Photronics (PLAB) 17th Annual Southwest IDEAS Conference summary

Business overview and industry trends

• Operating cash flow has accelerated in the past five to six years, now at 25–26% of revenue over the trailing 12 months.

• 80% of revenue originates from Asia, with the remainder from the US and Europe; US expansion is underway.

• The company operates in two segments: semiconductor (IC) and flat panel display (FPD), with about half of revenue from high-end products.

• Regionalization and reshoring of semiconductor production are driving new investments, especially in the US and Asia.

• The photomask market is about $6 billion, with 63% captive and 37% merchant suppliers; merchant share may rise as captives outsource more.

Technology, capacity, and expansion plans

• US facilities are being upgraded: Boise, Idaho can produce down to 7nm, Allen, Texas is expanding to 65nm and 40nm due to customer demand.

• Projects at older nodes are shifting from Boise to Allen to free up leading-edge capacity.

• A new investment in Korea will extend capabilities from 28nm down to 8nm and eventually 6nm, driven by customer outsourcing needs.

• China revenue has grown from 3% in 2019 to about 25% of total revenue, split evenly between IC and FPD.

• Revenue from the new US facility is expected in fiscal 2026, and from the Korea facility in fiscal 2028.

Market dynamics and financial performance

• The value of photomask sets increases sharply with advanced geometries, reaching $10–15 million at the leading edge.

• The company holds about a third of the merchant IC market and 28% of the FPD market.

• Pricing power improved post-COVID as lead times increased and customers realized the criticality of photomasks.

• Gross margins have risen from the low 20s to the mid-30s, with operating costs around 10–11% of revenue.

• Capital intensity is expected to rise to 24% in 2025 due to US and Asia expansions and tool replacements.