Good afternoon. My name is Steve, and I will be your conference operator today. At this time, I would like to welcome everyone to the KLA-Tencor Third Quarter Fiscal '12 Conference Call. [Operator Instructions] And now I'd like to turn the call over to Ed Lockwood with KLA-Tencor Investor Relations. Please go ahead.

Thank you, Steve. Good afternoon, everyone, and thank you for joining us on our call today. Joining me today are Rick Wallace, our President and Chief Executive Officer; and Mark Dentinger, our Chief Financial Officer. We're here today to discuss third quarter results for the period ended March 31, 2012. We released these results this afternoon 1:15 Pacific Time. If you haven't seen the release, you can find it on our website at www.klatencor.com or call (408) 875-3600 to request a copy. A simulcast of this call will be accessible on demand following its completion on the Investor section of our website. There you'll also find a calendar of future investor events, presentations and conferences, as well as links to KLA-Tencor's SEC filings, including our annual report on Form 10-K for the year ended June 30, 2011, and our subsequently filed 10-Q reports. In those filings, you'll find descriptions of risk factors that could impact our future results. As you know, our future results are subject to risks. Any forward-looking statements, including those we make on this call today, are subject to those risks, and KLA-Tencor cannot guarantee those forward-looking statements will come true. Our actual results may differ significantly from those projected in our forward-looking statements. More information regarding factors that could cause those differences is contained in the filings we make with the SEC from time to time, including our fiscal year 2011 Form 10-K and current reports on Form 8-K. We assume no obligation and do not intend to update these forward-looking statements. However, you can be assured that any updates we do provide will be broadly disseminated and available over the web. With that, I'll turn the call over to Rick.

Thanks, Ed. I'm pleased report that KLA-Tencor began calendar 2012 with a strong fiscal third-quarter, delivering revenue and earnings growth that surpassed the upper end of the guidance ranges. Revenue grew 31% sequentially to $841 million in the March quarter, and non-GAAP earnings per share was $1.27. Gross bookings in March were $833 million, coming in at the lower end of the guidance range, with the shortfall largely attributable to a shift in the timing of one large order into the June quarter. In general, the semi cap equipment demand environment is healthy today. Device manufacturers are maintaining a high level of investment at the leading edge in their efforts to support technology development and to meet robust and demand forecast associated with the rapidly growing mobile electronics markets. As a result of these technology and demand trends, the rate of change in device and process technology remains strong and continues to accelerate. In fact, the introduction of new transistor and memory technologies, such as high-k in metal gate and thin FET in logic and 3D NAND in memory, as well as advanced manufacturing and packaging techniques, are all contributing to driving higher technology development and manufacturing cost for our customers. These technologies and techniques are also compounding the yield challenges at the leading edge, helping to drive strong adoption of process control. This is translating to market-leading growth for KLA-Tencor, as advanced process control becomes increasingly important for our customers. And the industry continues to look to KLA-Tencor as the market leader to meet their increasing complex inspection and measurement challenges at the leading edge. Our strong market position was recently highlighted in Gartner's annual industry market research report. That study shows KLA-Tencor is growing share in process control, with particular strength in the wafer inspection and metrology markets,…

Thanks, Rick, and good afternoon, everyone. I'll remind you that we present our income statement in 2 formats: one, under U.S. GAAP; and the other in a non-GAAP format, which excludes amortization and write-down of intangible assets associated with acquisitions, restructuring related charges and credits, and any costs of credits which are outside of our core operations, including unusual tax items. There was a $0.06 per share difference between this quarter's GAAP and non-GAAP earnings. Our balance sheet and cash flow statements are presented in GAAP format only. Most of my prepared remarks on operations will refer to non-GAAP information. Where I mention GAAP numbers, I'll make the distinction. Reconciliation of our GAAP to non-GAAP income statement is attached to our press release and available at our website. Q3 new orders were $833 million. Net orders were $816 million and were down about 14% from last quarter. The regional distribution of new systems orders in the quarter-to-quarter change in distribution were as follows: the U.S. was 22% of new systems orders in Q3, up from 19% in the December quarter; Europe was 8% of new systems orders, up from 2% in Q2; Japan was 11%, up from 9% last quarter; Korea was 39%, up from 28% last quarter; Taiwan was 13%, down from 39% last quarter; and the rest of Asia was 7%, up from 3% in Q2. The distribution in new orders by product family in the quarter-to-quarter change in distribution were as follows: wafer inspection was 54%, compared with 47% last quarter; reticle inspection was 6%, down from 13% last quarter; metrology was 19%, down from 22% in the prior quarter; solar, storage, LED and other non-semi was 4%, up from 3% last quarter; and service was 17% of new orders in Q3, up from 15% last quarter.…

Okay. Thank you, Mark. At this point, we'd like to open up the call to Q&A. [Operator Instructions] And so, Steven, we are ready for the first question.

[Operator Instructions] And your first question comes from the line of Satya Kumar with Credit Suisse. Satya Kumar - Crédit Suisse AG, Research Division: I was wondering if you could give a little bit more color on the pushout that you talked about whether in logic, foundry or memory. Was the pushout related to end demand or was it related to other constrains like availability of other equipment like lithography or facilities? How should we think about that?

Sure. The pushout was actually just a timing issue, and the orders have since been processed. So it was really not related to any end demand, just getting things through your system.

Your next question comes from the line of Krish Sankar from Bank of America Merrill Lynch.

Rick, In terms of the foundries that are placing these huge CapEx numbers, from your vantage point, do you think that it's a mixture of both true end demand as well as improvement in yield? Or do you think the yield has a preload run rate if the CapEx does to increase to meet the demand? And I had a follow-up, too.

I think it is definitely the case. Our customers have a lot of demand for leading edge in the foundry world, and I think that's driving a lot of the activity we're seeing. And the yields, 32 nanometers are not great, and they're lower than that at 28. And I think there's also development work driving business for us at 20 nanometers. So -- and I have met with most of them in the last 90 days. And for sure, they're seeing strong demand based on kind of broad-based market pull, whether it be 4G or LTE chip sets, graphics, or processors, to support mobility, and it's at multiple customers. But there's certainly yield issues associated with both metrology and inspection, which is why I think KLA-Tencor's performing disproportionally well in this environment.

If I could squeeze a follow-up for Mark. You said the OpEx is increasing in June. How do we think of that going forward or how do we think about the incremental operating margin going forward as you start doing other investments?

Yes, 2 responses to that. The OpEx, we're anticipating at least based upon what we know today that the OpEx will continue to increase into next year as we prepare for a next-generation product development. It's probably going to be more pronounced on the research and development side than it is on the G&A side, but there will be a little bit of G&A growth as well. I still think you're looking at a few million dollars of quarter increase, as we move into next year. At least that's our mindset as of today. If things change, we'd certainly update you, but that's certainly our framework for today.

Your next question comes from the line of Terence Whalen with Citi.

When I look at the composition of your orders that you reported, it seems like there was a follow-up in logic orders but conversely a pickup in some of the memory orders. Can you describe the composition of these memory orders and what you're seeing in general in terms of behavior among your memory customers?

Yes, sure, Terence. I think that you're right. We saw memory picked up to about 29%. And if you look back in December, we're at 16%. So pretty significant increase there, largely in NAND and mostly technology-related dealing with some of the new yield challenges they have and metrology challenges at the advanced node. Logic, we did see lower logic, and I think that it's always -- logic tends to be kind of lumpy because there aren't that many players, and it's just where we are in the order cycle with them. And in fact, we don't see logic getting stronger as we go out in the June quarter. Probably, it'd be later in the year before we see logic pick up. So I think for now, in fact, we're forecasting logic down even further as a percent of total next quarter, with foundry actually picking back up.

And as a quick follow-up, do you expect the second half memory orders to be stronger than the first half?

Sure. We do see some signs of strengthening in DRAM for technology. I wouldn't say for capacity. And we'll see a little bit of that in the June quarter, as we forecast a little bit more activity going forward in DRAM. And I think the second half, again, technology-related, we do expect memory to pick up some, but we also see strength in the foundries. And as I said, we'll see logic, we believe, coming later in the calendar year.

Your next question comes from the line of C.J. Muse with Barclays.

This is Olga calling in for C.J. Just a follow-up on the 2 previous questions. You highlighted pretty solid visibility for foundry strengths through the rest of the year, expectations for logic to pick up in the second half and memory as well. So on a NAND basis, can you just talk about how you expect shipment and orders to be weighted first half versus second half?

You know, we really -- we're not in a great position to guide for the entire year. But when we do look out, we see CapEx in general for the year to be flattish to maybe down a few percent. And so from that standpoint, when you look back at the 2 compares, you do have to see some overall strengthening happening in the second half. And with our backlog situation, the model we gave, the guidance we gave for the next quarter, I think you could see we're normally at a book-to-bill about 1, if you take the midpoint on those ranges. And so we expect to be able to continue to do that. But probably we'd like to support our customer base as we think about the demands they have to ramp quickly. So all our efforts are on ramping, manufacturing, and we're really supply-constrained right now to be able to support our customer base.

And then specific to, I guess, process control intensity, given the continued yield issues that foundry and you've recently highlighted yield issues emerging in the NAND side as well, could we see process control intensity actually exceed 15% this year, or would it still be in the 14% to 15% range?

I think it's hard to get that precise on it as we go forward. I think it does depend somewhat on the complexion of the different customers that we're working in and their timing. But we've definitely seen since last year -- through last year, we saw an increase in intensity. Some customers are further along in their understanding of their challenges than others. There are a couple of other sectors that are low right now from a process control standpoint that we expect to pick up late in the year. And those -- reticle inspection is not particularly strong right now, and that's more just driven by the dynamics of that market. And the wafer manufacturers are not strong. So kind of in those 2 realms, we think there's more opportunity for intensity to increase. But that's not really happening in our next 90-day outlook.

Your next question comes from the line of Jim Covello with Goldman Sachs.

I do apologize if you touched on this. I was a little late hopping over from one of the other calls, but it's kind of a bigger picture question. Just you guys are uniquely positioned, I think, to comment on some of the differences and some of the similarities between the yield issues that happened at 45-nanometer, especially at some of the foundry customers and then the yield issues that are happening today. What do you think is similar? What do you think is different about these yield challenges that those customers are facing in this cycle?

Yes, I think, mainly, probably the bigger one is related to metrology. I think that there are a number of challenges people are facing in yield in general that we saw at 45, which plays to the defectivity. But there are some uniqueness associated with the metrology product lines that we have with multiple patterning happening and increased intensity and some of the 3D thin FET structures driving more metrology. So I'd say that the intensity goes up, and it's driven as much by increase in metrology as it is by the ongoing challenges of defectivity.

So -- I'm sorry. I think understood that, but the issue just -- from KLA-Tencor standpoint, it's just the issues that they're facing require more metrology than the issues the 45-nanometer yield challenges created. Is that what you're saying?

Exactly. Metrology is a bit more stressed than it was at 45, which is I think why the overall intensity goes up.

I see. And is there a simple way to explain the technical issue that drives that increase in metrology?

Yes, the fact that you have to do multiple patterning because EUV is late. And I think that they're definitely more critical layers which just drive -- so the requirements for overlay and the requirements for FinFET drive more metrology. There's also strong defectivity, but we had strong defectivity challenges back at 45 as well. That's what kickstarted a lot of our business.

Your next question comes from the line of Raj Seth with Cowen and Company.

Rick, just a follow-up on the last question. Is the mix of architecture types that are going through the foundries -- big die, consumer chips, et cetera, is that a material factor in some of the yield issues? Or is it more around the node transition and less about particular architectures, be it graphics or processors, et cetera?

No, it's definitely related to die size and geometry, Raj. You have both things happening, and I think it's more analogous to what happened to processors, microprocessors, in the '90s when they were getting both larger die but at the same time smaller dimensions. We're seeing that in mobility, driven by slightly different factors. One is a drive for less power. But it is definitely the case that the die are getting bigger and the yield challenges associated with that more pronounced, especially as they go to smaller design rules.

A quick follow-up if I might. The comment you made on the trajectory in the second half, what were you suggesting about the order trajectory? I think I understood what you said on shipments. But were the orders being expected flattish or would they be down? And does that include the incremental TSMC spending that they announced today?

Well, Raj, it's -- I mean, as I said, we don't like to model what the second half is going to look like at this point. It's really tough for us. But we do see a lot of good indicators out there in terms of the conversations we're having with customers in both the foundry space -- and there are many people who said foundries were going to fall off 3 quarters ago, and we see ongoing strength. And I think it's driven by this mobility drive. We have multiple players supporting that, including a big foundry increasing their CapEx today. We don't that is necessarily the end of that. But at the same time, we do have some opportunities because of the process challenges associated with the latest generation NAND and what we believe will be in DRAM. So on balance, I also think there's some capacity opportunities as we get wafer manufacturers turned back on, and that's going to take a while. But we're -- it's too soon to model. We have an overall view for the year relative to last year, flat to down 5. But I don't want to get into a specific guidance for the second half at this point.

Your next question comes from the line of Mark Heller with CLSA.

You mentioned supply chain constraints. I'm just wondering if your lead times are starting to extend at this point? And if so, what are they? And I was also hoping to -- can you sort of characterize your bookings concentration among your customers? Is it broadening out or is it still fairly concentrated with 1 or 2 customers?

Okay I'll take the 2 in the order you gave them. The first one, the supply constraints are really driven by the ability to get parts. It's not so much our space issues or talent. We've got the people. It's a matter of pulling the supply chain, and we've had a dramatic ramp. For us, it's kind of the usual suspects. It's going to be around optics. It's around illumination sources, whether they'd be laser or broadband. And it's really related to critical components which have longer lead time. And we've done -- and our suppliers have done a great job of ramping up to support us, but demand far exceeded what we had originally modeled. So we're playing catch-up. I would say that we're doing a good job of that. In terms of order, breadth is really among the logic and foundry players, and it's broad among logic and foundries as it was last quarter. What's slower, and we saw a little bit pickup in memory, but what's slower is there's just not a lot of action in DRAM. We do expect to see some of that. There's not much in the wafer manufacturers. There's not much, actually, in the reticle manufacturers right now. And so it is broad among foundries and logic on advanced nodes; not really very broad anywhere else.

Your next question comes from the line of Christopher Blansett with JPMorgan. William C. Peterson - JP Morgan Chase & Co, Research Division: This is Bill Peterson calling in for Chris. When looking in -- if you look at back maybe a year ago compared to the revenue run rates these days, it looks like the gross margins are around 100, maybe to 200 basis points lower. Can you provide any color around that? Is it related to customer mix, product mix? You're alluding to, for example, a lack of reticle and wafer. But I'm wondering what are the key moving parts within that?

Yes. Bill, this is Mark. You actually hit on one of them. We're categorizing mix, the customer mix, which includes the merge mashups [ph]. And we are seeing in terms of the margin pressure that we've experienced and this went up versus a year ago, Basically, it's mostly attributable to product mix. There is a little bit of volume component in terms of the big customers, and at least in this quarter, we had a product transition that pressured the inventory reserves a little bit more than what we've experienced in at least the last 5 or 6 quarters. So a combination of those 3 factors. But I would largely attribute it to the mix of products that we're shipping right now.

Your next question comes from the line of Vishal Shah with Deutsche Bank.

Can you just talk about the concentration of orders by different segments of foundries -- foundry, memory and logic, in the June quarter? And also, with respect to 20 nanometers spending, are you seeing just one customer spending or placing orders on that node? Or are you seeing multiple customers on that as well?

Yes, I'll take those in reverse order. We're definitely seeing multiple on 20 nanometer, but they're different stages, I would think of maturity. But we are seeing R&D related work for 20. In terms of forecasting what we see right now for June by end customer, memory we think is around 21%. With actually, most of that being, as we're forecasting right now, DRAM related. Logic at 12%, and foundry picking back up to 67% percent, and the non-semi at about 5%.

Your next question comes from the line of Jagadish Iyer from Piper Jaffray.

Two questions, Rick. So when you talked about significant outperformance in calendar 12, how should we think about in terms of your individual product lines between wafer inspection, metrology and reticle inspection? And I have a follow-up.

Well, I think we're doing pretty well across the board in terms of relative -- when we look at market share. We're talking more in general about the overall performance KLA-Tencor from a revenue perspective relative to the overall industry, where we see process control strengthening as we go forward for all the reasons we've talked about in the past. But also we have gained share, and so that puts us at a great position to support our customers as we go forward. There are great opportunities for us in metrology. I mentioned the double patterning, more layers, but also the challenges of defectivity. So right now, it's pretty broad. As I said earlier, I think the areas that are slower, that may pick up but won't then be on for most of this calendar year, relate to wafer manufacturers. And there's been some softening in overall investment by the reticle manufacturers at this point, which may pick up later in the year.

Okay. And on the -- one of your key customers is starting to work on the 40-nanometer, and you guys are well exposed on the R&D side. Where do you see clearly this would become incremental opportunities that could drive particularly in the second half? Any specific details on that one?

Well, I think that the advanced node work continues to challenge our customers. There's definitely work on now with 40-nanometer. When we think about the early phases of development, it tends to favor tools like the very advanced wafer inspection tools. Sometimes the e-Beam tools will get pulled into that. And there are -- we do have tools that are perhaps more related to capacity, and those tend to come during the ramp phase as opposed to the development phase. But we are seeing that demand right now and working closely with our customers on the tool sets to support their R&D.

Just one quick follow-up on the reticle inspection. When do you think it can bounce back?

Well, probably not for a couple of quarter. I mean we had a strong placement of a number of the 6xx product line when we introduced that. We're doing very well from a share perspective, but we do forecast another relatively softer quarter in the June, and we would expect in the second half to see more activity in reticle. But right now, it is definitely lower than it has been in prior quarters. Because of the size of those orders and the capital intensity of that equipment, that tends to be pretty lumpy, and we forecast that going forward as well.

Your next question comes from the line of Weston Twigg with Pacific Crest.

I just had a couple of quick questions. The first one, I'm just curious, looking longer-term over the next 2 or 3 years, I'm wondering if you can give us an idea which process control markets are most optimistic about in terms of growth or profit contribution.

Well, I think that the dynamics of foundry continue to play to KLA-Tencor. I think we're an important ingredient in anybody that's running at a high-mix environment and has a lot of process change. And I think that overall dynamics of the mobility markets support our business pieces that they're going to need more inspection than measurement. I would say that the DRAM less intensive and probably not a huge contributor to our progress going forward. I think that NAND, however, is because of the technology associated with, especially the 3D NAND work that's going on. So if I had to pick -- and logic continues to be, but logic, of course, is starting to blur with foundry if you look at the dynamics. I think over 2 to 3 years, logic looks more like foundry as the main logic players move to support the mobility market. And I think for us, the strength will be in those markets, less so in the DRAM market.

And how about just from a equivalent standpoint or a segment standpoint or segment standpoint, which products are you most optimistic about in terms of generating growth?

Well, I think that the demonstrated value that we've seen in our metrology, especially around multiple patterning, which drives both the overlay business and registration business but also the films business, is strong. I don't see any change in that because the complexity associated with that goes. And then defectivity. I think that there's no question that our strength in technology advancement in both the main platforms there, the Brightfield, the Darkfield, but also the bare wafer, are all well positioned to support advanced technology nodes. So I wouldn't say one is particularly stronger than the other when it comes to those 3 categories. But we do see big opportunities, and we're seeing it now when we provide more capability on the advanced design rules' defectivity. A lot of it is customers then learn what they've been missing, and that's part of what caught us by surprise with the big demand is they got a hold of a new technology. And of course, we heavily investing in R&D, and we'll be bringing out next-generation. We've got at least a 5-year roadmap mapped out in our key product lines, where we have developments going on that will be bringing out new capabilities to support the market as we go forward.

Okay. That's very helpful. And then, if I could just real quickly on the service revenue line. That's trended down for 3 quarters, it looks like. I'm just wondering if that starts to flatten out, maybe improved through the back half of the year?

Yes, I'd be happy to talk to that. A couple of things are happening there. First of all, we did have the OPD interruption this quarter, which cost us about $3 million in the top line. The second thing is that where we lightened up over the last, I would say, 2 to 3 quarters, is in what we call our billable work, which is where customers aren't on contracts. Most of the new tool customers are buying contracts that come along so that they can service the tool in its most intense initiation period of usage. So we do think that at least part of that effect was when Japan went through the tsunami last year. We had an intense increase in that particular region in billable. That has now subsided, that those customers have stabilized. So we suspect that we will begin to grow in the services revenue line in our fiscal Q4. We would expect that the growth to return to sort of normal trajectories as we move into next year. But those 2 phenomenon did have an impact on us over the last 2 to 3 quarters.

And to just add to that, I think that you're well aware that utilization at the leading edge is very high. But the utilization at the trailing edge is actually softer and that more tightly correlates to the service business than the leading edge does. So the systems business outperforms during that time period, in addition to the factors that Mark highlighted.

Your next question comes from the line of this Stephen Chin with UBS.

Just a question on your thoughts of technology upgrades versus capacity expansion in NAND. If you compare the state of foundry, logic is capacity-driven now. Memory is technology-driven now. But both could be more capacity-heavy as that we haven't -- the second half of the year? Is that kind how you're planning KLA?

Stephen, right. I think that's generally -- I might modify it a little. There's no question that there is technology happening in the foundries as well. Particularly in the areas of the advance design rules and that's a big catalyst for growth for us. But no question that memory right now is about technology, and it's also where we see capacity when we talk about the wafer manufacturers, which have been very, very slow. The only purchases we've seen in our wafer manufacturers have been associated with technology, indicating that we believe there'll be opportunity once they, too, resume their growth. But right now, there's -- it's all about technology. And I'd say the one kind of in the middle is NAND as it deals with advanced technology, and we're hoping to see some improvement in capacity later on NAND.

Your next question comes from the line of Ben Pang with Caris & Company. Benedict Pang - Caris & Company, Inc., Research Division: Two questions. One, if you look at the order guidance, if you didn't have that pushout with your order guidance have pretty much just been flat then at the midpoint?

I think that's right. Benedict Pang - Caris & Company, Inc., Research Division: Okay. And then when you talk about the DRAM strength, are you just talking about the June quarter or do you have some visibility beyond the June quarter on DRAM?

We don't have a lot of visibility beyond it. We do see some June activity. But as you know, I'm sure you know, there've been a couple of disruptions in DRAM, if you just look at some of the players that have caused to able to tap the brakes. One player didn't have really any access to capital, and the other one had a big financial problem. So that kind of froze everybody. Since then, you have one that's going through the process, and we think there'll be some resolution when it comes to the bankruptcy in Elpida, and the other one is merger completed in Korea, which means at least some of the CapEx. So we'll see technology, we're definitely seeing signs of that in the current quarter, and then we expect that later in the year, we'll see some resumption of capacity investment or more technology. But we're not talking about big numbers. I mean, it's been almost off. So we're talking about off of a very low base. Benedict Pang - Caris & Company, Inc., Research Division: Okay. And one final one. On the reticle inspection, you commented that, I guess, it will be slow for the a little while before you expect to see it pick up. Is the pick up around 22 nanometers then? Is 28 nanometer essentially done for reticle inspection?

I think there's 2 ways to think about it. There's definitely -- there's some truth about that the -- we sold a number of our 6xx series. The other thing is there is going to be some fab line business that becomes available. But when the yields are low on the advanced design rule, there's less business in the fab for some of the reticle business, so we see less business there until the yield issues really get ramped. And so I think that those are kind of 2 factors associated with that.

Your next question comes from the line of Edwin Mok from Needham & Co. Edwin Mok - Needham & Company, LLC, Research Division: Rick, so I noticed that your metrology order is down for the quarter. Was that due to just timing or is this specifically related to certain end market? Can you help us over that?

We're down but above -- down quarter-on-quarter, but they're running a little bit higher than they had historically. I think it was also -- frankly, the strength of the wafer inspection makes it as a percent come up. But yes, there's timing associated with that. Some of that we'll see as we go forward. And then it's also associated with some strength in wafer displacing NAND. Edwin Mok - Needham & Company, LLC, Research Division: I see. It's just a mix issue then. And then a question on the NAND side, I guess some of your peers has talked about NAND looks like it's going to be softer this year than a lot of, I guess, a lot of you were predicting for the year. Have you guys seen that softness in NAND or do you think you might not see that because you're more tied to margins than [indiscernible] these capacities [indiscernible] can you help us out on that?

Yes, there's no question on NAND. On capacity, it has been slow, and we don't expect that to change much. Where we have seen some business and had a reasonable quarter in the March quarter was associated technology, but as we said, going forward, even in the June quarter, we expect to see NAND as a smaller percentage of a smaller number. So I agree that we don't see a tremendous amount of investment in NAND either except for some technology.

Your next question comes from the line of Patrick Ho with Stifel, Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: I think Rick, you may have kind of touched on this in one of the prior questions. I just want to get it clear. With some of the challenges emerging in memory manufacturing, particularly on the NAND side of things, where vertical NAND structures are forthcoming. Where do you see the process control intensity for you guys in terms of either metrology and inspection? Do you see metrology getting the bulk of those increased dollars or are there inspection opportunities as well?

Well, so there's 2 sides of it. One is the overlay challenges and the 3D structures when it comes to making film measurements are both going to drive metrology for us. When it comes to the defectivity associated with the advanced design rules, just smaller device but also the VNAND structure creates opportunity for the wafer inspection. The other thing we've seen is some opportunity for bare wafer into memory in places where we haven't necessarily seen adoption in the past. So we think that's some good opportunity for us to penetrate further in those markets. So I'd say the mix is pretty good, given that wafer is overall larger percent of our business than metrology. I think you'd probably equal weighting and increase in opportunity, which means the mix stays similar. But both go up as a result of the process complexity. And that's based on the preliminary data we're seeing now and what we're working with customers in their development.

And your last question comes from the line of Mehdi Hosseini from Susquehanna Financial Group.

Two follow-up. I'm just trying to understand the dynamics of this pushout from March to June. And I apologize in advance if I'm beating the dead horse. But when I look at what we have heard from your customers and the customer's customers over the past couple of weeks, it seems like one measure of fabless company would have to redo the layout and come up with a new reticle set or mask set. Is that what could explain what led to this pushout?

No. The pushouts were related to just transferring of information and data, some pickups in IT. And we have since book the orders.

Okay. And then June quarter has historically been your strongest quarter. So this push from March to June mix, this June quarter even bigger than historical trends and things of sequential changes?

Possibly. I mean, as we have a pretty wide range on June capturing that. Couple of things have happened. One, we're in pretty big numbers for us. And we're talking about a not that large customer base, which has always been true but it's especially true now. And so you have large orders from a few customers creating a large range and a certain amount of uncertainty. The thing that does give us some confidence is there's a high demand for spots, and so for us to be able to respond to support our customers, so we think we'll get more clarity as the quarter goes on. But I think as we have seen in the last few quarters, it's getting harder for us to have much visibility although we see demand just because we have a fewer number of buying a larger percent of the order book. And so I would say we're going to -- it will be right down to the wire and as it was at the end of March, and that's why we've given such a large range.

Would be fair to say that the visibility for your customers will actually become even more challenging later this year because there could be a process as they determine or evaluate what the demand would be next year. So could that lead to sort of a pause in booking patterns because visibilities are very limited and orders have become very lumpy?

I don't think so. I think that we're at kind of a pretty narrow visibility now, and I don't think it will get much worse. The only exception I would give you that the caveat is if you go back to a market situation where there is macroeconomic shock, then our bets are off. But I think we're living in a world now where our customers are driven by consumers. Many of our customers are not producing for their own needs but producing as foundries, and therefore, they have less visibility and therefore, we have less visibility. And I think it's unfortunately the new normal because I think foundries will dominate the CapEx spending because they're the ones really benefiting the most from the mobility work, which is where most of the business -- semiconductor growth certainly looks to be for the next several years.

There are no further questions at this time. I'll turn it back to Ed Lockwood for any closing comment.

Thank you, Steve. Well, we'd like to thank everyone for joining us this afternoon and for your continued interest in KLA-Tencor.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.