Initiation of Coverage: A niche leader benefiting from widening AI demand

Research evidence excerpt

Initiation of Coverage: A niche leader benefiting from widening AI demand

TekscendTekscend PhotomaskPhotomask Corp UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: How much is the merchant photomask market likely to expand?

The merchant photomask market is likely to grow by about 25%–30% over the next three years

(8%–9% annualised), driven by higher mask counts and higher average selling prices reflecting the

ongoing shift toward cutting-edge technologies, in addition to increased outsourcing.

Q: Can Tekscend Photomask maintain its top share in the merchant mask market?

Yes. In addition to its technological advantage in DUV lithography and its broad customer base, the

company has built a competitive position in EUV through joint development with IBM and imec,

making it highly likely to maintain its leading market share, in our view.

UBS VIEW The merchant photomask market is expected to grow at 8%–9% annually in the next three years

(around 25%–30% cumulatively), supported by higher mask counts and higher average selling prices

accompanying semiconductor evolution, as well as greater outsourcing, especially in memory.

Against this backdrop, the company has established a competitive position not only through its

technological advantages in DUV and its global customer base, but also in EUV through joint

development, and we think the company is highly likely to maintain the top share in the merchant

market over at least the next 2–3 years.

EVIDENCE AI demand is accelerating the pace of expansion in the mask market.

The company has said photomask demand will likely accelerate from its historical 7.4% annual