Summary
KLA Corporation (KLAC) announced its strategic decision to exit the flat panel display (FPD) business, with manufacturing of FPD products expected to cease by December 31, 2024. This decision stems from the cancellation of a significant new technology project by a major customer and follows the company's prior exploration of alternatives for this segment. The FPD business represented a small portion of KLA's overall revenue, accounting for only 1.4% in calendar year 2023. While this exit is not expected to impact revenue guidance for the March 2024 quarter, the company anticipates incurring between $60-$70 million in non-cash inventory write-offs and $50-$70 million for impairment of goodwill and purchased intangible assets. Consequently, KLA has revised its financial guidance for the March quarter, expecting lower GAAP and non-GAAP gross margins and diluted EPS. The company anticipates an immaterially favorable long-term impact on profitability margins from this strategic shift.
Key Highlights
- 1KLA Corp is exiting its Flat Panel Display (FPD) business, with manufacturing to cease by December 31, 2024.
- 2The FPD business accounted for a minimal 1.4% of KLA's total revenue in calendar year 2023.
- 3The exit is primarily driven by the cancellation of a significant new technology project by a major customer.
- 4KLA reaffirms its revenue guidance for the March 2024 quarter at $2.3 billion +/- $125 million.
- 5The company expects to incur $60-$70 million in non-cash inventory write-offs and $50-$70 million in goodwill/intangible asset impairment charges in Q1 2024.
- 6Revised financial guidance for Q1 2024 reflects lower expected GAAP and non-GAAP gross margins and diluted EPS.
- 7KLA anticipates an immaterially favorable long-term impact on profitability margins from exiting the FPD systems market.