Lasertec Corporation 6920
Lasertec — Japan's most-traded stock at $23B — is inflating inventory to hide that its flagship ACTIS EUV mask-inspection tool is defective; a 65-70% writedown will erase 85% of retained earnings.
Thesis
Lasertec trades at $23B with the highest daily trading volume of any Japanese stock, yet Scorpion argues it is a textbook accounting fraud on the scale of Olympus and Toshiba. The flagship ACTIS EUV mask-inspection tool allegedly suffers fatal defects in its Ushio light source — tin spatter, instability, low uptime — which TSMC, Intel and Samsung privately complain about while shifting inspection work to KLA. Industry-leading 40% EBIT margins are contradicted by cash conversion averaging just 65% over five years and a 2024-Q1 low of 28%, while deferred revenue has collapsed 44 billion yen in four quarters — evidence that headline revenue growth is draining the prepayment pool. Scorpion estimates an inevitable 65-70% inventory writedown ($700M-$750M) that would erase 85% of retained earnings, with the Yokohama 'Innovation Park' exposed by drone footage as mostly empty buildings.
SCQA
Lasertec is Japan's most-traded stock with a $23B market cap, marketed as a 'Japan ASML' for supplying ACTIS EUV photomask-inspection tools — supposedly monopoly technology — to TSMC, Intel and Samsung.
The ACTIS light source is fundamentally defective (tin spatter, low uptime); customers are migrating to KLA; 70% of reported net income is non-cash while inventory and deferred revenue signal classic Olympus/Toshiba-style accounting fraud.
Investors should short the stock; management must take a 65-70% inventory writedown (~$700M-$750M) and restate revenue. Once disclosed, cumulative net income since 2019 collapses along with the EUV monopoly narrative.
A 65-70% inventory writedown erases ~70% of cumulative net income since ACTIS launch and 85% of retained earnings — damage greater than Toshiba's scandal relative to revenue, making the $23B valuation unsustainable.
The three reasons
- 1
ACTIS EUV inspection tool's Ushio light source is fatally defective; TSMC shifted work to KLA
- 2
Cash conversion of 65% vs peers' 100%+ plus 44 billion yen deferred-revenue collapse signals fraud
- 3
65-70% inventory writedown ($700-750M) will erase 85% of retained earnings — Olympus-scale fraud
Primary demands
- Recognize a 65-70% writedown of the $1.6B inventory book (ACTIS EUV tools)
- Restate revenue and deferred revenue (prepayments) that inflated headline growth
- Disclose customer dissatisfaction, product defects and the failed Urashima light source substitution
- Independent audit of the Yokohama 'Innovation Park' capex and the empty Fab 4A/4B facilities
KPIs cited
Pattern membership
Precedents cited
- Olympus 2011 accounting scandal (tobashi, goodwill inflation)
- Toshiba 2014-2016 accounting scandal
- Japanese listed-company accounting frauds more broadly
Composition what's on the 334 slides
Slide gallery ·
Notes
Japanese-language edition (the 'Jp' in the filename) of Scorpion Capital's June 2024 short report on Lasertec (TYO:6920). A 334-page investigative short, one of the longest public short reports ever published. Structured in 11 parts (第1部〜第11部) moving from financial-forensic analysis (Parts 1-3) to technical product failure (Parts 4-5), customer dissatisfaction across TSMC/Intel/Samsung/Global Foundries (Parts 6-6C), inventory evidence (Part 7), demand exhaustion (Part 8), KLA disruption threat (Part 9), technical substitution by customers (Part 10), and site-visit/drone exposé of the 'Innovation Park' (Part 11). Argument by analogy to Olympus (tobashi, 2011) and Toshiba (2014-16) is pervasive — positioning Lasertec as the next Japanese mega-fraud. Heavy use of: (a) peer-gap tables vs ASML/AMAT/LRCX/TEL/KLA on margins, cash conversion, inventory, (b) anonymous former-employee/customer quotes (KLA ex-executive, Ushio researchers, TSMC insiders, Marvell, GlobalFoundries), (c) drone photography and time-lapse video of Fab 4A/4B. Named villain is CEO Okabayashi, quoted from multiple earnings calls claiming Fab 4A/4B will 'contribute to production' — drone shots of dusty empty buildings supply the contradiction. No explicit price target; implied downside is structural (85% of retained earnings wiped). Stake size not disclosed. Visual production is clean editorial with consistent red-accent typography and professional charts, but with high text density reflecting forensic nature — a 4/5, not a 5 (not quite Ackman CP-tier in slide composition).