KLA Corporation: Long Term Thinking (NASDAQ:KLAC)



KLA Corporation (NASDAQ:KLAC) is well positioned to capitalize on the growth of the computer industry and the desire to re-embed supply chains. We believe KLA is fundamentally undervalued and view weakness as a buying opportunity.

Fears about WFE spending

Investments in the global semiconductor industry from 2000 to 2022 (Statista)

Overall Growth in Computing

4.4 Implications for Future Performance Improvements This paper shows that progress in computer chess, computer go, weather forecasting, protein folding, and oil exploration depends on an exponential increase in computing power. We suggest that this is probably a broader phenomenon since the computational techniques used for these areas are also used in many others. In particular, we point out that advances in natural sciences and engineering often require finer approximations, more complicated evaluations, repeated analyzes under different initial conditions, greater search depth and more degrees of freedom. Support for this view comes from Hyperion, a computer research company that collected 690 examples of high-performance computing. They found that investing in high-performance computing significantly improves commercial success and fosters scientific innovation in many areas [90].

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In this article, we bring together direct quantitative evidence of the impact that computing power has had on five areas: two computer heroes (chess and go) and three economically important applications (weather forecasting, protein folding, and oil exploration). Processing power explains 49% to 94% of performance improvements in these areas. But while economic theory typically assumes a power-law relationship between inputs and outputs, we find that linear improvements in these outcomes require exponential increases in computational power. This helps illustrate why the exponential growth in computing power driven by Moore’s Law was so important to progress, and why improvements in performance in many areas become economically weak when Moore’s Law collapses.

Supply chain re-shoring

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