Today, Oreste Donzella, who's EVP, runs the Electronics Packaging Components group for KLA. He's going to give a presentation, and then we'll have time for Q&A at the end. If anybody has questions, please email them through the system and I can relay those. Just quickly as a safe harbor for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley representative. With that, Oreste, turn it over to you for the presentation. Thank you. Joe, thank you for the introduction. Hello, everyone. I'm happy to be here, 45th Nasdaq Investor Conference. For looking statements, for more details, please refer to KLA IR website. Today, I'm going to talk about a couple of topics. One is introduction of EPC, that is Electronics Packaging and Components group that I have the honor to lead. In particular, where we are with the process of integration. EPC was born as an aggregation of multiple companies that we bought in the last few years. Then I'm going to dive down into packaging market, packaging technology, and explain how packaging is becoming an interesting driver for growth at KLA. Let me start with EPC first. It's all about market expansion diversification. That's the story of EPC group. Everything started when we acquired Orbotech and SPTS in February 2019. It was a single transaction. We acquired Orbotech. SPTS was an independent subsidiary of Orbotech, so we got pretty much two different companies in one. The purpose of this transaction was twofold. Was really, first of all, to extend our reach into electronics ecosystem, in particular expanding in new markets for KLA, printed circuit board and flat panel display. The second reason was we wanted to extend and expand our portfolio in the semiconductor, specialty semiconductor and packaging. This was done with the SPTS acquisition, of course, with the additional process equipment to our process control portfolio in this particular market, specialty semi and packaging. After the acquisition was completed in February 2019, our job was to integrate all these companies, and we created the EPC group, Electronics Packaging Component. February 2020 was right before COVID started to rise in Europe, actually, and then the rest of the world. Not an easy time for me to aggregate companies that were globally located, in particular in Belgium, Germany, U.K., and Israel, from the headquarter in United States. But we were able to face the challenge. I'm really happy to see how these companies are integrated under EPC in KLA. ICOS was a company that we acquired in 2018 to start our presence in packaging, and we found a very nice house for ICOS and EPC when we integrated with Orbotech and SPTS. Now EPC is one of the three business groups at KLA. Rick Wallace has been our President CEO since 2006, and there are three business groups. Ahmad Khan is in charge of semiconductor process control. This is the core KLA inspection and metrology business in semiconductor front-end fabs. Brian Lorig is in charge of service for semiconductor front-end. We have my team, EPC, that is spanning across multiple markets, multiple segments, including packaging, specialty and printed circuit board and flat panel display. One of the narratives behind the creation of EPC was to implement the so-called operating model. KLA operating model is a set of processes that we have been developing for many, many years at KLA to make sure that we instill rigorous discipline in the way how we manage our finance, the way how we develop new programs, in the way how we interact with our customers, our suppliers. I would like to say that is one of the serious sources of the success of KLA. My job as a leader of EPC was also to make sure that we integrate the KLA operating model in newly acquired companies like Orbotech and SPTS. When you look at the way how these three groups are present in the electronics ecosystem, going from the left to the right, you see all the chain of an electronic device up to a board in automotive or in mobile devices or in 5G infrastructure data and so on. Everything starts from substrates, reticles, you form the chips at the wafer level in front-end fabs, you go for packaging, eventually assembly and test. We have printed circuit board, the components, the packaging are integrated in printed circuit board, adding flat panel displays, you get to the final product, feeding all these industries in the new digital society. When you look at EPC, it's very much in every single part of this electronics ecosystem, and in particular, it's closer to the end product. EPC gave KLA the possibility to bring the company closer to the end customer, because we are much closer when you have to deal with a finished product like a component in packaging or a populated printed circuit board or the flat panel display. That's really the expansion that I was explaining in the beginning of my talk, looking at how EPC and the acquisition that we have done, Orbotech, SPTS, and previously ICOS, was able really to expand our market and get even closer to the end customers of the products. Now, packaging is probably the most interesting portion of the new markets we are serving right now. The packaging is also including some portion of PCB that we call the IC substrates. In this case, you can see the product portfolio that we designed in the last few years, even before or after the integration of Orbotech and SPTS, to serve the packaging industry. On the top, you can see process tools that come from SPTS. These tools are plasma vacuum-based. They are either etchers or dicers or deposition machines. At the bottom, you see process control. These are inspection and metrology tools that are generally coming from our front-end product portfolio. They have been customized to tailor the needs of packaging within the packaging industry. On the right side of this page, you can see our portfolio for final assembly and test. When you think about packaging market, you can think about really two markets in one. One market is a wafer level, and one market is assembly and test, and we are now well positioned on both. Let me go a little bit through some slides explaining why packaging is so important, so critical. I put in quotes that everything is changing. That is true. If you look at how the semiconductor technology has advanced in the last 50-plus years, it was all about Moore's Law. It was Gordon Moore that said the semiconductor is going to scale every two years or every 18 months. We double the transistor density. The biggest enabler of the semiconductor technology roadmap was the ability to scale the lateral geometry of transistor and eventually pack more chips in the same real estate. It is a piece of silicon. We were able to do this continuously for many years according to this Moore's Law. Of course, lithography was a big driver of the advances in the semiconductor technology. At a certain point, though, the Moore's Law started to slow down. It slowed down, of course, because of the complexity of scaling the lateral dimension of the transistor, but also because it was becoming extremely expensive. Of course, Moore's Law is not dead. We are keeping progressing our lateral scaling, in particular with EUV lithography in the last couple of years. We will continue to scale the lateral geometry, lateral dimension for a long time, but we need something else to augment the front-end scaling in a much cheaper and more economical way. This is where packaging is becoming very critical. It's critical, it's crucial for many reasons. It's, of course, crucial for cost. It's crucial for improving bandwidth. I'm going to talk about heterogeneous integration later. It is extremely important to really speed up the bandwidth and making sure that there is not much lagging time in the communication between, for example, memory and the CPU or GPU. It's a matter of power and for end application and the form factors. Overall, it's all about cost. Cost and performance. In this case, when I look at back, I've been in semiconductor for 29 years. Of course, most of my experience is in the front-end semiconductor. Packaging is a new territory for me as well in the last couple of years. I can see that the packaging is becoming now an industry going from protecting a device to differentiating the performance of the entire semiconductor package. There are plenty of packaging types available in the market, tailoring needs for every single industry or every single usage of a semiconductor device. Today, I'm going to go deeper in one of these, but we can talk many of these applications and many of the innovations that are coming for every single packaging type. I want to dive deeper into what is happening for high-performing computing chip, like CPU and GPU, because I believe this is where the most innovation is happening right now. It's happening because there is a secular shift from SoC, that is a system on a chip, to pretty much aggregating multiple dies in a single package. In other words, in the past, it was aggregation of multiple function in single die. Now, this disaggregation from a silicon, a reaggregation of multiple dies on a single substrate. This is what happens, of course, all the main players of CPU and GPU are following the same trends, how to integrate multiple dies, different dies, memories, logic control, CPU, GPU in a single package that is vertically integrated to create also an efficiency in terms of bandwidth, as I said, and also form factor. This is what we call heterogeneous integration. It's really enabling the scaling of the technology while keeping costs down. The disaggregation of the non-core functionalities makes the silicon chip less expensive, eventually, the integration comes at the packaging level, where it's cheaper to do and more efficient to do. Let me say a little bit about heterogeneous integration. What are the challenges in integrating multiple dies in a single package? What are the roadmaps that are driving these changes in the packaging industry? A lot of challenges. First of all, we are going to smaller features. The geometry that generate doesn't change much in packaging now, is changing more and more with heterogeneous integration, but also with other type of trends in fan-out wafer-level packaging, for example. We have new material. The packages are becoming bigger. We have new failure mechanism. We need to deal also with the fact that a packaging that has multiple dies inside will have even more challenges to yield. Now we are facing an integration of a potential yield losses because of multiple die integration in a single package, and yielding very complex packaging is becoming a big challenge. We have a lot of challenges, a lot of opportunities in packaging for KLA really to play a very pivotal role. One thing that is important to highlight is what I said in the previous slide. When you aggregate a lot of dies in a single package, the yield is going to be a function of the yield every single die, plus the yield that you are obtaining aggregating the dies in a single package. The yield is becoming a key factor, a key area of concern in the packaging industry much more than in the past. On top of that, we also have the possibility that some of the reliability concerns will escape the functional and the final testing, then they will become a reliability concern whenever the chips on the boards are, for example, assembled in a car or in a data center. For that kind of reasons, we need to really to change the way how the packaging industry is approaching yield enhancement. I have done a lot of work in the automotive market from front-end semiconductor fabs, where we enabled some screening methodology for the quality of the chips in front-end for automotive, that make sure that we have a pre-warning of a potential reliability failures in line, instead of waiting for the chip to be assembled on a board and eventually integrated in a car. I believe we need to use a similar methodology for chiplet packaging to track yield and reliability. This is what KLA has a long history, a long experience where we can really help the industry. Of course, in order to be successful, this is a KLA playbook. We need to work with all the suppliers, all the customers, all the key players. You have plenty of customers are now investing heavily in heterogeneous integration, multi-die packaging, including the top semiconductor companies, the fabless, and eventually also substrate fabricators, because substrate is becoming a key component of the entire package where you go to this heterogeneous integration. As I said, when you collaborate, what we can offer as KLA is multiple areas of collaboration. We can offer collaboration in implementing new architecture of die stacking process with our SPTS process equipment. We can collaborate with our customers and customer customers in defectivity reduction, in metrology process control, even data automation. That is extremely important because one of the success of the semiconductor front-end manufacturing has been in adopting automation for many, many years to generate enough data, relevant data, to create a process optimization. This concept is unknown in packaging. We will see more and more automation entering the packaging industry, and this is where KLA can provide an incredible help to the entire industry. The next inflection, heterogeneous integration that is today done generally through bumps is going to be doing bump less. This is what people refer as hybrid bonding. In hybrid bonding, of course, you don't do Thermocompression bonding bump- based bonding, but you do copper-to-copper bonding, and this is what we call hybrid. Of course, in this case, you have a huge benefits in terms of speed, bandwidth, and power efficiency. On the other end, you are getting a lot of challenges, thermal inspection, metrology, integration. We are doing a lot of work with the top customers in the way how we can develop integration process flow with all the inspection and metrology steps are needed to be successful in hybrid bonding. To just close my speech, I would say advanced package is a terrific opportunity for KLA, and we are seeing already benefits in our revenue. I was in Investor Day 2019. KLA did Investor Day in New York City. At that time, we started outlining our presence in packaging. Sorry, there is a typo here. The second last column is 2020 or 2021. You see for us in KLA, packaging has been a very small market, growing at 12% from 2014 to 2018, but was only in 2019 when we started integrating Orbotech, SPTS, in 2020, eventually with the creation of EPC. Now 2021, you can see the forecast with all these rising complexity of advanced packaging, that we see a huge, huge growth explosion for KLA revenue in the packaging. We see Triple CAGR in the last two years since the acquisition Orbotech SPTS, and aggregation to EPC group versus the past history of revenue trend at KLA. All in all, great time for advanced packages. It's extremely exciting from revenue growth, from financial, but also for technology complexity and from whatever KLA can offer to the industry. This is the end of my presentation. I hope you enjoyed. Real excited about talking about packaging. I think it's going to be a big driver for growth for KLA in the next future. Great. Well, thank you very much for that. That's very interesting. I'll start with some questions. If there's anyone in the audience, I think you guys know how to submit questions through the system. That'll come to my email, and I'll relay them. I'll start. You're nearing now year three, since the acquisition of Orbotech, and I guess a little longer than that for ICOS. Seems, from the outside, that the integration's been pretty seamless. Has anything surprised you as you've sort of combined the companies and anything in the integration process that's kind of upside or downside relative to your expectations? Yeah. Let me say, we completed the transaction of the acquisition of Orbotech in February 2019. It's almost three years. We integrated this company, started integrating this company with ICOS SPTS as well in February 2020, so it's less than two years ago. I cannot be happier than I am right now to say that we are ahead of our revenue and profitability targets. I would say there are a few reasons why we have been successful. Right now, it seems that this integration has been seamless. Of course, there is a lot of work that is going in the integration of a large company like Orbotech and SPTS together. I would say, let me say maybe, three reasons. First reason is we have been very clear what we wanted to achieve with this acquisition. We wanted to expand our SAM, reach into new markets, and expand our presence in specialty semiconductor and packaging with the integration of a process equipment tools from SPTS. We did that. We have been consistent with our deal thesis, why we wanted to buy Orbotech and SPTS. Second, we wanted to buy leaders in their own industry. We wanted to buy companies that KLA can provide help, either technically or from a market. Let me give you a couple of examples. Technically, I like to say, for example, the next generation of Automated optical inspection in PCB and substrates is coming with the optical module designed by KLA. In other words, you see already the synergy between whatever was Orbotech before and what is KLA because we are starting integrating design from KLA into Orbotech products. From market point of view, we got access to customers for Orbotech and SPTS that they cannot get any access before. Our ability to open the door with the top semiconductor in packaging, for example, is clearly benefiting, the former Orbotech and SPTS divisions. The third thing is the ability to implement the KLA operating model, I think this is essential. You asking me, are you surprised? I'm not surprised because we know how resilient, how strong our operating model was. Actually, if I'm surprised a little bit is in the fact that now looking at these large companies we buy, we figured out even more how strong our operating model is. For example, the rigor that we have in developing new technology that anytime we ship the first tool out of the door, the tool is ready for prime time without scrapping material, redesigning parts and so on. This is what we call PLC, product life cycle. This is our way to develop technology. Orbotech, SPTS didn't have this kind of discipline before. Now we are integrating, and they are getting a lot of benefits from it. Again, I didn't get really surprised for all these reasons. We have been consistent with the thesis. I believe this was good and think that the integration is seamless. A lot of work, a lot of effort. No major hiccups. Yeah. Good to hear. I guess another reason I was excited for your presentation, you know, is that there is so much discussion of advanced packaging from your customers. You know, 10 years ago, I don't remember CEOs talking about it. Now when I meet with Pat Gelsinger or Lisa Su, it's a major topic and not just, you know, as something they're talking about, but as a way of really building advantage into their business. How does that affect the fit? I think it does really elevate the importance of these technologies to your customers. Yeah, absolutely. As I said, it's a roadmap enabler right now. It's a combination of performance and cost, driving big interest from the top semiconductor companies in advancing the packaging roadmap. We see clear benefit to KLA because the complexity is driving the KLA process control business. As I said in the presentation, putting all these dies together in a single package is uncovering a lot of challenges in terms of yield reliability. KLA is there to help. Think about, Joe, if packaging was not going to scale as much as it is today, maybe we were not going to invest in packaging. KLA was not going to invest in packaging. Maybe we had like ICOS only for assembly and test dominating their market, getting more and more presence in their assembly and test for inspection methods for assembly and test for the finished package. The way our wafer level packaging is progressing right now is really exciting KLA to invest more and more. One of the reasons why we acquired Orbotech SPTS is actually because we saw an opportunity with wafer level packaging to play a bigger role. That's the reason why I'm not surprised why the top semiconductor CEOs are mentioning packaging all the times, because this is an enabler and is a differentiator for them. I'm not surprised either to see KLA investing more in packaging, because the complexity will drive more process control and process integration challenge that we can help with. Yeah. You had mentioned in the presentation, chiplet yield and some of these other issues. It kind of raises the question, outside of packaging, how do these developments affect KLA's overall process control business? Because you have smaller die, more heterogeneous die. How does that affect the way people pursue overall yield management and process control? Very important. I believe, first of all, of course, the challenges in process control are becoming more complex because what you said, small die, large package, integration, vertical integration, 2.5D, 2.1D integration. There is plenty of challenges. On top of that, I believe one thing that I'm very excited about it, because I like to see a big change in packaging industry, is the usage of data and automation. I know the top semiconductor companies are looking at that. We are getting a lot of requirements now to do more data automation in the wafer level package, even a substrate level that is unknown about it. Think about it, PCB industry is not automated at all. Trying to transition into EFEM, SECS/GEM protocol, automation, data analytics in a packaging fab or even a substrate fab is something really new and revolutionary. I believe this is going to be a big factor in the near and the long-term future in this industry. KLA, of course, can play a huge role because we have been in data analytics. We are a data company. We develop incredibly advanced, sophisticated technology, and we help our customers to solve very critical problems. At the end, we are a company that deals with data all the time. We can help with data automation of packaging industry and substrate industry as well. Great. I guess as you look at these trends going forward, we've seen already a pretty big advantage to companies like AMD with maybe four die in the package. Some of the complexity going forward seems pretty significant. Intel was telling me that Ponte Vecchio, I think at one point they were talking about 70 different tiles in Ponte Vecchio. Really, an order of magnitude more complexity than we're seeing today. How does that change the opportunity from your perspective? What opportunities does that open up as you get- Yeah, increasing. Increasing process control, increasing data, increasing automation. I want to mention also another point that we are seeing on the process side, not process control, but process side. We are seeing more and more adoption of plasma dicing. Today, the way how the customer singulate the wafers in multiple chips is with a mechanical dicing or laser dicing. Because the cleanliness standards for hybrid bonding or in general for heterogeneous integration is so important, now people are looking more and more to dice wafers, to singulate the wafers with plasma. That opens a completely new opportunity for our SPTS division here in U.K. It's another way how you see KLA playing a big role in something that you couldn't expect before SPTS Orbotech acquisition. KLA was becoming a key player in a plasma vacuum-based type of technology. This is happening in packaging because many things are happening. Great. I guess we have about one minute left. Last question from me would be, the intuitive thing to me as a semiconductor analyst is these kind of CPU opportunities where we've seen the stacking and the benefits of it. You also talked about areas like antenna in package, those kinds of things. How pervasive do you see that, and could we see areas like smartphones and analog areas becoming a bigger driver for you going forward in these markets? Joe, thanks for the question. Actually, it gives me the possibility to talk about another driver that is 5G. You mentioned antenna in package. With the 5G millimeter wave, now a fully integrated RF front-end module, requires also the antenna to be integrated with, of course, RF front-end, and the switchers, and the transceivers, and the power amplifiers, and so on, is packaged in a single package, generally done in SIP. The reason why you do that is twofold. First of all, signal integrity, and second is form factor. The package is becoming more and more critical. In fact, we see an increasing demand for our ICOS advanced technology because whenever you want to inspect and measure these very complex SIP packages with all these functionality integrated, you need a more advanced technology. This is what we see our component inspection growing quite a bit this year. On top of that, in order to make sure that you meet the signal integrity impedance requirements, you need to go to a next level of PCB board quality. We see a completely different aspects of our business taking advantage of this antenna and packaging a 5G millimeter wave, either in infrastructure or mobile, that is more in the component inspection and PCB. Again, the fact that KLA is so diversified now with EPC, that we play in multiple markets, give us the possibility to benefit and leverage all these drivers that are happening in the electronics ecosystem. Great. Well, with that, we're afraid we're out of time, this is a really interesting look at a new growth area within semiconductors, I really appreciate your time today. Thank you, Joe. I appreciate it. Thank you. Thank you, all. Bye