科磊 (KLAC) 2027 會計年度第一季法說會：營收創新高與更強勁的 2027 年展望

重點摘要

• 科磊 (KLA Corporation) 公布 2027 財年第一季營收創下 41.4 億美元的新高，季增 13%，年增 29%。營收超越該公司財測區間的中點。
• Non-GAAP 營業利益率達 46.1%，為科磊史上首次突破 46%。毛利率為 62.7%。
• 管理層預估 2027 財年第二季營收為 47 億美元，上下浮動 2 億美元，顯示營收將持續季增。
• 科磊上調了 2026 日曆年晶圓設備市場（含先進封裝）的預估至 1,500 億美元中段。管理層目前預期該市場在 2027 日曆年將突破 2,000 億美元。
• 先進封裝製程控制系統營收仍可望在 2026 日曆年達到約 11 億美元，代表年增率將超過 70%。
• 管理層表示，在手訂單與銷售管道的可見度支持 2027 日曆年展現強勁成長，科磊預期自身的成長幅度將超越整體晶圓設備市場。

核心財務數據

除另有說明外，科磊列報之財務結果均採用 Non-GAAP 基準。

業務與營運表現

AI 基礎設施投資仍是核心需求驅動力。科磊指出，先進晶圓代工與邏輯晶片的需求持續強勁，同時先進元件與封裝對製程控制密度的要求也日益提升。

先進封裝製程控制營收預計在 2026 日曆年將達到約 11 億美元。這將代表超過 70% 的成長，管理層形容該增速幾乎是整體先進封裝市場成長率的兩倍。隨著混合鍵合 (hybrid bonding) 與邏輯封裝採用更多類似前段製程的製造程序，該公司也觀察到需求正轉向更高靈敏度的檢測。

服務業務營收達到 8.5 億美元，年增 14%。成長動能來自科磊持續擴大的裝機規模、設備生命週期的延長，以及客戶在高產能利用率下對機台生產力與可用性的重視。

記憶體需求正在強化，特別是在 DRAM 和高頻寬記憶體 (HBM)。管理層表示，隨著客戶更加優先考慮良率、效能與可靠性，製程控制密度正逐步提升。在部分產品中，科磊觀察到 DRAM 的製程控制密度已接近先進邏輯晶片的水平。

本季供應可用性有所改善，支持 2026 日曆年下半年營收照計畫加速成長。然而，產品平均交期仍維持在 12 個月左右，部分第 4 代與第 5 代產品線的交期則更長。

科磊計畫在製造、服務、應用、工程及設施領域進行追加投資。管理層預計未來幾年每年資本支出約為 6 億至 8 億美元，資金主要用於擴充產能。

中國市場預計將佔 2026 日曆年營收的 27% 至 29% 左右。管理層預期中國區營收成長速度將慢於公司整體，並在 2027 日曆年降至 20% 出頭的比重。

管理層財測

針對截至 2026 年 12 月止的季度，科磊提供以下 2027 財年第二季財測：

在來自半導體客戶的半導體製程控制系統營收中，晶圓代工與邏輯晶片預計貢獻約 60%，記憶體預計貢獻約 40%。在記憶體領域中，DRAM 預計佔約 84%，NAND 則佔 16%。

管理層預計未來數個季度的營收將呈現季增長。與 2026 日曆年上半年至下半年大幅加速的情況不同，公司目前預期 2027 日曆年的成長將更加平穩。

科磊的長期模型目標是隨營收成長實現 40% 至 50% 的新增營業利益率槓桿效應。管理層表示，當全公司成長率接近 20% 時，表現可達到該區間的上限甚至更高。

風險與關注焦點

居高不下的記憶體成本對毛利率造成壓力，因為科磊的檢測系統需要大量的影像處理記憶體。公司正在努力減少記憶體使用量、降低產品成本，並在新產品中納入基於價值的定價模式。管理層預計毛利率將在 2027 日曆年持續改善，並在 2027 年中至下半年延伸至 2028 年期間朝 63% 至 64% 的目標區間邁進。

產品組合結構也是利潤率的限制因素之一。先進封裝與非半導體製程控制業務的快速成長雖有助於挹注營收與毛利金額，但其利潤率往往低於核心半導體製程控制業務。

部分領域的供給仍小於需求，特別是交期較長的光學零件。儘管零件可用性正在逐月改善，但科磊表示，如果供貨更充足，公司在 2026 日曆年本可交付更多系統。

客戶的基礎設施狀況也可能拖慢設備交付進度。管理層指出，即使客戶要求加速發貨，無塵室建設、原料取得以及電力限制仍可能導致晶圓廠準備就緒的時間延後。

分析師問答焦點

管理層表示，科磊預計在 2027 日曆年的成長將超越晶圓設備市場。此前景獲得 2 奈米與 1.4 奈米先進邏輯投資、新建 DRAM 廠房設施、更高的 HBM 製程控制密度，以及先進封裝持續成長的支撐。

關於毛利率，管理層表示生產規模擴大、產品成本控制措施以及新功能的定價，應能逐步抵消高企的記憶體成本。在業務組合保持一致的基礎上，半導體製程控制的毛利率可能會在 2027 日曆年下半年開始回升至 60% 中段的水平。

管理層認為，科磊先前對 2030 年晶圓設備市場達 2,200 億美元（上下浮動 200 億美元）的假設目前看來過於保守。公司正與主要供應商討論延伸至 2029 年與 2030 年的供應需求，但並未提供修正後的 2030 年市場預測。

在裝機規模擴大與客戶高產能利用率的支撐下，管理層預計服務業務將繼續維持在其長期成長區間的高檔運行。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Good afternoon. My name is Stephanie, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the KLA Corporation September Quarter 2026 Earnings Conference Call and webcast.

[Operator Instructions]

I will now turn the call over to Kevin Kessel, Vice President of Investor Relations and [ Analytics ]. Please go ahead.

Kevin Kessel

Welcome to the September 2026 quarterly earnings call. Joining me are our CEO, Rick Wallace and our CFO, Bren Higgins, we will discuss today's results as well as our outlook, which we released after the market close, and it is available on our website along with supplemental materials.

We are presenting today's discussion and metrics on a non-GAAP financial based unless otherwise specified. All the full year [indiscernible] we make always refer to calendar years. The earnings material contains a detailed reconciliation of GAAP to non-GAAP results. Our comments today are subject to risk and uncertainties reflected in the disclosure of the risk factors in our SEC filings. Any forward-looking statements, including those we make on the call today, are also subject to those risks, and KLA cannot guarantee those forward-looking statements will come through.

Our actual results may differ significantly from the projected in our forward-looking statements. For any subsequent updates, please refer to KLA's IR website, which also contain investor events, presentations, corporate governance information and links to our SEC filings. We will begin the call with Rick providing commentary on the quarter and our overall business environment, followed by Bren with financial highlights and our outlook.

I'll pass the call now to Rick. Rick?

Richard Wallace

Thanks, Kevin. KLA's September quarter beat the midpoint of our guidance ranges across all key metrics. Revenue was another record $4.14 billion. This, coupled with our December quarter revenue guidance of approximately $4.7 billion demonstrates the growth acceleration we planned for the second half of 2026. KLA's performance in the quarter was supported the continued strength in leading-edge foundry/logic related to AI infrastructure investments and increasing process control intensity across leading-edge devices and advanced packaging.

Other highlights for the quarter include KLA operating margins above 46% of the first time ever. Gross margin was 62.7%, and free cash flow was $1.34 billion. Over the course of calendar 2026, the AI demand environment has continued to strengthen as reflected in our performance. Additionally, our strong customer engagement has provided visibility into a more favorable outlook for wafer equipment investment for calendar 2026 and 2027. We see this reflected in our growing backlog and sales funnel forecast.

We expect momentum across our business to continue into the December quarter and we're positioned to deliver significant growth in calendar 2027. We have been proactively working with our strategic supply chain partners over the past year to keep up with our demand. Advanced packaging remains increasingly critical to AI infrastructure expansion and advanced packaging road maps continue to incorporate more sophisticated wafer front-end processes, which drive additional process control requirements. KLA's leading process control portfolio enables the company to address these requirements across a growing range of applications. For calendar 2026, advanced packaging process control systems revenue remains on track to hit approximately $1.1 billion or more than 70% year-over-year growth, nearly twice the growth rate of the advanced packaging market.

The growing complexity of KLA's installed base and lengthening tool life cycles continues to increase demand for services. KLA services revenue was $850 million in the quarter up 14% year-over-year, supported by a growing installed base and continued customer focus on tool performance, productivity and availability in this tight system utilization environment.

Finally, KLA's process, PCB and component inspection businesses are also benefiting from technology transitions and the rigorous performance requirements of high-performance computing. In summary, KLA is experiencing strengthening momentum driven by growth across the semiconductor ecosystem. Pace of our backlog growth is a key signal of accelerating momentum and provides confidence in our visibility into calendar 2027. Our September quarter results demonstrate the strength of KLA's market position and operating model execution.

Semiconductors continue to play an increasingly important role across global industries with growth driven by investment in AI infrastructure and expanding demand across a broader range of applications and markets. Together, these trends are supporting stronger and more durable and more diversified long-term growth for the industry. Additionally, the growing complexity of AI-enabled semiconductors is increasing process control intensity throughout the manufacturing flow, reinforcing KLA's long-term growth opportunity.

KLA's differentiated portfolio is uniquely positioned to address these requirements, while sustained AI data center investment and broader adoption of advanced packaging architectures continue to expand the company's addressable market. As we look ahead, we remain focused on supporting customer road maps, investing in innovation and scaling our global capabilities to meet expected demand growth through calendar 2027. As we progress toward our 2030 target model we remain committed to disciplined execution, technology leadership and our proven capital allocation strategy and create -- which will allow us to create durable shareholder value.

With that, I'll turn the call over to Bren to discuss the quarter's financial highlights.

Bren Higgins

Thank you, Rick. KLA delivered strong sequential and year-over-year growth in the September quarter. For the first time in our company history, KLA delivered operating margins over 46%. Our market leadership and disciplined execution, supported by our global team's dedication and focus on customer success. Revenue of $4.14 billion was above the point of guidance and rose 13% sequentially and 29% year-over-year. Non-GAAP diluted EPS was $1.22 and GAAP diluted EPS was $1.18 and each above the midpoint of the respective guidance ranges. Gross margin was 62.7%, slightly above the midpoint of the guidance range. Operating expenses were $688 million including $395 million in R&D and $293 million in SG&A.

Operating margin rose 240 basis points sequentially to 46.1%. Net income was $1.60 billion, GAAP income was [ $1.5 billion ]. Cash flow from operations is $1.53 billion, and free cash flow was $1.34 billion. The company had [ 1.311 ] billion diluted weighted average shares outstanding for the quarter. The breakdown of revenue by reportable segments and markets, major products and regions, can be found within the shareholder letter and slides.

Moving to the balance sheet, KLA ended the quarter with $4.7 billion in total cash, cash equivalents and marketable securities and $5.95 billion of debt. The company maintains a flexible and attractive bond maturity profile supported by investment-grade ratings from all 3 major rating agencies. The industry outlook continues to strengthen, with visibility improving as customers increase long-term investment plans. Despite these [ flat space ] limitations, customers have been very resourceful and are accelerating delivery expectations across all segments. We are, therefore, raising our expectation for the wafer equipment market, including advanced packaging to approximately the mid-$150 billion range in calendar 2026. KLA backlog continues to grow, and our sales tunnel visibility is unprecedented, supported by new fab investments by a broad base of customers. We continue to plan for significant growth in calendar 2027.

While we'll have more to say about market and customer segment expectations for next year in our earnings call in late January, we currently expect the wafer equipment market to exceed $200 billion in calendar 2027. Customer engagement remains robust with numerous new fab projects and greenfield facilities scheduled to come online in the quarters ahead. The primary area of focus for our customers is on delivery urgency aligned with new project plans. Against this backdrop, KLA's business momentum and critical role in leading edge process control positions us to deliver accelerating growth for the remainder of calendar '26 and continuing into 2027.

Our expectations of revenue growth acceleration in the second half of '26 are playing out as more capacity comes online in our long lead time supply chain areas. This is resulting in growth in the second half of calendar year '26 over the first half of approximately 25% and positions the company for continued sequential growth into calendar 2027. KLA's December quarter guidance is for revenue of $4.7 billion, plus or minus $200 million. Foundry/logic revenue for semiconductor customers is forecasted to be approximately 60%, and memory is expected to be about 40% of semiconductor process control systems revenue to semiconductor customers.

Within memory, DRAM is expected to account for approximately 84%, with NAND representing the remaining 16%. As a reminder, these business mix approximations pertains solely to our semiconductor customers and do not fully reflect our total semiconductor process control systems revenue.

Gross margin for the December quarter is forecasted to be 62.5%, plus or minus 1 percentage point. While the company is demonstrating expected operating leverage across the business as it grows, this being offset by persistently high memory costs for our system image processing requirements as we have discussed in prior quarters. We are actively engaged across the portfolio to optimize memory efficiency in our systems along with other product cost reduction initiatives. These efforts, coupled with driving our usual returns-based value sharing with our customers should offset this headwind over time.

Operating expenses are forecasted to be approximately $710 million in the December quarter. We will continue to prioritize next-generation product development scaling our business execution and company infrastructure investments to support expected revenue growth over the next several years. And we anticipate these expenses to grow sequentially through 2027 but at a much slower pace than revenue growth and consistent with our business model for operating margin leverage.

As a reminder, our business model is designed to deliver 40% to 50% incremental operating margin leverage on revenue growth over the long run. Other model assumptions include other income and expense, debt of approximately $25 million spent for the December quarter, and we expect it to remain at approximately this quarterly level. Planning tax rate is 14.5%. Our tax rate will vary quarter-to-quarter due to the geographic distribution of profit and various discrete items. The December quarter, non-GAAP diluted EPS is expected to be $1.44 plus or minus $0.11. And GAAP diluted EPS is expected to be $1.41 plus or minus $0.11. EPS guidance is based on a fully diluted share count of approximately 1.306 billion shares.

In conclusion, process control and KLA in particular, remain critical to the AI ecosystem build-out and benefits from numerous ongoing relevance inflections, including increases in leading-edge designs across foundry and logic, device size and value, rising complexity and performance requirements and the growing importance of advanced packaging. KLA is experiencing strengthening momentum and a broader set of growth drivers across the semiconductor ecosystem. The rate and pace of our backlog growth is a key signal of our accelerating momentum and increased confidence in our visibility leading into calendar 2027.

Our September quarter results demonstrate the strength of KLA's market position and operating model execution and support continued confidence in our performance moving forward. These recent results also illustrate the strength of KLA's market-leading portfolio, disciplined operating model execution and continued confidence in improving our performance moving forward.

Looking ahead, we remain focused on supporting customer road maps, investing in innovation and scaling our global capabilities to meet expected demand growth throughout calendar '27 and beyond. As we progress towards our 2030 target model, we remain committed to disciplined execution, technology leadership, our proven capital allocation strategy and creating durable shareholder value.

That concludes my prepared remarks. Kevin, please begin the Q&A.

.

Kevin Kessel

Operator, can you just give the instructions, and we'll get started.

Operator

[Operator Instructions]

We will now take our first question from Jim Schneider with Goldman Sachs.

分析師問答

James Schneider

Good to see the accelerated growth in the back half. Relative to calendar 2027 in your view of $200 billion in WFE, obviously, you have some good things going for you with advanced packaging growth and so on. So can you maybe kind of articulate how you're thinking about the way calendar '27 shapes up and your level of confidence that you're going to be -- your ability to outgrow that 30% rough market number for 2027?

Bren Higgins

Jim, thanks for the question. When we look at 2027, and we've been saying this for quite some time as we think the construct for '27 sets up pretty favorably for us. First, we feel very good about our supply situation, right? We've been working at it for the last 12 months. We indicated we see an acceleration in the second half. Certain components [indiscernible] have very long lead times. And so getting that to come online was a bit of a challenge in the first half, and we're seeing that play through, and that certainly informs our confidence in the December quarter, but also our views into '27.

The setup for 2 even around the leading edge, both in terms of the breadth of investment the lead edge, new node investment. We think that sets up very well for the company, greenfield investment in DRAM. The HBM dynamics and how that's affecting process control intensity. We're also seeing uplift in process control intensity and conventional memory.

Advanced packaging has been a nice growth driver. I don't see any reason why as we look at next year that, that part of our business wouldn't continue to grow faster than the market. So we feel overall that the setup is very leading edge centric. Packaging is augmenting the growth, and we think we're well positioned, and our supply should be there to be able to enable us to meet the demand. Demand is strong. I would say that we're -- I'm still behind in supply, but I still -- I think that the trajectory is good, and we feel pretty confident about the guidance we've given.

James Schneider

Sorry. And sorry, just one quick follow-up. As you think about the way the shape of 2027 starts to materialize, anything to call out in terms of the back half of 2026 was certainly much stronger than the first half. Do you think it's going to be more ratable through 2027? Or you get, again, maybe being a little more back half loaded?

Bren Higgins

Right now, it's in the next several quarters, given the backlog growth and the visibility in the funnel that we'll see sequential growth for the next several quarters? Sort of implied second half stronger. I think it's more linear. I won't have the same, I don't think, as of now. The same significant uptick in half-to-half growth, it looks a little more linear to us, but we would expect sequential growth moving forward.

Operator

We'll take our next question from Harlan Sur from JPMorgan.

Harlan Sur

On the gross margin front, I know the team had some cost headwinds this year. Memory pricing headwinds, maybe GPU, CPU pricing headwinds as well. Moving into next year, I know the team has benefit of new platforms, which carry higher pricing? Obviously, you're going to be driving higher volumes, maybe you've got other value pricing initiatives taking place. Can we expect the team to buy back into that sort of 63% plus range on a strong WFE outlook in 2027?

Bren Higgins

Yes, Harlan, it's a good question. As you said, there are some new parts in it. When you look at the target range, right, our target range that we outlined back in March and Investor Day was 63% to 64%. Certainly, some of the cost inputs have been challenging. We're doing a lot of work inside the company, both in terms of broader input costs but also memory, I'll call memory optimization work in terms of our use of memory in our systems. There'll be some mix dynamics looking forward, right? We do have more advanced packaging growth. We have growth in our non-semi PC businesses. So that tends to be a bit of a headwind to the overall margin, although contributor to both revenue growth and gross margin growth.

Scale will offset some of that. We'll see some manufacturing scale given the strong revenue growth environment. And some of our pricing initiatives, we think, similar to what we're hearing from peers, we think that, that will play through as we introduce new capabilities, and we're able to share in the value of those capabilities with our customers. So I think as we move forward, the memory environment will continue to be challenging. But I think as we go forward, we'll see improvement. I don't know exactly when we'll start to see it. But I think as we move through '27, certainly, as we move into the middle to the back half of '27 into '28 will be, I think, consistent with the operating model for gross margin that we laid out back in March.

Harlan Sur

I appreciate that. And then on the non-AI kind of more legacy node segments, auto, industrial, IoT, obviously, cyclical dynamics are strong. Supply is tightening at a very, very rapid pace. And we are seeing new capacity [indiscernible] has been announced since is this contributing to the strong growth outlook next year? And maybe what percentage of your process control systems business is mature and specialties.

Bren Higgins

Yes. I would say around power. I mean power is certainly something that is an area of focus in the industry and there was obviously -- there was a period of time where there was some overinvestment there, but I'm starting to see some indications of some recovery in that part of the market. Obviously, what's driving the business in a more significant way as everything related to high-performance compute. But when I look at the customers that we are serving, I do think that I'm seeing some improvement. So I think year-to-year, there's some growth. I don't think it will be at the level of what we expect from the leading edge. And you'll have activities in China, which will grow, but I don't think we'll grow -- we'll grow at a much slower rate. And so I think when you look at the overall legacy, I would expect to see some growth there. there. But the business is really being driven by what's happening at the leading edge. But I think that there's opportunities for us to augment growth moving forward from some more business in that part of the market.

Process control intensity tends to be lower in legacy nodes. If an established node, it's fairly mature unless our customers are changing designs, or design rules or have new reliability requirements that could drive inflections in intensity. But the intensity levels in legacy are lower than what they are at the leading edge.

Operator

We will take our next question from C.J. Muse with Cantor Fitzgerald.

Christopher Muse

I guess a follow-up, Bren, on the gross margin side. If we isolate just to process control, you were north of 65% in June of '25. And obviously, as you've talked about, major headwinds from DRAM, in particular. But curious, as those contracts roll off and you kind of move to new contracts, should we start to see better pricing as you pass that incremental along? And is there kind of a time frame where you see process control getting back to kind of that mid-60s level?

Bren Higgins

On a consistent mix, I can see it trending there as we move into the second half of '27. We start to do deals around new products beyond the existing business that we have. It's very difficult to go increase prices on existing business and existing backlog. So I think as we move forward, I don't see any reason why assuming mix is consistent that we won't start to see some improvement in the process control part of the business apples-to-apples.

Richard Wallace

And also, C.J., Bren mentioned in the last answer, but I'm not sure you heard it was that there are -- there is work going on to utilize less memory in the systems engineering work, which takes some time to do it. But when we design these systems, nobody really imagined the kind of increase in memory costs. And I think the common response to that is to make the systems more efficient around using memory before that will drive that percent content down over time. It takes a while for those to get in.

Christopher Muse

Very helpful. And I guess as a follow-up, -- can you kind of talk about what you've seen in the last kind of 3 to 6 months from a lead time perspective and how that informs kind of your outlook into 2028? And how you're thinking about hiring and what kind of work specifically on the supply chain to get ready for this multiyear growth cycle?

Richard Wallace

Yes, C.J. The conversations we've had with covers the last few months have been very consistent in that there is a huge request that we prioritize their projects. And they're laying out multiple-year investment cycles with an expectation that will support them through those ramps. So when we look out at the 2030 model that we laid out before, obviously, the assumptions in that model are going to be exceeded before 2030. So there is a significant amount of investment that we need to do pretty much across the board with talent but also with facilities and our investment in supply chain. And so Bren can share some of his perspective on that.

Bren Higgins

Lead times, I would say, [ Lisa ], and they vary by product, but we're averaging right around 12 months or so. And I would say that on the margin, they're extending certain products, it can be even further out than that, for example, Gen 4 and Gen 5 product lines. will have longer lead time. So it does vary. But I think we're in a pretty good position, as Rick said, to support it. I mean, we're making investments across the board. We'll add head count, both in manufacturing and service in the volume-centric parts of the business and applications and engineering over the course of the next 12 months. We're investing in every factoring cap. And so there are expansion plans, not only near-term requirements and doing things quickly, but also supporting what we believe will be a multiyear investment cycle here.

So we're encouraged by that in supply chain, particularly in those areas of long-term or long lead time items, particularly in the optics area, we are working with our key suppliers to make investments -- the investments show up in different forms, but also investing to support what we expect to be a very strong outlook over the next several years.

So there's a lot of activity going on. Obviously, that flows through our numbers activity that's supporting future revenue streams. But we think that, first of all, contemplated in the model and the guidance we've given. But certainly, a lot of focus in those areas.

Operator

We'll take our next question from Timothy Arcuri with UBS.

Timothy Arcuri

Bren, you did a really nice job this year only losing like 20 basis points worth of WFE share despite what was a pretty bad mix actually. It sounds like you think WFE is going to grow like low to mid-30s next year. and your lead times are 12-plus months. So you know like exactly what you're going to ship next year. So are you going to grow more than that? Will you grow more than low to mid 30, so you'll grow so you're gaining share next year gain dilute share?

Bren Higgins

Yes, Timm, on '26. I think the second half momentum highlights where I think the business is trending now. I mean the first half was weaker. And wasn't so much mix of business as much as it was just our ability to supply it. The backlog is pretty significant. If I had -- I've been short all year, I'm short now. So I feel that as we look at 2027. We feel pretty good. I talked about the setup, which I think is encouraging, but we feel pretty good about our ability to maintain and drive the growing ALA relevant story that we outlined at Investor Day. The parts of the market that are inflecting are very good for process control, we think they uniquely benefit process control.

And we think that, that as we are in a better position to supply and meet the demand that we can maintain the trajectory that we laid out. It doesn't mean it happens in every 6-month period or every quarter, but we think over time, similar to what we saw over the last 5 years, the next 5 setup is pretty strong. And we feel pretty comfortable about our views of share of market growth over the next -- between now and 2030.

Richard Wallace

So we think we can outgrow next year, Timm.

Timothy Arcuri

Got it. And then, Rick, I wanted to ask you about DRAM. So it's up like $450 million in December. I mean that's the plan. Your DRAM share is like 6% of WFE share. So that's like $10 billion of like DRAM WFE right there. Is there something unique going on? I know there's some big new fabs that are starting to get equipped. Is it as simple as that? Or is maybe your inspection intensity going up in DRAM. I mean that's just -- I mean I don't think I've ever seen you grow DRAM systems that much. So can you speak to that?

Richard Wallace

Yes. Intense definitely going up. I mean there's no question that we started seeing this a while ago, and I think it took a little while for our customers to fully understand and appreciate the challenges of making these advanced devices and given their supply shortages, the incremental value of yield. And so if you think back to how memory worked years ago, it's a pretty different world where anything they could squeeze out in terms of yield but also the performance expectations are much higher as these go into these mostly commercial operations. So yes, it's an intensity improving, and we see that continuing as we go forward.

Bren Higgins

I think the greenfield opportunity is also driving a retooling of fabs and retooling in a way where, to Rick's point, our customers' profitability levels are pretty high. And so yield is equivalent to printing money in some ways. So I think there's renewed focus there. I think that the road maps are driving the need for more investment, the performance requirements are more stringent, particularly when you look at like HBM, for example, and less redundancy, I/O counts, logic and base die, all these things are driving opportunities in this part of the market.

In some products, we see intensity levels in DRAM that are similar to leading-edge logic. So the market is definitely shifting there. And I think the new fabs is an accelerant to our views of growth. If you look at the second -- in 2027, we expect overall memory to be about 60% of our -- of the business. And in an environment, where to Rick's point, we feel pretty confident about our ability to perform pretty well relative to the overall market. So it's definitely changing in terms of the way you used to think about the business historically and at least in terms of the DRAM impact.

Operator

We'll take our next question from Krish Sankar with TD Cowen.

Sreekrishnan Sankarnarayanan

I can follow up on the last question on DRAM. You said from [indiscernible] WFE next year. The 2 big drivers this year was design and leading-edge foundry, as will be the same next year. I understand -- so is this mainly because greenfield and DRAM is coming in and leading-edge foundry/logic is going to [indiscernible]. Others are 2 key early specific drivers for outperformance next year, besides advanced packaging? And then I have a follow-up.

Richard Wallace

So Krish, let me clarify. You're saying if the same drivers are the same, why would it be different? Is that your question?

Sreekrishnan Sankarnarayanan

I'm just wondering is the mix shift going from DRAM from brownfield greenfield and logic going from 3 to 2.

Richard Wallace

So I think -- yes, those are drivers. But the other thing is we just weren't set up in the first half to be able to support assumptions go back 12 months, we're not the kind of growth rate we saw in fact, we even talked about -- we thought the growth was going to be happening in '27, but '26 was going to be pretty flat. So it took a little while to get things going in '26, which is why you're seeing our accelerated growth. Now the demand is in there. And the demand will continue as the technology nodes continue. And as we said, packaging is growing and outgrow the market next year. So I think it was more -- it was not a demand question for us as much as in the first half of '26, the supply question. Bren?

Bren Higgins

No, I think you covered it, Rick. Look, the new facilities will, I think, create an opportunity for us that will drive some incremental as customers are setting up a new facility in a market environment that is both challenging from a complexity point of view, but also where yield is critical.

Sreekrishnan Sankarnarayanan

Got it. Super helpful. And then just my follow-up. I understand lead times are extending. But in general, like besides ASML, KLA is at of the unique position that you always have long lead times. I'm just kind of curious, one of the views from some folks in the industry is that [indiscernible] could be the peak WFE a few years out. I'm just wondering from what you are seeing, given the fact that you have embedded [indiscernible] than us, kind of like how high do you think WFE can grow? Obviously, there is [indiscernible] and Terafab, but obviously, it's also specific to how good the yield of your customers are.

I'm just curious, from your vantage point, what do you see the WFE potential leading to.

Bren Higgins

For 2030. Look at Investor Day, we talked about a $220 billion plus or minus $20 billion view. And back then, where a lot of folks, I think, thought generally that was generally a middle of the road kind of plan. I would say today, it looks like a very conservative one. So we're certainly more optimistic about higher levels of industry investment. We think the flow-through and thesis in terms of KLA's participation in that is the same.

And as we think about these growth scenarios, certainly given the lead times on some of our products and the parts that go into them, we have to contemplate those in terms of preparing our supply chain for those outcomes. We are having deep conversations with our -- some of our key suppliers about our needs in 2029 and 2030 in that time frame. So we're trying to [indiscernible] the company to make sure that we can continue to drive the company consistent with the way we laid it out and support those higher-end scenarios that are being discussed in industry.

Operator

We'll take our next question from Stacy Rasgon with Bernstein Research

Stacy Rasgon

The first one, I like to go back to that 2030 model. So I mean you're basically there on WE next year. You're there at the high end or maybe a little above on the operating target. But what stops you in that WFE environment from getting to the revenue that you talked about in 2030 next year? We saw the equipment side? I understand maybe services and some of the other stuff takes a little more time to ramp up. But just supply, is it like the mix of demand? Like why shouldn't I be looking at a 2030 model more into the '27 time frame in your earning.

Bren Higgins

Well, so there were assumptions underneath that. I mean, first, there was a growth rate assumption around service, which, to your point, we won't be there. And that was based on aggregate installed base growth that will contribute to that. You also have the non-semi PC part of the business and the expected growth rate there. Within semi PC, underneath the number was an expectation of share growth over the next few years of a few points and then overall share of market would slowly tick up to -- from 2025, which was about 7.5% of overall wafer equipment to closer to 9%. So we're not there yet.

But in terms of how the financial model works underneath it, I don't see any reason why the financial model would not perform consistent with the way we laid it out. at that growth is more demand from the same customers for a lot of the same products. So I think we feel pretty good about the way the financial model will perform. Obviously, there are things like share count and other things that go into an EPS assessment, but at least from a top line point of view, I think -- see more or less assumptions that are implicit in that we're going to drive to over the next few years that we're not there yet. But in terms of the overall market and the current [indiscernible], that flows through.

Stacy Rasgon

Got it. My follow-up, maybe to dig into that financial model. So you've talked about 40% to 50% incremental operating margin. I think we filed that out in the shareholder letter as well. But again, you're already running even close to the high end of that range. So if you get operating leverage from here, it sort of implies that the incremental operating margin needs to be above where you're running today. So I mean into the high end of that or you can hire. Is there any reason I shouldn't think about that incremental operating margin range to be structurally higher given where things are running right now?

Bren Higgins

It depends a lot on year-to-year growth rates, right? So if you look at in a more normalized growth rate environment, we'll perform at the midpoint or so of the range. If you look at over the last year with revenue growth of 25%, and you take the guidance we gave for Q4, that puts you slightly above the top end of the range. And if you think about 2030, given expectations for growth in 2030, I would expect we'll be beyond that.

So it was more of a marker to give some sense to our shareholders and investors about how to think about how we're going to scale the company, what kind of leverage rises through the model. But if we're looking at growth rates for the whole company that are closer to 20%, then I would expect will perform more in line with the top end of the model or better. But that's just long term, how we think about it, how we make investment decisions, how we size it. And then if the industry turns out to be stronger, then that drives upside.

Operator

We'll take our next question from Joe Quatrochi with Wells Fargo.

Joseph Quatrochi

I was curious, your CapEx, I think, this quarter was the highest I think you ever seen it. I wonder if you could just kind of give us some color on what was driving that? Was there just related to supply chain dynamics or something else?

Bren Higgins

Well, in the quarter, we made a significant land purchase in India to build a new campus there supporting our long-term growth. So, that was a large portion of CapEx. Now I do expect our CapEx -- I think as I laid out at Investor Day, I talked about 2% to 3% of revenue going forward, but of course, revenue is growing. But on an absolute dollar basis, I would expect our CapEx to trend up over the next few years, somewhere between $600 and $800 million per year. As I said earlier, we're investing at every site. And so I would expect CapEx to trend north. It will be mostly around our capacity. There will be some things, obviously, we're doing in supply chain. But what the big needle mover is in the KLA space.

Joseph Quatrochi

And then the services business, I think you talked about operating at the high end of your long-term growth algo this year. Is there any reason that, that wouldn't be the case in 2027? Or how do we think about the growth in '27 for services?

Bren Higgins

Yes, no room to think that, that wouldn't be the case. I mean given the growth in the industry and what we're adding to the installed base, our systems are running at very high utilization, the value of yield in this environment. Service, I think, is in terms of the target range, we're likely to operate here moving forward towards the higher end of the range.

Operator

We'll take our next question from Melissa Weathers with Deutsche Bank.

Melissa Weathers

I wanted to go back to the supply chain side of things. You guys are as you said, you've been working on this for over a year. So -- and maybe some of your competitors are just now starting to see some more acute shortages. Can you just -- like what inning would you say we're in, in terms of you guys expanding your supply? Do you see risk of further like through the worst of it? Just where do you think we are in that process?

Bren Higgins

Yes. I talked about since at Investor Day. I think when you look at our supply, given the nature of some of our components that what drives our ability to ship is typically around optical components. And those have the longest lead time now we run into all kinds of small issues. But once we set the volumes get set by those high-end components. And so we just -- I think the supply chain team does an excellent job here managing all those little issues as they happen between the time that we get things scheduled and we ship tools.

In an environment of very strong growth. I think everybody runs into challenges of working through hedges and buffer stock and excess inventory. And then when you start living hand to mouth in terms of what your suppliers can provide, and there's a lot of demand there that it starts to create challenges. I think for KLA, we don't really compete for the things that matter the most to us. We don't compete with any of our competitors. We compete within KLA sometimes for those components. But once we have the ability there, it tends to be pretty reliable. And then we [indiscernible] component issues that happen along the way.

Melissa Weathers

So I guess your December quarter outlook, is that supply continued at all? Like could that -- not that I'm complaining, but -- could that have been higher if you had more supply? And then same thing with the over $200 billion WFE outlook, is that like you have in sight to that supply at this moment? Or like, I guess, how constrained is...

Bren Higgins

I kind of live in reality here. I don't get wrapped up into what ifs. It's what can we ship and what -- how is our supply chain as this translates into how we provide the guidance. As I said earlier, move rates on key components are increasing month by month. And so that informs not only what we expected to see in December, but how we're thinking about 2027. I would say, over the course of this whole year, I could absolutely have shipped more. My demand was ahead of my supply, but I do think we're in a position we're moving forward, we're seeing incremental supply come online and that is informing the visibility and guidance that we've given.

Richard Wallace

Yes, I think, Melissa, one thing to add, is Rick. I think that for some customers, they can say that they want deliveries and then they find us they've got delays themselves in terms of facilities. So it's not just the equipment, it's the readiness of the fabs. And so I think if you look out over time, yes, could you ship? Yes, maybe, but it doesn't mean they can utilize it right away. So that's why I think the -- when people talk about, can you be there to support the industry, it's really you need all the equipment suppliers to be able to do it, you need the facilities. You need to build so longer than just can the equipment guys ship.

So there's a case of a couple of customers right now that have asked for some deliveries and then they're on hold because they're waiting for their facilities. Does that make sense?

Operator

We'll take our next question from Chris Caso with Wolfe Research.

Christopher Caso

I just want to ask a follow-on to the capacity question as well and maybe in 2 parts. And one is, as we look in the business and let's say, let's look into '28, do you think that the [indiscernible] or more in your supply chain. And then for '28, I guess most of us are expecting a pretty significant acceleration in '28, our continued growth in '28 as customers have more clean room space. Are there any impediments to that, that you see in preparation time here?

Richard Wallace

Yes. I think, again, if you go and look at the history of a lot of these build-outs, people can have these plans, but then they get into delays when they're building clean rooms. There can be delays in having enough [indiscernible] look across the supply chain over the last several years, there have been plans that have been delayed over time and equipment can part of it, but it's only part of it. So our customers are sending very clear messages that they want to bring on these additional fabs and to do these build-outs.

But we have to kind of move in constantly, which is why you often find like we're part of a group that will be a supplier days for all these customers, and they'll be talking about the [indiscernible] plans. So they can have -- right now, it's theoretical how big it's going to be. But as you get closer to it, we'll see it build out. So it's not as simple as we're going to be late because we're working very closely with those customers as they're building.

As I mentioned, there's one customer right now that's desperate for more capacity, and they can't take equipment because they're clean room is [indiscernible]. And that's because they don't have -- so the bottleneck moves around bottleneck could be construction. It could be the fact that they can't get certain raw materials or they can get power. So you kind of have to look at it collectively in terms of -- it's a little bit like the challenges associated with data centers, it's not just the data center, it's the power for the data center, they have it. So that's why I think, yes, this industry is going to keep growing. In some ways, it's going to prolong the rate of growth because it's harder to add on as much capacity as some people are envisioning for example, for 2028. But it does, I think, mean we're going to have a longer cycle in terms of the growth.

So our motto is we're not going to be the constraint. We've said we're not going to be the bottleneck. We might have periods where we're a little behind. As Bren said, we'd like to ship. But we're doing everything we can working with our customers, with suppliers so the KLA is not the bottle back. It doesn't mean there won't be bottlenecks. It's just our goal is not to be the bottlenecks.

Bren Higgins

And we can do anything inside the company generally within the time fence it gets established within our long lead time components. What I mean by that is that we can hire the people we need. We can drive the facility utilization. Obviously, CapEx decisions around new facilities is a long-term process, which is why we're making the investments but you can also run extra shifts and so on to ensure that we're driving facility utilization.

So we are never in a situation where we're the bottleneck to Rick's earlier point. So I feel pretty very good about what -- how KLA is positioned and if we can do anything inside the company that within the time [indiscernible] established by our long lead time components.

Christopher Caso

That's a helpful clarification. As my follow-up, I'll ask about China. And it looked like it was up significantly in the quarter. I know that revenue tends to be lumpy. Can you talk about what your expectations are for China? What's embedded in the Q4 guidance and what your thoughts are for the China business as you head into next year?

Bren Higgins

Yes. It will come down in Q4. As I said, actually, I think I've been saying that since March is I thought that China as a percent of the total would be in the high 20 percentile. So we'll call it somewhere between 27% and 29%. And I still believe that, that, therefore, implies that the fourth quarter is in that similar range given what we've done in the previous 3 quarters. So it did pop up a little bit in September. But China is growing at a much slower rate than the overall business. And so it's coming down as a percent. And I think in 2027, that will continue. I expect China will likely grow a little bit, but not at the same rate as the growth -- and we're probably operating somewhere, I would say, in the low 20th percentile in 2027.

Now within our numbers, there's also our non-semi PC that also has business in China there is more PCB type investment that happens in China, component inspection in China. So it probably skews the numbers a bit up a little bit, but not much. So I think the numbers I provided give you, I think, enough directional clarity about where the business is today and where it's going.

Kevin Kessel

Operator, can you take the next question, please?

Operator

Yes. My apologies. We will go next to Shane Brett with Morgan Stanley.

Shane Brett

First question is on advanced packaging. At Investor Day, you mentioned that [indiscernible] is the workhorse packaging. We have the next 3 systems already ready. Are your customers requiring higher sensitivity tools? And if so, can you talk about the competitive environment at these higher sensitivity level?

Bren Higgins

Well, the advanced package, it's been flexing because of the move to more front-end like processes. Most of it, to your point, has been in the macro products. And we think the road map for those products, we're well positioned there. You are seeing more hybrid bonding and logic devices, which is driving the need for greater levels of sensitivity. We also talked about that at Investor Day. So you start to move from micron level sensitivity down to it does drive the need for -- so when we talk about our overall passes is starting to trend more towards higher-end systems. So the macro products are still [indiscernible] to use your work [indiscernible] the workhorse, but we're seeing, in some cases, some Gen 4 for packaging requirements. So to be an opportunity for KLA. We've been able to leverage a lot of the R&D that we've done across the more advanced platforms. And so we think we're very well positioned with proven products that can meet the higher-end requirements, and our customers understand that capability well.

So we think we're pretty well positioned in terms of of the growth opportunities in that part of the market.

Shane Brett

Got it. And my follow-up on logic. I know you assessed note-to-note share gain after a certain wafer start volumes installed. But internally, is there a preliminary expectation on your share gains from 2-nanometer, 1.4 nanometer. Are there any part of your product portfolio where you think the financial market would be surprised on just the magnitude of share gains?

Bren Higgins

We think the trend is in the right direction. I mean one thing about the next-generation nodes is they're starting to tune those nodes for high-performance compute requirements. And those required some of the more advanced capabilities and more sampling steps because of the value of the die. So with high-performance computing, you have large die, they're very valuable defect density is a challenge. You also have a very rich design environment. All those are good contributing factors. I don't have a point position to give you in terms of the directional trend, but we feel pretty good about the ability to continue to grow our share of the market, no to note.

Richard Wallace

And I think our relevancy with the linkage we have to our optical becomes more pronounced. And so as much [indiscernible] as it is adoption, those investments were made to really -- they'll show up more as we go to smaller designs.

Operator

And we will take our final question from Timm Schulze-Melander with Rothschild & Company Redburn.

Timm Schulze-Melander

Questions, one for Rick and one for Bren. Maybe the first one, just comparing '27 to 2026. When you look at the CapEx that we spent on it or is being spent on established nodes this year as a percent of the total market and you look forward to 2027. Can you just maybe describe how -- and I have a follow up.

Bren Higgins

Investment in 2 nanometer is -- I think, 2-nanometer and 3-nanometer the focus in logic, you'll see more there. You'll also see some investment in the next generation of 1.4. So as I do have any of that more advanced investment, and it was more 3-nanometer centric in '26. So I think it sets up, I think, good for us constructively in terms of just more 2-nanometer and more leading-edge investment at 1.4.

Timm Schulze-Melander

Very clear. And maybe just -- and then maybe one on [ memory ] in 2027. You've discussed your engineering strategy about how you're going to address that memory kind of impact your bill of materials. Can you just maybe talk about what your purchasing strategy is for '27 for memory, please?

Bren Higgins

Well, certainly, our focus early on and through this year has been mostly around in supply when things started to ramp in early '26. We felt pretty good about ensuring we had the supply which was no easy feat generally because of the constraints in the overall industry. And as demand has strengthened, we've had to go out and buy more at higher prices, less concerned about supply, but certainly, we're exposed to the pricing market and that informing the commentary that we've provided. But I think from a supply point of view, we feel pretty good about the supply we've secured to meet the requirements we have going forward.

Operator

This does conclude our question-and-answer session. I'd like to turn the program back over to Kevin Kessel for any closing remarks.

Kevin Kessel

Yes. thank you, everyone, again, for your interest in KLA. We know it's a very busy earnings day. There questions. Hopefully, we can connect here after the call in our call backs. And with I'll turn it back to the operator to formally close the call.

Operator

Thank you. This concludes the KLA Corporation webcast. Please disconnect your line at this time, and have a wonderful day. Goodbye.