While the market is focused on WFE, service revenue at the semicaps is accelerating faster. Combined service revenue across ASML, Lam, TEL and KLA grew 33% year on year in the June quarter against 20% for equipment. Service business is the real-time signal as its inflection is reflected in industry utilization rates ahead of equipment. Service business help logic/memory customers stay on top of yields and squeeze more wafer capacity, which is valuable in current situation.
Service business outgrew equipment at most semicaps and guided to grow anywhere between 12-17%. Long-term service targets now run from Lam's 10%+ and ASM's 12%+ up to KLA's 13-15% and AMAT's mid-teens, with the two most recent updates both revised upward.Last but not least, service business funds dividends at major semicaps.Source: Sravan Kundojjala