A maker of the inspection and measurement tools chipmakers use to spot defects in the wafers, reticles, and circuits that power phones and computers, KLA is one of the world's largest suppliers of semiconductor process control. It began in 1975 when Ken Levy and Bob Anderson founded KLA Instruments, taking the name from their initials, and it became KLA-Tencor after a 1997 merger before simplifying back to KLA in 2019. Fun fact: insiders jokingly recast the acronym as "Keep Learning Always."
10-K · Fiscal year ended Jun 30, 2026 · SEC filing ↗
KLA FY2026 revenue rose 12% to $13.58B and net income rose 19% to $4.83B, but gross margin faces pressure from DRAM chip costs and tariffs.
KLA's growth engine shifted from a broad AI increase to a memory-driven cycle. rose 12% to $13.58 billion and rose 19% to $4.83 billion, as the prior-year's $239 million did not recur and widened 3.1 points to 41.3%. The company enters FY2027 with a record $12.57 billion but warns that escalating DRAM chip costs and tariffs will pressure gross margins.
Key takeaways
rose 19% to $4.83 billion, aided by the absence of the $239.1 million pre-tax and purchased intangible asset charge that hit the PCB and Component Inspection in FY2025.
Semiconductor Process Control rose 12% for the year, but the quarterly growth rate decelerated from 31% in Q3 FY2025 to 13% in Q1 FY2026 and 9% in Q2 FY2026, before ticking back to 13% in Q3 FY2026 as memory demand strengthened.
Section summaries
Business
KLA provides advanced process control and process-enabling solutions for semiconductor and electronics manufacturing, organized into three segments.
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The Semiconductor Process Control supplies inspection, metrology, and software for IC, wafer, and reticle manufacturing.
The Specialty Semiconductor Process sells vacuum deposition and etching tools for MEMS, RF, and power semiconductors.
The PCB and Component Inspection offers inspection and direct imaging systems for PCBs, IC substrates, and packaged ICs.
Services accounted for approximately 23% of total revenues in fiscal 2026, focused on maintenance and productivity.
expanded 0.4 points to 61.3% for the full year, but the quarterly trend reversed: after peaking at 62.0% in Q2 FY2025, it slipped to 61.1% by Q3 FY2026 as unfavorable product mix, higher installation and warranty costs, and tariffs began to outweigh volume .
China fell to 30% of total sales from 33% in FY2025 and 43% in FY2024, as U.S. export controls continued to constrain shipments, while Taiwan and Korea customers drove growth through leading-edge foundry/logic and memory investments.
The company returned $3.35 billion to shareholders through $2.29 billion in stock repurchases and $1.06 billion in dividends, while was essentially flat at $4.14 billion, up only 1.5% .
rose to a record $12.57 billion, up from $7.86 billion a year earlier, driven by AI infrastructure demand, with 71-76% expected to convert to within 12 months.
What changed
The $239.1 million in the PCB that was flagged as a watch item in FY2025 did not recur in FY2026, removing a major drag on .
The deceleration in Semiconductor Process Control growth that was flagged in Q1 FY2026 continued: quarterly growth fell from 25% in FY2025 to 13% in Q1, 9% in Q2, and 13% in Q3, settling into a lower but still double-digit pace.
The pressure from DRAM chip costs that management warned about in Q2 FY2026 materialized in Q3, with margin slipping to 61.1% from 61.4% in Q2, confirming the that is expected to persist into FY2027.
China concentration fell further to 30% from 33% in FY2025 and 43% in FY2024, as the export controls flagged in prior filings continued to reshape the geographic mix without triggering the feared customer deposit refunds.
The One Big Beautiful Bill Act and OECD Pillar Two adoption in Singapore, flagged as potential tax-rate drivers starting in FY2027, remained a forward-looking risk with no material impact yet in FY2026.
What to watch
Q1 FY2027 from the 61.1% Q3 FY2026 level as escalating DRAM chip costs for image computers, tariffs, and product mix shifts continue to flow through — management has explicitly warned of pressure in calendar 2026.
Whether the record $12.57 billion converts to at the expected 71-76% rate within 12 months, or if export controls or customer pushouts cause slippage.
Semiconductor Process Control growth rate after the 13% Q3 FY2026 increase — whether memory-driven demand sustains as prior-year comparisons get harder and China exposure continues to shrink.
Impact of the One Big Beautiful Bill Act and OECD Pillar Two adoption in Singapore on the , which management has flagged as a potential material increase starting in FY2027.
International revenues represented approximately 87% of total revenues in fiscal 2026, with Taiwan Semiconductor Manufacturing Company Limited as a greater than 10% customer.
increased to $12.57 billion as of June 30, 2026, driven by AI infrastructure demand.
Export controls on China, tariffs, and customer concentration are the most material risks that could significantly harm revenue and operations.
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Escalating U.S. export controls, particularly the 2022-2025 BIS rules targeting advanced semiconductor manufacturing in China, have already reduced China from 43% to 30% of total sales and may cause further declines or require refunding customer deposits.
New and proposed U.S. tariffs, including a Section 232 investigation into semiconductor imports, increase costs and create supply chain uncertainty, while a February 2026 Supreme Court ruling adds volatility to the tariff landscape.
A highly concentrated customer base, especially in foundry/logic, increases exposure to order cancellations, pricing pressure, and individual customer financial health, which could materially impact and margins.
The company faces significant operational risks from a global DRAM chip shortage that is expected to continue hurting gross margins in fiscal 2027, and from Chinese export controls on rare earth elements critical to its products.
The ongoing upgrade of the company's ERP system, expected to complete in early fiscal 2027, presents risks of data migration issues, operational disruption, and financial reporting difficulties.
The company's leveraged capital structure, with $5.95 billion in outstanding Senior Notes, and its use of interest rate swaps to convert $2.00 billion of fixed-rate debt to floating-rate, expose it to rising interest costs and refinancing risks.
Our headquarters are located in Milpitas, California. We own and lease facilities worldwide that support our manufacturing, R&D, sales, service and administrative activities. Our principal manufacturing operations are located in the U.S., Singapore, Israel, China and various loc…
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Our headquarters are located in Milpitas, California. We own and lease facilities worldwide that support our manufacturing, R&D, sales, service and administrative activities. Our principal manufacturing operations are located in the U.S., Singapore, Israel, China and various locations throughout Europe. Our principal R&D activities are conducted in the U.S., U.K., India, China, Singapore and Israel. We also maintain sales and service facilities in major semiconductor manufacturing regions around the world to support our global customer base. We believe our facilities are well maintained and suitable for their intended purposes and that our existing manufacturing capacity, together with planned expansions and operational improvements, is adequate to meet our current requirements and expected near-term growth. Because many of our facilities support multiple business activities and technologies, we do not identify or allocate property assets by operating segment.
The information set forth below under Note 14 “Litigation and Other Legal Matters” to our Consolidated Financial Statements is incorporated herein by reference.
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The information set forth below under Note 14 “Litigation and Other Legal Matters” to our Consolidated Financial Statements is incorporated herein by reference.
FY26 revenue rose 12% to $13.58B on AI-driven foundry/logic and memory demand; gross margin expanded to 61.3%.
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Total revenues grew 12% to $13.58B, led by a 10% increase in product and a 16% increase in service revenue.
Semiconductor Process Control rose 12% on leading-edge foundry/logic, memory, and advanced packaging investments tied to AI and HPC.
PCB and Component Inspection increased 21%, driven by advanced packaging and PCB demand, partially offset by the prior-year exit from the Display business.
improved 40 to 61.3%, helped by higher volume and manufacturing efficiencies, partly offset by product mix and higher tariff and warranty costs.
was $4.14B; the company returned $3.35B to shareholders via $2.29B in repurchases and $1.06B in dividends.
Looking ahead to FY27, management expects continued growth as customer engagement and demand signals strengthen.
Quantitative and Qualitative Disclosures About Market Risk
Market risk arises from fixed-income, debt, equity, and FX exposures, managed via derivatives and swaps with quantified sensitivity.
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A 100 rate rise would reduce the $2.84B fixed-income portfolio's by $29.7M.
$2.00B of fixed-rate Senior Notes are swapped to floating; a 100 hike would add $20.0M in annual .
The $46.8M publicly traded equity stake could lose ~$23M in value under a hypothetical 50% price decline, with no hedging used.
Net forward/option contracts to purchase $497.4M in foreign currency hedge exposures; a 10% adverse FX move would lower contract by $158.1M, offset by underlying gains.
The undrawn $1.50B carries a 5.5 ; credit-rating-driven fee changes are deemed immaterial.
KLA's FY2026 revenue grew 12% to $13.58B, net income rose 19% to $4.83B, and total assets increased to $17.95B.
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Total revenues increased to $13.58 billion in FY2026 from $12.16 billion in FY2025, driven by growth in both Product and Service .
rose to $4.83 billion, or $3.66 per diluted share, compared to $4.06 billion, or $3.04 per diluted share, in the prior year.
Cash and cash equivalents decreased to $1.65 billion from $2.08 billion, primarily due to $2.30 billion in common stock repurchases and $1.06 billion in payments.
Total assets grew to $17.95 billion, with increases in , inventories, and marketable securities.
The company recorded no or purchased intangible asset charges in FY2026, compared to $239.1 million in FY2025.
A ten-for-one stock split was effected on June 11, 2026, with all share and per-share data retroactively adjusted.