KLA Corporation (KLAC) reported a standout third quarter for fiscal year 2025, posting record revenue of $3.06 billion, a robust 30% year-over-year increase, underscoring its leadership in semiconductor process control and advanced packaging. Profitability was equally impressive, with a GAAP net income of $1.09 billion and diluted EPS of $8.16, both surging 80%+ YoY, while non-GAAP EPS reached $8.41. A gross margin of 61.6% and a non-GAAP operating margin of 44.2% highlighted strong operational efficiency. Free cash flow for the quarter totaled $990 million, supporting shareholder returns of $507 million in buybacks and $226 million in dividends.

The Semiconductor Process Control (SPC) segment drove performance, contributing $2.74 billion in revenue—89% of total sales—and rising 31% YoY. Growth was fueled by demand for advanced logic, high-bandwidth memory (HBM), and advanced packaging, with notable strength in Taiwan and Korea. Wafer Inspection and Patterning, key SPC subsegments, represented 49% and 21% of overall revenue, respectively. Specialty Semiconductor Process and PCB & Component Inspection also delivered solid growth, up 20% and 26% YoY, respectively. Services revenue reached $669 million, marking its 52nd consecutive quarter of YoY growth, though tempered by U.S. export restrictions in China.

Geographically, Taiwan led with a 128% YoY increase to $988 million, driven by AI-related investments. Korea followed with an 88% YoY jump, while China declined 20% due to ongoing export controls. Despite this, China remains a major market, accounting for 26% of quarterly revenue and expected to comprise roughly 30% of full-year sales.

KLA continues to benefit from structural tailwinds in AI and advanced packaging, with revenue from the latter expected to exceed $850 million in 2025. For Q4 FY25, the company guided to $3.075 billion in revenue, 63% gross margin, and non-GAAP EPS of $8.53, even as it manages headwinds from tariffs and trade policy. Management reaffirmed confidence in outpacing the broader wafer fab equipment (WFE) market in 2025, powered by leadership in inspection and metrology, growing capital returns—including a 12% dividend hike and a new $5 billion repurchase program—and a healthy balance sheet with $4.0 billion in cash and $5.9 billion in debt.