KLA says optical parts pace its shipments; Coherent and Lumentum report November 4 and 5
KLA beat and guided higher, then told investors on the same call that optical parts pace its shipments and memory prices defer its margin recovery. Coherent reports November 4 and Lumentum November 5, and those two prints decide whether the constraint story holds.
Vincent Jiang · 3 min read
KLA−5.24% — KLA, down 5.24 percent today makes the inspection machines that tell a chipmaker whether its chips actually work, and on October 28 it reported record September-quarter revenue of $4.14 billion, up 29% year on year, beating the $4.04 billion consensus 12. The December guide was stronger still: $4.7 billion plus or minus $200 million against $4.54 billion expected, with adjusted earnings per share of $1.44 against $1.36 expected 12. Growth is reaccelerating, and the quarter itself was not the problem.
KLA revenue jumped 29% last quarter after three quarters of slower growth
Data
| Revenue, $B | |
|---|---|
| Q4 '24 | 3.08 |
| Q1 '25 | 3.06 |
| Q2 '25 | 3.18 |
| Q3 '25 | 3.21 |
| Q4 '25 | 3.3 |
| Q1 '26 | 3.42 |
| Q2 '26 | 3.66 |
| Q3 '26 | 4.14 |
The pacing item is a part KLA buys, not sells
The complication came from KLA's own call. Lead times average about 12 months, with high-end optical components the primary pacing item for shipping systems 3. High memory prices inside its image-processing systems are a headwind, so the 62.5% non-GAAP gross margin (adjusted, excluding certain costs) guided for December does not return to the 63-64% target range until the second half of 2027 23. The company that inspects everyone else's supply chain cannot fully control its own inputs.
Gross margin has climbed for two years but still sits below the 63-64% target
- Gross margin, %
- Estimate
Data
| Gross margin, % | |
|---|---|
| Q2 '24 | 60.7 |
| Q3 '24 | 59.6 |
| Q4 '24 | 60.3 |
| Q1 '25 | 61.6 |
| Q2 '25 | 62 |
| Q3 '25 | 61.3 |
| Q4 '25 | 61.4 |
| Q1 '26 | 61.1 |
| Q2 '26 | 61.4 |
| Q3 '26 | 61.9 |
| Q4 '26* (estimate) | 62.5 |
The 5.7% drop repriced the margin and shipping timeline, not the demand forecast
On October 30 KLAC fell 5.7% 5. KLA raised its 2026 wafer-equipment forecast to about the mid-$150 billions and expects the 2027 market above $200 billion 3; its advanced-packaging process-control revenue is on track for roughly $1.1 billion in 2026, growing more than 70%, about twice the market rate 4. The forecasts are intact.
What the market now asks is who owns the scarce component. Lam Research−5.46% — Lam Research, down 5.46 percent today, the wafer-fabrication equipment maker, already said parts capped its own December guide, with shipments slipping into March 8.
Marvell is bidding for the scarce part
The optics squeeze is now priced in deal terms, as this site reported on October 26 67. Marvell−9.25% — Marvell, down 9.25 percent today, the AI and data-center chip designer, is in advanced talks to buy laser maker Lumentum, whose optical capacity was sold out through early 2029 (our October 9 story), in a deal Bloomberg Intelligence now sizes near $100 billion, about 31% above Lumentum's−8.16% — Lumentum, down 8.16 percent today Friday close, paid in Marvell stock 67. The new fact since our coverage is KLA itself naming optics as what paces its shipments.
The first test of the squeeze comes this week
The counterpoint is that scarcity is the bull case's cost of goods: Coherent, the other big independent laser supplier, is doubling its indium phosphide output (the material its lasers are made from) and reports on November 4, and Lumentum reports November 5 7. Those two prints are the first hard read on whether optical supply loosens, and with it whether KLA's December guide and Marvell's premium hold.
The premium is priced, and insiders sold
Note the price already paid for all this: KLAC trades at about 28.7 times forward earnings against 19.4 for its sector, and insiders sold $112.3 million of stock over the past year with no purchases 45.
Watch November 4 and 5. If the laser suppliers confirm shortages, KLA's constraint is capacity, and the stocks that own the bottleneck keep the premium. If they do not, the 12-month lead time starts to look like a story with a shelf life.
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