TSI #2.4: Lasertec
Summary
Lasertec is a small player in the WFE area of the semiconductor industry, but it has a monopolistic position in a highly critical component of EUV lithography.
Leading-edge fabs need to use EUV > which needs EUV masks > which need regular inspections with high res and high throughput > this is what Lasertec delivers.
We’ll discuss the photomask background, mask inspection challenges, and the demand outlook for Lasertec.
Lasertec Overview, Financials, & Valuation Considerations
Interestingly, Japan-based Lasertec (ADR ticker: LSRCY) has been around for decades, but has only been able to achieve consistent growth in the last few years. It was founded in 1962 under the name of NSJ Corporation, and in 1986 it rebranded to Lasertec. In recent years, because of EUV adoption for HVM (High Volume Manufacturing) of semiconductors, there has been a significant demand increase for higher resolution defect inspection capabilities in both wafers and photomasks, and at present Lasertec has a monopoly in EUV mask inspection thanks to their long-enduring commitment to R&D in this field. This has ignited growth for a company that has long been operating in a competitive mask inspection market but now has a significant advantage.
The financials presented below indicate there is a notable degree of volatility in the growth and margins. This is because most of the growth is emanating from a few EUV-using foundry customers – i.e., TSMC, Samsung, and Intel – who, in turn, are only manufacturing for a few semiconductor customers. In general, the whole industry is still really early in adopting EUV at scale which is the source of the unpredictable growth and margins.
Lasertec has guided for FY22 revenue to come in at 83bn yen, but because income statement currency conversions are done on a weighted-average basis, we don’t know the USD/JPY rate at which to convert to dollars – and this has been made more challenging since the steep rise in the USD/JPY in the past few months. Therefore, we’ve estimated a USD/JPY rate of 118.0 to arrive at an expected $703m of revenue for FY22.