KLAC

KLA's inspection tools sit between process steps in the fab cleanroom. The most visible are the e-beam inspection (EBI) systems — large boxes that scan finished wafers with a focused electron beam, imaging features smaller than light wavelengths can resolve. An e-beam inspection system is roughly the size of a refrigerator, but it contains optics and electronics that can "see" individual transistors. The electron beam scans the entire wafer surface (300mm diameter) in about 30 minutes, imaging everything at sub-10-nanometer resolution. A single fab might have 5-10 of these tools running continuously.

Optical inspection tools are equally large and equally critical — they use advanced imaging and AI algorithms to detect defects at the wavelength limits of light. Between the e-beam and optical systems, a fab can inspect every wafer at multiple critical steps: after lithography, after etch, after deposition, before and after planarization (flattening the surface). KLA also sells metrology tools that measure critical dimensions (how wide is this transistor, how thick is this layer?) — less obvious than defect inspection, but equally mission-critical.

Revenue was a record $12.7 billion in calendar 2025, up 17% year-over-year. Process control systems revenue grew 19% and services grew 15%. KLA's business model is uniquely counter-cyclical within semiconductor equipment: a fab will skip buying new deposition tools to save capex, but it will not skip adding inspection capacity. Defects are unacceptable — a single defective chip that ships to a customer (say, an NVIDIA data center) can cost $100M in warranty claims and reputation damage. This makes KLA's revenue less cyclical than peers like Lam Research or Applied Materials.

The company competes on risk reduction, not price. A fab will pay $50M-$100M for a KLA inspection tool because the risk of missing defects and shipping bad chips is unacceptable. KLA's pricing power is extreme.