\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/06\/GettyImages-1245621798-e1717621891973.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Lasertec is one of dozens of companies that have seen their valuations skyrocket due to demand from AI developers, who have piled into manufacturers behind the global supply chain providing the advanced semiconductors and massive quantities of energy needed to power AI models.\u00a0<\/p>\n
Lasertec\u2019s signature product is its ACTIS EUV inspection machine, used to detect manufacturing flaws in cutting-edge semiconductors\u2014but Scorpion is claiming that the technology, along with Lasertec\u2019s financials, are a sham.<\/p>\n
\u201cThe ACTIS system is defective with a fatally flawed EUV light source and other insurmountable problems, which it has concealed from investors,\u201d Scorpion\u2019s report reads<\/a>. \u201cThe \u2018new\u2019 ACTIS A300, recently announced as its next-generation EUV product and driver of growth, is a hoax.\u201d<\/p>\n Lasertec\u2019s massive stock run-up has made it a rising star on the Tokyo Stock Exchange<\/a>: The company\u2019s shares traded for pennies as recently as 2018, before a six-year tear that saw its share price increase more than 2,000% as investors chased returns associated with its role in the ultrahot semiconductor manufacturing industry.\u00a0<\/p>\n EUV inspection machines are a must-have for large-scale manufacturers including TSMC, Intel<\/a>, and Samsung<\/a>, which depend on the complex and extremely expensive devices for quality control. Lasertec\u2019s main competitor in the EUV space is Dutch firm ASML, which has a near-monopoly on the equipment needed to etch chip designs onto wafers and charges $380 million apiece for its top-of-the-line machines<\/a>. Lasertec has been producing EUV quality control machines since 2017<\/a>.<\/p>\n Scorpion investigators visited Lasertec\u2019s production facilities and reported that the actual state of the site is far from what Lasertec has advertised. The firm, founded by former Carl Icahn acolyte Kir Kahlon, wrote that the company\u2019s new Yokohama \u201cinnovation park\u201d is actually \u201ca generally deserted facility with no R&D or production activity.\u201d Scorpion also cited interviews with leaders of Lasertec\u2019s main customers, who Scorpion claims are \u201cexasperated and furious to the point that TSMC has ceased buying [Lasertec\u2019s] EUV machines.\u201d<\/p>\n Scorpion also pointed to Lasertec\u2019s accounting practices. The short-seller alleges the company has routinely overstated revenue and earnings to investors, as well as manipulated its inventory numbers.\u00a0<\/p>\n Lasertec\u2019s stock dropped 5% after Scorpion\u2019s report was released. The company issued a brief letter stating that it \u201cclearly [denies] the allegation of improper accounting practices\u201d after market close on Wednesday, without elaborating on the alleged flaws in its EUV machines.<\/p>\n Severe disruptions to Lasertec\u2019s business could send ripples across the semiconductor sector more broadly, but would likely not have severe impacts. Lasertec competitor KLAC Corp. sells its own EUV inspection machines<\/a>, which would be a roughly like-for-like swap for major chipmakers. But any significant knock to Lasertec\u2019s share price would likely hurt the Tokyo Stock Exchange, which has largely depended on semiconductor stocks including Lasertec to fuel big gains over the past year.<\/p>\n Lasertec could not be immediately reached for comment.<\/p>\n<\/div>\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n