Investment Thesis
~70%+ global dicing/grinding share. Every AI package (CoWoS, HBM, chiplet) needs DISCO. FY2026: 6th consecutive record — ¥436.9B revenue, 42.3% OP margin. Q1 FY2027 re-acceleration guided: +18% revenue, +21.8% OP — quarterly shipment record forecast. CoWoS expanding 3.7x (35k→130k wpm by end 2026) implies ~27-36 additional DISCO dicers for TSMC alone. HBM supercycle: $54.6B market 2026 (+58% YoY), HBM grinding monopoly confirmed. New opportunity: Intel glass substrate singulation (proprietary 'pull-back method'). Dividend hiked 22% (¥413→¥505) — management confidence signal.
Risk
P/B ~13.4x approaching historical all-time peak of 15.47x — priced for perfection, no valuation cushion. FCF yield ~0.85% — any demand deceleration means multiple compression risk. Revenue growth decelerating 28% (FY2025) → 11% (FY2026); Q1 FY2027 re-accel is 1 quarter, not confirmed trend. Analyst consensus target ~¥76,950 barely above current ~¥72-76k — limited sell-side upside. Chinese entrants (CETC, Han's Laser) targeting mature-node dicing with 40-50% price discounts + government subsidies. Capex doubled ¥33B→¥70B — if orders moderate, FCF deteriorates sharply.
Monitoring Trigger
Q1 FY2027 results (around July 2026): confirm +18%/+21.8% guided revenue/OP re-acceleration. TSMC CoWoS capacity milestones: on track to 130k wpm by end 2026? HBM4 volume ramp at SK Hynix/Samsung — any dicing complexity/spec changes requiring new DISCO tools. If P/B exceeds 15.47x historical peak — reduce position. Intel glass substrate: first volume order announcement.
Key Dates
Update History
FY2026 actuals: 6th consecutive record, 42.3% OP margin. FCF resolved +¥63.7B. Q1 FY2027 re-acceleration +18%/+21.8% guided. Intel glass substrate added. P/B guardrail triggered (~13.4x vs 15.47x historical peak).
Key Metrics
Business Segments
| Segment | Revenue | Share | Description |
|---|---|---|---|
| Dicing Saws | ¥234B | 55% | Die singulation for advanced packaging |
| Grinding/Polishing | ¥127B | 30% | Wafer thinning for 3D IC stacking |
| Blades/Consumables | ¥64B | 15% | High-margin recurring |
Supply Chain Evidence
| Evidence | Customer | Product | Detail |
|---|---|---|---|
| confirmed | TSMC | Dicing for CoWoS packaging | Est. 70%+ global dicing share; NVIDIA H100/B100 packages[source](2025-01) |
| confirmed | SK Hynix / Samsung | HBM die singulation | All HBM production requires DISCO dicing[source](2025-01) |
| inferred | ASE / Amkor | OSAT advanced packaging | Leading OSATs use DISCO equipment |
| confirmed | Intel | Glass substrate singulation (SeWaRe method) | DISCO 'pull-back method' is proprietary solution for glass substrate cutting (SeWaRe defect elimination). Intel advancing glass substrates + EMIB packaging — DISCO confirmed as key equipment supplier.[source](2025) |
Sources & References
Peer Comparison
| Company | PE | Fwd PE | ROE | Op Margin | FCF |
|---|---|---|---|---|---|
| Advantest | 54 | 44 | 49.3% | 44.2% | +¥375B est. |
| Tokyo Electron | 40.21 | 30.85 | 23.9% | 24.2% | +¥398B |
| SCREEN Holdings | 23.29 | 17.85 | 19.8% | 19.0% | +¥49.4B |
| DISCO Corp | 55.44 | 43 | N/A | 42.3% | +¥63.7B (OCF ¥133.5B minus capex ¥69.8B; capex doubled FY2025→FY2026) |
| Lasertec | 44.17 | 45.06 | 43.0% | 46.1% | +¥96B |
| Shin-Etsu Chemical | 25 | 23.5 | 11.1% | 24.7% | +¥346B |
| Keyence | 43.64 | 39.9 | 13.5% | 51.0% | +¥451B (cash equivalents; FCF strongly positive given asset-light model) |
| Renesas Electronics | Loss | 17.78 | -2.1% GAAP / ~10.5% Non-GAAP | 33.7% Non-GAAP Q1 2026 (H1 guided 31.3%) | +¥364B (confirmed: OCF ¥453B minus capex ¥89B) |
| SoftBank Group | ~6.8x nominal (meaningless — non-recurring OpenAI gains) | 22.09 | ~43% nominal (OpenAI-inflated) | N/A (holding company) | -¥1,396B (approx) |
| SUMCO | Loss | N/A | -1.54% | -0.8% | -¥11B |
| Socionext | 36.77 | 22.44 | 6.0% | 7.5% | -¥4B |
| Nitto Boseki | ~25x operating basis | 22 | 13% | 13% | N/A |
| Asahi Kasei | 13.4 | 12 | 7.8% | 7% | N/A |
| Mitsubishi Gas Chemical | 12 | 11 | 8% | 8% | N/A |
| Meiko Electronics | 16 | 14 | 15.6% | 12% | N/A |
| Fujimi Inc | 18 | 16 | 12% | 15% | N/A |
| Hirose Electric | 22 | 20 | 8% | 15% | N/A |