Good morning. Welcome to the third day of J.P. Morgan's 51st annual Technology, Media, and Communications Conference. My name is Harlan Sur, Semiconductor Capital Equipment analyst for the firm. I'm very pleased to have Bren Higgins, Executive Vice President and Chief Financial Officer of KLA, here with us today. I've asked Bren to start off with some opening remarks, and then we can go ahead and kick off the Q&A. Bren, thank you very much for joining us this morning, and let me go ahead and turn it over to you. Yeah, Harlan, thank you for having us. Just quickly, I'm sure we'll talk a lot about the current environment. I just wanna spend just a minute and do a little retrospective on 2022. Company did about $10.5 billion in revenue in 2022, which was a growth rate in the high 20th percentile. We also drove earnings to grow in the high 30th percentile. It was a really strong year for the company overall. Our Semi PC, which is the semiconductor process control part of the company, the systems business was up about 36% in the year against a WFE backdrop that was in the high single digits. Really strong performance overall. Reflecting the strength of the mix in the logic foundry environment for the company, our increasing relevance around certain key products, which I'm sure. Mm-hmm ...we'll talk about as we move forward. What was recently published, some strong market share performance where the Gartner organization just published its market share report for the year, and we saw about 3 points of share gain overall for the company. Really pleased with that performance. Our service business, which really stands out when you go into a slower environment. When things are ramping, I think everybody tends to focus a lot on systems. Yeah. When things slow down a little bit, the resiliency of service becomes a bigger issue. Our service business last year was up almost 15%. We look at this year, it should be a growth year for that business, and comes at accretive operating margins, which is also a strong attribute of the business. Our EPC business, which is our More than Moore part of KLA, which is electronics, packaging, and components business, is closer to consumers, that business was not as strong as the semi front end, but still had a good year with high single-digit systems growth. As we look at 2023, we characterize the industry environment of down about 20% from a $95 billion WFE number from 2022, with memory being down considerably somewhere in that 40% range or so, flash down worse than DRAM overall. On the logic foundry side, leading edge, some slowdowns and adjustments to capacity planning at the leading edge after what was three years of pretty strong growth. In fact, WFE was up about 22% from 2019 to 2022. We knew there'd be a digestion or correction. Mm-hmm ...out there at some point. Certainly we got here faster than what we expected, so we're carrying a little bit of overcapacity related to what we were expecting to do and versus where we are today. But still, the leading edge is down more. But the legacy part of the business, which we define as 28 nanometer and below, continues to be strong, and I think that part of logic foundry is likely to be up this year. So, we also have exposure to parts of the market of WFE. They're reticle inspection, where there's reticle capacity that's being added, but also silicon wafer capacity. Mm-hmm. Those are parts of the market that are, that are driving some growth for the company this year, despite WFE being down. Service. Our service business isn't gonna grow 12%-14%, which is our long-term target this year, but should grow somewhere in the mid to high single digits. Yeah. We feel pretty good about that. Obviously, utilization rates on the installed capacity out there have slowed a bit, obviously mostly in the memory space. That does put some pressure on service growth, but service will continue to grow. 75% of the revenue in our service business is contract-based. It provides a predictable stream that we can rely on, but we can also optimize on from an efficiency point of view. We're happy we have that, and I think it's a good anchor for the company. It's only been down one year in the last couple of decades. I think the KLA service business, which is really about services and break, fix, support, not equipment and tools, is unique in the industry, given the nature of process control and the nature of how customers buy our products, the nature of the complexity of our products. That tends to be a good driver for us in any industry environment. The EPC business still is struggling a bit in terms of the exposure to some of these consumer markets which continue to be weaker. The PCB part of the business, the component inspection flat panel, is experiencing those dynamics. The specialty semiconductor, given the growth of compound semiconductor and power in the automotive market, looks to have a year that'll likely be flat to perhaps up a little bit this year. Some pockets of strength in there in a down year. As we look at the relative performance, KLA saw a nice step up in relative performance. Our share of WFE grew from the low sixes to the high sevens from 2021 to 2022. As we look at 2022 into 2023, I feel very good about the sustainability of that share of market and our ability to continue to outperform. A lot of good drivers that are driving more investment and process control across all segments. Maybe I'll just stop there and move on with the questions. Yeah. No, Yeah. No, that was a great overview. Thank you. If we, you know, you gave us a nice snapshot of the very sort of near to midterm. If we, if we step back and look back over the last 10 years, right? Four semiconductor down cycles, including this down cycle. Wafer equipment spending has grown at an 11% CAGR, versus the semiconductor industry growth at 6%. KLA has grown its revenues at a 12%-13% CAGRs over that period of time. Clear outperformance, you know, given the complexity challenges, more focus on yield and cost, the needs, you know, for more installed capacity to support strong demand trends. Do you anticipate WFE to continue to outperform overall semiconductor industry dynamics? With that, given what you're seeing, being the leader in the market, do you continue to see process control outperforming WFE as well? What are gonna be some of the major drivers? When you look back over that timeframe you talked about, there was a period of time where there was virtually no incremental logic foundry investment, right? In fact, logic foundry WFE from calendar 2012 to 2018, 2012 to 2018 was -3% or -4%. Mm-hmm. There was a period of time due to the delays in the introduction of EUV, the lack of scaling in the industry, the lack of new designs at the leading edge that drove a fairly limited sort of growth environment from a logic foundry point of view. Certainly, as we moved into the 2019 timeframe, we saw that start to change. You saw a lot of designs start to emerge at the 7 nanometer node. You saw the introduction of EUV, which started to add a technical driver to how our customers were managing their the ramping of their facilities and production yield. But also compelling attributes to the node that drove a much more robust design environment. That's important because our customers are managing against a lot of designs that they have to deliver in tight windows. They don't wanna start too many wafers. Mm-hmm. They don't wanna start too few. They have that dynamic that they're managing. Also they've got the, the pressure of a lot of different process flows and trying to manage through all that tests design rules in different ways. All that's been very good for process control, and we saw a step-up in the share of logic foundry as a. Mm-hmm ... of overall WFE from somewhere around 45%, 50% up around 60%+. Yeah. We're living in that environment today. Also, as you start to have all that capacity tied to those designs, as you start to ramp the next node, the ability to take that capacity and try to migrate it and try to reuse it. Yeah ... where their customers can, and given how much they invest, they all try to do that all the time. The opportunities to do that were fairly limited A, because the capacity was being consumed, but also B, because the technical drivers were starting to change. It forced a whole new investment cycle as you moved into the 5 nanometer node and so on. That was really good for process control. We expect as we move forward, a lot of- Yeah. ... the dynamics are gonna continue. Capital intensity has went down for a long period of time, and you go back about eight or ten years, and it sort of has stopped, and it's been slowly rising. Our view is that semiconductor revenue is gonna continue to grow. Mm-hmm. Semiconductor, you know, the, this view of $1 trillion. Yeah ... out there in 2030 that's been espoused by a number of folks. We think that's a reasonable way to think about it, a 6%-7% type growth rate from 2021. We think because of capital intensity, that WFE will likely grow a little bit faster than that. Because of the mix of business, the importance of process control, we'll see process control grow a little bit faster than that overall, and that KLA, given the products we're exposed to, where we have very strong share, which are inflecting in this environment, and we expect to grow moving forward. Plus new offerings that are coming down the pipe that we think that KLA is in a position to grow faster than that. When you back it up, you say... Yeah ... okay, what's the long-term view? We think, as we outlined at our investor day, that we'll grow revenue 9%-11%. With the operating model of the company, we should be able to grow the earnings of the company somewhere around 1.5 times the revenue growth rate. Yeah, I feel pretty good about our ability to sustain it. You know, we'll. As we thought about the 2026 plan, we knew there'd be a correction. Yeah ... out there, as I said earlier. We kind of built that into our model, and our view currently is unchanged from what we laid out a year ago. If we look at this year, you know, we estimate that your process control franchise will outperform WFE again this year, down about 12%-15% versus WFE at down 20%+. We know that your growth outperformance has been a combination of share gains and overall increasing process control intensity, as you just talked about. This year's demand profile, though, is a bit more different, right? We've got more contribution from mature technology, which tends to have lower process control intensity. That being said, your memory segment, which also has lower process control intensity, you know, is down quite a bit, right? There's some puts and takes here, but obviously continued strength in leading edge, relative strength in leading edge, advanced foundry and logic. Given your visibility, is overall process control intensity continuing to trend higher this year? You know, is part of the outperformance continued share gains as well? Yeah, I think it's a combination of the two, and I've been pretty adamant over the last six months about despite the maybe carry-forward of some of the capacity or some of the shipments that happened at the end of 2022 or happened in 2022 that would start to show up in 2023. That because we were able to outperform by as much last year. Yes ... that somehow there'd be a retrenching this year. It's pretty clear in my view that when we looked at 2023, that given customers continue to invest in roadmaps- Mm-hmm ... irrespective of what's happening from a demand point of view in both segments. That tends to be good for KLA, as we really provide information that speeds time to results to speed the time to ramp. It's not quality control, it's really, it's more about providing information to improve learning cycles as customers ramp a process node. They're gonna continue to do that. We feel pretty good about that. That memory was cycling more. As to your point, process control intensity is higher overall in logic and foundry. The market moves in our direction. Mm-hmm. I think that's a good thing. We have particular products that are inflecting with EUV. We would expect we're still short supply in those cases. Those products I would expect to grow this year. I thought that would be positive. There'd be infrastructure investment in China, but even silicon wafer investment overall, that in some ways is a little, I wouldn't call it countercyclical, but carries a different cycle. Yeah. That's a part of WFE that we're exposed to that others aren't, and we have a very strong share there. I think the effects of the export controls that were out there also, that the amount, the percent of the Semi business... Mm-hmm. Semi equipment business for KLA versus some of the peers was a little bit less in terms of where the export controls were falling. When I looked at all of it, I felt like, hey, that despite the fact there might be some of this carry-forward revenue, I felt pretty good about our ability to maintain our share of overall WFE and relative performance. It was an important message for us at earnings that against this backdrop of WFE- Yeah ... down somewhere around 20% that we think we're lining up somewhere in the, in the mid-teens. Right ... in terms of the relative performance. I think there's sustainability 'cause of some of the issues we talked about, and feel pretty good about where we're at. Your, your lead times for your tools are quite long, right? They're very complex relative to, let's say, some of your peers out there, optics, light sources, advanced chamber designs, pretty significant software compute and analytical capabilities embedded in your systems as well. Some of your tools, I believe, like reticle and wafer inspection, have like 9-12 month lead times, and demand continues to outstrip supply, right? Given all of this and some pretty significant next-generation process inflections, like move to Gate-All-Around, backside power delivery, you do have some insights into your customer spending trends next year, technology migration plans. I mean, what's your sense directionally, qualitatively about the setup for 2024? The 2024 question. I knew it was coming at some point. Look, look, I think as we go through this correction year, and certainly there's a macro overhang that's going to affect how the industry recovers, the industry's digesting capacity and then what will demand drivers look like as we move into 2024. Our view right now is we believe, and we've made decisions in terms of how we're sizing the company, with an expectation that we'll see a resumption in demand. Sequential demand at some point in 2024. It's not clear exactly when. Mm-hmm. We're certainly sizing and running the company with that expectation and believe that given what I said earlier about our views of our 2026 plan, that we need to make sure we're investing in the right products to be able to enable that, and that we have the capacity in place to be able to support it. Look, I think you look at the different segments, we're obviously benefiting a lot from some of the legacy investment. Yeah. Some of that is in China. I think there's a lot of backlog there. There are deposits there. I think that some of that continues. Some of it's tied to infrastructure, so there could be some timing elements. I mean infrastructure there, I mean, just actual construction. There could be some timing elements that affect when that business actually happens. I feel good about it sustaining. I don't know how much it'll grow, but I think it sustains. Certainly memory's correcting. It's meaningfully this year. Yeah. Expect it to do better. I think on the legacy or the leading edge side, the competitive dynamics are pretty strong. The N3 node will be a long life node given the amount of design activity that's there today driven by multiple markets. The competitive dynamics are strong as well, which should play well to KLA being it'll help sort of enable and ramp that capacity. I feel pretty good about all those factors in terms of how it's driving the setup into next year. How much? Not clear. Certainly, we're making decisions with an expectation that we'll see that, and if we don't, then we probably have more work to do from sizing the company for the current environment and the growth rate moving forward. From where we sit today, that's how we see it. You mentioned the Gartner 2022 market share statistics. You know, based on that, your number one market share leadership in process control continues strong in 2022, right? You are 4.5 times larger than your number two competitor. Process control segment outgrew WFE by 20 percentage points last year. You outgrew that by 800 basis points, which drove, as you mentioned, 3 percentage points of share gain last year. If I look under the hood, I mean, you gained share in multiple areas within process control, optical inspection, bare wafer inspection, mask inspection, macro defect, overlay, right, on top of maintaining your strong number 1 share in thin film metrology. These are all the major segments within process control. What segments do you see share gains this year? History has shown that there's been a pretty strong correlation, right, between your new product introductions and revenue growth, share gains. Help us understand what the team has in the new product pipeline over the next few years? Well, all that at 42% operating margins too. Exactly. We're pretty proud of at KLA, and I think is reflective of the value that we believe we add to our customers and how we share that value with them. I think one of the important aspects about our go-to-market at KLA is a portfolio of solutions that allows our customers to pick and choose across different technologies and capabilities and the economic drivers that affect their productivity. Most of our competitors are point product competitors. They don't introduce products as quickly as we do in terms of new capability, which keeps us on moving target. When the industry starts to shift in terms of where it's inflecting the need for certain capabilities versus others. When you have the portfolio, you're much better positioned to be able to provide that versus going to the customer and saying, "Yes, this one solution meets all your needs." It just, given the amount of investment, given the returns that are at stake, that just isn't all that applicable. When you look at the markets, I think most of the market share has come from the inflection around certain markets. Mm-hmm. If you look at the last few years, in fact, the optical inspection, the pattern inspection business, which is effectively about 4 platforms across KLA, where we address that market, actually 1.7 times faster than overall WFE. That's right. Over the last few years, probably one of the fastest-growing markets of scale in the overall industry. Our position in that market is very strong. As you see that market inflect given. The share we have, it tends to drive the overall market share results. Reticle inspection is another business of the company. Okay. It's a strong position. Again, a product where we address the market with a number of platforms, that allow our customers to balance this technical and economic set of requirements. Also had a very strong above-market growth year. It's pretty close to doubling in the year. That was another one. Right Given what's happened in terms of complexity on EUV reticles has driven it. You have the complexity, but also then the volume, given the wafer starts and the design environment I talked about, is really good for overall mask. There are two markets there. On the metrology side, thin film metrology had share gain. Yeah. In macro inspection, for the first time, we're number one in macro inspection as we start to see design rules start to shrink. The density of the lines and spaces. Yeah are shrinking, and that plays to a higher, capable solution. That's been a strong position for us as well. A number of markets where we saw this inflection, I think that drove the overall share. Moving forward, a lot of investments across the company to continue to deliver capability to support High-NA in an environment where you have pelliclization and an increased number of reticles. That's an important part of the second half of this decade. E-beam capabilities in review, but also inspection and metrology that we use to increase the relevance of the optical capabilities, to point our inspectors. I think that there's some new product offerings that are coming in those areas. We've used X-ray technology in some places. We're looking for a way to scale that more effectively to high volume production. A number of product opportunities, I think, that are coming down the pipe. We invest more than our competitors. Yeah. It drives, A, this portfolio approach, but also the ability to introduce products at a quicker cadence. Big bets to ensure that we're well-positioned in the future. Let's talk about some of these product segments. Wafer inspection, you guys said on the call that you expect your high-end optical wafer inspection business to grow this year. This is a segment where you guys have 90% market share in a $3.5 billion market, right? These are your advanced Gen4, Gen5 broadband plasma inspection systems. These are the workhorse systems in high volume manufacturing. We talked about new product pipeline as an indicator for business momentum. I know the team is working on their next generation broadband light source. Does the team see optical inspection scalability well past the 2 nanometer node? Well, you know, one of the great things about the pace of Moore's Law today is that it has a cadence that introduces enough new capability that makes it compelling from an end market point of view, but isn't fast enough that it drives you know, us to be able to invest, our customers to invest at a cadence that is, you know, extremely high. Mm-hmm puts pressure on our R&D spend and puts pressure on the extendibility of our platforms. You mentioned Gen4 and Gen5. Gen4 actually has a higher percentage of the overall optical inspection revenue than Gen5, and I think it's reflective of customers mix and matching across the portfolio to meet their different needs. There's another generation of Gen4 that's coming out. It's kinda, in some ways it's Gen 4.5, given some of the. Yeah The changes in this platform. We continue to add capability to Gen5, which meets our, you know, our customers' highest end requirements, both in R&D, but also in those most critical layers. Gen5 also supports the reticle environment by doing print check, where we actually print the wafers and use the wafer output to verify the fidelity of the reticle. There's a lot that's happening there. There's new capabilities that are coming out across both platforms, and we have been investing for the last five or six years in Gen6. I don't think we're gonna need Gen6. One of the great things about AI in our business, and we've been using AI for a long period of time. Yeah. That's right. That's right. Given the cost of our systems and what we charge for them, it's been a very unique application. I think one of the great things about what's happening in the industry is because cost of compute's coming down, it's opening up the application universe for more opportunities to use it. We've always used it, and it's allowed us to get more extendibility out of the hardware. We're not constrained as much by the physics and how much light we have, as much as we're constrained with the fact that, you know, filtering and doing analytics and understanding... Mm-hmm what's real from what isn't, are big challenges. We've been able to leverage that capability to understand that better. Again... Yeah effectively trying to speed time to results there. I think there's a next generation out there beyond. Yeah The N2. We're working on it now. I think what we have in the plans for Gen4 and Gen5 for the next, you know, five or six years is gonna meet the market requirements. Gen6 will come out when it's required. In our industry, being early doesn't necessarily pay. That's right. We could have certain capability today in the market. Judging by the fact that customers are spending the money the way they are, shows that the capability is the right capability. For what they want today. At some point, that would change. We try to make sure that we're in the market at the right time with the right solutions that balance cost of ownership and also technical requirements. I think that's a good segue into my next question in terms of introducing the right system, you know, at the time that your customers need it, right? This is your reticle inspection business. You guys were within striking distance of $1 billion, right, for your mask inspection business. You grew this business, like you said, you know, over 80% last year. Market share grew to 55%. I assume it's strong EUV layer penetration build out of more mature technology mask shops that were the main drivers. This year obviously is a weaker WFE year, but I think you guys have talked about continued infrastructure investments for mask as being one of the contributors. How are you thinking about the mask inspection business this year for the team? On your next generation platform, your 8xx e-beam mask inspection platform, maybe you can give us an update there. Sure. This market is, you've got the mask shop part of the market, and you have a fab part of the market. You're selling into those, and the requirements are different. In the legacy markets, particularly in China, there hasn't been a lot of investment and capability for legacy reticles. You've had a very strong demand environment, so there's more design activity, you need more reticles. Our customers there are now starting to invest in infrastructure to support those legacy markets. These are our 20 nanometer and above design rules, and we're selling platforms that we introduced a couple of years ago in many cases. From a manufacturing point of view, and I oversee manufacturing in the company, carries its challenges. Mm-hmm. When you're restarting manufacturing in volume, and volume for us, going from, you know, two to five or six in a given quarter, of a high value system is volume. Trying to ramp the supply chain and do the redesigning of parts that are necessary to sustain products that are that old. Those are the products that we're targeted for those markets, and so that's certainly a driver of growth in that part of the market I would expect it to grow this year. You're still continuing to see investment at the leading edge. Less so, but still leading edge investment from our Teron 6xx platform, which is effectively covering about 85%-90% of all the EUV reticles that are out there. There is fab requalification, which is driving Gen5. Mm-hmm. Which is where they're basically customers are validating the reticle in the fab in process. So when they're using it and they don't use it for a while, they bring it back, they wanna make sure there's no new contamination that was introduced at some point in the process. Then there's 8xx, which is the use of e-beam capability to do inspections on the reticle to meet the highest and most critical design rule requirements as it relates to EUV. That's a product that we've spent significant R&D dollars on over the past several years. We have a few tools in the field. My expectation and hope is that by get to the end of the year, we'll get revenue on at least one. You'll address part of the market with that and those highest... Right. -end requirements, the workhorse products being the Teron 6xx, which you continue to invest in, the optical tool, and then covering the fab part of the business with the optical inspection and the other requal capabilities a nd... Number of products. The team has always said that for your next generation actinic-based platform, you'll be ready when the market is ready for it. you know, I think the market's gonna be ready to move to high-end. We'll see the first of your customers moving to High-NA in 2025. Irrespective of that, is the team still on track to bring actinic to the solution to intercept the High-NA insertion? This is a meaningful product investment for the company, and probably be the most expensive thing we've ever invested in. If you look at the EUV reticle challenge, given the inflection that's happening and trying to control and manage that ecosystem, I was looking at some data, and over the last, you know, what we've spent to date, what I expect to spend this year, I'm probably approaching about $1 billion in R&D investment to solve this problem across a number of products. You're right, we don't think the market requirement for a high-end actinic solution exists until you get to High-NA. Mm-hmm. Both from a pitch point of view. Yep. Which is a design rule density. Mm-hmm. -point of view, the use of pellicles and the requirements for database, but also the number of reticles. All these things are gonna drive that capability that we think the requirements for that capability in that timeframe. I think if we had it today, I don't think we'd sell that many of them. Yep. As exhibited by the fact that customers are solving their problems today with what they're doing. Mm-hmm. When people come to me and say, "Well, are you late?" it's like, well, late would mean that you're spending all your money with somebody else and not with me. If you look at how this market's playing out, I actually feel in this particular area that we're seeing that investment with us. That tells you, I think, what our customers think in terms of their requirements at this stage. In the future, I think things are gonna start to change, and we'll need this capability, but for now we feel like we're well positioned. Perfect. Let's move over to your EPC franchise. It's driven a three-year CAGR, 10%-11%, including services. You drove 7% growth last year. That's even with the slowdown in consumer demand in the second half of the year. Coming into this year, you are anticipating your entire EPC business to be down. Within that, the specialty semiconductor processing equipment business to be flat to up. Here you have a strong exposure to analog, power management, RF manufacturing, very differentiated processing equipment for compound semiconductor-based technologies, right? You've got very good exposure to silicon carbide power transistor manufacturing, here the investment curve is quite strong, right? Obviously, SiC is focused on EV alternative energy infrastructure. What are, in addition to this, like what are the other end market dynamics that, you know are driving the strong trends in SPTS or what, or what we call the specialty semi business? It's a great business. It was an asset inside the Orbotech business that we acquired back in 2019. It validated in a lot of ways that if we can target markets where we can differentiate. If you look at that business and we segment reports and get a sense of where the margins are in that business and their position, that they design uniquely for certain markets, and those markets have inflected. They have carved out a position with products that are designed for those markets. As you said, right now, mostly around automotive, but if you go back, you know, a year and a half ago, RF is another part- Yeah. of their business that was strong. They have MEMS exposure and advanced packaging. There's also some new product offerings like plasma dicing, where we're starting to singulation wafers with a chemical process versus a mechanical laser, and that would introduce particlization in these parts of the market. It's a business that's done well. It's, you know, in the mid fives in terms of overall revenue level, and would expect that the drivers around automotive to continue as we move through this year. We felt that we could take those businesses, as I said, differentiate, engage with customers at a higher level than what they were able to do on their own, look for opportunities within the service business. I think we've been able to get a platform with our customers. Obviously, customers are willing to take more risks because they can hold us accountable. We've seen that part of the investment thesis play out well. It's a good business. It's got a low fifties gross margin, and it's in the $500 million, mid-$500 millions in terms of overall revenue level. I think some of the drivers driving it will continue as we move into, move through this year. Let's talk about the financial profile. Your best in class gross margins are expected to be in the range of 60%-61% through the second half of this calendar year. Your long-term target, you know, is 63%. You did execute to those levels, right, a number of times over the past two years at lower revenue levels. Help us bridge where, you know, you will be here in the second half of the year at 60%- 61% to your target level at 63%. What is the buildup to that? Yeah. We've had some headwinds this year, and if you just go back 12 months ago, what did we think about 2022 WFE? $100 billion. Yeah. What do we think about 2023 WFE? Growth off of that $100 billion. Where are we? $95 billion and somewhere in the mid-$70s billion. Right? Right. A pretty quick adjustment in a relatively short period of time. You look at the fourth quarter of 2022, we had output levels that were, revenue was almost $3 billion, output levels above that. You can imagine, you know, the capacity you have is in excess of that to be able to deliver that result. We've had to accept and adjust, both in our supply chain, but also just in the general capacity of the company, some headwind related to the underutilization of all of that. It's affected some demand driven inventory reserves we've taken that I would expect when we see demand resume, we'll get some of that back over time. Most of it, generally, we do. Also this capacity we've put in place in terms of equipment and fixtures and tooling and new CapEx facility space to support the expectations for growth moving forward. That will be a headwind for a little while, and we see resumption of revenue, we'll start to get some scale on that. We also get some of these new product offerings that come out, gives us an opportunity to reset some of the price versus cost... Mm-hmm. -dynamics over the last few years. KLA's go to market is much more about value and not about cost. There are opportunities to reset that as you move forward and introduce new products, and as those products become a bigger percentage of the mix, I would expect that to ultimately be a tailwind for us. In the near term, we're operating this range of 60 to 60- Mm-hmm. -1%. I think we're closer to 61 than 60, given the revenue expectations. I would expect to see that as revenue scales, we should be able to drive somewhere in excess of 60% of incremental gross margins on that incremental revenue. I feel pretty good about where we're positioned in the long run. Again, the 2026 plan at 63%+, That's right. ...given the mix expectations, Mm-hmm. we have across the business. We feel pretty good about getting there. I think we get through this period of softening and we see resumption of growth. I think that what you've come to expect from KLA will continue as we move forward. No, great insights. Thank you, Bren, for your participation today. Appreciate it. Thank you for having me.