KLA
- The verdict: a provider of mission-critical information that benefits from rising content and AI infrastructure capex. High margin and high cash generation.
- Moat:
- Mission critical (wafer inspection). Importance keeps rising with hyperbolic cooling cost.
- R&D scale monetized through an installed base (service is recurring revenue). It is a self-enforcing moat across generations.
- Lock-In binds per line and per application.
- Chinese competition is limited to mature nodes.
- Growth drivers:
- Rising process control content per wafer for each node migration.
- Installed base growth compounding into service.
- Economics:
- Low material content and high margin.
- Low capital intensity and high cash generation.
- Risk:
- Integration by rivals, in-sourcing by customers.
- China at 30% of revenue and falling.
- Unknown:
- Market share trajectory?
KLA versus ASML:
- KLA has more share to gain As process control intensity increases, while ASML is the market.
- AMSL's monopoly is shared with Carl Zeiss SMT, its sole supplier of lens, mirror, and collector (variable pricing) -> lower margin.
- ASML has a better price lever - can reprice within a generation - while KLA cannot.
Reports
