Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?

one of these labels we know to be true, but which one is it?

On June 5 2024, activist short seller Scorpion issued a damning report on the Japanese company Lasertec. The report comes in two parts, a massive 334 slide presentation which you can find here and a 53 page “summary” document which you can find here.

Lasertec is best known for its mask Inspection systems used to identify defects in the masks (also known as reticles) used to imprint patterns via lithography on silicon wafers. However, its primary claim to fame in recent years has been its introduction of mask inspection systems for the masks used in EUV lithography.

These systems are dubbed “Actinic”, referring to the use of 13.5nm extreme ultraviolet, the wavelength of EUV lithography. The latest version, the ACTIS A300, is aimed at ASML’s high-NA EUV tools.

The company’s success with EUV inspection systems has seen it rise from relative obscurity pre 2017 into one of the most sought-after technology companies in the world. It’s rise to fame was already well underway as far back as 2020 as this South China Morning Post article makes clear:

In the intervening years, Lasertec share price has continued to soar, almost doubling in value once again over the course of the past eight months:

At this juncture, it’s probably worth pointing out that Lasertec has been one of the most hyped technology companies in recent history. Its association (rightly or wrongly) with being the sole supplier of a critical support tool for EUV lithography has driven its share price off the charts compared to its peers. There’s been a plethora of media coverage on the company in recent years, all praising its success and driving its share price even higher.

Much of this share price appreciation was undeserved in our opinion. A quick glance at the market for their EUV inspection tools would point you to basically three customers, Intel, Samsung and TSMC. Regardless of how good their tools were, it’s a pretty limited market to say the least. In this regard, Lasertec was an ideal activist short seller target and that’s exactly what’s happened.

So what’s going on? Could Scorpion correct in labelling Lasertec as a “colossal fraud”? Given the huge amount of documentation to review, our purpose here is to do a brief, initial assessment of the claims being made by Scorpion. We shall follow up with a deeper dive in the coming weeks. However, even from a cursory review of facts, we see a number of significant anomalies in Scorpion’s claims. Let’s dig in…