The Growing Photomask Market: A Boon for KLA’s Inspection Business
Summary
Rising demand for 3nm and EUV nodes has driven up the complexity and cost of photomasks, with inspection playing a critical role in ensuring defect-free production.
KLA’s dominance in EUV mask inspection, including pellicle-compatible systems, positions it as a key player in supporting next-generation semiconductor manufacturing.
KLA Corp’s stock surged 66% since January 2022, far outperforming peers like Applied Materials (24%) and Lam Research (18%), highlighting its strong market position in photomask inspection tools.
The photomask market is at the epicenter of semiconductor innovation, driven by relentless advancements in chip manufacturing technology. As nodes shrink to 3nm and below, photomasks—integral to the lithographic process—are becoming increasingly complex and expensive. For companies like KLA Corporation (KLAC), which dominates the mask inspection and metrology sectors, these trends present a compelling growth opportunity. While players like Photronics (PLAB) provide critical context as leading mask manufacturers, the spotlight for investors remains firmly on how KLA's technological prowess aligns with the challenges and demands of the photomask ecosystem. I previously discussed KLA’s mask business in an October 8, 2024 Substack article entitled “KLA Walking a Fine Line Without Actinic Mask Inspection.”
The Photomask Market: Rising Costs and Complexity
The photomask market, valued at $3.71 billion in 2023, is expected to grow in line with the adoption of advanced lithographic technologies, particularly extreme ultraviolet (EUV) lithography. EUV masks, with individual layers costing upwards of $150,000, are central to the production of chips at 5nm and 3nm nodes. The number of masks required per set has skyrocketed, with leading-edge designs exceeding 100 masks, further driving costs, according to The Information Network’s newly published report entitled “Mask Making, Inspection, and Repair: Market Analysis and Strategic Issues.” The cost breakdown of mask production and wafer runs for advanced nodes is detailed below in Table 1.