Lasertec, a tiny maker of US$40 million chip testing machines, is Japan’s hottest stock thanks to EUV

The list of Intel’s annual supplier award winners tends to read like a who’s-who of the semiconductor industry’s biggest names. This year, it included a little-known Japanese company whose machines have become indispensable in the race to improve semiconductors and whose stock has been rocketing up as a result.

Lasertec is the world’s only maker of testing machines required to verify chip designs for the nascent extreme ultraviolet lithography (or EUV) method of chipmaking. In 2017, Lasertec solved a key piece of the EUV puzzle when it created a machine that can inspect blank EUV masks for internal flaws.

Last September, it cleared another milestone by unveiling equipment that can do the same for stencils with chip designs already printed on them. This March, Intel gave the tiny Yokohama-based company an award for innovation, its first after decades of doing business together.

“That’s a major milestone for us,” Lasertec president Osamu Okabayashi said in an interview. “It means a lot to be recognised this way as a supplier.”

The company’s stock has soared more than 520 per cent since the start of 2019, more than twice the gain of the second-best-performing security in the benchmark Topix index. That includes an increase of more than 50 per cent this year.

Intel declined to say if it was buying EUV equipment from Lasertec, which already supplies test gear to its rivals Samsung Electronics and Taiwan Semiconductor Manufacturing Co. The three chip fabricators are the only ones so far to announce EUV plans, because the technology is so complex and expensive. Okabayashi would only say that his company has “two or more” EUV customers.