KLA CORP
For the period ended Sep 30, 2026. Filed Oct 29, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Oct 29, 2026
KLAC$138.49+6.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-30.
0000319201-26-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-10-29.
0000319201-26-000034
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 129 previous paragraphs and 135 current paragraphs.
81 unchanged; 32 reworded; 21 added; 16 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 19 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
•Tariffs, retaliatory trade measures and other trade restrictions, as well as uncertainty regarding tariff authority, implementation and refund process;
Current report
•Our reliance on critical information, including our enterprise resource planning system for daily operations;
Current report
•Risks associated with our interest rate hedging activities;
Current report
•Ongoing changes in the technology industry, including artificial intelligence (“AI”) related developments and changes in semiconductor manufacturing processes, customer investment patterns and end-market demand;
Current report
•Risks related to the development, adoption, governance and use of AI by us, our competitors and third parties;
Current report
•Risks associated with our receipt of government funding;
Current report
While we continue to invest in technological innovation, demand for our products may be affected by the timing of customer adoption decisions and changes in delivery schedules, which can result in variability in our operating results. In addition, geopolitical factors, including government regulations and tariffs, have impacted our results of operations and may continue to do so. We have also increased our purchase commitments, in part to secure the supply of key components, which may affect the timing and magnitude of our costs and working capital requirements. Despite these dynamics, we delivered higher revenue and net income in the three months ended September 30, 2026 compared to the three months ended June 30, 2026 and September 30, 2025, driven by increased sales volume and disciplined cost management. Looking ahead, we expect continued revenue growth as we expand manufacturing capacity and increase production levels to meet customer demand.
Current report
Beginning this quarter, we have changed our primary basis of comparison of results of operations in Management’s Discussion and Analysis from the corresponding quarter in the prior fiscal year to the immediately preceding fiscal quarter. Management believes a sequential comparison provides a more meaningful view of current business trends and operating performance. Accordingly, the analysis below compares the three months ended September 30, 2026 to the three months ended June 30, 2026 and, as required in the first period following this change, also includes comparisons to the three months ended September 30, 2025, where applicable.
Current report
Total revenues increased 13% in thethree months ended September 30, 2026 compared tothe three months ended June 30, 2026, primarily due to higher demand from leading-edge customers in memory, foundry/logic, and advanced packaging technologies, supported by continued data center investment and the adoption of AI and HPC semiconductor devices. Service revenues increased 4%, reflecting support requirements associated with higher product shipments and continued growth in our installed base of tools.
Current report
Total revenues increased 29%in thethree months ended September 30, 2026 compared to thethree months ended September 30, 2025, primarily due to higher demand from leading-edge customers in memory, advanced packaging, and foundry/logic technologies, supported by continued data center investment and the adoption of AI and HPC semiconductor devices. Service revenues increased 14%, reflecting support requirements associated with higher product shipments and continued growth in our installed base of tools.
Current report
Revenues from our Semiconductor Process Control segment for the three months ended September 30, 2026 increased by 15% compared tothe three months ended June 30, 2026, and increased 29% compared to the same period in the prior year, reflecting higher demand from leading-edge customers in memory, foundry/logic, and advanced packaging technologies, supported by continued data center investment and the adoption of AI and HPC semiconductor devices. Revenue growth also benefited from higher service revenues due to support requirements associated with higher product shipments and continued growth in our installed base of tools.
Current report
Revenues from our customers in China increased 49% in the three months ended September 30, 2026 compared tothe three months ended June 30, 2026, and increased 13% compared to the same period in the prior year, primarily driven by increased demand from foundry/logic customers, particularly at mature technology nodes.
Current report
Revenues from our customers in Taiwan decreased 10% in the three months ended September 30, 2026 compared tothe three months ended June 30, 2026, primarily due to lower deliveries to leading-edge foundry/logic customers driven by the timing of customer expansion, partially offset by higher demand from memory customers. Revenues from customers in Taiwan increased 29% in the three months ended September 30, 2026, compared to the same period in the prior year, due to increased demand from leading-edge customers in foundry/logic, memory, and advanced packaging technologies.
Current report
Revenues from our customers in North America decreased 6% in the three months ended September 30, 2026 compared tothe three months ended June 30, 2026, primarily due to slightly lower leading-edge foundry/logic customer deliveries. Revenues from customers in North America increased 107% in the three months ended September 30, 2026, compared to the same period in the prior year, primarily due to increased demand from leading-edge customers in foundry/logic and memory technologies.
Current report
Revenues from our customers in Korea increased 33% in the three months ended September 30, 2026, compared tothe three months ended June 30, 2026, and increased 66% compared to the same period in the prior year, due to increased demand from memory customers, including investments supporting high-bandwidth memory and advanced DRAM technology roadmaps.
Current report
R&D expenses during the three months ended September 30, 2026 were comparable to the three months ended June 30, 2026.
Current report
SG&A expenses during the three months ended September 30, 2026 increased compared to the three months ended September 30, 2025, primarily due toincreases in employee-related expenses of $24.8 million as a result of additional headcount and higher employee compensation and benefit costs, and higher losses on disposal of fixed assets of $4.7 million.
Current report
Interest expense represents interest associated with our debt instruments. Interest on our senior, unsecured long-term notes (the “Senior Notes”) is payable semi-annually. Concurrent with the Senior Notes interest payments, floating interest payments on our interest rate swaps are paid semi-annually and the fixed-rate interest receivable on the swaps is received semi-annually.
Current report
Interest expense during the three months ended September 30, 2026 decreased slightly compared to the three months ended September 30, 2025, primarily due to favorable interest rate swap settlements.
Current report
The effective tax rate during the three months ended September 30, 2026 was higher compared to the three months ended June 30, 2026, primarily due to a reduction in the tax effects of our stock-based compensation expense and the tax effects of the Undertaxed Profits Rule (“UTPR”) provision under the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Global Anti-Base Erosion (“GloBE”) rules during the three months ended September 30, 2026. We are expecting $94.5 million tax expense in our fiscal year ending June 30, 2027 relating to the UTPR provision and have accrued $20.2 million tax expense during the three months ended September 30, 2026. As countries enact legislation to adopt the Side-by-Side Safe Harbor, the UTPR tax expense may be reversed without payment.
Current report
The effective tax rate during the three months ended September 30, 2026 was higher compared to the three months ended September 30, 2025, primarily due to the tax effects of the UTPR provision under the OECD Pillar Two GloBE rules during the three months ended September 30, 2026.
Removed paragraphs (16)
Previous report
•Tariffs and other trade restrictions;
Previous report
•Our inability to access critical information in a timely manner due to system failures;
Previous report
•Ongoing changes in the technology industry, and the semiconductor industry in particular, including future growth rates, pricing trends in end-markets, or changes in customer capital spending patterns;
Previous report
•Risks related to artificial intelligence (“AI”);
Previous report
•Our government funding for R&D is subject to audit, and potential termination or penalties;
Previous report
While we continue to invest in technological innovation, factors such as delays from customers in adopting new chips and technology methods could impact process control capital intensity. Pushouts or cancellations of deliveries to our customers could cause earnings volatility, due to the timing of revenue recognition as well as increased risk of inventory-related charges. Geopolitical factors, such as government regulations and tariffs, have had an adverse impact on our results of operations. However, despite these headwinds, our total revenues and net income improved in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Looking ahead, while we expect continued revenue growth in calendar year 2026, escalating costs for DRAM chips used in the Company’s image computers will continue to negatively impact our gross margin, though we expect this impact to be transitory.
Previous report
Total revenues increased 11% in thethree months ended March 31, 2026 compared tothe three months ended March 31, 2025, primarily due to the increase in product revenues, and is attributable to higher investments from our memory customers, particularly in DRAM, led by high-bandwidth memory, and steady growth in foundry/logic. An increase in service revenues of 16%, due to continued growth in our installed base of tools, also contributed to higher total revenues compared to the same period in the prior year.
Previous report
Total revenues increased 10%in thenine months ended March 31, 2026 compared to thenine months ended March 31, 2025, primarily due to the increase in our product revenues, and is attributable to higher investments by our memory customers, particularly in DRAM, led by high-bandwidth memory, strong customer adoption of our advanced packaging portfolio of products, and steady growth in foundry/logic. An increase in service revenues of 16%, as a result of continued growth of our installed base of tools, also contributed to higher total revenues compared to the same period in the prior year.
Previous report
Revenues from our Semiconductor Process Control segment for the three months ended March 31, 2026 increased by 13% compared to the same period in the prior year, primarily due toincreased revenue from our memory customers, particularly related to DRAM, led by high-bandwidth memory, growth in foundry/logic, along with higher service revenues from an increasing number of tools in our installed base. Revenues in this segment increased by 11% for the nine months ended March 31, 2026 compared to the same period in the prior year, primarily due to increased revenue from our memory customers, particularly related to DRAM, led by high-bandwidth memory, higher revenue from advanced packaging, along with higher service revenues from an increasing number of tools in our installed base.
Previous report
Revenues from our customers in China increased 5% and by less than 1% in the three and nine months ended March 31, 2026, respectively, compared to the same periods in the prior year, primarily due to continued legacy node demand, partially offset by the effects of U.S. export controls and regulations.
Previous report
Revenues from our customers in Taiwan decreased 12% in the three months ended March 31, 2026 compared to the same period in the prior year, primarily due to the timing of shipments. Revenues from customers in Taiwan increased 8% in the nine months ended March 31, 2026, compared to the same period in the prior year, primarily due to increased investments in process control to meet leading-edge demand driven by innovation and growth of AI.
Previous report
R&D expenses during the nine months ended March 31, 2026 increased compared to the nine months ended March 31, 2025 primarily due to increases in employee-related expenses of $87.6 million as a result of additional headcount and higher employee compensation and benefit costs, and engineering project material costs of $31.9 million.
Previous report
SG&A expenses during the nine months ended March 31, 2026 increased compared to the nine months ended March 31, 2025 primarily due to increases in provision for credit losses of $26.1 million, facilities-related expense of $20.3 million, and employee-related expenses of $17.6 million as a result of additional headcount and higher employee compensation and benefit costs.
Previous report
Interest expense during the three months ended March 31, 2026 was comparable to the three months ended March 31, 2025, as average outstanding debt was essentially unchanged.
Previous report
The effective tax rate during the three months ended March 31, 2026 was higher compared to the three months ended March 31, 2025, primarily due to a decrease in the proportion of earnings generated in jurisdictions with tax rates lower than the U.S. statutory rates and a decrease in the proportion of U.S. earnings eligible for the Foreign Derived Intangible Income deduction, partially offset by a decrease in our Global Intangible Low-Taxed Income.
Previous report
The effective tax rate during the nine months ended March 31, 2026 was higher compared to the nine months ended March 31, 2025, primarily due to a decrease in the proportion of earnings generated in jurisdictions with tax rates lower than the U.S. statutory rates and a decrease in the proportion of U.S. earnings eligible for the Foreign Derived Intangible Income deduction, partially offset by a decrease in our Global Intangible Low-Taxed Income and a $230.4 million goodwill impairment charge during the nine months ended March 31, 2024 which is non-deductible for income tax.
Reworded paragraphs (32)
Previous wording
•Evolving Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce (“Commerce”) rules and regulations (the “BIS Rules”) and their impact on our ability to sell products to and provide services to certain customers in People’s Republic of China (“China”);
Current wording
•Evolving Bureau of Industry and Security of the U.S. Department of Commerce rules and regulations and their impact on our ability to sell products to and provide services to certain customers in People’s Republic of China (“China”);
Previous wording
•Unexpected delays, difficulties and expenses in executing against our environmental, climate, or other ESG targets, goals and commitments;
Current wording
•Unexpected delays, difficulties and expenses in executing against our environmental, climate, or other ESG targets, goals and commitments, or meeting stakeholder expectations;
Previous wording
•Climate change, earthquake, flood or other natural catastrophic events, public health crises or terrorism and the adverse impact on our business operations;
Current wording
•Climate change, natural disasters, public health crises, terrorism, acts of war and other catastrophic events and the adverse impact on our business operations;
Previous wording
•Availability and cost of the materials and parts used in the production of our products;
Current wording
•Availability and cost of components, materials or subassemblies used in the production of our products, including due to limited-source suppliers, the availability of rare earth elements or DRAM chip shortages;
Previous wording
•We are subject to risks related to receivables factoring arrangements and compliance risk of certain settlement agreements with the government; and
Current wording
•We are subject to risks related to receivables factoring, banking arrangements and compliance risk of certain settlement agreements with the government; and
Previous wording
We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries. Our broad portfolio of inspection and metrology products, and related service, software and other offerings, support R&D and manufacturing of integrated circuits (“IC”), wafers and reticles. Our products, services and expertise are used by our customers to measure, detect, analyze and resolve critical and nanometric level product defects, helping them to manage manufacturing process challenges and to obtain higher finished product yields at lower cost. We also offer advanced technology solutions to address various manufacturing needs of printed circuit boards (“PCB”), specialty semiconductor devices and other electronic components, including advanced packaging, light-emitting diode (“LED”), power devices, compound semiconductor, and data storage industries, as well as general materials research. In addition, our services business has grown consistently year-over-year and accounted for approximately 23% of our total revenues in the third quarter of fiscal 2026. Our services revenue, which is generated largely from recurring “subscription-like” contracts, increases the value of our contract offerings and extension of system lifetimes resulting from growth in legacy semiconductor markets.
Current wording
We are a leading supplier of process control and yield management solutions and services for the semiconductor and related electronics industries. Our broad portfolio of inspection and metrology products, along with related services, software and other offerings, support R&D and manufacturing of integrated circuits (“ICs”), wafers and reticles. Our products, services and expertise enable our customers to measure, detect, analyze and resolve critical nanometer-scale product defects, helping them to address manufacturing challenges and achieve higher yields at lower cost.
Previous wording
•Semiconductor Process Control: a comprehensive portfolio of inspection, metrology and data analytics products as well as related service offerings that help IC manufacturers achieve target yields throughout the semiconductor fabrication process, from R&D to final volume production.
Current wording
•Semiconductor Process Control: a comprehensive portfolio of inspection, metrology and data analytics products as well as related service offerings that help IC manufacturers achieve target yields throughout the semiconductor fabrication process, from R&D through volume production.
Previous wording
The semiconductor industry continues to experience significant market expansion and diversification. High-performance computing and data centers, fueled by widespread adoption of AI, are driving industry growth. We expect this momentum to continue during calendar year 2026. AI is a technology inflection point driving innovation and demand at the leading edge, and we believe our portfolio of products is uniquely positioned to support leading-edge demand and the ongoing AI buildout. Our semiconductor customers generally operate in one or both of the major semiconductor device manufacturing markets: memory and foundry/logic. End-market demand drivers that are expected to continue to benefit KLA in the long term include adoption of extreme ultraviolet lithography (“EUV”) in high volume manufacturing for Logic and DRAM memory (including high-bandwidth memory), which drives new process control requirements and growth in key markets for KLA. Demand for advanced semiconductor technologies, particularly evident in the 2-nanometer node, which is seeing higher levels of investment and process control intensity, continues to drive investments in AI. Increasing complexity and value of semiconductor packages, particularly for AI and high-performance computing applications, is also driving significant growth in our advanced packaging business. The digitization of all industries, including 5G markets, advances in healthcare and industrial applications, together with the increasing adoption of electric vehicles and intelligence in automobiles, are powering leading-edge design node technology investments and capacity expansions.
Current wording
The semiconductor industry continues to experience market expansion and diversification. High-performance computing (“HPC”) and data centers, supported by increasing adoption of AI, are contributing to industry growth and these trends are expected to continue to influence industry investment in fiscal year 2027. AI represents a key technology inflection point driving innovation and demand at the leading edge, and our portfolio of products is well positioned to support leading-edge demand and the ongoing AI infrastructure buildout. Our semiconductor customers generally operate in one or both major semiconductor device manufacturing markets: memory and foundry/logic. Long-term demand drivers include continued adoption of extreme ultraviolet lithography (“EUV”) in high-volume manufacturing (“HVM”) for logic and DRAM (including high-bandwidth memory), which are increasing process control requirements and expanding our served market. Demand for advanced semiconductor technologies, particularly at leading-edge nodes such as 2-nanometer, is increasing process complexity and process control intensity, which in turn is driving incremental demand for our solutions. Increasing complexity and value of semiconductor packages, particularly for AI and HPC applications, is also driving significant growth in our advanced packaging business. Broader industry trends, including digitization, communication improvements, healthcare innovation, industrial applications, and increasing semiconductor content in automobiles and intelligent systems, are supporting continued investment in legacy and mature-node capacity, where long product lifecycles and expanding end-market demand require ongoing manufacturing investments.
Previous wording
We are continuously assessing the aggregate potential impact of government regulations, tariffs and other geopolitical risks on our financial results and operations. See Part II, Item 1A “Risk Factors” below, and also Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended June 30, 2025 for more information regarding how such actions by the U.S. government or another country could significantly impact our ability to provide our products and services to existing and potential customers, especially in China, and adversely affect our business, financial condition and results of operations.
Current wording
We are continuously assessing the aggregate potential impact of government regulations, tariffs and other geopolitical risks on our financial results and operations. See Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended June 30, 2026 for more information regarding how such actions by the U.S. government or another country could significantly impact our ability to provide our products and services to existing and potential customers, especially in China, and adversely affect our business, financial condition and results of operations.
Previous wording
(1)For the explanation why our net income increased to $1.20 billion in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, refer to the “Results of Operations” section below, as the change is a result of movements in various income statement line items.
Current wording
(1)Our net income increased to $1.55 billion in the three months ended September 30, 2026 compared to both the three months ended June 30, 2026 and September 30, 2025. For the explanation of these changes, refer to the “Results of Operations” section below, as the changes are a result of movements in various income statement line items.
Previous wording
We continue to focus on returning cash to our investors, making $626.0 million in share repurchases and paying $248.8 million in dividends in the three months ended March 31, 2026. Our Board of Directors has authorized a program that permits us to repurchase our common stock, including an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026. As of March 31, 2026, we had $10.31 billion of repurchase authority remaining. In March 2026, we also announced an increase in the dividend level to $2.30 per share per quarter, which was our 17th consecutive annual dividend increase. Refer to the “Liquidity and Capital Resources” section below for more information on our strong cash flow generation and strategy of returning excess cash to our stockholders.
Current wording
We continue to focus on returning cash to our investors, making $935.8 million in share repurchases and paying $305.1 million in dividends in the three months ended September 30, 2026. Our Board of Directors has authorized a program that permits us to repurchase our common stock, including an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026. As of September 30, 2026, we had $8.81 billion of repurchase authority remaining. In March 2026, we also announced an increase in the dividend level to $0.230 per share per quarter, which was our 17th consecutive annual dividend increase. Refer to the “Liquidity and Capital Resources” section below for more information on our strong cash flow generation and strategy of returning excess cash to our stockholders.
Previous wording
Revenues from our Specialty Semiconductor Process segment for the three months ended March 31, 2026 increased by 5% compared to the same period in the prior year, primarily due to timing of shipments and higher service revenues from an increasing number of tools in our installed base. Revenues in this segment decreased by 5% during the nine months ended March 31, 2026 compared to the same period in the prior year, attributable to lower volume of products sold, particularly in China, partially offset by higher service revenues from an increasing number of tools in our installed base.
Current wording
Revenues from our Specialty Semiconductor Process segment for the three months ended September 30, 2026 decreased by 13% compared to the three months ended June 30, 2026, primarily due to timing of system shipments partially offset by higher service revenues from an increasing number of tools in our installed base. Revenues in this segment increased by 16% during the three months ended September 30, 2026 compared to the same period in the prior year, due to timing of system shipments and higher service revenues due to support requirements associated with higher product shipments and continued growth in our installed base of tools. These period-to-period fluctuations primarily reflect the timing of customer deliveries rather than significant changes in underlying business activity.
Previous wording
Revenues from our PCB and Component Inspection segment decreased by 1% during the three months ended March 31, 2026 compared to the same period in the prior year, primarily due to revenues from our Display business being included in the prior year results, a business which has since been exited. The decrease was mostly offset by increased revenues from PCB products, along with higher service revenues from growth in our installed base of tools. Revenues in this segment increased by 9% during the nine months ended March 31, 2026 compared to the same period in the prior year, due to increased revenue from advanced packaging and PCB and component inspection products, along with higher service revenues from growth in our installed base, partially offset by the exit of the Display business.
Current wording
Revenues from our PCB and Component Inspection segment were essentially unchanged during the three months ended September 30, 2026 compared tothe three months ended June 30, 2026. Revenues in this segment increased by 28% during the three months ended September 30, 2026 compared to the same period in the prior year, due to increased revenue from advanced packaging and PCB and component inspection products, along with higher service revenues from growth in our installed base.
Previous wording
Revenues from our customers in Korea increased 80% and 50% in the three and nine months ended March 31, 2026, respectively, compared to the same periods in the prior year, primarily due to increased investments from our memory customers. Revenues from our customers in North America increased 40% in the three months ended March 31, 2026 compared to the same period in the prior year, due to increased investments from both memory and foundry/logic customers. Revenues from customers in North America increased 2% in the nine months ended March 31, 2026, compared to the same period in the prior year, primarily due to increased investments from memory customers and continued legacy node demand, partially offset by lower shipments to foundry/logic customers. Revenues from our customers in Japan decreased 47% in the three months ended March 31, 2026 compared to the same period in the prior year, due to decreased investments from customers in the semiconductor process control segment. The remaining regions accounted for less than 10% of total revenues individually in the periods presented.
Current wording
Each of the remaining regions accounted for less than 10% of revenue in all periods presented.
Previous wording
The following table summarizes the major factors that contributed to the changes in gross margin:
Current wording
The following tables summarize the major factors that contributed to the changes in gross margin during the periods presented:
Previous wording
Changes in gross margin from revenue volume of products and services reflect our ability to leverage existing infrastructure to generate higher revenues. Changes in gross margin from the mix of products and services sold reflect the impact of changes within the composition of product and service offerings. Changes in gross margin from manufacturing labor, overhead and efficiencies reflect our ability to manage costs and drive productivity as we scale our manufacturing activity to respond to customer requirements and amortization of intangible assets. In both the three and nine months ended March 31, 2026, manufacturing labor, overhead and efficiencies included increased employee-related costs due to increases in headcount offset by absorption benefits from better build plans, compared to the same periods in the prior year. Changes in gross margin from other service and manufacturing costs include the impact of tariffs, customer support costs, including the efficiencies with which we deliver services to our customers, and the effectiveness with which we manage our production plans and inventory risk. In both the three and nine months ended March 31, 2026, other service and manufacturing costs included higher installation and warranty costs and increased costs due to tariffs, partially offset by lower inventory-related charges, compared to the same periods in the prior year.
Current wording
Changes in gross margin from revenue volume of products and services reflect our ability to leverage existing infrastructure to generate higher revenues. Changes in gross margin from the mix of products and services sold reflect the impact of changes within the composition of product and service offerings. Changes in gross margin from manufacturing labor, overhead and efficiencies reflect our ability to manage costs and drive productivity as we scale our manufacturing activity to respond to customer requirements and amortization of intangible assets. In both periods presented above, manufacturing labor, overhead and efficiencies included higher employee-related costs due to increases in headcount partially offset by absorption benefits from higher manufacturing volumes. Changes in gross margin from other service and manufacturing costs include the impact of tariffs, customer support costs, including the efficiencies in which we manage our production plans and inventory risk.
Previous wording
R&D expenses during the three months ended March 31, 2026 increased compared to the three months ended March 31, 2025 primarily due to increases in employee-related expenses of $35.7 million as a result of additional headcount and higher employee compensation and benefit costs, and engineering project material costs of $7.3 million.
Current wording
R&D expenses during the three months ended September 30, 2026 increased compared to the three months ended September 30, 2025, primarily due to an increase in employee-related expenses of $31.4 million as a result of increased headcount and higher compensation and benefits costs.
Previous wording
SG&A expenses during the three months ended March 31, 2026 increased compared to the three months ended March 31, 2025 primarily due to increases in provision for credit losses of $23.1 million, employee-related expenses of $14.9 million as a result of additional headcount and higher employee compensation and benefit costs, and facilities-related expense of $6.6 million.
Current wording
SG&A expenses during the three months ended September 30, 2026 increased compared to the three months ended June 30, 2026, primarily due to higher losses on disposal of fixed assets of $4.6 million and an increase in facilities-related expense of $3.1 million.
Previous wording
Restructuring charges were $0.2 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively. Restructuring charges were $0.9 million and $5.6 million for the nine months ended March 31, 2026 and 2025, respectively. For additional information, refer to Note 17 “Restructuring Charges” to our Condensed Consolidated Financial Statements.
Current wording
Restructuring charges were immaterial for the each of three months ended September 30, 2026, June 30, 2026 and September 30, 2025. For additional information, refer to Note 17 “Restructuring Charges” to our Condensed Consolidated Financial Statements.
Previous wording
Interest expense during the nine months ended March 31, 2026 decreased compared to the nine months ended March 31, 2025 primarily due to reduced interest expense following our $750.0 million debt repayment in the second quarter of fiscal 2025.
Current wording
Interest expense during the three months ended September 30, 2026 decreased slightly compared to the three months ended June 30, 2026, primarily due to reduced factoring-related interest expense of $4.3 million.
Previous wording
The change in other expense (income), net during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to a net fair value gain of $31.9 million from an equity security, favorable foreign exchange fluctuations of $12.4 million, and higher interest income of $4.1 million.
Current wording
The change in other expense (income), net during the three months ended September 30, 2026 compared to the three months ended June 30, 2026 was primarily due to a net fair value loss of $18.5 million from an equity investment and release of a tax reserve of $11.6 million in the prior quarter.
Previous wording
The change in other expense (income), net during the nine months ended March 31, 2026 compared to the nine months ended March 31, 2025 was primarily due to a net fair value gain of $35.1 million from an equity security, favorable foreign exchange fluctuations of $13.4 million, partially offset by lower interest income of $4.3 million.
Current wording
The change in other expense (income), net during the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was primarily due to a net fair value loss of $15.1 million from an equity investment, partially offset by favorable foreign exchange fluctuations of $3.1 million.
Previous wording
The following table provides details of income taxes:
Current wording
The following tables provide details of income taxes:
Previous wording
As of March 31, 2026, our cash, cash equivalents and marketable securities totaled $4.96 billion, compared to the $4.49 billion balance as of June 30, 2025. Refer to below discussions of sources and uses of cash during the nine months ended March 31, 2026. As of March 31, 2026, $1.09 billion of our $4.96 billion of cash, cash equivalents and marketable securities were held by our foreign subsidiaries and branch offices. We have recorded appropriate provisions for income or withholding taxes that may result from future repatriations of this balance.
Current wording
As of September 30, 2026, our cash, cash equivalents and marketable securities totaled $4.74 billion, compared to the $4.90 billion balance as of June 30, 2026. Refer to below discussions of sources and uses of cash during the three months ended September 30, 2026. As of September 30, 2026, $785.7 million of our $4.74 billion of cash, cash equivalents and marketable securities were held by our foreign subsidiaries and branch offices. We have recorded appropriate provisions for income or withholding taxes that may result from future repatriations of this balance.
Previous wording
We typically finance our liquidity requirements through cash generated from our operations. Net cash provided by operating activities during the nine months ended March 31, 2026 was $3.24 billion compared to $2.92 billion during the nine months ended March 31, 2025. This increase was primarily due to an increase in customer and other collections of approximately $960 million primarily driven by higher shipments, a decrease in income tax payments of approximately $73 million and a decrease in other tax payments of approximately $30 million; partially offset by increases in accounts payable payments of approximately $580 million and employee-related payments of approximately $165 million.
Current wording
We typically finance our liquidity requirements through cash generated from our operations. Net cash provided by operating activities during the three months ended September 30, 2026 was $1.53 billion compared to $1.16 billion during the three months ended September 30, 2025. This increase in cash provided was primarily due to an increase in customer and other collections of approximately $940 million primarily driven by higher shipments, a decrease in income tax payments of approximately $58 million and a decrease in other tax payments of approximately $50 million; partially offset by increases in accounts payable payments of approximately $595 million and employee-related payments of approximately $70 million.
Previous wording
Net cash used in investing activities during the nine months ended March 31, 2026 was $1.02 billion compared to $122.9 million of net cash provided during the nine months ended March 31, 2025. This increase in cash used was primarily due to increases in net purchases of available-for-sale securities of $1.11 billion, and capital expenditures of $51.8 million, partially offset by a $16.5 million increase in proceeds from capital-related government assistance.
Current wording
Net cash used in investing activities during the three months ended September 30, 2026 was $177.9 million compared to $410.0 million during the three months ended September 30, 2025. This decrease in cash used was primarily due to decreases in net purchases of available-for-sale securities of $332.0 million, partially offset by a $98.9 million increase in capital expenditures and $1.1 million decrease in government assistance.
Previous wording
Net cash used in financing activities during the nine months ended March 31, 2026 was $2.51 billion compared to $3.16 billion during the nine months ended March 31, 2025. This decrease in cash used was primarily due to a $750.0 million debt repayment during the nine months ended March 31, 2025 and a decrease in common stock repurchases of $5.5 million, partially offset by increases in payment of dividends and dividend equivalents of $101.9 million and tax withholding payments related to vested and released restricted stock units (“RSU”) of $12.7 million.
Current wording
Net cash used in financing activities during the three months ended September 30, 2026 was $1.48 billion compared to $881.8 million during the three months ended September 30, 2025. This increase in cash used was primarily due to increases in common stock repurchases of $390.7 million, tax withholding payments related to vested and released restricted stock units (“RSUs”) of $157.6 million and payment of dividends and dividend equivalents of $51.1 million.
Previous wording
The shares of common stock repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the nine months ended March 31, 2026 and 2025. The total amount of stock repurchases during the nine months ended March 31, 2026 and 2025 were $1.72 billion for both periods. The stock repurchase program is intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our Employee Stock Purchase Program as well as to return excess cash to our stockholders. As of March 31, 2026, an aggregate of $10.31 billion was available for repurchase under our stock repurchase program, which reflects an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026.
Current wording
The shares of common stock repurchased under our stock repurchase program have reduced our basic and diluted weighted-average shares outstanding for the three months ended September 30, 2026 and 2025. The total amount of stock repurchases during the three months ended September 30, 2026 and 2025 were $935.8 million and $545.1 million, respectively. The stock repurchase program is intended, in part, to mitigate the potential dilutive impact related to our equity incentive plans and shares issued in connection with our Employee Stock Purchase Program as well as to return excess cash to our stockholders. As of September 30, 2026, an aggregate of $8.81 billion was available for repurchase under our stock repurchase program, which reflects an increase in the authorized repurchase amount of $7.00 billion in the third quarter of fiscal 2026.
Previous wording
During the three months ended March 31, 2026, our Board of Directors declared a regular quarterly cash dividend of $1.90 per share on our outstanding common stock, which was paid on March 3, 2026 to our stockholders of record as of the close of business on February 17, 2026. During the same period in fiscal year ended June 30, 2025, our Board of Directors declared and paid a regular quarterly cash dividend of $1.70 per share on our outstanding common stock. The total amount of regular quarterly cash dividends and dividend equivalents paid during the three months ended March 31, 2026 and 2025 was $248.8 million and $225.8 million, respectively. The total amount of regular quarterly cash dividends and dividend equivalents paid during the nine months ended March 31, 2026 and 2025 was $752.5 million and $650.6 million, respectively. The amount of accrued dividend equivalents payable for regular quarterly cash dividends on unvested RSUs with dividend equivalent rights as of March 31, 2026 and June 30, 2025 was $15.8 million and $13.3 million, respectively. These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 9 “Equity and Long-term Incentive Compensation Plans” to our Condensed Consolidated Financial Statements.
Current wording
During the three months ended September 30, 2026, our Board of Directors declared a regular quarterly cash dividend of $0.230 per share on our outstanding common stock, which was paid on September 1, 2026 to our stockholders of record as of the close of business on August 17, 2026. During the same period in fiscal year ended June 30, 2026, our Board of Directors declared and paid a regular quarterly cash dividend of $0.190 per share on our outstanding common stock. The total amount of regular quarterly cash dividends and dividend equivalents paid during the three months ended September 30, 2026 and 2025 was $305.1 million and $254.0 million, respectively. The amount of accrued dividend equivalents payable for regular quarterly cash dividends on unvested RSUs with dividend equivalent rights as of September 30, 2026 and June 30, 2026 was $10.4 million and $13.3 million, respectively. These amounts will be paid upon vesting of the underlying unvested RSUs as described in Note 9 “Equity and Long-term Incentive Compensation Plans” to our Condensed Consolidated Financial Statements.
Previous wording
As of March 31, 2026, we had an aggregate principal amount of senior, unsecured notes totaling $5.95 billion (collectively, “Senior Notes”) with due dates ranging from fiscal 2029 through fiscal 2063. For additional information on these Senior Notes, see Note 7 “Debt” to our Condensed Consolidated Financial Statements. As of March 31, 2026, we were in compliance with all of our covenants under the Indenture associated with the Senior Notes.
Current wording
As of September 30, 2026, we had an aggregate principal amount of Senior Notes totaling $5.95 billion with due dates ranging from fiscal 2029 through fiscal 2063. For additional information on these Senior Notes, see Note 7 “Debt” to our Condensed Consolidated Financial Statements. As of September 30, 2026, we were in compliance with all of our covenants under the relevant indentures associated with the Senior Notes.
Previous wording
We have in place a Credit Agreement (“Credit Agreement”) for an unsecured Revolving Credit Facility (“Revolving Credit Facility”) with a maturity date of July 3, 2030 that allows us to borrow up to $1.50 billion. Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $500.0 million in the aggregate. As of March 31, 2026, we had no outstanding borrowings under the Revolving Credit Facility. We were in compliance with all covenants under the Credit Agreement as of March 31, 2026 (the net leverage ratio was 0.54 to 1.00, compared to a maximum net leverage ratio of 3.25 to 1.00 on a quarterly basis covering the trailing four consecutive fiscal quarters for each fiscal quarter). Considering our current liquidity position, short-term financial forecasts and ability to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending June 30, 2026.
Current wording
We have in place a Credit Agreement (“Credit Agreement”) for an unsecured revolving credit facility (“Revolving Credit Facility”) with a maturity date of July 3, 2030 that allows us to borrow up to $1.50 billion. Subject to the terms of the Credit Agreement, the Revolving Credit Facility may be increased by an amount up to $500.0 million in the aggregate. As of September 30, 2026, we had no outstanding borrowings under the Revolving Credit Facility. We were in compliance with all covenants under the Credit Agreement as of September 30, 2026 (the net leverage ratio was 0.49 to 1.00, compared to a maximum net leverage ratio of 3.25 to 1.00 on a quarterly basis covering the trailing four consecutive fiscal quarters for each fiscal quarter). Considering our current liquidity position, short-term financial forecasts and ability to prepay the Revolving Credit Facility, if necessary, we expect to continue to be in compliance with our financial covenants at the end of our fiscal year ending June 30, 2027.
Previous wording
Working capital was $7.60 billion as of March 31, 2026, which represents an increase of $986.4 million compared to our working capital of $6.61 billion as of June 30, 2025. As of March 31, 2026, our principal sources of liquidity consisted of $4.96 billion of cash, cash equivalents and marketable securities, as well as $1.50 billion availability under our Revolving Credit Facility. Our liquidity may be affected by many factors, some of which are based on the normal ongoing operations of the business, spending for business acquisitions, and other factors such as uncertainty in the global and regional economies and the semiconductor, semiconductor-related and electronic device industries. Although cash requirements will fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents balances, marketable securities and our Revolving Credit Facility, will be sufficient to satisfy our liquidity requirements associated with working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations for at least the next 12 months.
Current wording
Working capital was $8.02 billion as of September 30, 2026, which represents a decrease of $58.5 million compared to our working capital of $8.08 billion as of June 30, 2026. As of September 30, 2026, our principal sources of liquidity consisted of $4.74 billion of cash, cash equivalents and marketable securities, as well as $1.50 billion availability under our Revolving Credit Facility. Our liquidity may be affected by many factors, some of which are based on the normal ongoing operations of the business, spending for business acquisitions, and other factors such as uncertainty in the global and regional economies and the semiconductor, semiconductor-related and electronic device industries. Although cash requirements will fluctuate based on the timing and extent of these factors, we believe that cash generated from operations, together with the liquidity provided by existing cash and cash equivalents balances, marketable securities and our $1.50 billion Revolving Credit Facility, will be sufficient to satisfy our liquidity requirements associated with working capital needs, capital expenditures, cash dividends, stock repurchases and other contractual obligations for at least the next 12 months.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
We also offer advanced technology solutions across a range of adjacent markets, including printed circuit boards (“PCBs”), advanced packaging, specialty semiconductor (such as LEDs, power devices and compound semiconductors), data storage and general materials research. In addition, our services business has grown consistently year-over-year and accounted for approximately 20% of our total revenues in the first quarter of fiscal 2027. Our services revenue, which is generated largely from recurring “subscription-like” contracts, provides maintenance and other services to maximize uptime, productivity and tool life for our customers, supported in part by continued demand from legacy semiconductor markets.