PSA Research Round-Up for the Week ending March 01, 2019: Highlighting reports on the Global EUV Opportunity Set as 7nm Goes Mainstream / Camera Industry

The Weekly Comment Summary by Pelham Smithers
As we wrote in our 27 Feb report on Extreme Ultraviolet Lithography (EUV), the semiconductor industry has had an intriguing choice between opting for ever more complex multiple-patterning solutions using Deep Ultraviolet (DUV) technology or shifting to the untried EUV alternative. As it happens, a similar situation is occurring in the, admittedly, much smaller (photo) mask writer market. Pelham Smithers pits the potential fortunes for multi-beam writers NuFlare Technologies (6256 JT) and Jeol Inc (6951 JT) against each other in this race that has only just begun.

Reports / Flash Notes Summaries
1. The Global EUV Opportunity Set as 7nm Goes Mainstream
2. Camera Industry – Does the Data Denote the New Normal, or a Temporary Holding Point?
3. Japan Stock Market Strategy: Investing When the Risk Protects You
Company / Sector / Thematic Comments at a Glance

Technology: Consumer Electronics / Gaming
1. Sony (6758 JT): New Xperia Phone Looks Better than Expected, but…
2. Nintendo (7974 JT) and the Share Buyback Issue / New Pokémon Titles for the Switch
3. Nexon (3659 JT): More Bidders for NXC
4. Capcom (9697 JT): Sales of Resident Evil 2 Remake Hit 4mil
Technology: Industrial Electronics / Precision / Components
5. Outlook for 10.5G Capex
6. Camera Industry Update
7. Nikkei Article: Toshiba Memory to Post CY18 1Q Operating Loss – Read-Across to Toshiba (6502 JT)
8. Positive Bloomberg Report Sends MLCC-Plays Higher
Chemicals / Materials
9. Foldable Phones and the Supply Chain
10. The Latest Surprise in HDD Roadmap: Implications for Hoya (7741 JT)
11. Sumitomo Chemical (4005 JT): Downward Revision Not Surprising
12. Feedback from World Smart Energy Week: Lithium Ion Batteries
Autos
13. Stabilisation of Residual Values in the US
14. Subaru (7270 JT) Tops US Reliability Study
15. Toyota’s (7203 JT) Lexus on a High
Auto Parts / Machinery
16. Ichikoh (7244 JT) Falls on Brake Light Issue
Internet / eCommerce
17. ZOZO (3092 JT) Suffers Yet Another Withdrawal from ZOZOTOWN
Enterprise Software
18. Pasona (2168 JT) Urged to Spin Off / Merge Subsidiary Benefit One (2412 JT)
19. Cybozu Inc (4776 JT): Strong January Sales, OP figures
Pharmaceuticals
20. Chugai Pharma(4519 JT): Readthrough from Roche Acquisition of Spark Therapeutics
Macro / Market
21. Japan, China Macro Data Releases
22. Analyst Downgrades Increasing

PSA Company Visits, Tours and Interviews
• Visited: Mitsubishi Chemical Holdings (4188 JT), Ferrotec (6890 JT), iStyle (3660 JT)
• Attended a plant tour at: Nippon Shokubai (4114 JT), Ichikoh (7244 JT)
• Attended earnings meeting for Nabtesco (6268 JT)
• Attended the World Smart Energy Exhibition in Tokyo

Weekly Market Comment by Pelham Smithers
EUV Commercialization Draws Attention to the Mask Writer War
As we wrote in our 27 Feb report on Extreme Ultraviolet Lithography (EUV), the semiconductor industry has had an intriguing choice between opting for ever more complex multiple-patterning solutions using Deep Ultraviolet (DUV) technology or shifting to the untried EUV alternative. As it happens, a similar situation is occurring in the, admittedly, much smaller (photo) mask writer market (US$600mil market vs US$12bil lithography market).
In the semiconductor manufacturing process, the first bit you do after designing the semiconductor is make the photomask. The simplest way to explain a photomask is that it is the IC version of a photographic negative. However, whereas you take one negative and create a (2D) photograph from it, because the semiconductor process is very much a 3D process, you need to break up the semiconductor design so that a photomask only has the bit of the design needed for any one part of the fabrication process. At leading edge technologies, you need around 50 photomasks to fabricate a DRAM, 40 for (3D) NAND and 80 for logic, such is the extent of the design deconstruction.
By definition, patterning the mask is as technically a precise process as patterning the wafer. However, there is a big advantage when it comes to patterning the mask, you can do it a lot slower. In wafer fabrication, you want to be printing wafers at a rate of 200/hour. However, assuming that you’ve spent six months designing a semiconductor, you could spend another month printing a set of masks. So even if it took 10 hours to print a mask, you could print a set of 80 masks in that time using just one mask writer. That slower speed means that you can use a piece of tried and trusted technology – electron beam lithography – to pattern the masks. Electron beam lithography is too slow to pattern a wafer – it is estimated it would take 22 years to pattern a single 300mm wafer at 10nm – but it is – or was – fine for patterning a single mask.
For years, the go-to mask writer system was single variable shape beam (VSB) with Japan’s NuFlare Technology (6256 JT) as the primary vendor. As we moved to finer lithographic nodes, the only constraint on the mask writing process was the need to speed up the process to accommodate the increase in lines per mask. To do this, NuFlare simply had to increase the dosage of electrons beamed from 70A/cm2 in the mid-2000s to 1,200A/cm2 by 2017. However, at that point, the industry ran into a problem – 1,200A/cm2 was as powerful as the technology could go. From here on, you either needed to wait longer, increase the number of mask writers or move to a new technology. For a bit, the first two were used, but it has started to become preferable to move to a multi-beam solution.