SAN JOSE, Calif., Apr. 11, 2001 - KLA-Tencor Corp. (Nasdaq: KLAC) announced today that it has taken another step in its strategic growth plan by signing a definitive agreement to purchase Phase Metrics-the leading supplier of inspection/certification technologies to the data storage industry. The acquisition, for an undisclosed sum, will be accounted for as a purchase and will be finalized no later than April 30, 2001.

Company officials report that Phase Metricsâ?? tools and technologies will be combined with KLA-Tencorâ??s existing data storage inspection and metrology solutions to create a new corporate division focused exclusively on advanced data storage technologies. Whereas KLA-Tencorâ??s demonstrated technology and expertise focuses on front-end data storage metrology and inspection, Phase Metricsâ?? efforts are focused on data storage back-end inspection and test. By leveraging the naturally synergistic products and services from both companies, in tandem with their joint sales, marketing and customer support channels, the newly combined entity is expected to create the single largest yield management force in the data storage industry.

According to KLA-Tencor President and Chief Executive Officer Ken Schroeder, the acquisition marks the latest move in the companyâ??s plan to leverage its core competencies and leadership position in the global semiconductor industry to create similar industry-leading positions in other advanced technology markets. "We are targeting growing high-tech market segments where sophisticated yield management and process control strategies are critical to manufacturing success. The data storage industry is an excellent example. Combining Phase Metricsâ?? business opportunities with KLA-Tencorâ??s existing data storage business, as well as with our financial and distribution strengths, should create another growth engine for the company."

KLA-Tencorâ??s new data storage division will be located in Phase Metricsâ?? existing facilities in San Diego, Fremont and Hayward, Calif. Frank Brienzo, who currently serves as vice president of business operations and chief manufacturing officer at KLA-Tencor, will head the new division as general manager.

"The data storage market is experiencing rapid growth, which is largely driven by the demand for hard disk drives in the mobile, desktop, enterprise and consumer segments," stated Brienzo. "Over the next several years, increasingly demanding technology requirements will fuel an exponential increase in the need for yield management and process control within the data storage industry." Currently, the data storage hard disk drive market is expected to grow from 200 million to 370 million in unit volume by 2004, a compound annual growth rate of 16 percent*.

Phase Metrics is headquartered in San Diego, and has sales and support facilities in Korea, Japan, Malaysia, Singapore, Thailand and the U.S. The companyâ??s products provide in-line testing and real-time process feedback. They include media certifiers, optical inspection systems, factory automation systems, servowriters and head-related test equipment. Phase Metrics has an installed base of more than 4,200 testers worldwide.

Forward Looking Statements: The following statements in this press release are forward-looking statements, and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995: statements regarding anticipated changes in the market for disk drives or yield management technologies for manufacturing products relating to disk drives. These forward-looking statements are based on current information and expectations, and involve a number of risks and uncertainties. Actual results may differ materially from those projected in such statements due to various factors, including but not limited to: the size and timing of orders from, and shipments to, major customers; the timing of introductions of new products and product enhancements by the Company or its competitors; the Companyâ??s ability to develop, introduce and market new, advanced products; the cycle nature of the data storage industry; the rescheduling of capital expenditures by the Companyâ??s customers; variations in the Companyâ??s customer base and product mix; the level of any significant volume pricing discounts provided by the Company; the availability and cost of key production materials and components; the Companyâ??s ability to effectively manage its inventory and to control costs; the Companyâ??s dependence on a limited number of products and customers; the Companyâ??s success in expanding its operations overseas; personnel changes; expenses associated with the acquisition; and, fluctuations in amortization and write-downs of intangible assets. For other factors that may cause actual results to differ from those projected, please refer to the companyâ??s Form 10-K, Forms 10-Q and other filings with the Securities and Exchange Commission.

*Source: IDC.


About KLA-Tencor: KLA-Tencor is the world leader in yield management and process control solutions for semiconductor manufacturing and related industries. Headquartered in San Jose, Calif., the company has sales and service offices around the world. An S&P 500 company, KLA-Tencor is traded on the Nasdaq National Market under the symbol KLAC.

Contact:
Meggan Powers
Director Corporate Communications