KLA Corp expects first-quarter revenue of US$3.15 billion, plus or minus US$150 million, surpassing Wall Street’s average estimate of US$3 billion.

The US-based chipmaking equipment supplier attributes this growth to strong demand for AI-supporting advanced processors.

For the quarter ended June 30, 2025, KLA reported revenue of US$3.18 billion and adjusted earnings of US$9.38 per share, both above analyst expectations.

TSMC contributed over 10% of KLA’s annual revenue as it expands US manufacturing, while China made up 30% of June quarter sales.

Despite China being its largest market, KLA anticipates weaker demand due to ongoing trade tensions and export restrictions.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ KLA’s growth trajectory reflects the semiconductor equipment industry’s golden age

KLA’s consistent financial performance demonstrates the exceptional opportunity in semiconductor capital equipment over the past decade.

The company’s net income has grown from approximately $600 million in 2010 to projected $2.5 billion by 2025, representing a compound annual growth rate of 10.5%1.

Their operating income has expanded even faster, from $700 million to an estimated $3 billion over the same period, achieving an 11.5% CAGR2.

This growth significantly outpaces most industrial sectors and reflects KLA’s 20% market share position in an industry experiencing unprecedented demand3.

The broader semiconductor capital equipment market supports this trajectory, with projections showing growth from $127.81 billion in 2025 to $155.09 billion by 20294.

KLA’s exceptional returns on equity consistently above 30% and their ability to increase dividends for over 10 consecutive years demonstrate how companies positioned in critical technology infrastructure can generate sustained premium returns56.

2️⃣ China represents both KLA’s biggest opportunity and greatest risk

KLA’s China exposure illustrates the complex trade-offs facing US semiconductor equipment companies in the current geopolitical environment.

China accounts for 30% of KLA’s total sales, making it their largest single market, yet the company explicitly expects “lower overall demand from China this year” due to trade restrictions.

This tension is particularly significant given that China’s semiconductor industry generated $179.5 billion in revenue in 2022, representing 16% of global output7.

The US has imposed strict export controls on advanced semiconductor technologies to China, while China has responded with export restrictions on critical materials like gallium and germanium essential for semiconductor manufacturing8.

For KLA, this creates a strategic dilemma: they must balance serving a market that represents nearly one-third of their revenue while navigating increasingly restrictive trade policies.

The company’s ability to maintain growth despite anticipated China weakness suggests their exposure to AI-driven demand from other regions, particularly through customers like TSMC, provides meaningful diversification from geopolitical risks.

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