KLA Corp beats Q2 estimates as AI semiconductors drive chipmaking tool demand to new highs

KLA: AI-driven process control boom lifts 2026 semiconductor equipment demand

US semiconductor equipment maker KLA said growing AI infrastructure demand is accelerating investment in advanced logic chips, high-bandwidth memory (HBM), and advanced packaging, driving higher process control intensity, while supply constraints and cost pressures remain ongoing risks. According to Reuters and MarketBeat, KLA posted revenue of US$3.3 billion in the second quarter of fiscal 2026 (ended December 2025), up 7% year-over-year and above market expectations of US$3.25 billion, while net profit climbed 39% to US$1.15 billion. By business segment, KLA's services revenue reached US$790 million in the second quarter of fiscal 2026, rising 6% quarter-over-quarter and 18% year-over-year, extending a 16-year record of annual growth with a compound annual growth rate (CAGR) exceeding 12%, while product revenue totaled US$2.51 billion. CFO Bren Higgins said on the earnings call that second-quarter revenue came in above the midpoint of prior guidance, while non-GAAP gross margin rose to 62.6%, supported by stronger services performance and improved manufacturing efficiency. CEO Rick Wallace said rising chip system complexity has expanded process control requirements from wafers into advanced packaging. KLA has integrated AI-driven analytics into its solutions to streamline manufacturing workflows and shorten time to yield targets. Advanced packaging-related revenue within KLA's systems business reached US$950 million in 2025, up more than 70% year-over-year. For the third quarter of fiscal 2026, KLA forecasts revenue of US$3.2 billion to US$3.5 billion, exceeding market expectations of US$3.28 billion. Higgins said the wafer fabrication equipment (WFE) market is expected to expand to US$120 billion in 2026 and reach around US$135 billion when advanced packaging components are included. However, shipments in the first half of 2026 are likely to be constrained by the limited availability of long-lead-time components such as optical parts and customer fab construction timelines, while rising DRAM costs used in imaging systems are placing short-term pressure on margins. In the memory segment, Wallace said process control intensity has risen sharply for HBM-related DRAM production, driven by higher device value, tighter tolerance margins, increased metal layer counts, and broader adoption of advanced lithography, all requiring more frequent inspection and metrology to meet high-performance computing (HPC) standards. On geopolitical developments, KLA expects its China market in 2026 to remain flat or post slight growth, amid localization efforts in China and continued adjustments to US export controls on advanced technologies. Article edited by Jack Wu

KLA Corp beats quarterly results estimates on strong chipmaking tool demand

Jan 29 (Reuters) - KLA Corp beat Wall Street expectations for second-quarter revenue and profit on Thursday, as enterprises ramped up orders for its chip fabrication tools used to manufacture advanced artificial intelligence semiconductors. A surge in demand for powerful processors, which fuel large language models and AI applications, has boosted spending on chipmaking equipment made by companies such as KLA. However, KLA's shares fell around 7% in extended trading despite the upbeat results. "The problem is that the stock had already sprinted into the print, hitting fresh highs with expectations that were arguably loftier than the published consensus," said Michael Ashley Schulman, chief investment officer of Running Point Capital Advisors. KLA faces an uncertain long-term outlook, with demand in China challenged due to government mandates on locally sourcing advanced chipmaking tech. Moreover, the U.S. has imposed restrictions on the export of advanced technology to China in an effort to prevent the Asian nation from using American tech to supercharge its military. "What KLA offered for the March quarter looks like steady growth rather than renewed acceleration," Schulman added. Peer Lam Research gave an upbeat quarterly forecast on Wednesday, bolstered by strong demand for chipmaking tools. KLA reported second-quarter revenue of $3.3 billion, beating analysts' average estimate of $3.25 billion, according to data compiled by LSEG. The company earned $8.85 per share on an adjusted basis, compared with profit estimates of $8.80 per share. KLA forecast third-quarter revenue of $3.35 billion, plus or minus $150 million, compared with estimates of $3.28 billion. It projected adjusted earnings per share of $9.08, plus or minus 78 cents, while analysts expect $8.94 per share. (Reporting by Zaheer Kachwala in Bengaluru; Editing by Shreya Biswas)