KLAC: Hold Despite Long-Term Chip Growth Potential


  • KLA Corp is expected to benefit from long-term growth trends in chip manufacturing, process complexity, and the advanced packaging market.
  • The stock price may be overvalued due to industry momentum, and FCF and ROE growth need to be monitored.
  • Initiating coverage with a Hold rating due to KLAC’s slowing growth rates and potential overvaluation.
  • My analysis specializes in identifying companies that are experiencing growth at a reasonable price. Rating systems don’t consider time horizons or investment strategies. My articles aim to inform, not to make decisions.

Woman is working with resistors pick and place machine in circuit board factory

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Investment Thesis

KLA Corp (NASDAQ:KLAC) CFO Bren Higgins was at the J.P. Morgan (JPM) Global Technology, Media, and Communication Conference at the beginning of this week. At the conference, he discussed

KLA Corp

LAM Research (LRCX)

Applied Materials (AMAT)

ASML Holding (ASML)

Samsung Electro-Mechanics (OTCPK:SSNLF)

Current Strategy

Leverage leadership in yield management to expand into new areas like advanced packaging and emerging technologies

Focus on customer collaboration and developing next-gen deposition and etching tech for advanced nodes

Diversified product portfolio across chipmaking. Invest in R&D for advanced materials and process control

Maintain dominance in lithography systems and develop next generation EUV technology

Integrate vertically within Samsung chip ecosystem and expand into broader market segment


Dominant player in yield management. Strong customer relationship. Focus on innovation.

Expertise in deposition & etching processes. Strong R&D capabilities. Global presence.

Broad product range in the industry. Leading position in several segments. Strong brand recognition

Unmatched expertise in lithography. High barrier to entry. Strong financials

Cost advantages within Samsung supply chain. Growing presence in advanced packaging


Reliant on mature markets. High level of debt

Vulnerable to chip market fluctuations. Lower market share compared to KLA

Lower margins compared to some competitor. Complex organizational structure

Limited product portfolio. Reliant on few major customers

Limited brand recognition outside of Samsung ecosystem. Reliant on parent company success

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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