Over the past few years, we’ve seen KLA evolving from its origins as a process control company focused on front-end solutions, to a more holistic organization that extends its reach into more segments of the electronics chain, like, packaging, display, and components. The ICOS inspection product line got it pointed in that direction back in 2008, and the 2019 acquisition of Orbotech, along with its subsidiary SPTS Technologies, brought them the rest of the way. The company even rebranded and assigned new meaning to its initials: Keep Looking Ahead.
Last November at SEMICON Europa, I sat down with Oreste Donzella, EVP at KLA, to talk about KLA’s master plan to integrate the newly acquired companies, but he wasn’t ready to disclose that information. So instead, we talked about another one of his passions: ensuring device reliability in automotive electronics. However, after the recent announcement of the establishment of the Electronics, Packaging, and Components (EPC) Group to be led by Donzella, it was time to continue that conversation via Zoom.
The intention for the EPC Group is to bring together ICOS, SPTS Technologies, and Orbotech’s printed circuit board (PCB) and flat panel display (FPD) divisions. “ICOS had run almost independent for more than a decade and SPTS had never been fully integrated into Orbotech. We saw it as a great opportunity to pull all of these businesses together in the new EPC structure,” explained Donzella.
In answer to my burning question, “What about the individual brands? Will they go away?” Donzella explained that the brands are widely recognized by customers and remain effective in each business they serve. Each division will be accountable for its business results as part of the same group within KLA.
How does EPC fit into the overall KLA corporate structure? Donzella explained that KLA now comprises three main groups:
- Semiconductor Process Control Group, run by Ahmad Khan, manages the KLA semiconductor process control core business.
- Global Support and Services, run by Brian Lorig, manages the KLA semiconductor service business, mostly based on a subscription model, as well as KLA Pro and KLA Instruments organizations.
- The EPC Group, with the four divisions mentioned in the previous paragraph, reports to Oreste Donzella.
The Changing Needs of Customers
After years of smartphones as the only driver for semiconductor innovation, “something magical happened in 2017, prompting the so-called data era,” said Donzella. He’s talking about the emergence of many trends, such as 5G, artificial intelligence (AI), and the Internet of Things (IoT), driving the transformation of key industries like mobile, data centers, automotive and virtual connectivity.
Take 5G and the need to build 5G base stations with a higher content of semiconductors, for example. “We are only at the beginning of this revolution that will continue with the adoption of mmWave technology for several years. The SPTS business inside the EPC group, for example, is greatly benefitting from this trend because they’re a leader in deposition and etch for RF device critical for 5G infrastructure,” said Donzella.
Additionally, the need for scaling compute power to facilitate the AI revolution is inspiring innovation in packaging through heterogeneous integration, 2.5D, and 3D hybrid bonding approaches, which is offering another growth opportunity to the KLA product portfolio.
The KLA Secret Sauce
In the news announcement, KLA CEO Rick Wallace references KLA’s operating model, and how it will be applied to the EPC Group. I asked Donzella what he meant by that.
“We go through a rigorous product life cycle (PLC) operating process to design, build, prototype, and test our products. We’ve been doing it for 25 years, and it’s our secret sauce for risk-free product development,” he explained.
Another element of KLA’s operating model is its process for strategic planning. “I believe nobody does it like KLA. Strategic planning is methodically done in three different steps. We take a meticulous top-down look at the market and history, considering opportunities, competition, and risks, and use it as a basis for financial and strategic planning for the next years,” he said. “The EPC Group will embrace and take advantage of this crucial process of KLA’s operating model to develop solutions that meet market needs and deliver on financial commitments.”
Why Expand Outside of Process Control?
In a nutshell, it’s all about growth. “We can’t grow only in a market space that we already have a very strong position,” explained Donzella.
By acquiring Orbotech and SPTS, not only did the company expand its reach into new markets, like FPD, it also extended its semiconductor and packaging product portfolio to process technologies. For PCB, KLA now offers a comprehensive portfolio that includes inspection, repair, direct imaging, drilling, and software solutions. FPD offers inspection and test product solutions. Finally, SPTS provides deposition and etch processes that are developed specifically for RF, compound semiconductor, MEMS, power, and advanced wafer-level packaging applications.
“We killed two birds with one stone,” he said. “SPTS is the fastest-growing division right now, because of growth in MEMS and RF, but we expect the entire EPC Group to deliver exciting results in the next few years.”
That said, be on the lookout for more growth in EPC as KLA keeps looking ahead.