Part of my ongoing series into the semiconductor capital equipment industry. The sector at large has been beaten up over the last 6 months. Some companies in this space have been more impacted than others. But overall demand for semiconductors, and the tools that make them, is expanding with multiple long-term mega-trends such as AI, 5G, Autonomous Driving, Data Centers etc.
In other words, investors with a long-term horizon can find very high quality businesses in a secular growth industry trading at reasonable or attractive prices. My previous presentation covered Applied Materials $AMAT. KLA Corp ($KLAC) is a similar company, but one that specializes in a niche of “inspection and metrology” equipment. These are the tools that inspect and detect defects during the production process and are mission-critical for ensuring semiconductor production efficiency. By some estimates, KLA has ~50% market share in this specialized space and enjoys entrenched customer relationships and very high…
