Greetings and Happy New Year, thank you for attending JP Morgan's 19th annual virtual CES Technology Forum. My name is Harlan Sur, Semiconductor and Semiconductor Capital Equipment Analyst. Very pleased to have Oreste Donzella, Executive Vice President of KLA's Electronics, Packaging and Components Division, EPC. This includes specialty semiconductor processing equipment, printed circuit board processing and an inspection, component inspection, and display inspection and test. This segment provides great diversification alongside KLA's semiconductor process control business. Oreste will take us through KLA's EPC segment and how every product line in his division is key to enabling next generation technologies such as 5G, next gen compute architectures like AI, IoT, touches the automotive markets as well. After his presentation, we'll follow it up with questions. Oreste, thank you very much for joining us today, and let me turn it over to you. Harlan, thanks for having me. It's a great pleasure to be at your conference this year. I put together this presentation to tag you along our journey of transformation that we started at New York Investor Day in September 2019. It's only 16 months, it seems to be like 10 years considering what happened in the last 16 months in the world. First of all, obligatory slide on the statement. You can see more details in the IR website of KLA. Now, first of all, let me talk about KLA and EPC in particular, the Electronics, Packaging and Components group that I have the honor to lead, and how this group and entire KLA is exposed to the mega trends that are really driving our semiconductor and electronic industries. Let's start from the numbers. These numbers are coming from the fiscal year 2020 that ended in June 2020, so they are not updated number. Of course, we are in a quiet period. We are not going to make any assessment or any statement about the last quarter results. This was, again, until the fiscal year 2020, ending in June 2020. You can see we are now at almost a $6 billion company in terms of revenue per year. 57,000 tools installed all around the world with more than 10,000 people. You see, 75%, let's say three-quarter of our business is relative to new system sales and a quarter in the service that is very much tied to maintenance contract that is an annuity to our revenue. When you look at what KLA has done in the last 40 + years, until 2019, we were really in one market, one segment for one application, this was a semiconductor process control. For semiconductor process control, I intend finding defects that matter and find the problems that affect the chip performance and yield. KLA has been the leader in the semiconductor process control for many, many, many years, and it was until 2019, when we completed the acquisition of Orbotech and SPTS, only in that particular segment of the market. With the acquisition of Orbotech, the main purpose was to expand the SAM, the serviceable available market. We did, I would say, with this acquisition, expanding twofold. On one end, we expanded in completely new markets adjacent to semiconductors, like print ed circuit board, packaging, flat panel display, and also specialty semiconductor like RF devices, power and MEMS. On another end, we also strengthened our position in the semiconductor itself by introducing a process technology capability from the acquisition of SPTS, that at that time was a subsidiary of Orbotech. You can see in one acquisition, it's kind of we killed two birds with a stone. In one end, we expanded in new markets. On another end, we were able to complement our process control presence in the semiconductor market with the process solutions as well. Now, if you want to map all our presence in the entire electronic ecosystem, you see a very big diversification of our offering. Going from the right to the left here, you can see front-end wafer fabs where we started, in particular in advanced semiconductor, but also specialty semiconductors. You see going right to the left, you see assembly and packaging components, PCB. In the lower part of this slide, you can see also presence in display fabrication, in particular in the area of testing and inspection. Because we are engineers, we love numbers, I put the numbers in the middle of this slide in yellow. You can see the critical geometry that we can cover in all our spectrum of solutions, from the 5 nm advanced semiconductor to 100 micron in some of the PCB applications. Again, a very big diversification that makes KLA a very strong player, not only in the semiconductor process control, but in a much broader electronics ecosystem. Let me say how we are exposed to the megatrends. Before going there, I want to say a little bit of words on the organization chart. Of course, when we acquired Orbotech and SPTS, we closed the acquisition in February 2019. The next question was: How do we integrate Orbotech? We decided, actually it was around the time that we came to New York City for the Investor Day, we decided to create an organization that we announced early in 2020, that is pretty much collecting all the markets that are not the semiconductor process control with a front end that now KLA is serving. As I said, mostly specialty semiconductor packaging component, PCB, and display. This is the organization that I lead, it is called EPC, Electronics, Packaging and Components, Ahmad Khan is leading the semiconductor process control that is a historical branch of KLA, and Brian Lorig is leading the service organization. The three of us report to Rick Wallace, who has been our CEO and President since 2006. One thing that I would like to emphasize as well, is the fact that while we integrated this large acquisition, we are also applying what we call KLA Operating Model. A KLA Operating Model is really the secret sauce. It is what keeps all us together. It is the very rigorous set of rules, processes, methodologies that we have been using for many, many years at KLA. It is really a foundation for our success, and now we are expanding this type of model for all the companies we acquire. Let me talk about the secular trends and how KLA, and in particular EPC, are exposed to them. Let me say that 2020 has been an incredibly challenging year for everybody. From business point of view, of course, the semiconductor was the most resilient, and semiconductor capital equipment, most resilient industry that you can see. The reason is because really we saw an acceleration with the COVID of everything that is rotating around us and is driving the society, the modern society right now. It was accelerated because, of course, secular trends like 5G or AI didn't stop. They accelerated. We saw more and more opportunities in accelerated, also the visual interaction, that interaction, either at work or social interaction, that have semiconductor at the front and the center of whatever we can do to really interact among each other. If you look at on the right side of this table there, you see what are the indices that are benefiting the most from really the secular trends that we see in electronics. These are mobile data center, automotive, and most recently, also healthcare, and also the automation and really the advancement of technology in healthcare also got an acceleration with the COVID pandemic that we are living right now. At the bottom of this slide, you see how, pretty much this is from Gartner, you see how the semiconductor revenues is forecasted to grow in the next year. You see pretty steady growth of semiconductor revenue and, of course, semiconductor capital equipment that is supporting this revenue. When you try to narrow down to EPC, you see, for example, three out of the markets we serve, like SPTS, specialty market, ICOS and Orbotech PCB, you see how much the revenue is driven by the mega trends. You see, for example, SPTS is very much exposed to mobile and 5G infrastructure, ICOS to smartphones and data, Orbotech PCB in particular from 5G infrastructure, mobile and data as well. Whatever is really driving electronics and technology is something that KLA and EPC in this case are very much exposed to. That's the reason why we believe in the secular story of semiconductor and of course, secular story of KLA. Let me talk a little bit on three of these secular trends, starting from 5G. Of course, 5G is extremely important, and it has a huge impact on semiconductor. This is across the board, phasing from higher memory content to application processor technologies, shrink in mobile, but also adjacentviation to semiconductor-related industries. Like for example, we see more and more PCB content and complexity become much higher due to the 5G infrastructure and the 5G smartphones. Also, 5G is driving new type of packaging, new type of components that need much more advanced process control technology. 5G, again, is the first driver I want to talk, and it is a terrific opportunity for growth at KLA across the board, as I said, in advanced semiconductor with the core process control business we have, but also specialty semiconductor in particular because of the RF higher content and complexity, but also packaging, also printed circuit board. We see 5G again, an incredible opportunity for KLA. Switching to data. I would like to start from Moore's Law, 1965. It's still working, although slowing down a little bit, becoming tougher to do conventional transistor scaling. The industry is not shy of innovation, and the biggest one that is happening right now is the introduction of EUV photolithography. This innovation and the scaling in a conventional way of the transistor is becoming more expensive. For that kind of reason, more and more of the innovations are moving into packaging, in particular, moving from a system-on-a-chip approach to chiplets through disaggregation of functionality of a single component in multiple devices that are then aggregated in a three-dimensional way through packaging. That's the reason why packaging is becoming an incredibly important part of the semiconductor, the electronics supply chain, and KLA is investing a lot of effort, time, and money in designing a new product portfolio in packaging to enable innovation across the board. We introduce some of these tools, and we may talk a little bit more in details later at the SEMICON Taiwan in September 2020. Finally, automotive. After a couple of years of decline, I've been happy to hear all people who talked before me about how the automotive industry is recovering already, we expect a faster growth coming up in the next few years. Because of the secular trends in automotive are not changing. They got a little bit decelerated because of COVID, before COVID because of some inventory digestion. The electrification, autonomous connectivity, these are still with us, these are important secular trends that all the electronic industry will take leverage, eventually we will see a lot of innovation and a lot of new business coming from automotive semiconductor. Where is KLA on this? KLA has been partnering with the automotive ecosystem in the last two, three years to set up new standards for inline screening of potential chip reliability failures in wafer front end. Also we are developing new solutions, in particular process solutions, for the new compound semiconductor introduction automotive, in particular silicon carbide, gallium nitride. These are the three trends that I would like to take as an example, 5G data with the packaging implications and automotive, to showcase KLA as a global leader in electronics value chain, and also the possibility of a very bright future and sustainable growth for the company. Now, back to you, Harlan. Great overview, Oreste, great overview of the opportunities and great overview of the business. Even in a tough demand environment, as you mentioned in 2020, EPC, we estimate, grew about 9%-10%, in line with your long-term target CAGR for the business. Stepping into this year, we have things like data center CapEx spending is set to grow 20%, automotive production is going to grow 15%, 5G smartphones more than doubling. OLED display CapEx is starting to inflect higher. We have your EPC business growing about 10% this year, given some of these trends. Maybe you can just help us understand what segments, specialty semi, PCB, component inspection, display, which of these components are going to do well, and any areas of weakness? Yeah. Let me start saying that we have been very happy with the results we have achieved in EPC since the creation of this group that is very, very new. It's only several months. We see continuous strength in all the markets we serve. Now, as I said in my presentation, let's start from 5G. When I say 5G, it means a base station, a smartphone. Because of the unit sale increase in the smartphone, and because the higher content of, in particular, RF devices in both base stations and smartphones, we see, of course, SPTS, that is our process solution branch for specialty semiconductor, that is going to shine in the next years because exposed quite a bit to 5G. Also we see 5G also influencing, as I said, PCB and ICOS business on the component inspection. Data is going to drive, of course, more and more sophisticated packaging where we are investing quite a bit of, as I said, resources in order to come up with a compelling product portfolio. We see both SPTS and ICOS are very much exposed to the data centering packaging innovation. The final, automotive, is another area where we are much exposed because with SPTS, we are leader in developing a process solution, in particular, etch and deposit solution for power devices. We see a big exposure there as well. On the display side, the display has been weaker. In the last couple of years has been stagnating because of inventory digestion, and also because the consumer market, in particular TV, didn't go very well last year. Now, we are restructuring the organization, we are restructuring the cost. We are taking this time also to make sure that we can come up even stronger from profitability point of view when the market will resume. We expect, actually, the market to see momentum in 2021, and then eventually, gradually get into the revenue stream in 2022 and 2023. That's what we see over the markets. No, that's a good outlook, high-level outlook for 2021. If I think about it from maybe from a longer-term perspective, again, going back to the 2019 Analyst Day, the team's outlook for your EPC business was about a 9%-10% CAGR from 2019 to 2023, achieving $1.4 billion, $1.5 billion in revenues in 2023, or about 20% of KLA's total revenues at that time. Based on the results thus far in 2020 and our outlook, it feels like the team appears to be on track to hit the 2023 target. The first question is your team still on track to hit the 2023 targets? Number one, and then over the next few years, assuming a 9%-10% CAGR, what end markets will be growing faster than trend line, and what end markets will be growing slower than the trend line? Yeah. First of all, we remain very optimistic on the trajectory that we outlined in September 2019. It seems that really we are evolving in the right way. The second question is about the long-term growth, frankly speaking, are the same that we are seeing in 2021. 5G, for example, is going to be a long wave. Yes. 5G is not going to stop right now. I really appreciate the comment in one of the previous interviews saying that 250 million subscribers of 5G, but there are 6 billion mobile subscribers in the world, so we have a long way to go. We have a very good margin for improvement there. The automotive is going back to the double-digit growth. Again, we saw a deceleration in the last couple of years, but we are confident, everybody in the industry is confident that the automotive electronics will grow double digit in the next three, five years, so we can take advantage. Computing storage, of course, are big drivers as well. Now, the segments, the end markets that I believe they are not going to grow as fast as the others I mentioned before are pretty much PC and maybe some consumer type- Sure. -of application. Again, the long-term growth, the beauty of this particular moment of the industry, I've been in the semiconductor industry for 28 years, is we have never seen so many drivers together, and we have never seen the near-term drivers to be also long-term drivers at the same time. That's a very unique time for semiconductor and electronics. One of the reasons for the company's sort of very differentiated premium profitability profile, gross margins, operating margins, free cash flow margins, is that the team has pricing power, right? Part of it is because in the semiconductor process control business, the KLA team is a strong number one in the market. It's four times larger than its nearest competitor. Within your EPC business around some of your key end markets, mobile, automotive, data center, or looking at it from a product perspective, looking at specialty semis, advanced printed circuit board, component inspection, and display. What is your market share position, in these product categories? More importantly, who are some of your major customers? First of all, let me state, really happy with the position that KLA was able to pretty much to gain in the last many, many years in the semiconductor process control. We are the number one leader in this area, in this market with 4x more than the nearest competitor, 4x more share than the nearest competitor. For what concerns all the new markets, when I talk about specialty or PCB or component or display, I want to take this as an opportunity to explain a little bit what is our strategy for acquisition. Because when we look at targets for acquisition, we would like to acquire market leaders, no question about it. We don't want to acquire people who are not the leaders in their segments, in their markets. This is what we have done with Orbotech, SPTS. Let me start with SPTS, for example. SPTS produce a plasma vacuum-based deposition and etching system for specialty semiconductors. In this particular category of the semiconductor business, they are the number one. We are the number one with SPTS. We are talking about RF filters. We are talking about MEMS and power devices for automotive. Right. Or RF or 5G infrastructure. SPTS has been able for many, many years, even before KLA acquired SPTS, Orbotech, to shine in these niche markets because of their customization of the solutions they provide to our customers. Who are the customers? You ask the customer. In this case, the usual suspects. I mean, you can Infineon, ST, NXP on the automotive side, on RF, of course, Skyworks, Qorvo. These are the major customers of SPTS. Of course, SPTS is at play in packaging as well, in wafer level packaging. This is where we partner with all the major IDM, both logic and memory, major foundries and also OSATs. Micron and Samsung and Intel and TSMC and hynix and all the OSATs and other major semiconductor customers are our customers in packaging as well. On the PCB area, this is an interesting market. Frankly speaking, before the acquisition, I didn't even know. Now I start to learn, I learn day by day. The uniqueness of Orbotech and now KLA presence in the PCB is the breadth of portfolio. We play in inspection, we play in repair, we play in imaging, we play in inkjet. In all these segments we play, we are the market leader. The goal of PCB actually is to expand outside these segments, to figure out if we can do something else in other segments of the PCB market where we are the number one. We would like to be number one in any market that we would like to enter, either organically or inorganically. The same as FPD. Our presence in display is not that big as a percentage of spending. We are only in test and inspection, but in these segments we are number one. We've always said that we used to cover Orbotech, and what we used to say, and part of the reason why we covered Orbotech is because we would always tell ourselves that in display, in PCB, and other parts, they were the KLA of the PCB industry or KLA of the display industry. A good example is advanced PCBs, right? Vias, interconnect layers, they're all approaching deep submicron geometries that we were seeing at the wafer level, right? Like five, 10 years ago. As the pitch and feature sizes continue to decrease, has the KLA team started to apply technologies from your core semiconductor process control division to some of your PCB products or some of your other inspection products? Can you give us examples of where KLA is applying some of your core optics, sensors, software, platform designs to your EPC inspection platforms? Well, that's a great question, actually. It gives me the opportunity to talk about acquisition strategy again. Because in addition to target market leaders, we would like also to target companies where KLA can contribute, either in operation efficiency or technology innovation. You are right, PCB of course, is far behind semiconductor in terms of complexity, but they are ramping very fast. In particular, the number of vias and the geometry is getting tighter. On top of that, there is a big need to go higher end with the PCB, in particular through IC substrates that are so important and so complementary to the packaging industry. I'll give you an example. Just an example that actually is very new because we are developing, for example, the next automated optical inspection for PCB, and we are building this new tool around KLA design optics. In other words, KLA optics are designed, and they are implementing in the automated optical inspection for PCB and substrates. We believe by this combination, we are able to serve the high-end market of substrate of PCB even better with this innovation. One of the areas that you touched upon that I want to get into is, if you look at the mega trends within auto, 5G, RF, and even applicability into the industrial markets, power transistors are a key building block, right? Inverters and EVs, industrial solar, power amplifiers, and 5G base stations, and one of the key enablers is power transistors, IGBT, power MOSFET, next generation silicon carbide, gallium nitride power transistors. You touched upon this in your slides, but what equipment and solutions etch deposition that EPC has that are used to manufacture these newer SiC and GaN-based power transistor architectures? This is another great question. We have been working with silicon substrates forever, and compound semiconductor has been like a very small market. Because of, as you know, the breakdown voltage strength and because of the wide bandgap, these materials now are more and more useful for all the power semiconductor power device needs, in particular in the automotive EV or charging or even RF for 5G infrastructure. I'll give you a couple of examples of implementation of KLA technology for silicon carbide or gallium nitride. When you go for a fast switcher and you design a power switch in the future for charging or EV, you are designing the technology around some very circular rounded bottom of the trench. Making trench etch that are rounded at the bottom is extremely tough to do. We are not talking about 5 nm here. We are talking about different type of complexity. We know for sure that SPTS is developing technology that can accommodate this kind of process integration scheme that is very important for the electrification of the vehicle in the future when all EV are going to have power inverter, for example, made by silicon carbide. Another example is how we apply our own technology of gallium nitride on silicon carbide etching and making sure that we have separation of gallium nitride and silicon carbide, and we have a selectivity of the material that is provided by our own etch solution. These are examples where the SPTS technologies, although they don't serve the latest and greatest application processor of smartphones, are very sophisticated, narrowly focused on some critical problems that our customers are facing. Oreste, we're just about out of time. I want to thank you for the insights on the EPC franchise at KLA, lots of great growth drivers, and looks like setting up for another pretty solid growth year in 2021. Thank you very much. I appreciate your participation. Thanks for having me. Thank you. Yes.