Brian Chin: Okay. Yes. That’s fair. And this is probably just digging into a question that was recently asked. But, I mean, I think the math might suggest that in the March quarter, the memory system revenue could be something like $250 million, maybe $250 million to $300 million. Maybe that’s not trough, but it seems pretty low comparable to recent periods and going back low ways. And so, maybe not trough, but not too far off, is that kind of unfair conclusion?
Bren Higgins: I would have to — yes, you’re right. I mean, it’s lower than it has been for a few years. I don’t know if it was lower in any given quarter back, let’s say, in late 2018 or early 2019 in that time frame. I’d have to look. But it’s certainly as a percent of the total as low as it’s been for some time.
Operator: Thank you. Our next question will come from Sidney Ho with Deutsche Bank. Your line is open.
Sidney Ho: Great. Thanks for taking my question. The revenue decline in the March quarter is a little more severe than we kind of expected. I guess, we had thought the revenue is relatively stable, especially given the large backlog you had going into the quarter. Is it just that you were able to pull in some of the revenues into the December quarter, or was it my assumption that revenue could be stable in the near term was incorrect?
Bren Higgins: Sidney, it’s a great question, and you’re absolutely right. It pulled in into the December quarter. When we started the quarter, we had risked out some of the…
Operator: It seems we have lost speaker connection. Please hold. Ladies and gentlemen, please stand by as we work through this technical difficulty. Again, ladies and gentlemen, please stand by as we work through this technical difficulty. All right. We are now back live.
Bren Higgins: Thank you, Chelsea. Sorry, we got cut out there. I know a little in answer to Sydney. So Sidney, let me just start again. Your question was about just the quarter-to-quarter changes. And you’re absolutely right that we did see the strength in Q4, and that was a pull forward from the March quarter. As we were looking at the business back in October, we had some systems where we were dealing with some supply chain issues, particularly as it relates to broadband plasma and reticle inspection products. As we work through the quarter, we were able to work with those suppliers, get the parts we need, run through our qualification processes and complete those tools. Customers, given the demand and balance we’ve been dealing with for some time on these products, our ability to supply relative to where demand is, we’re more than willing to take the products when we had them finished.
So when you add the two quarters together, the number is basically the same. And our view here is we’re going to keep the line moving, particularly as it relates to getting these systems out the door to meet customer requirements. And so we finished them and we shipped them at the end of the quarter.
Sidney Ho: Okay. That’s helpful. Thanks. Can I ask the second question? You talked about expecting operating expenses to come down throughout the year. What is a good level to think about exiting this calendar year? Talk about maybe what are the areas you see more — you’ll see more of the cuts. And are there any of the actions impacting the gross margin positively as well? Thanks.
Bren Higgins : Yes. I think the gross margin guidance we gave earlier stands for itself and reflects some of the actions that we’re taking just to deal with. One of the challenges in our factories is we’re coming off, which drove our inventory issue that we had this quarter as well as we’re coming off pretty high growth expectations in a pretty short period of time. It wasn’t that long ago when people were talking about $100 billion of WFE this year and 105 or more into 2023, so $100 billion in 2022. And so there’s been about $30 billion plus of WFE that’s come out in a relatively short period of time. That had an effect on some of the buying that we’ve done to drive our supply chain the way that we have. But also, it will have to deal with some of the underutilization of the factory resources that were put in place to support higher volume levels.
But the guidance I gave in terms of gross margin reflects those actions and what we plan to do. I would think that by the end of the year, we’ll probably be looking at a quarterly run rate based on how we’re running the business today. And our expectations for topline, somewhere in that — I’ll say, somewhere around $530 million to $535 million. So, we’ll see it trend down as we go according to each quarter, more or less. And depending on how we see the topline evolving, not only as we look at the second half of the year, but as you start to look at 2024 and size 2024, then we’ll come to a determination whether that is appropriate level for us to be at or whether we need to do more or less from there.
Operator: Thank you. Our next question will come from Atif Malik with Citi. Your line is open.
Atif Malik: Hi, thanks for
Operator: All right one moment. All right, Atif, your line is open.
Atif Malik: Can you hear me?
Rick Wallace: Yes, we can hear you.
Atif Malik: All right. So, I have a question on the memory investments. Are you expecting memory CapEx reduction to be broad this year, or just one or two memory makers?
Rick Wallace: I’m expecting it to be pretty broad. Look it will vary by customer. And as you know, it’s not our strongest market in terms of overall exposure, and we tend to be more focused on the technical part, right, technology roadmaps, less so than capacity. So, when we look at it — I think it’s pretty broad across all our customers, but varies according to some of them, right? I don’t think they’re all completely consistent.
Atif Malik: Got it. And then on China WFE, are you expecting China WFE to be down as much as overall WFE? And what’s holding China WFE? Is it the trailing edge investments? And what’s driving higher investments on the trailing edge? Is it all to end market or maybe higher process control intensity?
Bren Higgins: Yes. Most of the logic investment has been at the legacy nodes. The other thing that gives us some confidence about 2023 that I had mentioned in the earlier answer was the infrastructure investment that’s happening in China for mask investment, mask infrastructure, and for wafer infrastructure, which is parts of WFE that we’re exposed to that some of our peers are. So, when I look at the overall, inclusive for KLA, inclusive of what we expect in export restriction, which hasn’t changed from what we talked about a quarter ago, I think overall, we’ll see our business in China likely decline less than the overall WFE.
Atif Malik: Thank you.
Operator: Thank you. Our next question will come from Tim Arcuri with UBS. Your line is open.
Tim Arcuri: Hi guys, thanks. There was a question before about EUV and I’m wondering if you can sort of help give a number in terms of how much of your revenue attaches directly to EUV. There’s not a ton of inspection in the litho cell, but you certainly get pulled along with anything that helps sort of ordered onto scaling. So, — and obviously, EUV does that. So, I’m kind of wondering if you can handicap, how much of your revenue gets carried along with EUV? And then I had a follow-up. Thanks.
Rick Wallace: Yes, Tim, we don’t really break it out like that, but I can kind of give it a shot and talk about applications that are related. The main one, the most obvious one is €“ that’s new is print check, and that is inspection that’s directly related to EUV. And I think the other one is, of course, all the reticle stuff. There is some overlay work that also happens relative to some of the matching challenges associated with EUV. So I would say, part of each of those markets, and if you had to add them all up, probably 15% to 20% of what we’re €“ overall, what we’re doing in those markets is probably related directly to EUV as opposed to additional scaling. We can do some work and come back on that because it has been growing. The print check part has been driving a lot of the growth that we’re seeing in the Gen 5 in particular work that we’re seeing. So that’s kind of how I’d handicap it Bren?
Bren Higgins: I think that’s good.
Tim Arcuri: Awesome, Rick. Thank you. Super helpful. Bren, I had a question for you on process control systems. It seems like the guidance €“ well, actually, it’s a two-part question. It seems like the March guidance implies something in the 16.5% range for Process Control segment systems. So I wanted you to confirm that, first of all. And then the real question is the timing of when the process control systems bottoms because Lam is bottoming in March, but it seems like if I take low to mid-70s WFE, I assume you don’t lose much WFE share. It’s kind of hard to see the number not bottoming until you get to 1.1 roughly and you’re still at 1.6. So, can you sort of answer those for me?
