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Any forward-looking statements, including those we make on the call today, are also subject to those risks, and KLA cannot guarantee those forward-looking statements will come true. Our actual results may differ significantly from those projected in our forward-looking statements. Rick will start with some introductory comments, followed by Bren with financial highlights and our outlook. Before I turn the call over to our CEO, Rick Wallace, I wanted to remind everyone that our 2025 Investor Day will be held on the morning of June 18th in New York City.

Now over to Rick.

Richard P. Wallace -- President, Chief Executive Officer, and Director

Thank you, Kevin. I will summarize KLA's overall performance for calendar '24 and the December quarter and cover company highlights and updates on the industry landscape. For calendar 2024, KLA again delivered relative growth outperformance, strong profitability and healthy return to shareholders. Specifically, 2024 revenue grew 12% to a record $10.85 billion and the process control revenue grew by over 12%, which indicates increased market share, while the services business grew 15% to $2.5 billion for the year.

Also, for the calendar year, KLA maintained industry-leading gross and operating margins at 61% and 41%, respectively. The company grew free cash flow to $3.4 billion and returned $2.9 billion in a combination of dividends and share buybacks. KLA's outperformance for the year was driven by a return to growth at the leading edge, which includes increased investments in AI, high-performance computing and continued momentum in advanced packaging, as well as sustainable performance for KLA's services business. And turning to the December quarter, results for KLA came in above the midpoint non-GAAP guidance range, despite navigating through the business impact of new U.S.

government export controls, which were released late in the quarter. Specifically, the quarter revenue topped $3 billion for the first time. Diluted GAAP was $8.20, finishing at the upper end of the guidance range for the quarter. GAAP diluted EPS was $6.16.

The business landscape is performing as expected, and we're encouraged by the strong demand we're experiencing in leading-edge logic with specific memory customers supporting high-bandwidth memory and advanced packaging. KLA's differentiated portfolio of solutions aligns exceptionally well with enabling our customers to navigate increasing complexity, growing design starts, and larger semiconductor devices in an environment of rising semiconductor demand. Specific highlights in the quarter include a combination of strong sequential and year-over-year revenue growth, demonstrating an improving industry environment. KLA is specifically positioned to benefit from accelerating growth at the leading edge.

Across all sectors, there are technology development investments supporting AI and HBM, as well as a strengthening supply/demand environment which positions the wafer fab equipment industry for growth in calendar 2025. AI continues to be a crucial catalyst for KLA. We are well aware of the recent revelations of DeepSeek and the implications that it portends to diminish demand for advanced semiconductor in support of the AI infrastructure build-out. As a company that has been developing AI models for use in our own inspection systems for many years, our own experience supports the theory that increased compute efficiency enables more adoption of AI on our platforms.

The demand is clearly elastic. As it pertains to the demand environment for advanced semiconductor. We see no reason to believe that the increased compute efficiency in AI will have an impact on the advanced demand environment in the foreseeable future. AI is both an important driver and enabler of KLA's business.

Specific drivers connected to AI that are a positive for KLA's growth are higher volume and higher value wafer demand, more complex designs, accelerating product cycles, larger die size, and growing advanced packaging demand. These trends demonstrate the increasing value of process control and assisting our customers through managing a dynamic production environment as investments and complexity increase. Exemplifying this momentum for our advanced packaging portfolio continued in the quarter, the growing demand for more powerful systems of chips is driving more complex heterogeneous chip integration enabled by advanced packaging, which increases the value of process control in the chip package. This is fueling growth for KLA and our broad portfolio of systems.

KLA advanced packaging revenue grew to approximately $500 million in calendar 2024 and is expected to exceed $800 million in calendar 2025, up from our last estimate of $750 million. KLA's Service business grew to $667 million in the December quarter, up 4% sequentially and 18% year over year. This makes 50 consecutive quarters of growth for our Services business on a year-over-year basis. Finally, quarterly free cash flow was $757 million in calendar 2024, and the free cash flow margin was 31% over the same period, putting KLA among the top companies in the S&P 500.

Total capital return in the December quarter was $877 million, comprised of $650 million of share repurchase and $227 million in dividends. Total capital return over the past 12 months was $2.9 billion. KLA views consistent and healthy capital returns as fundamental to delivering value for shareholders. KLA's December quarter results delivered strong sequential and year-over-year growth, which validates KLA's process control leadership and portfolio strength.

KLA operating model and the dedication of our global team continues to be the foundation of our sustained success. I'll now pass the call over to Bren to cover financial highlights and our outlook.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Thanks, Rick. KLA's December quarter results demonstrate market leadership, combined with the consistent execution and dedication of our global team to meet customer commitments and drive sequential and year-over-year growth profitability improvements. Revenue was $3.08 billion, above the guidance midpoint of $2.95 billion. Non-GAAP diluted EPS was $8.20, above the guidance midpoint.

GAAP diluted EPS was $6.16. Gross margin was 61.7%, operating expenses were $596 million. Operating expenses were comprised of $342 million in R&D and $254 million in SG&A. Operating margin was 42.3%.

Other income and expense net was a $31 million expense. The quarterly effective tax rate was 13.7%. Net income was $1.1 billion, cash flow from operations was $850 million, and free cash flow was $757 million. The breakdown of revenue by reportable segments and markets, major products and regions can be found within the shareholder letter and slides.

Moving to the balance sheet, KLA ended the quarter with $3.8 billion, in total, cash, cash equivalents and marketable securities, debt of $5.9 billion and a flexible and attractive bond maturity profile supported by strong investment-grade ratings from all three major rating agencies. During the December quarter, we retired our $750 million November 2024 bond at maturity with cash on hand. KLA's balance sheet provides the ability to fund our growth strategy, organic and inorganic, and offer attractive capital returns to shareholders. Turning to our outlook.

The industry outlook continues to gain momentum in the near term, driven by an increasing investment in leading-edge logic, high-bandwidth memory, and advanced packaging. We expect the WFE market to grow by a mid-single-digit percentage in 2025 from the high $90 billion level for calendar 2024. Growth in calendar 2025 is expected to be fueled principally by increasing investment in both leading-edge foundry/logic and memory to support growing AI and premium mobile demand, offset by lower overall demand from China due to the digestion of elevated levels of investment over the past couple of years. In an encouraging development, our top customer recently said in an earnings call that they expect the number of new takeouts for N2, or the 2-nanometer node, in the first two years to be higher than both N3 and N5 in their first two years, fueled by both smartphone and HPC applications.

As communicated in early December, we continue to estimate the impact on KLA's revenue in calendar 2025 from recent export controls in China to be approximately $500 million, plus or minus $100 million, with roughly 70% of the impact affecting our systems business. While we are hopeful, based on our interpretation of the regulations, that there should be licensing opportunities that will mitigate some of this impact, we are taking a cautious view given the significant delays in processing license requests by the U.S. government over the past few years. However, given KLA's business momentum, market share opportunities and higher expected process control intensity at the leading edge across all segments, we are confident we will continue to deliver growth outperformance compared with the WFE market in 2025.

KLA's March quarter guidance is as follows: Total revenue is expected to be $3 billion, plus or minus $150 million. Our revenue guidance is up 27% year over year at the midpoint, further illustrating the improvement we expect to see in calendar 2025. Foundry/logic revenue from semiconductor customers is forecasted to be approximately 73%, and memory is expected to be approximately 27% of semi-process control systems revenue to semiconductor customers. Within memory, DRAM is expected to be about 75% of the revenue mix and NAND, the remaining 25%.

Non-GAAP gross margin is forecasted to be 62%, plus or minus 1 percentage point or up approximately 30 basis points sequentially at the midpoint, despite slightly lower revenue, primarily due to more favorable product mix expectations. For calendar 2025, based on expectations for business mix across systems and service, systems product mix, and factory utilization, we expect gross margin for the year to be approximately 62% and plus or minus 50 basis points. Non-GAAP operating expenses are forecasted in the March quarter to be approximately $585 million as we continue to make significant product development and scaling investments to support expected revenue growth. Given our expectations for company growth over the next couple of years, we will maintain our operating expense trajectory.

For the remainder of calendar 2025, we expect sequential increases of approximately $15 million in incremental operating expenses per quarter. This is driven by our priority around our product development roadmap requirements, as well as revenue growth expectations. Our business model is predicated on ensuring 40% to 50% incremental non-GAAP operating margin leverage on revenue growth over the long run. Other model assumptions include non-GAAP other income and expense net of approximately $36 million expense for the March quarter and expect this to be roughly consistent throughout the calendar year.

The tax assumption from March remains at 13.5% and we expect this to remain through the June quarter. Beginning in the September quarter, which is the first quarter of our fiscal year, our tax rate will reflect the adoption of global taxation, Pillar 2. Based on our current modeling, we think Pillar 2 implementation will drive the tax rate slightly higher to approximately 14% in the second half of the calendar year. We will provide an update on this planning rate midyear if necessary.

For the March quarter, GAAP diluted EPS is expected to be $7.77, plus or minus $0.60. Non-GAAP diluted EPS of $8.05, plus or minus $0.60. EPS guidance is based on a fully diluted share count of approximately 133.3 million shares. In conclusion, our near-term revenue guidance points to relative stability around current business levels.

Based on the strength of our backlog and market position, we see growth in calendar 2025 and expect to outperform the mid-single-digit growth rate we expect from the WFE market. KLA is focused on delivering a differentiated product portfolio that addresses customers' technology roadmap requirements and drives our longer-term relevancy and growth expectations. With the KLA operating model guiding our best-in-class execution, KLA is focused on implementing our strategic objectives designed to drive outperformance. KLA's focus on customer success, innovative solutions, and operational excellence drives industry-leading financial free cash flow performance and allows us to return capital consistently.

That concludes the prepared remarks. Let's begin the Q&A.

Kevin Kessel -- Vice President, Investor Relations and Market Analytics

Thank you, Bren. Operator, can you please provide the instructions for Q&A?

Questions & Answers:

Operator

[Operator instructions] In the interest of time, we ask that you please limit yourself to one question and one follow-up. We'll take our first question from Vivek Arya with Bank of America. Please go ahead. Your line is open.

Michael Mani -- Bank of America Merrill Lynch -- Analyst

Hi. This is Michael Mani on for Vivek Arya. Thank you for taking our questions. To start, we heard from two of your peers yesterday, the peer that is action deposition focused, issued a pretty similar WFE view to you guys for single digits while the other reiterated their annual guide suggesting that litho spending remains healthy.

So, the question is if total WFE is increasing something like $5 billion or so this year, but within that, litho WFE is also increasing, edging up, also growing pretty strong, so consuming a good part of that incremental growth, what exactly is happening to the process control part of the market this year? And if process control WFE is growing solidly, which it seems like it is, does that suggest that mid-single digits for WFE could be conservative? Or are there other parts of the market that are shrinking by that much? Thank you.

Operator

And pardon me, speakers, do you have us muted?

Kevin Kessel -- Vice President, Investor Relations and Market Analytics

My apologies.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah, this is Bren. I'll take that one. And the guidance was clear that we think it's somewhere in that range of about $5 billion, to use number, into 2025 versus 2024. We feel pretty good about KLA's share of overall WFE opportunity into next year.

Obviously, as we move into '25, we've got more investment in leading edge, and that's certainly a nice driver for our business, and we're already seeing KLA's share of WFE at the N2 node being meaningfully greater than what we saw at N3. What's happening in the DRAM, first, advanced DRAM is good for us with scaling in EUV, but also as you look at high-bandwidth memory, high-bandwidth memory is also driving process control intensity due to the lack of redundancy, more complex logic circuitry and the base die, the need for more reliability, bigger chips and so on. So, we feel pretty good about all of that. And then I think, finally, the growth that we referenced in the letter in advanced packaging is accelerating for the company.

It seems like every quarter, I keep raising the numbers, so I'm pretty excited about the opportunities that are there, and it seems to be accelerating as we move into this year. So, for all those reasons, it looks like process control intensity, KLA's share of market looks to increase in 2025 based on our assessment. And in an environment where memory is probably a higher percent given expected growth in DRAM, I think the dynamics I talked about more than offset a slightly a changing mix that's still foundry/logic heavy, but a little bit more DRAM in terms of our views on '25.

Michael Mani -- Bank of America Merrill Lynch -- Analyst

Got it. That's helpful. Thank you. And for my next question, just -- could you help us with the linearity for revenue this year the best extent you can? Just because we're kind of at a high order mark to revenue this quarter, so should we expect maybe it to be more first-half weighted versus second half, especially given China is normalizing it into the year and there's this impact of the export restrictions that we should consider? Thank you very much.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah, the second half, I'm not going to comment on it. As we said in the letter, we feel pretty good about relative stability as we look at the funnel here moving forward. We'll see, as we start to move through the year, what happens. But in terms of how we're modeling the company, it seems that we're bouncing around this $3 billion level, plus or minus, at least as we look at the first half of the year.

Kevin Kessel -- Vice President, Investor Relations and Market Analytics

Next question, please.

Operator

Thank you. [Operator instructions] Our next question will come from Harlan Sur with J.P. Morgan. Please go ahead.

Harlan Sur -- Analyst

Good afternoon. Thanks for taking my question. In process control, a strong outperformance for the team in calendar '24. I think your process control systems business was up 15% year over year, right? That's versus WFE at up kind of mid-single digits.

But if I look back over the past five years, the team's process control business has outgrown WFE on average by about 500 to 700 basis points per year. So, given this year is going to be more leading-edge technology inflection-driven, which is where obviously you guys have a strong leadership position, is it fair to assume that if WFE is up mid-single-digit percentage points this year, that your process control business should grow kind of low to mid-teens percent in calendar '25?

Richard P. Wallace -- President, Chief Executive Officer, and Director

Harlan, thank you for those comments. Obviously, we're not going to guide for the year. But clearly, we're feeling great about the position we have. And a couple of things have changed, as you well know, in terms of the dynamics.

One, because we've resumed scaling, there's more opportunity for more inspection. So, I've always viewed the opportunities as being twofold. One, there needed to be an opportunity, and then we had to have a solution. And sometimes we've had the case where, for example, if you go back years to 3D NAND, where, of course, if we could have looked through and found defects, there would have been an opportunity.

It was tough to do. But now we're really at an interesting point where the leading edge, every dynamic is going kind of in our favor. In terms of higher-value wafers, you've got larger die size. We talked about this in the prepared remarks.

And you've got accelerated technology nodes and more layers that need to be figured out. The other dynamic, of course, that you know is HBM, is looking more like logic than it used to, less redundancy, more valuable, more die and, of course, the dynamic around packaging. So, we feel great, as Bren said, about process control's position and overall -- and the spend for our customers. And that's the conversation we're having with our leading customers is very focused on getting that availability and being supportive of their technology ramps as they make these big investments going forward.

Harlan Sur -- Analyst

That's great. Thank you for that. And then on the 60% growth outlook for your advanced packaging business this year, can you just kind of help us unpack that a bit? How much of that mix is 2.5D packaging technology like CoWoS versus HBM versus other packaging types? And what is the rough mix of process control versus semi-manufacturing systems? And then we're already starting to see some future AI designs moving to 3D SoIC technology starting next year. Is this a further tailwind for the team given the higher complexity of these next-generation 3D architectures?

Richard P. Wallace -- President, Chief Executive Officer, and Director

Yeah. Great questions. I mean, I think two things have happened, and we got this early indication from our leading customers a year and a half, two years ago, that the challenges in packaging were going to look a lot more like what was going on in the front end, and they ask us to make some of the platforms that we use for the front end available for packaging. And so, back to the question.

What is this, a lot of it's inspection and metrology derivatives of the projects and programs that we have and have many years of experience with. There's clearly some plasma dicing so SPTS as part of that overall solution. But there's no question that our customers are driving. As you know, it's a very expensive when you have these high-end chips along with this complex packaging, and the risks are very high if there's yield loss.

So, there's more inspection opportunity there, and we feel great about the continued growth as we go forward. Right now, it's mostly 2.5, but -- 2.5 HB, but we see it's going to go forward. And our customers are -- this is an area that's moving very quickly. And because they need solutions, they're very focused on making sure we understand them as we go forward.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah. Harlan, Bren here. It's about 65%, 70% semi-PC versus process.

Harlan Sur -- Analyst

Great insights. Thank you.

Operator

Thank you. Our next question will come from C.J. Muse with Cantor Fitzgerald. Please go ahead.

C.J. Muse -- Analyst

Good afternoon. Thank you for taking the question. I just wanted to dig a little bit deeper in your outperformance relative to WFE. Within that, you're including that $500 million China hit.

And so, would love to hear, I guess, beyond the rising process control intensity at 2-nanometer and HBM, are there other drivers? Are those the two principal ones we should be thinking about?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah, C.J., those are the two principal ones. Yeah. You've got higher intensity at the node. And to Rick's point, we feel very good about some product momentum in a number of our markets.

So, that's -- and then, I think, finally, as you look at that and you look at what's driving growth. Within process control, you've got an acceleration in certain products where we have a strong market position. So, they're influencing the growth rate, obviously, more relative to the overall. So, that also drives an improvement, optical pattern inspection being one of those areas.

Richard P. Wallace -- President, Chief Executive Officer, and Director

Well, and reticle. I mean, we saw some improvement in some of the work in reticle. And including the Gen 5, C. J., for or print check, which obviously shows up in the optical, but it's part of that solution.

So, look, we're feeling pretty good and there was some investment made by our customers to support prior nodes once they've realized that there was still a yield opportunity there.

C.J. Muse -- Analyst

Just to follow up on that, Rick, you talked about share gain. Can you elaborate on that? And then my second question would be on service. You talked about hitting kind of the long-term growth rate over time, but would be curious given kind of the China impact, how you're thinking about growth for overall service in calendar '25? Thanks so much.

Richard P. Wallace -- President, Chief Executive Officer, and Director

Sure. So, on the share side, I think there are a couple of areas that might be more obvious than others. One is optical, simply because optical grew disproportionately perhaps in the rest of the market, and we have a large share there, so that creates a greater overall position there. We had some really strong momentum in e-beam, but then the other area where we really saw some strong performance was in packaging.

And so, that's the one where the teams have really done a great job focusing in the last couple of years, and we've been able to see continued momentum there. So, we feel pretty good about it. Obviously, the numbers for the year aren't going to come out, but we had gained a lot of share in the last couple of years. And the question was would there be any retrenchment.

We feel pretty good about where we are. For service, anytime you lose access to a fab, you had the immediate headwind that you can't get access to that equipment. So, as I look at growth this year, I think growth is probably in the high single digits for service, which is below the long-term model, we outperformed the long-term model by a little bit in 2024. Over time though, it's generally our view, at least in terms of how we run the company as we think about the efficiency of the market that if you have fabs that are inhibited from being able to supply that, that capacity has to get added somewhere else.

And so, that would create an opportunity for us to make some of that up over the very long term. And obviously, that would mean that you would end up with -- whatever was spent before would have to be replaced somewhere else. So, I think over the long run, we feel pretty good about the growth trajectory in our long-term model. But in the short run, it does affect, obviously, your ability to get at that capacity, which puts pressure on the growth rate and also puts some pressure on our ability to move resources around, and so we'll have to deal with some inefficiency as we've staffed up to support those fabs and now we have to have move those folks to support other customers.

So, there's a few moving parts. But in the long run, we feel pretty good about the trajectory given the higher value of offerings, what we're seeing in terms of pricing as it relates to new products the opportunities in packaging for incremental service. So, I think that the drivers for service are all pretty compelling. Obviously, the installed base is growing, lifetimes are increasing.

So, in the long run, we feel pretty good about the long-term target.

C.J. Muse -- Analyst

Thanks so much.

Operator

Thank you. Our next question will come from Joe Quatrochi with Wells Fargo. Please go ahead.

Joe Quatrochi -- Wells Fargo Securities -- Analyst

Thanks for taking my question. Just a follow-up on the services impact from China. Just given the fact that most of your services is highly recurring. Do we just take that, I guess, quarterly kind of run rate impact all in the March quarter and then grow from there? Or is there further kind of headwinds to think about in the out quarters?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah, I think that's the way to think about it because you lose what you would have gotten at those fabs and then it grows from there. So, I think that's a reasonable way to think about it.

Joe Quatrochi -- Wells Fargo Securities -- Analyst

OK. Perfect. And then just thinking about capital intensity for process control on the DRAM side, can you talk about just the difference in HBM process control intensity relative to conventional DRAM, just how to think about that adoption? I know obviously, EUV being adopted across the board is helpful for you guys, too.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah. So, as I said earlier, right, with an HBM device, you've got a few things that are happening. You've got bigger die because you have to drill the PSVs. They're bigger, so you have less redundancy, which historically has been pretty significant DRAM.

And so, that's been a headwind to process control intensity. The logic circuitry is more complex. The reliability on all the die in the stack is higher. So, for all those reasons, it's very good for process control intensity.

I think overall, for DRAM, it's moving the needle probably somewhere from, we'll call it, the 9% to 10% range where we've been historically, as a percent of WFE, that it probably moves up a good 100, 150 basis points from there. Now obviously, mix will affect that. Most of the focus is on HBM in terms of new requirements. So, mixed dynamics could affect that.

But we feel pretty good about these dynamics as they affect and drive the DRAM market. And it's most pronounced in the latest technology nodes, and that's where we're seeing it more. And so, it's going to take a little bit of time for us to really figure out what that overall looks like. I think by Investor Day, we should be in a pretty good position to talk about it on a longer-term basis.

Joe Quatrochi -- Wells Fargo Securities -- Analyst

Thank you.

Operator

Thank you. Our next question will come from Timothy Arcuri with UBS. Please go ahead. Your line is open.

Timothy Arcuri -- Analyst

Thanks. Bren, can you give us RPO? It was supposed to be up. Can you give us the number?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah. So, RPO was down about $900 million. About half of that was related to de-bookings we took due to the December 2nd regulations. So, about half of it related to that.

And then the other half, shipment levels were higher. So, that's how it played out in the quarter.

Timothy Arcuri -- Analyst

Got it. OK. Thanks. And then process control systems, you said pretty stable from here, but what about EPC? It was up a lot this quarter.

It grew a lot in -- well, it didn't grow that much, but it grew a lot in Q4. So, how to think about it for this year? Can it grow 10%, perhaps low double digits this year?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah. I think overall, EPC is probably going to be about mid-single digits. You have to remember that what shows up in EPC is flat panel business. And so, at the end of this quarter, we will be done shipping systems for flat panel after we announced end of manufacturing 12 months ago.

So, you have the flat panel revenue coming out. And so, obviously, that, in this year, affects the overall growth rate of the EPC businesses as we report those segments. So, overall, we feel pretty good. If you look at SPTS growth, especially semiconductor, mostly driven by advanced packaging growth year to year, ICOS component inspection, again, a packaging-centric business is also growing.

PCB businesses are more tied to mobility and capacity, so less growth in those areas. And then, of course, you got the offset from losing the FPD piece. Now losing the FPD piece does enhance the margin ratios, right, gross margins probably 20 bps higher. I think operating margins are probably 30 bps higher because the revenue mix is a little bit richer.

And certainly, that's factored into how we guided gross margins as we look at next year -- or look at this year, 2025.

Timothy Arcuri -- Analyst

Thank you, Bren.

Operator

Our next question will come from Krish Sankar with TD Cowen. Please go ahead.

Krish Sankar -- Analyst

Thanks for taking my questions. And Rick and Bren, thanks for quantifying the $500 million plus or minus impact from export control. You also spoke about China WFE dilution. I'm just kind of curious, if you layer in the dilution from China, how to think about your decline in China sales year over year on top of export controls in '25 versus '24?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah. I'll try to help with that. I mean, obviously, we'll have to see how the year plays out. But if you look at how we finished the year, right, this last quarter was 36%.

We finished the year at 41% of our business in China. As we look at 2025, I think that percentage drops to about 29% plus or minus a point or two as we go forward here. And so, when you do the math on that, assuming the stability that we articulated about our top line as we think about where we are right now, that translates into the overall China business down somewhere around 20% or so.

Krish Sankar -- Analyst

Got it. Got it. That's very helpful. And then another question is, can I know, in China, I apologize for this.

But when you look at your numbers compared to some peers, over the last two quarters, your China sales have been more resilient compared to your peers. Is this due to the wafer business? Or is it because China is building domestic critical capacity? Like, what's happening there that kind of makes you relatively more resilient to your peers?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah. I think the easiest way to think about it is you have to remember that KLA is really about helping customers qualify process and speed time to results, yield learning and so on. So, as a result, you end up with -- particularly with greenfield fabs, a higher level of adoption as that fab's opening and more continuous investment at lower levels. So, when a customer goes to add a significant amount of capacity, obviously, more capacity-centric peers are going to participate, but then they'll get it in that quarter, and then it will fall off, where ours tends to be a little bit more consistent in terms of the investment profile.

And so, it also, I think, tends to hold up because I think the value of a process control, given the maturity of those operations, is pretty high.

Krish Sankar -- Analyst

Got it. Very helpful. Thanks a lot.

Richard P. Wallace -- President, Chief Executive Officer, and Director

Thanks, Krish.

Operator

Thank you. Our next question will come from Tom O'Malley with Barclays. Please go ahead.

Tom O'Malley -- Analyst

Hey, guys. Thanks for taking my question. Mine is a little short-term oriented, so forgive me here. But the last two things we've seen you and a competitor kind of talk about better NAND pretty significantly into the March quarter.

I was just hoping you can give us just a little more detail. It didn't sound like from a sequential basis, you had really called that out. I don't think you gave a ton of detail, so that would make sense that we didn't see it coming there. But just maybe describe what's happening there? Is that coming from a single customer? Is that coming across multiple customers? I totally understand it's a much lower base from these guys.

But would love to try to figure out where the strength is coming from just on a sequential basis into March.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

The strength, at pretty low levels, it's pretty broad-based. We have seen the NAND business tick up, right, over the course of the '24 and into '25. We expect a little bit more improvement there. I think overall, for the industry off of a very low level, there's likely to be some WFE growth there, but it's not significant.

And as a percent, it's bigger, obviously, given the level of WFE at that presently. But I would expect to see that improve a little bit moving forward, but not a lot in 2025.

Tom O'Malley -- Analyst

GotchA. And then on the DRAM side, clearly, there's debate in the broader market. You guys called out AI in some of your prepared remarks, but it seems like there are some share jockeying that's currently taking place. It sounded more positive for the year, your kind of view on the DRAM side.

Any commentary just when you think about six months ago is when you talk to your customers. Obviously, people were putting in capacity for kind of all of 2025. Have you seen incremental spend there in the short term or rush orders to try to catch up by customers? Anything on that would be helpful.

Richard P. Wallace -- President, Chief Executive Officer, and Director

Well, I think our customers -- it's Rick. Our customers certainly set out their plans looking out for the year. So, there's been no real short-term change. I do think the strength in terms of what they're seeing in demand and support of the AI infrastructure continues to grow, and we see momentum there.

So, we are definitely in conversations and a lot of them about slot availability. Remember, we still have many products or a few critical products that are supply constrained, so we're in conversations about that. So, we feel pretty good about the demand, especially at the leading edge. And the dynamics around advanced DRAM are playing to our strength because of the challenges, both the value of those devices, but also the yield challenges.

And as we mentioned before, the die sizes are smaller, less redundancy and it's looking more like higher process control intensity as we talked about.

Kevin Kessel -- Vice President, Investor Relations and Market Analytics

Next question, please.

Operator

Thank you. Our next question will come from Chris Caso with Wolfe Research. Please go ahead.

Chris Caso -- Analyst

Hi, thanks. Just a follow-up question with regard to the China impact. And you've given some color on what you expect that for the year. From a quarterly basis, is there any sort of incremental headwind or benefit as we go into the second half? I know that you talked about some of the mitigations and licenses, which are taking some time.

But I guess how do we think about this as we go sequentially through the year?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah, we're pretty cautious with it overall. We'll see how it plays out. As I said in the prepared remarks in terms of licenses that could mitigate the impact. But when we look at it over the course of the year or what we expected, it was pretty consistent across the year.

So, it wasn't -- maybe again, that could be the nature of how customers buy process control versus other types of products. But it was pretty -- half to half was more or less pretty consistent.

Chris Caso -- Analyst

OK. Got it. And just a follow-up on gross margins. Again, you're kind of starting out with 62%, you're guiding to 62% for the full year.

So, sort of assuming that remains stable as you go through the year. And I guess at what point, with regard to some of the operating leverage that you typically get with the fall-through, what's kind of the starting point from that, that we could start to see some of the leverage kick in as revenue starts to grow?

Richard P. Wallace -- President, Chief Executive Officer, and Director

Yeah. Look, we have mixed issues that generally are the biggest impacting item to our overall gross margins more so than customers or segments. But I would expect as we start to see overall revenue accelerate, we'll start to see the kind of leverage that we've seen historically. So, I said 62%, plus or minus about 50 basis points.

The reason, I think, some of that is predicated on what happens moving forward. We do have -- depending on the mix, right? we do have markets like the packaging market, which carry a lower gross margin given the complexity of the tools than some of our higher-end systems, but obviously, the gross margin dollars are quite significant. And the relevancy growth in KLA is significant. So, we're pleased with that.

But I think as we move forward, I think you're likely to see us continue in that 60% to 65% range as we as we accelerate revenue over time. And as we talked about in our 2022 plan, we saw gross margins were around 63% or so, obviously predicated on a volume level of about $3.5 billion. So, that gives you a sense of kind of where we're at from here to there moving forward. And I feel pretty good about our ability to achieve that, given the investments we've made that are still -- I think we're in a good position to deliver against that.

I don't think we have to go and make incremental investments in terms of the capacity -- the hard asset capacity we have to execute to those business levels.

Chris Caso -- Analyst

Got it, helpful. Thank you.

Operator

Thank you. Our next question will come from Srini Pajjuri with Raymond James. Please go ahead.

Srini Pajjuri -- Analyst

Thank you. One short-term question on your March quarter guidance. Just the foundry/logic, I think you're guiding for 73% of the mix to be foundry/logic. That is, I think, implies at least in a mid-single-digit type decline.

We haven't seen a decline in that business in a while, and I'm just trying to understand how that reconciles with your comment about N2 demand being strong in the short term.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah. I'm taking a look at it. I don't think it -- it doesn't look like it changes all that much. So, I think given that the overall revenue guidance is what it was, I think for semi-PC systems, I mean, we'll see how the quarter ends up.

And we do have business that isn't -- there's infrastructure business, for example, that doesn't show up in those percentages. So, when I look at the businesses that -- the semiconductor customers, it's pretty consistent. So, I don't think it will change a little bit. But as we talked about I think memory, overall, is a higher percentage of the mix in 2025 than it was in 2024.

Richard P. Wallace -- President, Chief Executive Officer, and Director

There were some other customers non-N2, N3 that showed up in December that aren't showing up.

Srini Pajjuri -- Analyst

OK. OK. That makes sense. And then, I guess, as we go through the year, obviously, N2 is going to be relatively strong.

Do you still have, I guess, material contribution? Are you still expecting material contribution from N3? Or is it at a minimal level? And then, I guess, just a follow-up to that, how does the, I guess, PC intensity change as we go from N3 to N2? Thank you.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah. So, most of the focus, in terms of new investment, is on 2-nanometer. There still is some incremental investment that's happening in N3, but the vast majority of it is 2-nanometer-centric. Obviously, there's packaging investment that's also happening.

And I mentioned it earlier yet, the story have been -- over the last couple of quarters or so, I've said that at N3 versus N2. At N2, we thought we were about 75 basis points higher in terms of KLA share WFE. I think that we're likely higher than that. It's probably 90-ish basis points, maybe 100 basis points, so trending in the right direction for sure.

Srini Pajjuri -- Analyst

Got it. Thank you.

Operator

Thank you. Our next question will come from Brian Chin with Stifel. Please go ahead.

Brian Chin -- Analyst

Good afternoon. Thanks for letting us ask a few questions. Yeah, I was just curious, in terms of logic/foundry chip makers that are at the leading edge, but maybe not expanding capacity aggressively, can you comment on the magnitude of residual spending you still see with them tied to R&D and technology development? Obviously, you're able to offset that or any drag there and outgrowing WFE this year. But just curious if you had any sort of commentary around that.

Richard P. Wallace -- President, Chief Executive Officer, and Director

Are you saying -- I'm sorry, you said ones that aren't at the leading edge?

Brian Chin -- Analyst

At the leading edge, but not expanding capacity aggressively. There's kind of one guy doing that. But in terms of the other ones, you're sort of on the pace or maybe -- on the pace, but just not billing out aggressively. Maybe some of the residual spending engagement you still have with them?

Richard P. Wallace -- President, Chief Executive Officer, and Director

So, let's say, we derisked that in our '25 plan.

Brian Chin -- Analyst

OK. Fair enough. And then maybe just carrying forward that last question, the -- I thought process control intensity going from 2-nanometer gale around A16, because I think they're kind of meant to be somewhat closely coupled to some degree.

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yeah, we're a little early on that one. So, I'd like to -- before we started making comments, actually shipping to support that activity in a way to actually model it. And one of the things, obviously, we've seen over the course of the last several nodes, for intensity reasons, but also for share is that because of the design start environment, limiting reuse, customers are managing a much more dynamic design environment, you now have more designs that are driving the leading-edge ramps, all these things have been positive factors, and then there's a share element as well. This fundamental, I think, shift moving forward in the composition of semiconductor revenue to larger, higher-value die with defect density is very problematic, I think, plays to growing opportunities for process control.

We have to execute on our programs to be able to deliver the right solutions for customers to solve their problems and solve the right problems to scale the production. But I think if we execute our own business, it does create an opportunity for us to see continued tailwinds in this area.

Richard P. Wallace -- President, Chief Executive Officer, and Director

Yeah. And let me give a little more perspective, too, because we've actually -- usually, if the spending is done at a node, that process control intensity is kind of set. But what we've seen happen is when we have new solutions that find new defect problems that are yield impacting, we've seen some backporting of that. So, in other words, you might see some systems going into prior nodes, which actually drives those intensities up for the prior node, which is the new baseline to go forward.

So, we feel -- we think part of the outperform is the fact that we actually have more solutions that solve the problems. We've always had more opportunities than we've had answers for in terms of customers trying to figure out how to learn quicker and adopt new technologies, but our technologies are really coming together in a way that we think there's -- it's both share, but also it drives adoption simply because we're solving more problems. So, when we look at what we're seeing for N2, we feel pretty good about the potential to help our customers ramp those nodes, and that will be a basis on which to build going forward. For example, a lot of people didn't model, early on, the reticle verification on wafer, the print check that we're using for Gen 5.

That's, essentially, a new application. Once people value that, then they might even go back and backport some of that capability when there's yield opportunity. So, we feel pretty good about where we are in terms of driving overall intensity, and that will be part of the message we share at our Investor Day is how we see that going forward, which will include the node you talked about.

Brian Chin -- Analyst

OK, great. Thank you.

Operator

Thank you. Our next question will come from Charles Shi with Needham and Company. Please go ahead.

Charles Shi -- Needham and Company -- Analyst

Good afternoon. Thanks for taking my question. So, I think that you guys don't want to explicitly call out the direction for the second half in terms of the growth relative to the first half of the year. But it sounds like the base case assumption from you guys is you're probably going to be around that $3 billion per quarter level, maybe throughout the year.

Maybe some of that is contingent upon whether you can get some export licenses for that $500 million impact from the latest export control. But is there any other swing factors that you probably don't have a conclusion yet, but that could support some of the second half growth? Is there anything that you haven't mentioned?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Well, the license is, as we said earlier, we haven't built that into the plan. And so, we'll see how that plays out. And I think the stabilizing around current levels as we look forward, it seems like we're operating around this level. And as the EBIT go beyond the middle of the year, we'll see what happens.

We mentioned earlier about derisking some opportunities. And so, we'll see how those potentially play out around certain customers, but that could be a swing factor as well. And I think that back to what we said about certain parts of the market, we've been a little bit more cautious on. We'll see if there's more upside that -- in China that, I think, we've tried to de-risk that relative to the levels of investment we've seen over the last couple of years.

But we'll see how that plays out as we move forward. But I think we're -- for now, it feels like around the current levels is the best that I can do from a guidance point of view.

Charles Shi -- Needham and Company -- Analyst

Thanks, Bren. Maybe a quick follow-up. What's the expectation for China revenue contribution into March quarter?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

It will come down as a percent being high 20s. We will see. We'll see what ends up revenue in -- right, because you've got different rev-rec policy issues from -- whether it's a new customer and a new fab versus an established customer, so that could either accelerate revenue to revenue shipment or extend it to an acceptance process. So, we'll see how things play out.

But in general, I would expect it to drop from the 35% level probably into the high 20s, maybe 30% at the highest.

Charles Shi -- Needham and Company -- Analyst

Thanks. That's very helpful. Thank you.

Richard P. Wallace -- President, Chief Executive Officer, and Director

Sure.

Operator

Thank you. [Operator instructions] We'll take our next question from Atif Malik with Citi. Please go ahead.

Atif Malik -- Analyst

Hi, thank you for taking my questions. Rick, the question on foundry concentration comes a lot with investors. Obviously, you guys are doing very well with your top foundry customer on N2 and it's all around, and there's a reference in Japan that's kind of ramping this year. How are you guys leaning into the two struggling foundries this year if that poses a risk to your business?

Richard P. Wallace -- President, Chief Executive Officer, and Director

I'm sorry, say it again, how are we dealing with --

Atif Malik -- Analyst

How are you guys leaning into the two struggling foundries and what impact that could have both this year and out two years in terms of your exposure?

Richard P. Wallace -- President, Chief Executive Officer, and Director

Well, we obviously work with all our customers. And so, if there's a way for us to add value, we're doing that. I think the bulk of the stated capeEx number pretty clearly heads toward the direction of the biggest player in the market in terms of investment. But the others, we engage.

I mean, certainly, everyone that we work with wants to improve their ramp-up time of new technology and improve their yield. And so, of course, we're doing that, but that's not where the bulk of the business is these days. So, I don't see a huge difference in terms of how we're engaging now relative to how we were in the past. It's just -- the dynamics have shifted much more toward the leader who's further ahead now than they've been in quite a while.

Atif Malik -- Analyst

Fair enough. And Bren, on the $500 million restrictions impact, can you give some color? Were those like trailing-edge logic projects? Or was it in DRAM contribution in those sales?

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Yes, most of it was logic. Yes, very little. In fact, all of it was logic. They're very little, that was memory.

Atif Malik -- Analyst

Thank you.

Operator

Thank you. And it appears we have no further questions at this time. I would like to turn the call over to Kevin Kessel for any additional or closing remarks.

Kevin Kessel -- Vice President, Investor Relations and Market Analytics

Thank you very much, and thank you, everybody, for your time and your attention. We know how busy today is and this week is, so we appreciate it. We'll be speaking with you all very soon. And I'll turn it back now to the operator for any closing instructions.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Kevin Kessel -- Vice President, Investor Relations and Market Analytics

Richard P. Wallace -- President, Chief Executive Officer, and Director

Bren D. Higgins -- Executive Vice President, Chief Financial Officer

Michael Mani -- Bank of America Merrill Lynch -- Analyst

Bren Higgins -- Executive Vice President, Chief Financial Officer

Harlan Sur -- Analyst

Rick Wallace -- President, Chief Executive Officer, and Director

C.J. Muse -- Analyst

Joe Quatrochi -- Wells Fargo Securities -- Analyst

Timothy Arcuri -- Analyst

Krish Sankar -- Analyst

Tom O'Malley -- Analyst

Chris Caso -- Analyst

Srini Pajjuri -- Analyst

Brian Chin -- Analyst

Charles Shi -- Needham and Company -- Analyst

Atif Malik -- Analyst

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KLA (KLAC) Q2 2025 Earnings Call Transcript was originally published by The Motley Fool