Good afternoon. My name is Candace, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter Fiscal Year 2014 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Ed Lockwood, with KLA-Tencor Investor Relations, you may begin your conference.

Thank you, Candace. Good afternoon, everyone, and welcome to our conference call. Joining me on our call today are Rick Wallace, our President and Chief Executive Officer; and Bren Higgins, our Chief Financial Officer. We're here to discuss second quarter results for the period ended December 31, 2013. We released these results this afternoon at 1:15 p.m. Pacific time. If you haven't seen the release, you can find it on our website at www.kla-tencor.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 Relations 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, 2013, 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 results. 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 2013 Form 10-K and our current reports on Form 8-K. We assume no obligation and do not intend to update those forward-looking statements. However, any updates we do provide will be broadly disseminated and available over the Web. With that, I'll turn the call over to Rick.

Thank you, Ed. Good afternoon, everyone, and thank you for joining today's call. KLA-Tencor executed well in the second quarter of fiscal year 2014, delivering revenue and EPS in the upper half of the range of guidance and shipments above the top end of the range, and demonstrating market leadership and strong execution across our worldwide operations. New orders were below the range in Q2. As previously indicated, in Q2, a customer delayed a large order for mask inspection tools earmarked for 10-nanometer development. We currently expect that order to book in the first half of calendar year 2014. Regarding our customer focus and growth objectives, as the market leader on process control, our success is dictated by ongoing productive collaboration with customers, and continuing to innovate and execute so we can bring new products to market. KLA-Tencor advanced our leadership in the December quarter, winning key customer engagements in each of our major end markets. Process control is continuing to play a critical role in enabling the major technology inflections underway at the leading edge, as well as helping customers solve their most complex yield challenges. Customer highlights in Q2 included adoption of our latest generation broadband plasma inspectors by customers for 14-nanometer pilot programs in foundry and in memory for both 3D NAND and 2X nanometer DRAM projects. KLA-Tencor's broadband plasma inspection platform leads the optical inspection marketplace today in terms of capability and cost of ownership. In laser scattering wafer inspection, KLA-Tencor extended our leadership in mine monitoring applications in Q2, achieving a significant advantage in head-to-head competition in the quarter, both in terms of dollar and unit share. Q2 also marked a record for quarterly bookings in our fill measurement and optical CD division. KLA-Tencor's specter shape metrology solution is critical and a successful ramp of…

Thanks, Rick, and good afternoon. Revenue for Q2 was in the upper half of the range of guidance at $705 million, and fully diluted GAAP earnings per share were $0.83. Non-GAAP earnings per share finished the quarter at the upper end of the guided range at $0.85. In our press release, you'll find a GAAP to non-GAAP reconciliation of the $0.02 difference. My comments on the quarter will be focused on the non-GAAP results, which exclude the adjustments covered in the press release. New orders in Q2 were $728 million, finishing below guidance of $800 million to $950 million for the quarter. As previously discussed at investor conference in nearly December, a significant multiple system mash-up order that was originally scheduled to book in Q2 moved out of the quarter as the customer shifted the delivery dates for these tools into the first half of calendar 2015. These shipments are now expected to revenue in the middle of 2015 instead of in the beginning of that calendar year. Customer concentration is driving more volatility around the order profiles on a quarterly basis. Though our December orders fell short of our forecast, our aggregate orders across the December and March quarters remain in the $1.5 billion to $1.6 billion we have been targeting, only slightly below the 6-month outlook that we expected at the beginning of the December quarter. This forecast range is consistent with business levels that would support strong revenue growth for KLA-Tencor in 2014 and strong relative performance for the company in what is expected to be a good year for industry growth. Turning now to our customer segment commentary. Foundry came in below the original forecast at 47% of new orders for Q2. Foundry demand was slightly weaker than expected due to timing delays for 28-nanometer fill-out…

Okay. Thank you, Bren. [Operator Instructions].

[Operator Instructions] And your first question comes from Timothy Arcuri with Cowen and Company.

Bren, does the order guidance in March, does that assume that the pushed out reticle business books in March? And then I have a follow-up.

Yes, Tim. As we roll it up. I mean, I think, as I said at the end of last quarter, I think that business shifts into the first half. I think, right now, we expect it to book in March. But as I had indicated in the past, I think there is some fluidity to this particular order because the delivery date is further out. So right now, our expectations are that we'll see this business book. But, obviously, there's an extra element of risk with it. And I think because of the size of the ASPs associated with this particular quarter, it is something that has driven our views on, perhaps, maybe a wider range may be appropriate. This, coupled with just general customer concentration, overall, large orders. So that's how we're thinking about it today.

Okay. And then, Rick, there's been a lot of talk about EUV and about the insertion point and a lot of confusion about what TSM has said about EUV and what they haven't said about EUV. But can you just give your perspective? Because it seems like these chip makers are able to push out the need for EUV by just extending emergence. So I'm curious, your perspective on the timing of EUV.

Sure. I think that the timing has moved out, from my perspective, especially for high-volume manufacturing. And the insertion point at 10 nanometers, I think, is now pushed to 7. Although there still could be a couple areas at 10. But one of the indications we have was the industry's need for an at-wavelength reticle tool. We have seen that push out. Because -- well, the feedback we get from customers is they believe they can make do with what they have in terms of using our 6xx because it's relatively low volume. And it's all about the economics. EUV remains too slow to be put into production on an economic base. So there's a lot of work to do to get the source up, to get the throughput up. But right now, what we're getting from customers is double patterning is more and more the plan of record as they go to 10 nanometers, and that puts EUV and high HBM more at the 7-nanometer node. And that's how we're currently planning.

And your next question comes from Harlan Sur with JPMorgan. Harlan Sur - JP Morgan Chase & Co, Research Division: Over the past couple of months, it seems as though there has been a firming of your customers' programs and projects across all segments. CapEx outlooks have been provided to the markets. I believe you're still projecting 10% WFE growth this year. But relative to your view 3 months ago, has anything changed as it relates to CapEx spend by segment? It seems like foundry and DRAM could be a bit stronger than previously anticipated. But would love to get your views.

Well, I think, on the nearer term -- I think, as we mentioned in the prepared remarks -- in December, we did see a little bit of weakness which we've really attributed more to timing related to non-leading edge foundry and, at the leading edge, some adjustments to some capacity planning. So on the whole, relative to 3 months ago, I think our view is slightly weaker, as I had said. I think in terms of how we're thinking about 2014, we feel pretty confident. It's always hard to say how or where it's going to land from an order and shipment perspective. But in terms of our overall views on the remainder of the year, we still believe that we're looking at somewhere around plus 10%. And as you said, I think as you see more input from customers, in terms of their discussions about next year's planning, I think overall, from a year perspective, we feel pretty good about that forecast today. Harlan Sur - JP Morgan Chase & Co, Research Division: Great. And then the team has talked about the migration to sub-20 nanometers driving a mix that is more focused on some of your high-end inspection tools, like your broadband plasma platform, let's say, versus your darkfield line monitoring products. So given all of the migrations that are taking place across your customer base, how are you seeing that sort of current order mix playing out? Are you seeing that it is being more relatively skewed towards high end and any way to quantify this mix or mixed shift relative to, let's say, 18 to 24 months ago?

Sure. This is Rick. I think that the best way to think about it is the way we laid out the segments and the process control intensity back at our Analyst Day in July. And that is that at 2x you see an increase, overall increase, in process control intensity. And we baseline 4x to 2x from 13.7% blended to 14.7%. So an increase of over 10% in terms of the overall from 13.7% to 14.7%. But -- I guess a little under 10%. But we were basing that partly on the increased adoption of the more advanced tools. And so 2 things have happened. One, the laser-based tools have gotten more complex as you go down, and therefore, higher ASPs. And the broadband plasma also has advanced. And I'd say the mix is more dependent on where you are in the ramp, but I think we laid that out. Early in the ramp, you tend to see more of the broadband plasma tools, and then as the ramp progresses, the laser scanning tools come in. But all of them, because they're more capable, provide more value. And with that comes higher ASP, which is a big part of what drives the overall WFE number. So, so far, what we've seen since we laid out that model publicly but also since we started modeling it probably 24 months ago, it's pretty much conforming to what we thought it would be in terms of that. And we have seen strength in both product lines as we've increased the intensity associated with the new nodes. Does that make sense? Harlan Sur - JP Morgan Chase & Co, Research Division: Yes, makes sense.

And your next question comes from Krish Sankar with Bank of America Merrill Lynch.

The first question I had is very close. In terms of your March quarter guidance for memory orders, 20% of your bookings is going to be memory. What is the split between DRAM and NAND? And also, along the 3D NAND side, you said Phase 1 is almost complete for the leader. When do you expect Phase 2 to start ordering?

Yes, Krish, it's Bren. I'll go ahead and start. So NAND as a percent of the memory mix is 40%. So 60-40 DRAM to NAND in the March quarter. We've had 4 pretty good quarters from a memory mix perspective and so we think that March is a little bit lower. To my point in the prepared remarks, as most of the orders came in, in the second half, mostly in the September quarter related to the significant project in China. And so those tools shipped in the December quarter and those tools are being installed today. There will be a second phase and we think it's a big part of what happens in 2014. That second phase happens some time midyear and into the fall in terms of timing of deliveries. So that's what we're planning today. And no indications that things are not on track there and we're pretty happy with what we're seeing in terms of the installations and the new tools going in.

And the other part of your question, I think, talked about other players. We do see other players coming in, in '14, probably toward the later part of '14, for 3D, and maybe 1 or 2 more players in that time frame, depending on how technology development goes for them. But I do think it will be a competitive market if you view out 12 months from now. My estimation is there'll probably be 3 players with that capability and development and ramping.

Got it. That's very helpful. And if I could just ask a quick follow-up. Rick, I remember your SEMICON slides on process control intensity growing. I was just wondering, just if I look at foundry specifically, when you go from 20 planar to 16 or 14 FinFET, is there a way to quantify what is the increase in the sam [ph] for you guys?

Well, we did it with steady-state, the steady-state assumption about process control intensity. So it depends how much they're investing in the node obviously. But we had the increase, we had the logic foundry at 2x being 17% going to 18.4%. So not quite a 10% increase in the sam [ph] just from that node transition. But as you know, it depends on where you are in the ramp, it depends on which particular players and what kind of challenges they're facing. But I think, overall, we're continuing to see that kind of pressure, driven largely, of course, by the FinFET challenges with yield, but also the multi-patterning that's more prevalent once you go to the 1x, given the current lithography options people have.

Your next question comes from Jim Covello with Goldman Sachs.

This is Jack Sheng on behalf of Jim Covello. So my first question is, given your view on WFE spending this year, can you just give us an idea of on the weighting of that spending between first half and second half? In addition, can I also get some color on the differences between logic, foundry and memory?

Jack, this is Bren. So I think, in terms of weighting, I'm not really ready to call that yet. I think the biggest wildcard in that is, at least from an order perspective, will be timing related to some significant projects that are going to happen in that sort of midyear to fall time frame. But we mentioned the memory project earlier. There are a couple significant projects on the foundry logic side as well. I think the deliveries are fairly firm on those projects in the second half of the year or so. And I think the timing of those, the order placement, I think, is one question in terms of whether the first half of the year is stronger or weaker than the second half. So we'll see how that goes in terms of timing. In terms of mix, overall, I think foundry and logic probably grows in line with market about 10% or so. We think NAND flash is probably up somewhere between 10% and 15%. And we're a little bit more cautious on DRAM just because historically, there's just been more volatility there. So there's some growth there but off a low base. So that's how we're thinking about it. And I think when you think about the overall mix, you probably end up with foundry and logic somewhere around 60% to 65%, the memory 35% to 40%, in terms of how we're thinking about it today.

That's incredibly helpful. And then as a quick follow-up, so many of your competitors have been pretty vocal about gaining share over you guys this year. So with that said, how should we think about share shifts and markets such as e-beam and low-beam inspection going forward?

Well, we -- when we look at the market share data over the last several years, in spite of a lot of claims that people have made they're gaining share, we actually feel pretty good about our position and don't really see much evidence of share loss. In fact, in some of our most important segments, we've actually moved ahead. And some of our products it's actually quite hard to measure share. For example, our broadband plasma, there's really not another broadband plasma tool. There are laser-scanning tools, but they compete with our laser scanning where we have a pretty good position. So -- and that -- as I -- if I look out -- I look back and I look forward, I don't see a lot of change in the share position. I do see some potential going forward for some gains on our side. But I don't really -- right now, we've not been experiencing any real significant challenges that make me change our view of our share position. There are always bumps in the road as there have been in the past in certain segments at certain times. But in aggregate, we feel very good about our position and confident we can maintain it going forward.

And your next question comes from Terence Whalen with Citi.

I believe you alluded earlier to a statement regarding capital intensity of memory and inspection increasing. I was wondering if you could elaborate on that a little bit more.

Sure, Terence. We laid out in SEMICON West we're sticking with the analysis we did, which had, just to remind people, 4x node at about 8.8% capital intensity. As compared to logic and foundry, by the way, it's 15.8%. So significantly less but still increasing, 2x going to 9.3%, and then 1x going to 10.2%. But the other way you can think about 1x is being V-NAND being equivalent even though that's not technically a 1x node. In fact, it goes backwards in terms of lithography technology. But it is increased in overall opportunity for us. And since we laid that out, and we had that model before we laid it out, we've seen market behavior pretty much in order with that dynamic of what we've forecasted of about a 10% increase from the 4x, the 2x node and then another, not quite 10%, but on that order, increase as we go to the V-NAND node.

Okay, terrific, Rick, and then, I believe that you talked a little bit earlier about EUV. My question specifically is, does the change in insertion in EUV that seems to be a consensus now, does that affect any of your investments in EUV reticle inspection? And where are you in the process of developing reticle inspection for EUV?

It will certainly change our ramping up of our investment. We will maintain core technology and continue to invest. But it -- there have been different scenarios in which we would have ramped that investment over the next couple of years. And what we talked about at SEMICON West was doing that in conjunction and partnership with our key customers to be able to support that ramp. We don't believe that, that's as eminent as people believed it was 9 months ago based on the delays and productivity gains on the scanner. So we will continue to invest, but it'll be at -- we won't see a ramp as we had forecasted going forward. But again, that was going to be shared with customers. So Bren can speak to the implication that has to the overall model. But in general, we won't be ramping our investment as soon as we originally planned.

Yes, so Terence, I think that from an EUV perspective, we've been essentially investing in early development activity, technological feasibility work. And so we continue to do that obviously, having the ability to continue to progress here and maintain some optionality around this. It's important for us. But I don't expect inflection on spending, and that's why I feel pretty comfortable with the guidance around our OpEx sort of flattening out here at this level over the next several quarters.

And your next question comes from Mehdi Hosseini with Susquehanna International.

I'm a little bit confused, Rick. If I were to take the $100 million out of your March guide, it suggests to me that the core business declined by 8% compared to September and March will be down 4%. And we have been waiting for these turns, especially from foundry side, for almost 12 months. So where is the turn? And from what I hear from now, there is incremental emphasis on 3D NAND. Can you help me reconcile the trend and how you see things evolving? Because your booking trend is not really giving me much confidence. And I have a follow-up.

Well, as I said, I mean, I think that it is a bit of a wide range because we're not exactly sure how the reticle inspection business sort of ends up here at the end of the quarter. I mean, as I said earlier, there has been a little bit of weakness on the foundry and logic side of things over the December quarter and into March in terms of timing around some of the non-leading-edge activity. And I think some rational, not with the rationalization, but some digestion, if you will, around some of the wafer start plans for particular customers on the leading edge. So we think that, that resolves itself. It's mostly about timing. And I think, as I said earlier, I mean, fluctuations quarter-to-quarter here in our order profile, given the size of the orders, the number of customers, the big ASPs and so on, can cause a little bit of volatility there. I don't think the order number is as a cyclical indicator, perhaps, as it used to be, as the industry has changed. As we look at calendar '14, we continue to believe, consistent with the revenue guidance for the March quarter, that we're operating at $800 million to $850 million range from a revenue perspective. We'll see some fluctuations in orders, to a larger extent in shipment. But that's how we see the year and that's how we're sizing the company to support the dynamics they're having in the industry.

Yes. I'd also just add to that. I think what we saw in September was uncharacteristically strong for that part of the cycle. Typically, September, we don't have enough quarter like that. And I think, in effect, what we had was some pull-in to the September quarter from December and then we did actually have a little pushout from September -- from December into March. But to Bren's point, when we aggregate it and we look out, it's still pretty much falling in line with what we believed would happen if you integrate it over time. And I think, as we look out for '14, that's pretty consistent with our view as well.

Sure. Let me ask the question a different way. You talked about $800 million to $850 million of shipments for the June. Would you have to hit the high end of your booking guide to do that shipment in June, given where your backlog is?

No, I think given just timing in terms of where deliveries are lining up, it's driving a lower number than you would expect in the March quarter. And I think, as we move into June, we'll see that, that ramp pick -- we'll see a ramp in shipments in June, which is why I put that color into the prepared remarks. So I think that's consistent with general views around the current views of the range in the midpoint to be able to make that happen. Obviously, if you were to come in the extreme low end of the range or below that and then perhaps those plans would change. But given our backlog and the lead time we get from customers, we feel pretty good about how those quarters are shaking out.

And also, Mehdi, the other thing is on those -- on that bookings, to some degree, the bookings we're talking about that have been in question, some of the reticle bookings, wouldn't ship in June anyway, right? So that's more a part of the -- what it would look like in terms of where we are in that range. And that's part of the wildcard and the wide range for the quarter.

Your next question comes from John Pitzer with Crédit Suisse. Farhan Rizvi - Crédit Suisse AG, Research Division: This is Farhan, asking a question on behalf of John. My first question is on memory. If I look at the long-term trend, KLAC's orders in memory segment have outpaced your peers' and I just wanted to understand better, like what's driving the long-term growth on a relative basis to your peers in terms of memory growing at a faster rate for KLA. Is it more of a market trend or more of a market share trend?

Great question. I think there's 2 elements. One, our share has definitely increased in memory. We've focused on that a few years ago. It didn't show up because there wasn't a lot of memory activity and so when finally the memory guys started spending, we benefited from that trend. The other thing is that the process control intensity has increased with the new design roles. And lastly, I think that the memory manufacturers have recognized the value of getting memory process control capability early in the ramp or for technology development. So part of what we're seeing is accelerated demand earlier in the cycle. I think it does normalize over time to the process control intensity we talked about at SEMICON West. So in some ways, we'll get -- we'll benefit very early in the ramp. There's also some technology catch-up. There were people that were doing investments were on hold for a while, I think, while they were integrating acquisitions and so on. And once they got focused again on manufacturing at new nodes, they invested. So I think it's a combination of those 3 factors: increased share, increased investment, process control intensity and timing of where they are in the cycle. Farhan Rizvi - Crédit Suisse AG, Research Division: Got it. And just one question on the June shipments. I mean, your -- if I adjust for the $100 million of orders, the guidance for March quarter orders is in the range of -- it's lower than the December quarter. You're basically guiding to $600 million to $800 million. How can you get a shipment growth in June quarter? Because the $100 million order won't start shipping in the June quarter. So the June quarter orders need to increase significantly, is that a fair assumption?

Also I'm not guiding the June quarter shipments. I was just giving some color on our expectations about the range. When we get there, we'll actually provide a number. But as I look at the build plans today and the timing of some of these shipments, I would have expected, given our expectations for the quarter, that shipments would have been a little bit higher this quarter. But as I said it was all about where delivery timing is set up. So as I look at the June quarter, given our expectations for orders in the next 6 months, plus our backlog position, I was comfortable with providing the color statement that I gave around $800 million to $850 million range. So that's how we're thinking about it. And we'll see -- around those reticle inspection shipments, we'll see where those ultimately end up landing from an order perspective. And as I said earlier, that's why we're -- I've expanded the range to see how -- to deal with that potential risk.

And your next question comes from Stephen Chin with UBS.

This is Mahavir. Just one question about order profile for calendar '14. Rick, you talked about a number of memory projects in the second half. And if you look at the memory order guidance for the March quarter, it's at $160 million roughly and your peak was about $300 million back in September quarter. Just wondering if we should think about order profile as perhaps growing throughout 2014 or kind of bucking the trend, if you will, in the September quarter when you typically have a decline.

Yes. As I said earlier, I think it's hard to say in terms of the timing of that business midyear. And I think I mentioned one significant memory project. The others were foundry and logic projects that are out there in that time frame. So we'll just have to see, from a timing perspective, where they land. I mean, one situation that we do deal with today is we do get less lead time than we used to get historically, so in terms of order to shipment. So there is some fluidity, if you will, in terms of the timing. But in terms of how we're lining up the rest of the year, we see ourselves operating in this range of $800 million to $850 million and orders could come in above that level, orders could come a little bit below that level in the 12-month or 12-week cycle. But at the end of the day, we think we're going to -- we're operating at that level.

Your next question comes from Weston Twigg with Pacific Crest Securities.

Just real quickly, you had mentioned advanced packaging is one of the drivers for growth. And I just wondered if you could give us some idea how much of that really could be contributing at this point and potentially how big that market could be and maybe even if you could lay it out over the next couple of years, that would be helpful.

Not much. I mean, we're not counting on advanced packaging for calendar '14 to significantly contribute. We do have some investigations developments there. But we're not -- that's not in our baseline for what we're seeing out for the rest of this year.

So -- understood. But since you mentioned it as one of the drivers for growth, can you give us an idea of how the market could evolve maybe for you?

Well, we have some plan and I do think there are -- if you look out a couple of years, there's probably $100 million or so of opportunity on an annualized basis for us there but we're not seeing that today. We're seeing maybe part of that and so I do think there's some growth opportunity. But it's -- it would be high growth rate just off of a reasonably small base.

Your next question comes from Mahesh Sanganeria with RBC Capital Markets.

Rick, I just want to follow up on your commentary on the foundry. Can you give your view on what do you think is driving the delay or pushout of the foundry, especially the -- I'm interested in the 20-nanometer? Is it that customer is having issue ramping or that the demand has pushed out? That would be very helpful.

I think there's a couple of things. One, there's -- certainly, not everybody is delaying. So I think it's more -- the leaders are still going and then there's there some delay behind. And I think the delays tend to be around a combination of factors. One is getting the process right, so the yield is there so they can ramp. The other one is I do think there is a bit of churn going on based on some management changes in some of the foundries. And I think that's creating, at least, a pause, as people are regrouping and trying to figure out different kind of partnership strategies and who might be doing what for whom.

Okay. I think that makes perfect sense. On -- and there's one -- I want to follow up on the EUV reticle inspection. I know you mentioned in the past that you would need in order of $500 million of investment from your partners to be able to invest in that project. What's the response? Is the customers, they're not willing to do that or they want to wait and -- but they would do it? What's the response on that -- your proposal?

Well, we said, just to clarify, $500 million we thought was the total cost and we were looking to share that. So not $500 million from them but $500 million in total. The response was there was a lot of interest last summer and earlier last year. But it was all contingent on people feeling like the insertion point was going to be as planned. I think every one of the major partners we talked to indicated their belief that the insertion was delaying and, therefore, their urgency waned quite a bit. So they're all very interested. Many have said, not just the overall companies, but individuals, that they think it's a must because the need for pellicles is becoming clear on EUV. The challenge with the need for pellicles is -- the need for pellicles also means more power is needed because the pellicle actually consumes some of the power. But it does drive the market to need an actinic tool in high-volume manufacturing. But the biggest issue is the perceived delay in the timing of that high volume. So interest, but not yet at the point of us securing funding where that looked [ph]. I'd say much more promising if I go back 9 months in terms of it being a near term. And we're in agreement with our customers that we don't want to be investing in a capability that they don't need because jointly there are great, high-return projects we could do. And so instead, we're focusing our efforts on supporting the multi-patterning challenges that people are going to face as the alternative to EUV.

And your next question comes from Edwin Mok with Needham & Company. Y. Edwin Mok - Needham & Company, LLC, Research Division: So first one is on gross margin. This past quarter, you have a margin expansion. You mentioned favorable mix. Just wanted to know if that's metrology inspection or customer mix, any kind of color around that? And then I noticed that you guys are effectively guiding margin to be lower in the coming quarter but your revenue backlog actually expanded and you have more tools being signed off by customers. Why are you guiding margin to be lower?

Yes. So gross margins in the December quarter were stronger than expected and our product mix was a little bit richer than what we thought it would be in the October quarter or at the October call. So we're higher in wafer inspection. Obviously, it has higher gross margin and so that was a part of that as well as higher-end reticle inspection as well. As I look into the March quarter, I mean, we are benefiting. And then, of course, I think also in the December quarter, efficiencies in manufacturing were favorable to our planning. So we had a very strong incremental gross margin in March outperforming -- or in December outperforming our model, 60% to 70% incremental gross margin model. We'll underperform it a little bit in the March quarter as the mix is less favorable. But I think when you think about it, over the 6-month time frame, I think the incremental gross margins are high 60s, 68%, 69%. So a little bit of volatility driven by some of the dynamics I mentioned earlier. So it depends what you're shipping and as those tools revenue that drives gross margin. We do have, obviously, a number of products in the company and they all have different margin profiles. So mix is probably a bigger factor for us than it is for some of our peers. Y. Edwin Mok - Needham & Company, LLC, Research Division: Okay, that's fair. And then for -- I think, Rick, you mentioned on your prepared remark that you have record order for OCD and metrology is very strong. Was wondering if that's driven by the kind of foundry or the logic side. Or are you seeing incremental demand on the memory side because of things like 3D NAND? What's the driver for the stronger booking? And is this a sustainable trend?

I think it is. I -- not -- probably not quarter-to-quarter, just the way the orders tend to come in kind of lumpy that way. But what's driving it is really 3D structures, both in memory, but also in logic. That and finally having capability to meet the needs. It's a very tough technical challenge, and it's taken our team who has done incredible work -- it takes a lot of work to get to having solutions that are robust enough to work in production. But we've made a lot of progress and I think we're seeing the benefit from that. And as we forecast going forward, I think it's a -- it's not a technically a share opportunity in the sense that we have a large share. I think it's a share opportunity in terms of against the alternatives, which historically, CD SEMs have been the primary use for -- primarily used for CD measurement. But I think the optical has a lot of capability, especially when you're dealing with the 3D structures.

Your next question comes from Patrick Ho with Stifel, Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Rick, maybe first, can you give a little more color in terms of the 3D NAND opportunity? When you mentioned the process control intensity being above 10% [indiscernible], is there a waiting or a bias towards inspection or metrology? Or is it kind of a mix of both kind of 50-50 split in terms of the increasing process control intensity for 3D NAND?

Yes, I don't think there's much difference actually. There's, I guess, probably, I'd say, maybe a little metrology bias because overlay becomes a bigger challenge. I do think that the 3D inspection challenge is pretty significant as well. But I think probably, it's a little biased toward metrology. But I wouldn't say by a lot. I don't have the data in front of me. But my gut says it's probably a little more metrology focused, although we had success with inspection. I mean, one of the big challenges people had and their fears, and I think we're not out of the woods yet because nobody's really ramped in production on it, was trying to figure out how, once you identify defects, you can deal with them because they're going to be varied and what is the -- how do you determine the root cause and then fix it. And we've got some clever inspection technology, as well as metrology and technology, to be able to penetrate those layers. But there's still this issue of fixing and moving forward. But overall, if I'd have to tip it, I'd tip it a little more toward the metrology side. Patrick J. Ho - Stifel, Nicolaus & Co., Inc., Research Division: Okay, great. That's really helpful. And maybe a big-picture industry outlook. I think you've given us a good color of what you expect for 2014. But obviously, there are always a lot of moving pieces. If the industry does trend, and you've seen many of these upturns, a lot of time they track higher than expected. If there are key customer variables as we get into the second half of the year, where do you see the potential upside between foundry and, say, memory? Where's the greater chance for upside potential as the year progresses?

Wow, it's a good question. I don't have a great answer. I guess I would say foundry because I think there is -- foundry can be driven like -- I guess both can be driven by this opportunity for share gain. But foundry, in particular, I think there's a lot of dynamics around that and I do think the fabless companies would like to be able to have alternatives. And so if you have success of the advanced nodes at multiple foundries, I think you could see investment tracking that. Memory guys, I think, are going to have to prove out 2 things. One, the DRAM technologies. And we know that, overall, they're not as capital-intensive as the foundries would be. And then 3D, I think, you could have the followers to the leader come in. But I'd say, again, if I had to bias it, I'd say probably a little more toward the foundry and logic phase toward the end of the year.

[Operator Instructions] And your next question comes from Ben Pang with Northland Capital.

First, just to follow up on the EUV pushout. How long does it take you to develop your part of this technology?

2017, 2018 is what we'd said we'd have a production tool had we gone and followed the investment plan. So I think we're looking closer toward 2020 based on what I anticipate a massive -- a one-node essentially shift toward HBM. Now we do have capability in our 6xx, and I think customers will utilize that for the relatively small volume. But I would say that the HBM that's going to require actinic reticle is pushed out.

And when you talk about small volumes in terms of just the number of layers, that would be a 1 or 2 layer you would look at it as high volume or small volume?

Low volume. And I think what will happen is there's going to be a number of EUV scanners out there that are already -- people are committed to getting. There's a number, they're going to want to use. And once they're out there, they're going to want to try what they can to get in some production. But they're relatively low throughput. So they're going to get a couple of layers. On their own, economically, they wouldn't have probably passed. But since they're already out there, they're going to get used. But there's not going to be a massive ecosystem development to support that. That's what I'm talking about. That's the HBM stuff. So it's not inconsistent with the idea that there's going to be a number of scanners out there. They're just not going to be doing a lot of layers on them.

Okay. And then a follow-up on the reticle inspection pushout. Is that an indication that 10-nanometer has also pushed out then?

Well, it's about -- yes, that was what we said in December. That the customers had split their delivery date, and it -- because they split the delivery date, they split the PO placements. So those delivery dates slipped into the first half of 2015. And as a result, the orders will slip into the first half of this year. So we're planning for them. But I'm always a little cautious. Once you've had one move and a point -- there is some fluidity around those plans. And perhaps, one slips into June. And it -- and then which is why we wanted to set the order guidance the way we did in terms of the range. Because at $30 million, you can have a sales impact on, and you'll end up the course [indiscernible].

Okay. My question is more, is that an industry trend or just specific customer?

Yes, I'll jump in on that. I don't think it's a big trend. I think it's -- we're talking about the timing and I think they're -- they do have capability to handle some of the development with the existing tool. And this is to get to higher volume. So I think -- and Bren's point, it's a 3- to 6-month kind of delay. And these are people that were ahead. So I don't know that it's an industry issue.

The issue will come is if everybody else, when they're -- the whole industry struggles on the FinFET technology, what does that do overall, does that push everything? And that's gotten a lot of people's attention, the challenges associated with FinFET.

And we have no further questions at this time. I'll turn the call back to our presenters.

Thank you, operator. And on behalf of management, I'd like to thank everyone for joining us on our call today. Just a reminder, an audio replay will be available on our website later this afternoon. And once again, we appreciate your continuing interest in KLA-Tencor.

And this concludes today's conference call. You may now disconnect.