 of the U.S. Export Administration Regulations, including China.
In October 2023, Commerce issued the 2023 BIS Rules (the “2023 BIS Rules”) designed to update export controls on advanced computing semiconductors and semiconductor manufacturing equipment, as well as items that support supercomputing applications and end-uses, to certain D1, D4 and/or D5 countries in Supplement No. 1 of Part 740 of the U.S. EAR, including China.
ITEM 1A. RISK FACTORS A description of factors that could materially affect our business, financial condition or operating results is provided below. Risk Factors Summary The following summarizes the most material risks that make an investment in our securities risky or speculative.
ITEM 1A. RISK FACTORS A description of factors that could materially affect our business, financial condition or operating results is provided below. 10 Table of Contents Risk Factors Summary The following summarizes the most material risks that make an investment in our securities risky or speculative.
At times, we may also enter into strategic alliances with customers, suppliers or other business partners with respect to development of technology and IP. These alliances typically require significant investments of capital and exchange of proprietary, highly sensitive information.
At times, we may also enter into strategic alliances or collaborative arrangements with customers, suppliers or other business partners with respect to development of technology and IP. These projects typically require significant investments of capital and exchange of proprietary, highly sensitive information.
We may lose revenue in future periods related to anticipated sales to customers in China unless we are able to replace their orders with other customer orders for which either a license has been obtained or is not required.
We may lose revenue in future periods related to anticipated sales to customers in China unless we are able to replace their orders with other customer orders for which either an export license has been obtained or is not required.
Our industry includes large manufacturers with substantial resources to support customers worldwide. Some of our competitors are diversified companies with greater financial resources and more extensive research, engineering, manufacturing, marketing, and customer service and support capabilities than we possess.
Our industry includes large manufacturers with substantial resources to support customers worldwide. Some of our competitors are diversified companies with greater financial resources and more extensive research, engineering, 26 Table of Contents manufacturing, marketing, and customer service and support capabilities than we possess.
Commercial, Operational, Financial and Regulatory Risks • Our vulnerability to a weakening in the condition of the financial markets and the global economy; • Risks related to our international operations, such as tariffs or similar trade impairments, and longer payment cycles or collection difficulties associated with international sales; • Laws, rules, regulations or other orders that may limit our ability to sell our products or provide service on products previously sold to certain customers; • IP disputes can be expensive and could result in an inability to sell our products in certain jurisdictions; • Increasing attention to ESG matters, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business; • We may be unable to attract, onboard and retain key personnel; • Reliance on third-party service providers could result in disruptions if such third parties cannot perform services for us in a timely manner; • Cybersecurity incidents could result in the loss of valuable information or assets or subject us to costly disruption, remediation, regulatory investigations, litigation and reputational damage; • We may face disruptions if we cannot access critical information in a timely manner due to system failures; • We may not find suitable acquisition candidates or fail to successfully integrate our acquisitions; • Natural disasters, such as earthquakes, health crises such as the COVID-19 pandemic, acts of terrorism or war or other catastrophic events, and the lack of insurance thereof, could significantly disrupt our operations, including affecting the global supply chain, for lengthy periods of time; • We are exposed to fluctuations in foreign currency exchange rates, interest rates and the market values of our portfolio investments; • We are subject to tax and regulatory compliance audits; • Economic, political or other conditions in the jurisdictions where we earn profits can impact the tax laws and taxes we pay in those jurisdictions, subsequently impacting our effective tax rate, cash flows and results of operations; • Increased compliance costs with federal securities laws, rules, and regulations, as well as NASDAQ requirements; and • Changes in accounting pronouncements and laws could have unforeseen effects.
Commercial, Operational, Financial and Regulatory Risks • Our vulnerability to a weakening in the condition of the financial markets and the global economy; • Risks related to our international operations; • Laws, rules, regulations or other orders that may limit our ability to sell our products or provide service on products previously sold to certain customers; • Tariffs and other trade restrictions; • IP disputes can be expensive and could result in an inability to sell our products in certain jurisdictions; • Differing stakeholder expectations, requirements and attention to ESG matters, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business; • We may be unable to attract, onboard and retain key personnel; • Reliance on third-party service providers could result in disruptions if such third parties cannot perform services for us in a timely manner; • Cybersecurity incidents could result in the loss of valuable information or assets or subject us to costly disruption, remediation, regulatory investigations, litigation and reputational damage; • We may face disruptions if we cannot access critical information in a timely manner due to system failures; • We may not find suitable acquisition candidates or fail to successfully integrate our acquisitions; • Natural disasters, such as earthquakes, public health crises, acts of terrorism or war or other catastrophic events, and the lack of insurance thereof, could significantly disrupt our operations, including affecting the global supply chain, for lengthy periods of time; • We are exposed to fluctuations in foreign currency exchange rates, interest rates and the market values of our portfolio investments; • We are subject to tax and regulatory compliance audits; • Economic, political or other conditions in the jurisdictions where we earn profits can impact the tax laws and taxes we pay in those jurisdictions, subsequently impacting our effective tax rate, cash flows and results of operations; • Increased compliance costs with federal securities laws, rules, and regulations, as well as NASDAQ requirements; and • Changes in accounting pronouncements and laws could have unforeseen effects.
To the extent BIS does issue licenses to us or to our customers, such licenses may have a short duration or require us to satisfy various conditions.
To the extent Commerce does issue licenses to us or to our customers, such licenses may have a short duration or require us to satisfy various conditions.
However, we are unable to comprehensively identify all vulnerabilities (particularly as related to third-party software and systems), apply patches or 20 Table of Contents confirm that mitigating measures are in place, or ensure that any patches will be applied by us or our third parties before exploitation by a threat actor.
However, we are unable to comprehensively identify all vulnerabilities (particularly as related to third-party software and systems), apply patches or confirm that mitigating measures are in place, or ensure that any patches will be applied by us or our third parties before exploitation by a threat actor.
Some of these laws impose strict liability for certain releases, which may require us to incur costs regardless of fault or the legality of actions at the time of release.
Some of these laws impose strict liability for certain releases, which may require us to incur costs regardless of fault or the legality of 15 Table of Contents actions at the time of release.
We and our third-party providers regularly experience cyber-attacks and events and on occasion incidents involving unauthorized access to systems and data and, although no such attacks, events or incidents have materially impacted our operations or financial results, there can be no assurance that such attacks, events or incidents will not be material to KLA in the future.
We and our third-party providers regularly experience cyber-attacks and events and on occasion incidents involving unauthorized access to IT Systems and Confidential Information and, although no such attacks, events or incidents have materially impacted our operations or financial results to date, there can be no assurance that such attacks, events or incidents will not be material to KLA in the future.
We may incur additional indebtedness in the future by accessing the unfunded portion of our Revolving Credit Facility and/or entering into new financing arrangements. We also announced a stock repurchase program, under which the remaining available for repurchases was $2.18 billion as of June 30, 2024. A portion of the remaining repurchases may be financed with new indebtedness.
We may incur additional indebtedness in the future by accessing the unfunded portion of our Revolving Credit Facility and/or entering into new financing arrangements. We also announced a stock repurchase program, under which the remaining available for repurchases was $5.03 billion as of June 30, 2025. A portion of the remaining repurchases may be financed with new indebtedness.
If we are unable to attract, onboard and retain key personnel, 19 Table of Contents or if we are not able to attract, assimilate, onboard and retain additional highly qualified employees to meet our current and future needs, our business and operations could be harmed.
If we are unable to attract, onboard and retain key personnel, or if we are not able to attract, assimilate, onboard and retain additional highly qualified employees to meet our current and future needs, our business and operations could be harmed.
We are subject to various risks related to compliance with laws, rules and regulations enacted by legislative bodies and/or regulatory agencies in the countries in which we operate and with which we must comply, including environmental, safety, antitrust, anti-corruption/anti-bribery, unclaimed property, economic sanctions and export control regulations.
We are subject to various risks related to compliance with laws, rules and regulations enacted by legislative bodies and/or regulatory agencies in the countries in which we operate and with which we must comply, including environmental, safety, antitrust, anti-corruption/anti-bribery, unclaimed property, conflict minerals and other responsible sourcing practices, economic sanctions and export control regulations.
If attackers are able to exploit vulnerabilities before patches are installed or mitigating measures are implemented, significant compromises could impact our systems and data. AI may be used to generate cyberattacks as AI capabilities improve and are increasingly adopted.
If attackers are able to exploit vulnerabilities before patches are installed or mitigating measures are implemented, significant compromises could impact our IT Systems and Confidential Information. Moreover, AI may be used to generate cyberattacks as AI capabilities improve and are increasingly adopted.
Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $250.0 million in the aggregate. As of June 30, 2024, we had no outstanding borrowings under our Revolving Credit Facility.
Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $500.0 million in the aggregate. As of June 30, 2025, we had no outstanding borrowings under our Prior Revolving Credit Facility.
Failure to obtain export licenses could also harm our RPO, requiring us to return substantial deposits received from customers in China for purchase orders, and/or further limiting our ability to meet our contractual obligations and sell our products or provide services to our customers in China.
Failure to obtain export licenses have harmed and could continue to harm our backlog, requiring us to return substantial deposits received from customers in China for purchase orders, and/or further limiting our ability to meet our contractual obligations and sell our products or provide services to our customers in China.
Historically, we have recorded restructuring charges related to our prior global workforce reductions, large excess inventory write-offs, and material impairment charges related to our goodwill and purchased intangible assets, such as the goodwill impairment charge recorded in the third quarter of fiscal 2024 and the goodwill and purchased intangible asset impairment charges recorded in the second quarter of fiscal 2024.
Historically, we have recorded restructuring charges related to our prior global workforce reductions, large excess 30 Table of Contents inventory write-offs, and material impairment charges related to our goodwill and purchased intangible assets, such as the goodwill and purchased intangible asset impairment charges recorded in the second quarter of fiscal 2025.
We are exposed to risks related to the use of AI by us, our competitors and other third parties. We are increasingly incorporating AI capabilities into the development of technologies and our business operations, and into our products and services. AI technology is complex and rapidly evolving, and may subject us to significant competitive, legal, regulatory and other risks.
We are increasingly incorporating AI capabilities into the development of technologies and our business operations, and into our products and services. AI technology is complex and rapidly evolving, and may subject us to significant competitive, legal, regulatory and other risks.
Any cybersecurity incident or occurrence could impact our business directly, or indirectly by impacting third parties in the supply chain, in many potential ways: disruptions to operations; misappropriation, corruption or theft of Confidential Information; misappropriation of funds and Company assets; reduced value of our investments in research, development and engineering; litigation (including class action lawsuits) with, or payment of damages to, third parties; reputational damage; costs to comply with regulatory inquiries or actions; data privacy issues; costs to rebuild our information systems and networks; and increased cybersecurity protection and remediation costs.
Any impact to the availability, integrity or confidentiality of our IT Systems of Confidential Information can materially adversely impact our business, operations and financial condition directly, or indirectly by impacting third parties in the supply chain, in many potential ways: disruptions to operations; misappropriation, corruption or theft of Confidential Information; misappropriation of funds and Company assets; reduced value of our investments in research, development and engineering; litigation (including class action lawsuits) with, or payment of damages to, third parties; reputational damage; costs to comply with regulatory inquiries or actions; data privacy issues; costs to rebuild our IT Systems or restore our Confidential Information; and increased cybersecurity protection and remediation costs.
We are also exposed to risks in connection with strategic alliances into which we may enter. In addition to our efforts to develop new technologies from internal sources, part of our growth strategy is to pursue acquisitions and acquire new technologies from external sources.
We are also exposed to risks in connection with strategic alliances or collaborative arrangements. In addition to our efforts to develop new technologies from internal sources, part of our growth strategy is to pursue acquisitions and acquire new technologies from external sources.
Certain of these events may become more frequent or intense as a result of climate change, and climate change may also contribute to chronic changes such as sea-level rise or changes to meteorological or hydrological patterns that may also disrupt our or our suppliers’ operations or otherwise adversely impact our business.
Certain of these events may become more frequent or intense as a result of climate change, or other environmental or social issues, which may in some instances also contribute to chronic changes such as sea-level rise or changes to meteorological or hydrological patterns that may also disrupt our or our suppliers’ operations or otherwise adversely impact our business.
Standards for ESG metrics and reporting continue to evolve due to a variety of factors, and our disclosures may evolve as well; however, we cannot guarantee that our approach will align with any particular methodology or stakeholder expectations.
Standards for ESG metrics and reporting continue to evolve due to a variety of factors, and our disclosures are expected to evolve as well, whether in response to regulatory requirements or otherwise; however, we cannot guarantee that our approach will align with any particular methodology or stakeholder expectations.
Entity List, imposing export restrictions to entities that could disrupt or prevent our product shipment, and further disrupt our revenue recognition and business operations, and our ability to support our customers in China. 16 Table of Contents These rules and regulations may significantly harm our business unless we are able to obtain required licenses.
Entity List and impose other end use or end user export restrictions, which could disrupt or prevent our product shipment, and further disrupt our revenue recognition, business operations and our ability to support our customers in China. 13 Table of Contents These rules and regulations may significantly harm our business unless we are able to obtain required licenses.
Because the techniques used to obtain unauthorized access to our IT Systems change frequently and increasingly leverage technologies such as AI, cyber-attacks may not be recognized until launched against a target and are increasingly designed to circumvent controls, avoid detection and remove or obfuscate forensic artifacts.
Because the techniques used to perpetrate cyberattacks and other security incidents change frequently and increasingly leverage technologies such as AI, cyber-attacks may not be recognized until launched against a target and are increasingly designed to circumvent controls, avoid detection and remove or obfuscate forensic artifacts.
Disruption of our manufacturing facilities or other operations or those of our suppliers, or in the operations of our customers, due to climate change, earthquake, flood, other natural catastrophic events, public health crises such as the COVID-19 pandemic or terrorism could result in cancellation of orders, delays in deliveries or other business activities, or loss of customers and could seriously harm our business.
Disruption of our manufacturing facilities or other operations or those of our suppliers, or in the operations of our customers, due to climate change, earthquake, flood, other natural catastrophic events, public health crises or terrorism could result in cancellation of orders, delays in deliveries or other business activities, or loss of customers and could seriously harm our business. 19 Table of Contents We have significant manufacturing operations in the U.S., Singapore, Israel, Germany, U.
One country that has drafted Pillar Two legislation is Singapore, where KLA earns significant profits and currently benefits from tax incentives granted by the Singapore Economic Development Board. If enacted, the tax liability from top-up tax may have a material and adverse impact to our effective tax rate in the fiscal year when such law is effective.
One country that has adopted Pillar Two legislation is Singapore, where KLA earns significant profits and currently benefits from tax incentives granted by the Singapore Economic Development Board. The tax liability from top-up tax may have a material and adverse impact to our effective tax rate beginning in the quarter ending September 30, 2026.
However, our ability to achieve our anticipated revenue levels is a function of numerous factors, including the volatile and historically cyclical nature of our primary industry, customer order cancellations, macroeconomic changes, operational matters regarding particular agreements, our ability to manage customer deliveries, the availability of resources for the installation of our products, delays or accelerations by customers in taking deliveries and the acceptance of our products (for products where customer acceptance is required before we can recognize revenue from such sales), our ability to operate our business and sales processes effectively, and a number of the other risk factors set forth in this Item 1A.
However, our ability to achieve our anticipated revenue levels is a function of numerous factors, including the volatile and historically cyclical nature of our primary industry, customer order cancellations, macroeconomic changes, operational matters regarding particular agreements, our ability to manage customer deliveries, the availability of resources for the installation of our products, delays or accelerations by customers in taking deliveries and the acceptance of our products (for products where customer acceptance is required before we can recognize revenue from such sales), our ability to operate our business and sales processes effectively, and a number of the other risk factors set forth in this Item 1A. 27 Table of Contents Because our expenses are in most cases relatively fixed in the short term, any revenue shortfall below expectations could have an immediate and significant adverse effect on our operating results.
Difficulties encountered during adoption could result in internal control deficiencies or delay the reporting of our financial results. Risks Associated with Our Industry Ongoing changes in the technology industry, as well as the semiconductor industry in particular, could expose our business to significant risks. The industries we serve, including the semiconductor and PCB industries, are constantly developing and changing.
Difficulties encountered during adoption could result in internal control deficiencies or delay the reporting of our financial results. 22 Table of Contents Risks Associated with Our Industry Ongoing changes in the technology industry, as well as the semiconductor industry in particular, could expose our business to significant risks.
The instigation of legal proceedings or claims, our inability to favorably resolve or settle such proceedings or claims, or the determination of any adverse findings against us or any of our employees in connection with such proceedings or claims could materially and adversely affect our business, financial condition and results of operations, as well as our business reputation. 17 Table of Contents We are exposed to various risks related to the legal, regulatory and tax environments in which we perform our operations and conduct our business.
The instigation of legal proceedings or claims, our inability to favorably resolve or settle such proceedings or claims, or the determination of any adverse findings against us or any of our employees in connection with such proceedings or claims could materially and adversely affect our business, financial condition and results of operations, as well as our business reputation.
In addition, current or future immigration laws, policies or regulations may limit our ability to attract, hire and retain qualified personnel.
Our competitors have targeted individuals in our organization who have desired skills and experience. In addition, current or future immigration laws, policies or regulations may limit our ability to attract, hire and retain qualified personnel.
We have a Credit Agreement (the “Credit Agreement”) and a Revolving Credit Facility (the “Revolving Credit Facility”) with a maturity date of June 8, 2027 with two one-year extension options that allow us to borrow up to $1.50 billion.
On July 3, 2025, we replaced our Prior Revolving Credit Facility (“Prior Revolving Credit Facility”) with a new Credit Agreement (the “Credit Agreement”) and new Revolving Credit Facility (the “Revolving Credit Facility”) with a maturity date of July 3, 2030, with two one-year extension options that allow us to borrow up to $1.50 billion.
Entity List. In October 2022, BIS published the 2022 BIS Rules (the “2022 BIS Rules”) that introduce restrictions related to semiconductor, semiconductor manufacturing, supercomputer, and advanced computing items and end uses.
Entity List, and other facilities in China where the production of advanced node IC occurs. In October 2022, Commerce published the 2022 BIS Rules (the “2022 BIS Rules”) that introduced restrictions related to semiconductor, semiconductor manufacturing, supercomputer, and advanced computing items and end uses.
Our failure to accurately predict evolving industry standards and develop as well as offer competitive technology solutions in a timely manner with cost-effective products could result in loss of market share, unanticipated costs and inventory obsolescence, which would adversely impact our business, operating results and financial condition.
Our failure to accurately predict evolving industry standards and develop as well as offer competitive technology solutions in a timely manner with cost-effective products could result in loss of market share, unanticipated costs and inventory obsolescence, which would adversely impact our business, operating results and financial condition. 25 Table of Contents We must continue to make significant investments in R&D in order to enhance the performance, features and functionality of our products, to keep pace with competitive products and to satisfy customer demands.
There can be no assurance regarding the outcome of current or future legal proceedings or claims, which could adversely affect our operating results, financial condition and ability to operate our business. Increasing attention to ESG matters, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business.
There can be no assurance regarding the outcome of current or future legal proceedings or claims, which could adversely affect our operating results, financial condition and ability to operate our business.
As of June 30, 2024, we had $6.70 billion aggregate principal amount of outstanding indebtedness, consisting of $5.95 billion aggregate principal amount of senior, unsecured long-term notes (the “Senior Notes”). We have $750.0 million principal of our senior, unsecured long-term notes due during the second quarter of fiscal 2025.
As of June 30, 2025, we had $5.95 billion aggregate principal amount of outstanding indebtedness, consisting of senior, unsecured long-term notes (the “Senior Notes”).
We have significant manufacturing operations in the U.S., Singapore, Israel, Germany, United Kingdom, Italy and China. In addition, our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers located in numerous countries throughout the world.
K., Italy and China. In addition, our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers located in numerous countries throughout the world.
In addition, the threat could be introduced from the result of us, our customers and business partners incorporating the output of an AI tool that includes a threat, such as introducing malicious code by incorporating AI generated source code.
In addition, the threat could be introduced from the result of us, our customers or business partners incorporating AI into our respective businesses, for example, introducing malicious code by incorporating AI generated source code.
In the event we default on our borrowings, these domestic subsidiaries shall be liable for our borrowings, which could disrupt our operations and result in a material adverse impact on our business, financial condition or stock price. 31 Table of Contents Our leveraged capital structure may adversely affect our financial condition, results of operations and net income per share.
In addition, certain of our domestic subsidiaries are required to guarantee our borrowings under our Revolving Credit Facility. In the event we default on our borrowings, these domestic subsidiaries shall be liable for 28 Table of Contents our borrowings, which could disrupt our operations and result in a material adverse impact on our business, financial condition or stock price.
Our revenue from sales of products and provision of services to customers in China was 43%, 27% and 29% for fiscal years 2024, 2023 and 2022, respectively. Additionally, the Chinese government has adopted, and may further adopt, new regulations, in response to U.S. government actions, which could adversely affect our ability to do business in China.
Additionally, the Chinese government has adopted, and may further adopt, new regulations, in response to U.S. government actions, which could adversely affect our ability to do business in China.
Such an outcome could cause customers, suppliers or investors to view us as less stable, or could cause us to fail to meet financial analysts’ revenue or earnings estimates, any of which could have an adverse impact on our stock price. 30 Table of Contents In addition, our management is constantly striving to balance the requirements and demands of our customers with the availability of resources, the need to manage our operating model and other factors.
Such an outcome could cause customers, suppliers or investors to view us as less stable, or could cause us to fail to meet financial analysts’ revenue or earnings estimates, any of which could have an adverse impact on our stock price.
The change in GILTI and FDII percentages can have a material and adverse impact to our effective tax rate beginning in the quarter ending September 30, 2026. On August 16, 2022, the enactment of the Inflation Reduction Act (“IRA”) introduced a corporate alternative minimum tax (“CAMT”) that is effective for us beginning in the quarter ended September 30, 2023.
On August 16, 2022, the enactment of the Inflation Reduction Act (“IRA”) introduced a corporate alternative minimum tax (“CAMT”) that was effective for us beginning in the quarter ended September 30, 2023. The CAMT applies a 15% minimum income tax rate on certain large corporations.
We can provide no assurance that these objectives can be met in a timely manner in response to industry cycles. Each of these factors could adversely impact our operating results and financial condition. The growth that we have experienced over the past few years has resulted in higher levels of backlog, or RPO.
We can provide no assurance that these objectives can be met in a timely manner in response to industry cycles. Each of these factors could adversely impact our operating results and financial condition. We are exposed to risks related to the use of AI by us, our competitors and other third parties.
The success of these alliances depends on various factors over which we may have limited or no control and requires ongoing and effective cooperation with our strategic partners. Mergers and acquisitions and strategic alliances are inherently subject to significant risks, and the inability to effectively manage these risks could materially and adversely affect our business, financial condition and operating results.
Mergers, acquisitions, strategic alliances and collaborative arrangements are inherently subject to significant risks, and the inability to effectively manage these risks could materially and adversely affect our business, financial condition and operating results.
In furtherance of those efforts, we often must exercise discretion and judgment as to the timing and prioritization of manufacturing, deliveries, installations and payment scheduling.
In addition, our management is constantly striving to balance the requirements and demands of our customers with the availability and allocation of resources, the need to manage our operating model and other factors. In furtherance of those efforts, we often must exercise discretion and judgment as to the timing and prioritization of manufacturing, deliveries, installations and payment scheduling.
Competition for engineering and other technical personnel in many areas of the world in which we operate is especially intense due to the proliferation of technology companies worldwide. Our competitors have targeted individuals in our organization who have desired skills and experience.
The expansion of high technology companies worldwide and the elevated demand for talent from the growth in the demand for semiconductors in recent years has increased demand and competition for qualified personnel. Competition for engineering and other technical personnel in many areas of the world in which we operate is especially intense due to the proliferation of technology companies worldwide.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe full Board also regularly receives briefings from management on our cyber risk management process. Board members receive presentations on cybersecurity topics from management or external experts as part of the Board’s continuing education on topics that impact public companies.
Biggest changeBoard members receive presentations on cybersecurity topics from management or external experts as part of the Board’s continuing education on topics that impact public companies. Our management team, including our Chief Legal Officer and Chief Information Security Officer (“CISO”), is responsible for assessing and managing our material risks from cybersecurity threats.
See Part I Item 1A “Risk Factors – We depend on information technology for our business and are exposed to risks related to cybersecurity threats and cyber incidents affecting our, our customers’, suppliers’ and other service providers’ systems and networks. ” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the “Committee”) oversight of cybersecurity risks, including oversight of management’s implementation of our cybersecurity risk management process.
See Part I Item 1A “Risk Factors – We depend on information technology for our business and are exposed to risks related to cybersecurity threats and cyber incidents affecting our, our customers’, suppliers’ and other service providers’ systems and networks. ” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee (the “Committee”) oversight of cybersecurity risks, including oversight of management’s implementation of our cybersecurity risk management process. 32 Table of Contents The Committee receives quarterly reports from management on our cybersecurity risks.
The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, where it deems appropriate, regarding cybersecurity incidents it considers to be significant or potentially significant. 35 Table of Contents The Committee reports to the full Board regarding its activities, including those related to cybersecurity.
In addition, management updates the Committee, where it deems appropriate, regarding cybersecurity incidents it considers to be significant or potentially significant. The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also regularly receives briefings from management on our cyber risk management process.
Our management team, including our Chief Legal Officer and Chief Information Security Officer (“CISO”), is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management process and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
The team has primary responsibility for our overall cybersecurity risk management process and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeInformation regarding our principal properties as of June 30, 2024 is set forth below: (Square Feet) US Other Countries Total Owned (1) 1,134,127 1,086,070 2,220,197 Leased 612,631 2,523,446 3,136,077 Total 1,746,758 3,609,516 5,356,274 __________________ (1) Includes 421,132 square feet of property owned at our location in Serangoon, Singapore, where the land on which this building resides is leased.
Biggest changeOther Countries Total Owned (1) 1,134,127 3,147,113 4,281,240 Leased 555,043 2,292,335 2,847,378 Total 1,689,170 5,439,448 7,128,618 __________________ (1) Includes 421,132 square feet of property owned at our location in Serangoon, Singapore, where the land on which this building resides is leased.
ITEM 2. PROPERTIES Our headquarters are located in Milpitas, California. As of June 30, 2024, we owned or leased a total of approximately 5 million square feet of space for research, engineering, marketing, service, sales and administration worldwide primarily in the U.S., Singapore, Israel, India, China, and Belgium.
ITEM 2. PROPERTIES Our headquarters are located in Milpitas, California. As of June 30, 2025, we owned or leased a total of 7.1 million square feet of space for research, engineering, marketing, service, sales and administration worldwide primarily in the U.S., Germany, U. K., Singapore, Israel, and India.
We believe our properties are adequately maintained and suitable for their intended use and that our production facilities have capacity adequate for our current needs. We do not identify or allocate assets by operating segment.
We believe our properties are adequately maintained and suitable for their intended use and that our production facilities have capacity adequate for our current needs. We do not identify or allocate assets by operating segment. Information regarding our principal properties as of June 30, 2025 is set forth below: (Square Feet) U.S.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid (3) per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value that May Yet Be Purchased Under the Plans or Programs (1)(2) April 1, 2024 to April 30, 2024 247,051 $ 674.14 247,051 $ 2,478,282,516 May 1, 2024 to May 31, 2024 223,638 $ 728.15 223,638 $ 2,315,441,164 June 1, 2024 to June 30, 2024 168,498 $ 802.35 168,498 $ 2,180,246,686 Total 639,187 639,187 __________________ (1) Our Board of Directors has authorized a program that permits us to repurchase our common stock, including a $2.00 billion increase approved by the Board in the first quarter of fiscal 2024.
Biggest changePeriod Total Number of Shares Purchased (1) Average Price Paid (3) per Share Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)(2) April 1, 2025 to April 30, 2025 169,783 $ 643.29 169,783 $ 5,347,461,929 May 1, 2025 to May 31, 2025 272,564 $ 732.50 272,564 $ 5,147,809,123 June 1, 2025 to June 30, 2025 134,467 $ 867.44 134,467 $ 5,031,167,586 Total 576,814 576,814 __________________ (1) Our Board of Directors has authorized a program that permits us to repurchase our common stock, including a $5.00 billion increase approved by the Board in the fourth quarter of fiscal 2025.
As of June 30, 2024, approximately $2.18 billion remained available for repurchases under our repurchase program. All shares in the table were purchased pursuant to our publicly announced repurchase program. (2) Our stock repurchase program has no expiration date and may be suspended at any time.
As of June 30, 2025, $5.03 billion remained available for repurchases under our repurchase program. All shares in the table were purchased pursuant to our publicly announced repurchase program. (2) Our stock repurchase program has no expiration date and may be suspended at any time.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed and traded on the NASDAQ Global Select Market of The Nasdaq Stock Market LLC under the symbol “KLAC.” On August 1, 2024, we announced that our Board of Directors had declared a quarterly cash dividend of $1.45 per share to be paid on September 3, 2024 to stockholders of record as of the close of business on August 15, 2024.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 33 Table of Contents Our common stock is listed and traded on the NASDAQ Global Select Market of The Nasdaq Stock Market LLC under the symbol “KLAC.” On August 7, 2025, we announced that our Board of Directors had declared a quarterly cash dividend of $1.90 per share to be paid on September 3, 2025 to stockholders of record as of the close of business on August 18, 2025.
As of July 22, 2024, there were 413 holders of record of our common stock. Equity Repurchase Plans The following is a summary of stock repurchases for each month during the fourth quarter of the fiscal year ended June 30, 2024.
As of July 21, 2025, there were 405 holders of record of our common stock. Equity Repurchase Plans The following is a summary of stock repurchases for each month during the fourth quarter of the fiscal year ended June 30, 2025.
The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of all dividends) from June 30, 2019 to June 30, 2024. 37 Table of Contents June 2019 June 2020 June 2021 June 2022 June 2023 June 2024 KLA Corporation $100.00 $167.96 $283.88 $282.67 $435.50 $747.40 S&P 500 $100.00 $107.51 $151.36 $135.29 $161.80 $201.54 PHLX Semiconductor $100.00 $139.33 $236.62 $183.13 $266.96 $402.02 Our fiscal year ends June 30.
The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of all dividends) from June 30, 2020 to June 30, 2025. 34 Table of Contents June 2020 June 2021 June 2022 June 2023 June 2024 June 2025 KLA Corporation $100.00 $169.01 $168.30 $259.29 $444.99 $487.89 S&P 500 $100.00 $140.79 $125.85 $150.51 $187.47 $215.89 PHLX Semiconductor $100.00 $169.82 $131.43 $191.59 $288.53 $295.18 Our fiscal year ends June 30.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 53 Consolidated Balance Sheets as of June 30, 2024 and 2023 54 Consolidated Statements of Operations for each of the three years in the period ended June 30, 2024 55 Consolidated Statements of Comprehensive Income for each of the three years in the period ended June 30, 2024 56 Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended June 30, 2024 57 Consolidated Statements of Cash Flows for each of the three years in the period ended June 30, 2024 58 Notes to Consolidated Financial Statements 59 Report of Independent Registered Public Accounting Firm 102 Schedule II Valuation and Qualifying Accounts 104
Biggest changeFinancial Statements and Supplementary Data 49 Consolidated Balance Sheets as of June 30, 2025 and 2024 50 Consolidated Statements of Operations for each of the three years in the period ended June 30, 2025 51 Consolidated Statements of Comprehensive Income for each of the three years in the period ended June 30, 2025 52 Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended June 30, 2025 53 Consolidated Statements of Cash Flows for each of the three years in the period ended June 30, 2025 54 Notes to Consolidated Financial Statements 55 Report of Independent Registered Public Accounting Firm 95 Schedule II Valuation and Qualifying Accounts for the three years in the period ended June 30, 2025 97
Item 6. [Reserved] 38 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 38 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 52 Item 8.
Item 6. [Reserved] 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 48 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor additional details, refer to Note 19 “Segment Reporting and Geographic Information” to our Consolidated Financial Statements. 43 Table of Contents The primary factors impacting the performance of our segment revenues for fiscal year 2024 compared to fiscal year 2023 are summarized as follows: • Revenue from our Semiconductor Process Control segment decreased in fiscal 2024 compared to fiscal 2023 primarily due to the broad, macro-driven slowdown that has impacted semiconductor demand overall, causing the semiconductor industry to rebalance its supply chain and reduce inventory levels, and memory device manufacturers and foundry/logic customers to reduce their capacity expansion-focused capital expenditure plans. • Revenue from our Specialty Semiconductor Process segment, which comprises etching and deposition solutions for advanced packaging and specialty semiconductor markets, remained relatively flat in fiscal 2024 compared to fiscal 2023. • Revenue from our PCB and Component Inspection segment decreased in fiscal 2024 as compared to fiscal 2023 primarily due to continued market softening.
Biggest changeFor additional details, refer to Note 18 “Segment Reporting and Geographic Information” to our Consolidated Financial Statements. 40 Table of Contents The primary factors impacting the performance of our segment revenues for fiscal year 2025 compared to fiscal year 2024 are summarized as follows: • Revenue from our Semiconductor Process Control segment increased in fiscal 2025 compared to fiscal 2024 primarily due to a resumption of growth in the industry, demonstrated by strong demand for many of our products, especially those in our inspection portfolio, as well as higher service revenue from an increase in our installed base. • Revenue from our Specialty Semiconductor Process segment, which comprises etching and deposition solutions for advanced packaging and specialty semiconductor markets, increased in fiscal 2025 compared to fiscal 2024 primarily due to increased revenue from our advanced packaging business. • Revenue from our PCB and Component Inspection segment increased in fiscal 2025 as compared to fiscal 2024 primarily due to increased revenue from packaging products related to AI and a settlement received in the second quarter of fiscal 2025 related to cancellation of a technology project by a major Display customer that resulted in our decision to exit the Display business in the third quarter of fiscal 2024.
We typically estimate the SSP of products and services based on observable transactions when the products and services are sold on a stand-alone basis and those prices fall within a reasonable range. We typically have established SSP ranges for individual products and services due to the stratification of these products by customers and circumstances.
We estimate the SSP of products and services based on observable transactions when the products and services are sold on a stand-alone basis and those prices fall within a reasonable range. We typically have established SSP ranges for individual products and services due to the stratification of these products by customers and circumstances.
Our product revenues in any particular period are impacted by the amount of new orders that we receive during that period and, depending upon the duration of manufacturing and installation cycles, in the preceding periods.
Our product revenues in any particular period are impacted by the amount of new orders we receive during that period and, depending upon the duration of manufacturing and installation cycles, in the preceding periods.
Service revenues Service revenues are generated from product maintenance and support services, as well as billable time and material service calls made to our customers.
Service revenues are generated from product maintenance and support services, as well as billable time and material service calls made to our customers.
Our stock repurchase program is intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our ESPP as well as to return excess cash to our stockholders.
The stock repurchase program is intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our ESPP as well as to return excess cash to our stockholders.
For additional information on the Revolving Credit Facility, see Note 8 “Debt” in the Notes to the Consolidated Financial Statements. Factoring Arrangements We have agreements with financial institutions to sell certain of our trade receivables and promissory notes from customers without recourse.
For additional information on the Revolving Credit Facility, see Note 8 “Debt” in the Notes to our Consolidated Financial Statements. Factoring Arrangements We have agreements with financial institutions to sell certain of our trade receivables and promissory notes from customers without recourse.
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 to final 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, FPDs, advanced packaging, MEMS and other electronic components.
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 to final 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.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses incurred in connection with acquisitions, R&D credits as a percentage of aggregate pre-tax income, non-taxable or non-deductible increases or decreases in the assets held within our Executive Deferred Savings Plan (“EDSP”), the tax effects of employee stock activity and the effectiveness of our tax planning strategies.
Our future effective income tax rate depends on various factors, such as tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses incurred in connection with acquisitions, R&D credits as a percentage of aggregate pre-tax income, non-taxable or non-deductible increases or decreases in the assets held within our Executive Deferred Savings Plan, the tax effects of employee stock activity and the effectiveness of our tax planning strategies.
Additionally, a significant portion of global FPD and PCB manufacturing has migrated to China. Chinese government initiatives around self-sustainability are propelling China to expand its domestic manufacturing capacity and attracting investment from semiconductor manufacturers from Taiwan, Korea, Japan and the U.S.
Additionally, a significant portion of global PCB manufacturing has migrated to China. Chinese government initiatives around self-sustainability are propelling China to expand its domestic manufacturing capacity and attracting investment from semiconductor manufacturers from Taiwan, Korea, Japan and the U.S.
See Note 7 “Goodwill and Purchased Intangible Assets” in the Notes to the Consolidated Financial Statements for additional information. Income Taxes.
See Note 7 “Goodwill and Purchased Intangible Assets” in the Notes to our Consolidated Financial Statements for additional information. Income Taxes.
Considering our current liquidity position, short-term financial forecasts and ability to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending June 30, 2025.
Considering our current liquidity position, short-term financial forecasts and ability to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending June 30, 2026.
We base these estimates and assumptions on historical experience and evaluate them on an ongoing basis to ensure that they remain reasonable under current conditions. Actual results could differ from those estimates.
Where applicable, we base these estimates and assumptions on historical experience and evaluate them on an ongoing basis to ensure that they remain reasonable under current conditions. Actual results could differ from those estimates.
Discussions and analysis of fiscal year 2023 as compared against fiscal year 2022 have been omitted and can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the SEC. 38 Table of Contents EXECUTIVE SUMMARY We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries.
Discussions and analysis of fiscal year 2024 as compared against fiscal year 2023 have been omitted and can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC. 35 Table of Contents EXECUTIVE SUMMARY We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries.
In connection with the downward revision of financial outlook for our PCB and Display businesses noted above, we recorded impairment losses related to purchased intangible assets of $26.4 million during the second quarter of fiscal 2024.
In connection with the downward revision of financial outlook for our PCB and Display businesses noted above, we recorded impairment losses related to purchased intangible assets of $8.7 million during the second quarter of fiscal 2025 and $26.4 million during the second quarter of fiscal 2024.
Additionally, management also uses judgments to evaluate whether or not the customer has obtained control of the product and consider several indicators in evaluating whether or not control has transferred to the customer, which could also impact the timing of revenue recognition, and could have a material effect on our financial position and results of operations. Inventory Valuation.
Additionally, management also uses judgments to evaluate whether or not the customer has obtained control of the product and considers several indicators in evaluating whether or not control has transferred to the customer, which could also impact the timing of revenue recognition, and could have a material effect on our financial position and results of operations.
These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 10 “Equity, Long-term Incentive Compensation Plans and Non-Controlling Interest” to our Consolidated Financial Statements. On August 1, 2024, we announced that our Board of Directors had declared a quarterly cash dividend of $1.45 per share.
These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 10 “Equity, Long-term Incentive Compensation Plans and Non-Controlling Interest” to our Consolidated Financial Statements. On August 7, 2025, we announced that our Board of Directors had declared a quarterly cash dividend of $1.90 per share.
Recent Accounting Pronouncements For a description of recent accounting pronouncements, including those recently adopted and the expected dates of adoption as well as estimated effects, if any, on our Consolidated Financial Statements of those not yet adopted, see Note 1 “Description of Business and Summary of Significant Accounting Policies” to our Consolidated Financial Statements. 42 Table of Contents RESULTS OF OPERATIONS Revenues and Gross Margin Year Ended June 30, (Dollar amounts in thousands) 2024 2023 2022 FY24 vs.
Recent Accounting Pronouncements For a description of recent accounting pronouncements, including those recently adopted and the expected dates of adoption as well as estimated effects, if any, on our Consolidated Financial Statements of those not yet adopted, see Note 1 “Description of Business and Summary of Significant Accounting Policies” to our Consolidated Financial Statements. 39 Table of Contents RESULTS OF OPERATIONS Revenues and Gross Margin Year Ended June 30, (Dollar amounts in thousands) 2025 2024 2023 FY25 vs.
Entity List (a list of parties that are generally ineligible to receive U.S.-regulated items without prior licensing from BIS), restricting our ability to provide products and services to such entities without a license.
Entity List (a list of parties that are generally ineligible to receive U.S.-regulated items without prior licensing from Commerce), restricting our ability to provide products and services to such entities without an export license.
Goodwill and Long-Lived Assets Impairment. We assess goodwill for impairment annually as well as whenever events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable.
We assess goodwill for impairment annually as well as whenever events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable.
Cash Dividends: The total amounts of regular quarterly cash dividends and dividend equivalents paid during the fiscal years ended June 30, 2024, 2023 and 2022 were $773.0 million, $732.6 million and $638.5 million, respectively.
Cash Dividends: The total amounts of regular quarterly cash dividends and dividend equivalents paid during the fiscal years ended June 30, 2025, 2024 and 2023 were $904.6 million, $773.0 million and $732.6 million, respectively.
Revenue is also impacted by average customer pricing, customer revenue deferrals associated with volume purchase agreements, the effect of fluctuations in foreign currency exchange rates and increased trade restrictions as discussed in the “Executive Summary” section above.
Revenue is also impacted by average customer pricing, customer revenue deferrals associated with volume purchase agreements, the effect of fluctuations in foreign currency exchange rates, increased trade restrictions as discussed in the “Executive Summary” section above and the availability of government incentives for semiconductor capital investments.
The amounts of accrued dividend equivalents payable for regular quarterly cash dividends on unvested RSUs with dividend equivalent rights were $11.8 million and $12.2 million as of June 30, 2024 and 2023, respectively.
The amounts of accrued dividend equivalents payable for regular quarterly cash dividends on unvested RSUs with dividend equivalent rights were $13.3 million and $11.8 million as of June 30, 2025 and 2024, respectively.
Restructuring charges were $21.6 million for the year ended June 30, 2024, primarily due to severance and related charges for the restructuring of the PCB and Display operating segment, as described further in Note 7 “Goodwill and Purchased Intangible Assets,” as well as writedowns of certain right of use (“ROU”) assets and fixed assets that were abandoned.
Restructuring Charges Restructuring charges were $7.7 million and $21.6 million for the years ended June 30, 2025 and June 30, 2024, respectively, primarily due to severance and related charges for the restructuring of the former PCB and Display operating segment, as described further in Note 7 “Goodwill and Purchased Intangible Assets,” as well as write-downs of certain right of use assets and fixed assets that were abandoned.
Although cash requirements will fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents balances and our Revolving Credit Facility, will be sufficient to satisfy our liquidity requirements associated with working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations, including repayment of outstanding debt, for at least the next 12 months.
Although cash requirements will fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents balances, marketable securities and our $1.50 billion Revolving Credit Facility, will be sufficient to satisfy our 46 Table of Contents liquidity requirements associated with working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations for at least the next 12 months.
The following table shows total receivables sold under factoring agreements and proceeds from sales of LC for the indicated periods: 49 Table of Contents Year Ended June 30, (In thousands) 2024 2023 2022 Receivables sold under factoring agreements $ 254,889 $ 328,933 $ 250,983 Proceeds from sales of LC $ 22,242 $ 69,247 $ 151,924 Factoring and LC fees for the sale of certain trade receivables were recorded in Other expense (income), net and were not material for the periods presented.
The following table shows total receivables sold under factoring agreements and proceeds from sales of LC for the indicated periods: Year Ended June 30, (In thousands) 2025 2024 2023 Receivables sold under factoring agreements $ 230,552 $ 254,889 $ 328,933 Proceeds from sales of LC $ 55,525 $ 22,242 $ 69,247 Factoring and LC fees for the sale of certain trade receivables were recorded in Other expense (income), net and were not material for the periods presented.
Cash Flows Used in Investing Activities Net cash used in investing activities during the fiscal year ended June 30, 2024 was $1.48 billion compared to $482.6 million during the fiscal year ended June 30, 2023.
Cash Flows Used in Investing Activities Net cash used in investing activities during the fiscal year ended June 30, 2025 was $202.5 million compared to $1.48 billion during the fiscal year ended June 30, 2024.
Cash Flows Used in Financing Activities: Net cash used in financing activities during the fiscal year ended June 30, 2024 was $1.78 billion compared to $2.83 billion during the fiscal year ended June 30, 2023.
Cash Flows Used in Financing Activities: Net cash used in financing activities during the fiscal year ended June 30, 2025 was $3.79 billion compared to $1.78 billion during the fiscal year ended June 30, 2024.
The increase in service revenues by 10% in the fiscal year ended June 30, 2024 compared to the prior fiscal year is primarily attributable to an increase in our installed base. Revenues by segment (1) Year Ended June 30, (Dollar amounts in thousands) 2024 2023 2022 FY24 vs. FY23 FY23 vs.
The increase in service revenues by 15% in the fiscal year ended June 30, 2025 compared to the prior fiscal year is primarily attributable to the growth of our installed base. Revenues by segment (1) Year Ended June 30, (Dollar amounts in thousands) 2025 2024 2023 FY25 vs. FY24 FY24 vs.
We remain committed to product development in new and emerging technologies. Selling, General and Administrative Year Ended June 30, (Dollar amounts in thousands) 2024 2023 2022 FY24 vs. FY23 FY23 vs.
We remain committed to product development in new and emerging technologies. 42 Table of Contents Selling, General and Administrative Year Ended June 30, (Dollar amounts in thousands) 2025 2024 2023 FY25 vs. FY24 FY24 vs.
For additional information, refer to Note 20 “Restructuring Charges” to our Consolidated Financial Statements. 46 Table of Contents Interest Expense and Other Expense (Income), Net Year Ended June 30, (Dollar amounts in thousands) 2024 2023 2022 FY24 vs. FY23 FY23 vs.
For additional information, refer to Note 19 “Restructuring Charges” to our Consolidated Financial Statements. Interest Expense and Other Expense (Income), Net Year Ended June 30, (Dollar amounts in thousands) 2025 2024 2023 FY25 vs. FY24 FY24 vs.
We recorded a valuation allowance of $289.5 million and $259.2 million for the years ended June 30, 2024 and June 30, 2023, respectively, primarily related to California credit carry-forwards. Based on the enacted income apportionment rules in California, our future California income tax liability will not be sufficient to fully utilize the credit carry-forwards.
We recorded tax valuation allowances of $310.6 million and $289.5 million as of June 30, 2025 and June 30, 2024, respectively, primarily related to California credit carry-forwards. Based on the enacted income apportionment rules in California, our future California income tax liability will not be sufficient to fully utilize the credit carry-forwards.
FY23 FY23 vs. FY22 R&D expenses $ 1,278,981 $ 1,296,727 $ 1,105,254 $ (17,746) (1) % $ 191,473 17 % R&D expenses as a percentage of total revenues 13 % 12 % 12 % 1 % — % R&D expenses may fluctuate with product development phases and project timing as well as our R&D efforts.
FY23 R&D expenses $ 1,360,334 $ 1,278,981 $ 1,296,727 $ 81,353 6 % $ (17,746) (1) % R&D expenses as a percentage of total revenues 11 % 13 % 12 % (2) % 1 % R&D expenses may fluctuate with product development phases and project timing as well as our R&D efforts.
The increase in the amount of regular quarterly cash dividends and dividends equivalents paid during the fiscal year ended June 30, 2024 as compared to the fiscal year ended June 30, 2023 reflected the increase in the level of our regular quarterly cash dividend from $1.30 to $1.45 per share that was announced during the three months ended September 30, 2023.
The increase in the amount of regular quarterly cash dividends and dividends equivalents paid during the fiscal year ended June 30, 2025 as compared to the fiscal year ended June 30, 2024 reflected the increases in the level of our regular quarterly cash dividend from $1.45 to $1.70 per share and from $1.70 to $1.90 per share that were announced during the first and fourth quarters, respectively of fiscal 2025.
We maintain guarantee arrangements available through various financial institutions for up to $83.9 million, of which $49.9 million had been issued as of June 30, 2024, primarily to fund guarantees to customs authorities for value-added tax and other operating requirements of our subsidiaries in Europe, Israel, and Asia.
We maintain guarantee arrangements available through various financial institutions for up to $126.8 million, of which $92.7 million had been issued as of June 30, 2025, primarily to fund guarantees to customs authorities for value-added tax and other operating requirements of our consolidated subsidiaries worldwide.
These decreases were partially offset by an increase in employee-related expenses of $31.1 million. Our future operating results will depend significantly on our ability to make products and provide services that have a competitive advantage in our marketplace. To do this, we believe that we must continue to make substantial and focused investments in our R&D.
Our future operating results will depend significantly on our ability to make products and provide services that have a competitive advantage in our marketplace. To do this, we believe that we must continue to make substantial and focused investments in our R&D.
As a result, we recorded a $219.0 million goodwill and purchased intangible asset impairment charge for the PCB and Display reporting unit in the second quarter of fiscal 2024. In March 2024, we made the decision to exit the Display business but continue to provide services to the installed base for the discontinued product lines.
In March 2024, we made the decision to exit the Display business but continue to provide services to the installed base for the discontinued product lines. As a result, we recorded a $70.5 million goodwill impairment charge, and an immaterial amount of purchased intangible assets were abandoned in the third quarter of fiscal 2024.
Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $250.0 million in the aggregate. As of June 30, 2024 and 2023, we had no outstanding borrowings under the Revolving Credit Facility.
Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $500.0 million in the aggregate. See Note 20 “Subsequent Events” in the Notes to our Consolidated Financial Statements. As of June 30, 2025 and 2024, we had no outstanding borrowings under the Prior Revolving Credit Facility.
If, however, a portion of these funds were to be repatriated to the U.S., we would be required to accrue and pay state and foreign taxes of approximately 1%-22% of the funds repatriated. The amount of taxes due will depend on the amount and manner of the repatriation, as well as the location from which the funds are repatriated.
If, however, a portion of these funds were to be repatriated to the U.S., we would be required to accrue and pay state and foreign taxes of approximately 1%-22% of the funds repatriated.
Although China is currently seen as an important long-term growth region for the semiconductor and electronics capital equipment sector, Commerce has adopted regulations and added certain China-based entities to the U.S.
Although China is currently seen as an important long-term growth region for the semiconductor and electronics capital equipment sector, the U.S. government has tightened export controls for commodities, software, and technology (collectively, “items”) destined to China over the past several years. In the last few years, Commerce has adopted regulations and added certain China-based entities to the U.S.
As of June 30, 2024, $1.13 billion of our $4.50 billion of cash, cash equivalents, and marketable securities were held by our foreign subsidiaries and branch offices. We currently intend to indefinitely reinvest $122.1 million of the cash, cash equivalents and marketable securities held by our foreign subsidiaries for which we assert that earnings are permanently reinvested.
We currently intend to indefinitely reinvest $66.6 million of the cash, cash equivalents and marketable securities held by our foreign subsidiaries for which we assert that earnings are permanently reinvested.
Management uses judgments in identifying performance obligations, determining the stand-alone selling price (“SSP”) for each distinct performance obligation and allocating consideration from an arrangement to the individual performance obligations based on the SSP.
Fixed consideration includes amounts to be contractually billed to the customer while variable consideration includes estimates for discounts and credits for future usage. Management uses judgment in identifying performance obligations, determining the stand-alone selling price (“SSP”) for each distinct performance obligation and allocating consideration from an arrangement to the individual performance obligations based on the SSP.
Gross margin Our gross margin fluctuates with revenue levels and product mix and is affected by variations in costs related to manufacturing and servicing our products, including our ability to scale our operations efficiently and effectively in response to prevailing business conditions. 44 Table of Contents The following table summarizes the major factors that contributed to the changes in gross margin: Gross Margin Fiscal Year Ended June 30, 2022 61.0 % Revenue volume of products and services 0.9 % Mix of products and services sold 0.1 % Manufacturing labor, overhead and efficiencies (0.1) % Other service and manufacturing costs (2.1) % Fiscal Year Ended June 30, 2023 59.8 % Revenue volume of products and services (1.1) % Mix of products and services sold 0.6 % Manufacturing labor, overhead and efficiencies (0.3) % Other service and manufacturing costs 1.0 % Fiscal Year Ended June 30, 2024 60.0 % Changes in gross margin from revenue volume of products and services reflect our ability to leverage existing infrastructure to generate higher revenues.
The following table summarizes the major factors that contributed to the changes in gross margin: Gross Margin Fiscal Year Ended June 30, 2024 60.0 % Revenue volume of products and services 1.8 % Mix of products and services sold (1.3) % Manufacturing labor, overhead and efficiencies 0.4 % Other service and manufacturing costs — % Fiscal Year Ended June 30, 2025 60.9 % Changes in gross margin from revenue volume of products and services reflect our ability to leverage existing infrastructure to generate higher revenues.
As of June 30, 2024, we were in compliance with all of our covenants under the relevant indentures associated with the Senior Notes. Revolving Credit Facility: We have in place a Credit Agreement for an unsecured Revolving Credit Facility with a maturity of June 8, 2027 that allows us to borrow up to $1.50 billion.
As of June 30, 2025, we were in compliance with all of our covenants under the relevant indentures associated with the Senior Notes. 45 Table of Contents Revolving Credit Facility: On July 3, 2025, we replaced our Prior Revolving Credit Facility with a new unsecured Revolving Credit Facility with a maturity date of July 3, 2030, that allows us to borrow up to $1.50 billion.
Factors that can affect our credit ratings include changes in our operating performance, the economic environment, conditions in the semiconductor and semiconductor capital equipment industries, our financial position, material acquisitions and changes in our business strategy.
Credit Ratings Our credit ratings as of June 30, 2025 are summarized below: Rating Agency Rating Fitch A Moody’s A2 S&P A- Factors that can affect our credit ratings include changes in our operating performance, the economic environment, conditions in the semiconductor and semiconductor capital equipment industries, our financial position, material acquisitions and changes in our business strategy.
We also offer advanced technology solutions to address various manufacturing needs of PCBs, FPDs, specialty semiconductor devices and other electronic components, including advanced packaging, LED, power devices, compound semiconductor, and data storage industries, as well as general materials research. Our semiconductor customers generally operate in one or both of the major semiconductor device manufacturing markets: memory and foundry/logic.
We also offer advanced technology solutions to address various manufacturing needs of PCBs, specialty semiconductor devices and other electronic components, including advanced packaging, light emitting diode (“LED”), power devices, compound semiconductor, and data storage industries, as well as general materials research.
FY22 Revenues: Product $ 7,482,679 $ 8,379,025 $ 7,301,428 $ (896,346) (11) % $ 1,077,597 15 % Service 2,329,568 2,117,031 1,910,455 212,537 10 % 206,576 11 % Total revenues $ 9,812,247 $ 10,496,056 $ 9,211,883 $ (683,809) (7) % $ 1,284,173 14 % Costs of revenues $ 3,928,073 $ 4,218,307 $ 3,592,441 $ (290,234) (7) % $ 625,866 17 % Gross margin 60% 60% 61% —% (1)% Product revenues Our business is affected by the concentration of our customer base and our customers’ capital equipment procurement schedules as a result of their investment plans.
FY23 Revenues: Product $ 9,472,854 $ 7,482,679 $ 8,379,025 $ 1,990,175 27 % $ (896,346) (11) % Service 2,683,308 2,329,568 2,117,031 353,740 15 % 212,537 10 % Total revenues $ 12,156,162 $ 9,812,247 $ 10,496,056 $ 2,343,915 24 % $ (683,809) (7) % Costs of revenues $ 4,751,867 $ 3,928,073 $ 4,218,307 $ 823,794 21 % $ (290,234) (7) % Gross margin 60.9% 60.0% 59.8% 0.9% 0.2% Our business is affected by the concentration of our customer base and our customers’ capital equipment procurement schedules as a result of their investment plans.
FY22 Revenues: Semiconductor Process Control $ 8,733,556 $ 9,324,190 $ 7,924,822 $ (590,634) (6) % $ 1,399,368 18 % Specialty Semiconductor Process 528,701 543,398 456,579 (14,697) (3) % 86,819 19 % PCB and Component Inspection 552,491 631,604 832,176 (79,113) (13) % (200,572) (24) % Total segment revenues $ 9,814,748 $ 10,499,192 $ 9,213,577 $ (684,444) (7) % $ 1,285,615 14 % __________ (1) Segment revenues exclude corporate allocations and the effects of changes in foreign currency exchange rates.
FY23 Revenues: Semiconductor Process Control $ 10,947,359 $ 8,733,556 $ 9,324,190 $ 2,213,803 25 % $ (590,634) (6) % Specialty Semiconductor Process 587,107 528,701 543,398 58,406 11 % (14,697) (3) % PCB and Component Inspection 621,721 552,491 631,604 69,230 13 % (79,113) (13) % Total segment revenues $ 12,156,187 $ 9,814,748 $ 10,499,192 $ 2,341,439 24 % $ (684,444) (7) % __________ (1) Segment revenues exclude corporate allocations and the effects of changes in foreign currency exchange rates.
Off-Balance Sheet Arrangements: As of June 30, 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition and results of operations that are material to investors. 51 Table of Contents
Off-Balance Sheet Arrangements: As of June 30, 2025, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial position, changes in financial condition, revenues and expenses, results of operations, liquidity, cash requirements or capital resources that are material to investors.
Events or changes in circumstances that could affect the likelihood that we will be required to recognize an impairment charge for long-lived assets primarily include declines in our operating cash flows from the use of these assets.
Events or changes in circumstances that could affect the likelihood that we will be required to recognize an impairment charge for long-lived assets primarily include declines in our operating cash flows from the use of these assets. 38 Table of Contents For finite-lived purchased intangible assets, we determine whether the assets are recoverable based on the forecasted undiscounted future cash flows that are expected to be generated by the lowest-level associated asset grouping.
For discussions on tax examinations, assessments and certain related proceedings, see Note 14 “Income Taxes” to our Consolidated Financial Statements. 47 Table of Contents Liquidity and Capital Resources As of June 30, (Dollar amounts in thousands) 2024 2023 2022 Cash and cash equivalents $ 1,977,129 $ 1,927,865 $ 1,584,908 Marketable securities 2,526,866 1,315,294 1,123,100 Total cash, cash equivalents and marketable securities $ 4,503,995 $ 3,243,159 $ 2,708,008 Percentage of total assets 29 % 23 % 21 % Year Ended June 30, (In thousands) 2024 2023 2022 Cash flows: Net cash provided by operating activities $ 3,308,575 $ 3,669,805 $ 3,312,702 Net cash used in investing activities (1,476,985) (482,571) (876,458) Net cash used in financing activities (1,776,017) (2,830,289) (2,257,005) Effect of exchange rate changes on cash and cash equivalents (6,309) (13,988) (28,941) Net increase in cash and cash equivalents $ 49,264 $ 342,957 $ 150,298 Cash, Cash Equivalents and Marketable Securities: As of June 30, 2024, our cash, cash equivalents and marketable securities totaled $4.50 billion, which represents an increase of $1.26 billion from June 30, 2023.
LIQUIDITY AND CAPITAL RESOURCES As of June 30, (Dollar amounts in thousands) 2025 2024 2023 Cash and cash equivalents $ 2,078,908 $ 1,977,129 $ 1,927,865 Marketable securities 2,415,715 2,526,866 1,315,294 Total cash, cash equivalents and marketable securities $ 4,494,623 $ 4,503,995 $ 3,243,159 Percentage of total assets 28 % 29 % 23 % Year Ended June 30, (In thousands) 2025 2024 2023 Cash flows: Net cash provided by operating activities $ 4,081,903 $ 3,308,575 $ 3,669,805 Net cash used in investing activities (202,481) (1,476,985) (482,571) Net cash used in financing activities (3,785,687) (1,776,017) (2,830,289) Effect of exchange rate changes on cash and cash equivalents 8,044 (6,309) (13,988) Net increase in cash and cash equivalents $ 101,779 $ 49,264 $ 342,957 Cash, Cash Equivalents and Marketable Securities: As of June 30, 2025, our cash, cash equivalents and marketable securities totaled $4.49 billion, compared to the $4.50 billion balance as of June 30, 2024.
Senior Notes: As of June 30, 2024, we had an aggregate principal amount of senior, unsecured notes totaling $6.70 billion with due dates ranging from fiscal 2025 through fiscal 2063. For additional information on these senior notes, see Note 8 “Debt” in the Notes to the Consolidated Financial Statements.
Refer to Note 20 “Subsequent Events” to our Consolidated Financial Statements for additional information regarding the declaration of our quarterly cash dividend announced subsequent to June 30, 2025. Senior Notes: As of June 30, 2025, we had an aggregate principal amount of senior, unsecured notes totaling $5.95 billion with due dates ranging from fiscal 2029 through fiscal 2063.
R&D expenses during the fiscal year ended June 30, 2024 decreased compared to the fiscal year ended June 30, 2023 primarily due to a decrease in engineering project material costs of $36.5 million, a decrease in consulting costs of $7.1 million and a decrease in restructuring expense of $5.8 million.
R&D expenses during the fiscal year ended June 30, 2025 increased compared to the fiscal year ended June 30, 2024 primarily due to an increase in employee-related expenses of $70.1 million, an increase in depreciation expense of $5.9 million and an increase in engineering project material costs of $4.9 million.
Provision for Income Taxes The following table provides details of income taxes: Year Ended June 30, (Dollar amounts in thousands) 2024 2023 2022 Income before income taxes $ 3,190,032 $ 3,789,190 $ 3,489,237 Provision for income taxes $ 428,136 $ 401,839 $ 167,177 Effective tax rate 13.4 % 10.6 % 4.8 % Tax expense was higher as a percentage of income before taxes during the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 primarily due to the impact of the following items: • Tax expense as a percentage of income increased during the fiscal year ended June 30, 2024 due to a $263.1 million goodwill impairment charge, which is non-deductible for income tax purposes; and • Tax expense decreased by $35.2 million during the fiscal year ended June 30, 2023 primarily relating to a decrease in our unrecognized tax benefits from the settlement of income tax examinations.
Provision for Income Taxes The following table provides details of income taxes: Year Ended June 30, (Dollar amounts in thousands) 2025 2024 2023 Income before income taxes $ 4,644,448 $ 3,190,032 $ 3,789,190 Provision for income taxes $ 582,805 $ 428,136 $ 401,839 Effective tax rate 12.5 % 13.4 % 10.6 % Tax expense was lower as a percentage of income before taxes during the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024 primarily due to goodwill impairment charges, which are non-deductible for income tax.
Revenues by region Revenues by region, based on ship-to location, for the periods indicated were as follows: Year Ended June 30, (Dollar amounts in thousands) 2024 2023 2022 China $ 4,196,727 43 % $ 2,867,443 27 % $ 2,660,438 29 % Taiwan 1,738,065 18 % 2,493,379 24 % 2,528,482 27 % North America 1,070,791 11 % 1,254,956 12 % 928,043 10 % Japan 963,203 10 % 888,016 9 % 724,773 8 % Korea 906,924 9 % 1,895,710 18 % 1,430,495 16 % Europe and Israel 540,263 6 % 682,103 6 % 636,664 7 % Rest of Asia 396,274 3 % 414,449 4 % 302,988 3 % Total $ 9,812,247 100 % $ 10,496,056 100 % $ 9,211,883 100 % A significant portion of our revenues continues to be generated in Asia, where a substantial portion of the world’s semiconductor manufacturing capacity is located, and we expect that trend to continue.
Revenues by region Revenues by region, based on ship-to location, for the periods indicated were as follows: Year Ended June 30, (Dollar amounts in thousands) 2025 2024 2023 China $ 4,042,567 33 % $ 4,196,727 43 % $ 2,867,443 27 % Taiwan 3,205,392 27 % 1,738,065 18 % 2,493,379 24 % Korea 1,452,826 12 % 906,924 9 % 1,895,710 18 % North America 1,362,311 11 % 1,070,791 11 % 1,254,956 12 % Japan 1,133,002 9 % 963,203 10 % 888,016 9 % Europe and Israel 574,197 5 % 540,263 6 % 682,103 6 % Rest of Asia 385,867 3 % 396,274 3 % 414,449 4 % Total $ 12,156,162 100 % $ 9,812,247 100 % $ 10,496,056 100 % 41 Table of Contents There was a decrease in revenues from our customers in China, accounting for 33% of total revenues in fiscal 2025 compared to 43% of total revenues in fiscal 2024.
The change in Other expense (income), net during the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 was primarily due to the following: higher interest income of $87.8 million due to higher rates, partially offset by the following: a pre-tax gain of $29.7 million from the sale of our interest in Orbograph to a portfolio company of a private equity firm in fiscal year 2023 and a higher net fair value loss of $17.3 million from an equity security compared to the prior fiscal year.
The change in Other expense (income), net during the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024 was primarily attributable to higher interest income of $17.1 million due to higher interest earning balances and a 43 Table of Contents higher net fair value gain of $7.0 million from an equity security compared to the prior fiscal year, partially offset by higher net foreign exchange losses of $10.2 million.
Push out or cancellation of deliveries to our customers could still cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges.
While we continue to invest in technological innovation, factors such as delays from customers in adopting new chips and technology methods could impact process control capital intensity. Push out or cancellation of deliveries to our customers could still cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges.
Working Capital: Working capital was $5.37 billion as of June 30, 2024, which represents an increase of $741.2 million compared to our working capital as of June 30, 2023. As of June 30, 2024, our principal sources of liquidity consisted of $4.50 billion of cash, cash equivalents and marketable securities and availability under our Revolving Credit Facility.
As of June 30, 2025, our principal sources of liquidity consisted of $4.49 billion of cash, cash equivalents and marketable securities, as well as $1.50 billion availability under our Revolving Credit Facility.
Inventories are stated at the lower of cost or net realizable value using standard costs that approximate actual costs on a first-in, first-out basis.
These 37 Table of Contents credits and incentives are estimated at contract inception and updated at the end of each reporting period if and when additional information becomes available. Inventory Valuation. Inventories are stated at the lower of cost or net realizable value using standard costs that approximate actual costs on a first-in, first-out basis.
We were in compliance with all covenants under the Credit Agreement as of June 30, 2024 (the leverage ratio was 1.51 to 1.00 and our then maximum allowed leverage ratio was 3.50 to 1.00).
We were in compliance with all covenants under the prior Credit Agreement as of June 30, 2025 (the leverage ratio was 1.02 to 1.00 compared to a maximum leverage ratio of 3.50 to 1.00 on a quarterly basis covering the trailing four consecutive fiscal quarters for each fiscal quarter).
This decision triggered a quantitative impairment assessment for the Display reporting unit as of March 31, 2024, which resulted in a total goodwill impairment charge of $70.5 million in the third quarter of fiscal 2024. 41 Table of Contents Long-lived assets, including both tangible and purchased intangible assets, are tested for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
This decision triggered a quantitative impairment assessment for the Display reporting unit as of March 31, 2024, which resulted in a total goodwill impairment charge of $70.5 million in the third quarter of fiscal 2024.
The following table sets forth some of our key consolidated financial information for each of our last three fiscal years: Year Ended June 30, (Dollar amounts in thousands, except diluted net income per share) 2024 2023 2022 Total revenues $ 9,812,247 $ 10,496,056 $ 9,211,883 Costs of revenues $ 3,928,073 $ 4,218,307 $ 3,592,441 Gross margin 60 % 60 % 61 % Net income attributable to KLA $ 2,761,896 $ 3,387,277 $ 3,321,807 Diluted net income per share attributable to KLA $ 20.28 $ 24.15 $ 21.92 CRITICAL ACCOUNTING ESTIMATES The preparation of our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in applying our accounting policies that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
The following table sets forth some of our key consolidated financial information for each of our last three fiscal years: Year Ended June 30, (Dollar amounts in thousands, except diluted net income per share) 2025 2024 2023 Total revenues $ 12,156,162 $ 9,812,247 $ 10,496,056 Costs of revenues $ 4,751,867 $ 3,928,073 $ 4,218,307 Gross margin 60.9 % 60.0 % 59.8 % Net income attributable to KLA $ 4,061,643 $ 2,761,896 $ 3,387,277 Diluted net income per share attributable to KLA $ 30.37 $ 20.28 $ 24.15 We continue to focus on returning cash to our investors, making $2.15 billion in share repurchases and paying $904.6 million in dividends in the year ended June 30, 2025.
The market approach estimates the fair value of a reporting unit by utilizing the market comparable method, which uses revenue and earnings multiples from comparable companies.
The market approach estimates the fair value of a reporting unit by utilizing the market comparable method, which uses revenue and earnings multiples from comparable companies. During the second quarter of fiscal 2025, we noted a continued deterioration of the long-term forecast for our PCB business, which is part of our PCB and Component Inspection reportable segment.
These decreases were partially offset by an increase in facility-related expenses of $25.3 million and an increase in consulting costs of $12.5 million. Impairment of Goodwill and Purchased Intangible Assets During the second quarter of fiscal 2024, we noted a significant deterioration of the long-term forecast for our PCB and Display businesses.
During the second quarter of fiscal 2024, we noted a significant deterioration of the long-term forecast for our PCB and Display businesses. As a result, we recorded a $219.0 million goodwill and purchased intangible asset impairment charge for the PCB and Display reporting unit in the second quarter of fiscal 2024.
FY22 SG&A expenses $ 969,509 $ 986,326 $ 860,007 $ (16,817) (2) % $ 126,319 15 % SG&A expenses as a percentage of total revenues 10 % 9 % 9 % 1 % — % SG&A expenses during the fiscal year ended June 30, 2024 decreased compared to the fiscal year ended June 30, 2023 primarily due to $16.8 million of compensation-related expense from the sale of Orbograph Ltd.
FY23 SG&A expenses $ 1,029,734 $ 969,509 $ 986,326 $ 60,225 6 % $ (16,817) (2) % SG&A expenses as a percentage of total revenues 8 % 10 % 9 % (2) % 1 % SG&A expenses during the fiscal year ended June 30, 2025 increased compared to the fiscal year ended June 30, 2024 primarily due to increases in the following areas: facility-related expenses of $15.9 million, employee-related expenses of $12.9 million, depreciation expense of $12.0 million, promotional expenses of $8.3 million, travel expenses of $6.8 million and engineering project material costs of $6.1 million.
As of June 30, 2024, an aggregate of $2.18 billion was available for repurchase under our stock repurchase program, which reflects an increase in the authorized repurchase amount of $2.00 billion in the first quarter of fiscal 2024. 48 Table of Contents Cash Flows Provided by Operating Activities: We have historically financed our liquidity requirements through cash generated from operations.
As of June 30, 2025, an aggregate of $5.03 billion was available for repurchase under our stock repurchase program, which reflects an increase in the authorized repurchase amount of $5.00 billion in the fourth quarter of fiscal 2025.
(2) The interest payments associated with the Senior Notes payable included in the table above are based on the principal amount multiplied by the applicable interest rate for each series of Senior Notes.
Interest payments of $5.48 billion associated with all of our debt obligations are based on the principal amount multiplied by the applicable interest rate for each series of Senior Notes. For additional details, refer to Note 8 “Debt” to our Consolidated Financial Statements.
FY22 Interest expense $ 311,253 $ 296,940 $ 160,339 $ 14,313 5 % $ 136,601 85 % Other expense (income), net $ (155,075) $ (104,720) $ 4,605 (50,355) (48) % $ (109,325) (2,374) % Interest expense as a percentage of total revenues 3 % 3 % 2 % Other expense (income), net as a percentage of total revenues (2) % (1) % — % The increase in interest expense during the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 was primarily due to additional interest expense on our $750.0 million Senior Notes issued in February 2024.
FY23 Interest expense $ 302,166 $ 311,253 $ 296,940 $ (9,087) (3) % $ 14,313 5 % Other expense (income), net $ (171,487) $ (155,075) $ (104,720) $ (16,412) (11) % $ (50,355) (48) % Interest expense as a percentage of total revenues 2 % 3 % 3 % Other expense (income), net as a percentage of total revenues (1) % (2) % (1) % Interest expense during the fiscal year ended June 30, 2025 was comparable to the fiscal year ended June 30, 2024 as average debt outstanding was essentially unchanged.
Refer to Note 21 “Subsequent Events” to our Consolidated Financial Statements for additional information regarding the declaration of our quarterly cash dividend announced subsequent to June 30, 2024. Stock Repurchases: The shares repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the fiscal years ended June 30, 2024 and 2023.
Stock Repurchases: The shares of common stock repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the fiscal years ended June 30, 2025, 2024 and 2023. The total amount of stock repurchases during the fiscal years ended June 30, 2025, 2024 and 2023 were $2.15 billion, $1.74 billion and $1.31 billion, respectively.
This increase in cash used was mainly due to an increase in net purchases of available-for-sale, equity and trading securities of $1.01 billion and a decrease in proceeds from the sale of a business of $75.4 million, partially offset by a decrease in capital expenditures of $64.2 million and a decrease in cash used in business acquisitions of $23.5 million.
The decrease was mainly due to an increase in net proceeds from available-for-sale securities of $1.33 billion, primarily due to the sale of investments to support the $750.0 million debt principal payment in November 2024, and $6.3 million in proceeds from capital-related government assistance, partially offset by increases in capital expenditures of $57.9 million and IP acquisitions of $5.0 million.
This decrease was mainly due to a net increase in debt-related proceeds of $1.53 billion, partially offset by an increase in cash used for common stock repurchases of $423.9 million, and an increase in cash paid for dividends and dividend equivalents of $40.5 million.
The increase was mainly due to a debt repayment of $750.0 million contrasting with debt-related proceeds of $735.0 million in the prior year, and increases in cash used for common stock repurchases of $414.2 million and cash paid for dividends and dividend equivalents of $131.6 million.
We have accrued state and foreign tax on the remaining cash of $1.01 billion of the $1.13 billion held by our foreign subsidiaries and branch offices. As such, these funds can be returned to the U.S. without accruing any additional U.S. tax expense.
As such, these funds can be returned to the U.S. without accruing any additional U.S. tax expense. Cash Flows Provided by Operating Activities: We typically finance our liquidity requirements through cash generated from our operations.
We recorded unrecognized tax benefits of $245.7 million and $213.1 million for the years ended June 30, 2024 and June 30, 2023, respectively.
Evaluation of tax positions, their technical merits, and measurements using cumulative probability are inherently subjective estimates since they require our assessment of the probability of future outcomes. We recorded unrecognized tax benefits of $258.6 million and $245.7 million for the years ended June 30, 2025 and June 30, 2024, respectively.
As a result, we recorded a $70.5 million goodwill impairment charge and an immaterial amount of purchased intangible assets were abandoned in the third quarter of fiscal 2024. See Note 7 “Goodwill and Purchased Intangible Assets” to our Consolidated Financial Statements for further details.
See Note 7 “Goodwill and Purchased Intangible Assets” to our Consolidated Financial Statements for further details.
Failure to obtain export licenses could also result in a substantial reduction to our RPO or require us to return substantial deposits received from customers in China for purchase orders. We are continuously assessing the aggregate potential impact of government regulations on our financial results and operations.
The inability to obtain export licenses has resulted in a reduction to our backlog and required us to return some deposits received from customers in China for purchase orders, and limited our ability to meet our contractual obligations and sell our products or services to our customers in China.
(3) Represents an estimate of significant commitments to purchase inventory from our suppliers as well as an estimate of significant purchase commitments associated with goods, services and other assets in the ordinary course of business. Our obligation under these purchase commitments is generally restricted to a forecasted time-horizon as mutually agreed upon between the parties.
We maintain commitments to purchase inventory from our suppliers as well as goods, services, and other assets in the ordinary course of business. Our estimate of our significant purchase commitments primarily for material, services, supplies and asset purchases is $2.42 billion as of June 30, 2025, a majority of which will be due within the next 12 months.
Removed
The pervasive and increasing needs for semiconductors in many consumer and industrial products, the rapid proliferation of new applications for more advanced semiconductor devices, and the increasing complexity associated with leading edge semiconductor manufacturing drive demand for our process control and yield management solutions.
Added
In addition, our services business has grown consistently each quarter on a year-over-year basis and accounted for approximately 22% of our total revenues in fiscal 2025, due to increases in the installed base of KLA systems.
Removed
Continuing advancement of innovation spurred by the performance, power and price benefits of being at the leading edge, increasing involvement in legacy nodes as semiconductor content increases, and innovation and growth of new enabling technologies are fueling long-term growth for the semiconductor equipment industry.
Added
Our services revenue, which is generated largely from recurring “subscription-like” contracts, increases the value of our contract offerings and extension of system lifetimes resulting from growth in legacy semiconductor markets. Our semiconductor customers generally operate in one or both of the major semiconductor device manufacturing markets: memory and foundry/logic.
Removed
End-market demand drivers that are expected to continue in the long term are related to high performance computing, AI including 2-nanometer chip technology, the deployment of 5G telecommunications technology and associated high-end mobile devices, the electrification and digitization of the automotive industry, the revival of personal computer demand and associated innovations to support remote work, virtual collaboration, remote learning and entertainment, and the growth of the IoT.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+2 added−3 removed3 unchanged
Biggest changeWe have in place a Revolving Credit Facility that allows us to borrow up to $1.50 billion, has a maturity date of June 8, 2027 with two one-year extension options, and may be increased by an amount up to $250.0 million in the aggregate. As of June 30, 2024, we had no borrowings under the Revolving Credit Facility.
Biggest changeOn July 3, 2025, we replaced our Prior Revolving Credit Facility with a new Revolving Credit Facility that allows us to borrow up to $1.50 billion, has a maturity date of July 3, 2030 with two one-year extension options, and may be increased by an amount up to $500.0 million in the aggregate.
See Note 5 “Marketable Securities” to our Consolidated Financial Statements in Part II, Item 8; “Liquidity and Capital Resources” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II Item 7; and “Risk Factors” in Part I Item 1A of this Annual Report on Form 10-K for a description of recent market events that may affect the value of the investments in our portfolio that we held as of June 30, 2024.
See Note 5 “Marketable Securities” to our Consolidated Financial Statements in Part II, Item 8; “Liquidity and Capital Resources” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II Item 7; and “Risk Factors” in Part I Item 1A of this Annual Report on Form 10-K for a description of recent market events that may affect the value of the investments in our portfolio that we held as of June 30, 2025.
Accordingly, we believe that, as a result of the hedging of certain of our foreign currency exposure, changes in most relevant foreign currency exchange rates should have no material impact on our results of operations or cash flows. 52 Table of Contents
Accordingly, we believe that, as a result of the hedging of certain of our foreign currency exposure, changes in most relevant foreign currency exchange rates should have no material impact on our results of operations or cash flows. 48 Table of Contents
These securities, as with all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase. If market interest rates were to increase immediately and uniformly by 100 bps from levels as of June 30, 2024, the fair value of the portfolio would have declined by $16.1 million.
These securities, as with all fixed income instruments, are subject to interest rate risk and will decline in value if market interest rates increase. If market interest rates were to increase immediately and uniformly by 100 bps from levels as of June 30, 2025, the fair value of the portfolio would have declined by $21.5 million.
Pursuant to the terms of the Credit Agreement, we are also obligated to pay an annual commitment fee on the daily undrawn balance of the Revolving Credit Facility at a rate that ranges from 4.5 bps to 12.5 bps, depending upon our then prevailing credit rating. As of June 30, 2024 the annual commitment fee was 6 bps.
Pursuant to the terms of the Prior Credit Agreement, we were also obligated to pay an annual commitment fee on the daily undrawn balance of the Revolving Credit Facility at a rate that ranges from 4.5 bps to 12.5 bps, depending upon our then prevailing credit rating. As of June 30, 2025, the annual commitment fee was 5.5 bps.
Assuming a decline of 50% in market prices, the aggregate value of our investment in the marketable equity security could decrease by approximately $13 million, based on the value as of June 30, 2024.
Assuming a decline of 50% in market prices, the aggregate value of our investment in the marketable equity security could decrease by approximately $12 million, based on the value as of June 30, 2025.
As of June 30, 2024, we had net forward and option contracts to purchase $254.1 million in foreign currency in order to hedge certain currency exposures (see Note 17 “Derivative Instruments and Hedging Activities” to our Consolidated Financial Statements for additional details).
Foreign Currency Risk As of June 30, 2025, we had net forward and option contracts to purchase $50.9 million in foreign currency in order to hedge certain currency exposures (see Note 17 “Derivative Instruments and Hedging Activities” to our Consolidated Financial Statements for additional details).
All of the potential changes noted below are based on sensitivity analyses performed on our financial position as of June 30, 2024. Actual results may differ materially. As of June 30, 2024, we had an investment portfolio of fixed income securities of $1.71 billion.
All of the potential changes noted below are based on sensitivity analyses performed on our financial position as of June 30, 2025. Actual results may differ materially. Interest Rate Risk As of June 30, 2025, we had an investment portfolio of fixed income securities of $2.05 billion.
If we had entered into these contracts on June 30, 2024, the U.S. dollar equivalent would have been $274.9 million. A 10% adverse move in all currency exchange rates affecting the contracts would decrease the fair value of the contracts by $124.1 million.
If we had entered into these contracts on June 30, 2025, the U.S. dollar equivalent would have been $81.8 million. A 10% adverse move in all currency exchange rates affecting the contracts would decrease the fair value of the contracts by $153.4 million.
As of June 30, 2024, the fair value and the book value of our Senior Notes due in various fiscal years ranging from 2025 to 2063 were $6.26 billion and $6.63 billion, respectively.
As of June 30, 2025, our fixed rate Senior Notes had a fair value and book value of $5.54 billion and $5.88 billion, respectively, due in various fiscal years ranging from 2029 to 2063.
Our equity investment in a publicly traded company is subject to market price risk, which we typically do not attempt to reduce or eliminate through hedging activities. As of June 30, 2024, the fair value of our investment in the marketable equity security, which began publicly trading on the Tokyo Stock Exchange on April 5, 2021, was $25.6 million.
As of June 30, 2025, the fair value of our investment in the marketable equity security, which began publicly trading on the Tokyo Stock Exchange on April 5, 2021, was $24.0 million.
Removed
Each Term SOFR Loan will bear interest at a rate per annum equal to the applicable Adjusted Term SOFR rate, which is equal to the applicable Term SOFR rate plus 10 bps that shall not be less than zero, plus a spread ranging from 75 bps to 125 bps, as determined by our credit ratings at the time.
Added
As of June 30, 2025, we had no outstanding borrowings under our Prior Revolving Credit Facility.
Removed
The fair value of the borrowings under the Revolving Credit Facility is subject to interest rate and credit risk due to the timing of the rate resets and changes in the market’s assessment of risk of default, respectively.
Added
Any increase in our commitment fee under our Credit Agreement due to changes in credit ratings would have no material impact on our results of operations or cash flows. Marketable Equity Security Risk Our equity investment in a publicly traded company is subject to market price risk, which we typically do not attempt to reduce or eliminate through hedging activities.
Removed
Additionally, as of June 30, 2024, if our credit ratings were downgraded to be below investment grade, the maximum potential increase to our annual commitment fee for the Revolving Credit Facility, using the highest range of the ranges discussed above, is estimated to be approximately $1 million.