KT Venture Group to augment KLA-Tencor?s growth strategy and provide key opportunities for technology innovation

SAN JOSE, Calif., Oct. 12, 2000-KLA-Tencor Corp. (Nasdaq: KLAC) today announced the formation of KT Venture Group, LLC, a new corporate venture capital fund. KT Venture Group is chartered with exploring and investing in early-stage start-up companies in the electronics industry. With $50 million in assets, the new venture capital fund will target the industries that complement KLA-Tencor's line of products and services, including the semiconductor, reticle, wafer manufacturing and data storage markets. In addition, KT Venture Group will target other emerging electronics markets in which KLA-Tencor's technology and expertise can provide unique value.

"KLA-Tencor's business strategy has always been to increase shareholder value by developing market-leading technologies and products from within the company and by acquiring innovative, successful products and technologies from outside KLA-Tencor," stated Ken Schroeder, president and chief executive officer of KLA-Tencor. "With the formation of KT Venture Group, we have added a third strategy-to increase shareholder value by investing in promising start-ups that address the markets we currently serve or address emerging new markets. We believe that KT Venture Group can identify these new ventures, and that KLA-Tencor can accelerate the success of these ventures by not only adding capital, but also providing assistance such as building alliances and providing staffing and business counsel."

KT Venture Group will offer an affiliate program to a select group of start-up companies that provides assistance in marketing, manufacturing, procurement, human resources and training. With access to proven business practices and policies, start-ups joining the affiliate program can accelerate their business plan objectives. KT Venture Group will also offer the use of available office and cleanroom space at KLA-Tencor facilities to select start-up companies. In addition,KT Venture Group will establish key alliances with targeted private venture capital firms as well as other corporate venture capital groups and affiliates to identify and support the most promising start-ups in the targeted industry segments.

Industry veterans Peter Wolken and Robert Lee will manage KT Venture Group's investment portfolio. Wolken, who has been a successful venture capitalist for more than 20 years, has been recruited as general partner of KT Venture Group. In 1982, Wolken founded Associated Venture Investors (AVI), which has managed $140 million across three funds that specialize in seed and early-stage investments in high-tech companies positioned for high-growth segments of the Information Technology market. Prior to AVI, Wolken was a general partner at Page Mill Partners. He also has extensive management experience in the electronics industry with leaders such as General Electric and Etec Systems.

Lee, who has been appointed vice president and general partner of KT Venture Group, has served at KLA-Tencor for nine years in various management roles, most recently as vice president of business development. In that role, he successfully managed external strategic merger and acquisition projects, and led KLA-Tencor's internal business development efforts. Lee holds a bachelor's degree in engineering from Harvey Mudd College and an MBA from Stanford University.

"Robert's proven skills at identifying and evaluating strategic business opportunities for KLA-Tencor make him an ideal choice to help lead KT Venture Group," added Schroeder. "Peter, who has an impressive record as a successful venture capitalist, will also be a valued addition to this new group and will play a key role in establishing strategic alliances with other venture capital firms. With these two experienced gentlemen at the helm, we anticipate that KT Venture Group will play a major role in ensuring KLA-Tencor's future growth and continued market leadership."

KT Venture Group is located at KLA-Tencor Corporation, 160 Rio Robles, Building D, San Jose, Calif., 95134. Phone: (408) 875-3206, fax: (408) 875-2223.

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