Goldman Sachs: Progress toward the commercialization of Japan’s photomask technology advances; DNP maintained at Neutral

Overview

Based on Goldman Sachs’ observations after attending Photomask Japan 2026, held from April 8 to 10, 2026, this report focuses on developments in photomask technology in Japan’s electronics and semiconductor sectors, with particular emphasis on Nano-imprint lithography (NIL) and Curvilinear photomasks. The report argues that DNP is continuing to advance NIL template manufacturing and Curvilinear technology development, and that industry commercialization readiness is becoming more concrete.

Core views

The core views are threefold. First, DNP has successfully used a 10nm line-width template in manufacturing, showing that NIL technology continues to move toward practical application. Second, SADP may help offset NIL’s challenges in uniformity, defects, and mass-production feasibility, enabling it to serve as a scaling path for some nodes without EUV. Third, Curvilinear photomasks have made progress in performance validation and 0.33NA EUV demonstration masks, but inspection and yield remain key issues that must be solved before commercialization. For DNP’s shares, Goldman Sachs maintains Neutral because the earnings potential of its high-growth businesses has already been largely reflected in the current share price.

Analysis framework

The report combines conference research, company disclosure tracking, and valuation analysis. The technology section draws on 55 photomask research presentations at Photomask Japan 2026 and DNP’s prior IR Day disclosures; the investment view uses a sum-of-the-parts valuation approach and also takes into account DNP’s medium-term management plan, growth-business investment, structural reform, cross-shareholding sales, and shareholder return policy.

Methodology notes

• Valuation methodsSOTP

  sum-of-the-parts valuation

  Goldman Sachs uses FY3/27 as the base year, applies different EV/EBITDA multiples to DNP’s business segments, and applies a -15% conglomerate discount to total business value to calculate enterprise value and target price.

• technology_assessmentNIL plus SADP

  NIL combined with SADP

  NIL forms nanoscale circuitry on substrate resin using a stamp-like template; SADP may help compensate for NIL’s shortcomings in uniformity, defects, and mass-production feasibility, thereby supporting pattern scaling for more advanced process nodes.

• technology_assessmentCurvilinear photomask

  curvilinear photomask design

  Curvilinear replaces traditional straight-line Manhattan designs with curves, diagonal lines, and freeform shapes, aiming to improve light diffraction and pattern blurring issues in the EUV era and enhance line-pattern precision.

• rating_frameworkGoldman Sachs relative rating

  stock ratings relative to the coverage universe

  Goldman Sachs’ Buy, Neutral, and Sell ratings are based on a stock’s total return potential relative to the coverage universe; stocks not included in the buy or sell investment list but still carrying a valid rating are generally considered Neutral.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Dai Nippon Printing

  The report’s main covered company; progress in photomask technology is related to the company’s Electronics business.

  Strengths

  It has core technologies accumulated from its printing business and is expanding into growth businesses such as semiconductor photomasks and battery pouches; it is also executing cross-shareholding sales and shareholder return plans.

  Weaknesses

  Goldman Sachs believes the growth potential of these businesses is already fully reflected in the current share price; NIL and Curvilinear commercialization still faces technical and mass-production challenges.

  Comparison

  Compared with traditional Manhattan photomask designs, Curvilinear may improve diffraction and blurring issues in the EUV era; compared with EUV-dependent paths, NIL combined with SADP may provide an alternative scaling solution for some nodes.

  Risks

  Changes in customer production plans or technology roadmaps, DNP production issues, difficulties procuring key materials, intensifying competition, a sharp appreciation of the yen, and rising raw material costs.

• NIL lithography technology

  A key industry technology theme that may affect advanced-node patterning paths.

  Strengths

  It has the potential to combine scaling and energy efficiency; DNP has reported 10nm-class manufacturing progress.

  Weaknesses

  Uniformity, defect control, and mass-production feasibility remain challenges.

  Comparison

  It may become a scaling method without EUV at some nodes, but it requires process compensation such as SADP.

  Risks

  If mass-production yield, defect control, or customer validation fall short of expectations, commercialization timing and revenue targets may be delayed.

• Curvilinear photomask

  A key industry design method applicable to improving photomask performance in the EUV era.

  Strengths

  By using curves, diagonal lines, and freeform shapes, it may form circuit patterns with higher resolution than traditional methods; multiple tests have already shown high performance versus older technologies.

  Weaknesses

  Inspection workflows and yield still need improvement.

  Comparison

  Compared with Manhattan straight-line designs, it is better suited to the challenges of light diffraction and pattern blurring in the EUV era.

  Risks

  If inspection efficiency, data-processing complexity, or manufacturing yield cannot meet requirements, commercialization progress may be hindered.

Key data

• ConferencePhotomask Japan 2026, April 8-10, 2026Goldman Sachs attended the conference and listened to 55 photomask research presentations.
• NIL technological progressSuccessful manufacturing using a 10nm line-width templateDNP’s reported manufacturing progress is consistent with its disclosure last December regarding a 10nm line-width template.
• NIL mass-production timingFY3/28DNP stated at its FY3/26 IR Day that the NIL business will begin mass production in FY3/28.
• NIL sales targetReach ¥4.0 bn by FY3/31DNP set this business sales target at its FY3/25 IR Day.
• Curvilinear status0.33NA EUV demonstration mask completedThe report says inspection workflows and yield still need to be addressed.
• Target price¥2,900Goldman Sachs’ 12-month target price for Dai Nippon Printing.
• Current disclosed price¥3,002The Dai Nippon Printing price shown in the report disclosure.
• Valuation multiplesSmart Communication 6.4x; Life & Healthcare 11.2x; Electronics 8.0x EV/EBITDAUsed for SoTP valuation, with a -15% conglomerate discount applied to total business value.

Impact & implications

For the semiconductor equipment and materials supply chain, progress in NIL and Curvilinear suggests that advanced-node patterning may have more technology pathways, and in some scenarios may reduce dependence on EUV or improve EUV photomask efficiency. For DNP, photomask operations are an important growth area in its transition from traditional printing to higher-value-added electronic materials, but the key issue at the stock level is not whether the technology is progressing, but whether these advances can exceed the expectations already built into the market.

Risks

• A sudden change in customer production plans or technology roadmaps could affect demand for DNP’s products.
• If DNP encounters production issues, it may not be able to meet orders.
• Difficulties procuring key materials could constrain capacity or delivery.
• Intensifying price competition from peers could reduce market share or profitability.
• A sharp appreciation of the yen could weigh on earnings.
• A significant rise in raw material costs could compress margins.
• If NIL’s uniformity, defect, and mass-production issues cannot be resolved, the pace of commercialization may fall short of expectations.
• Inspection workflows and yield for Curvilinear photomasks remain major bottlenecks before practical application.

What to watch

• Whether DNP’s NIL business begins mass production as planned in FY3/28.
• Progress in orders, customer validation, and capacity build-out toward the NIL business’s FY3/31 ¥4.0 bn sales target.
• Validation results for defect rates, uniformity, and mass-production stability after combining SADP with NIL.
• Improvements in inspection workflows and yield for Curvilinear photomasks beyond 0.33NA EUV.
• DNP’s next FY3/27-FY3/29 medium-term plan and its allocations for growth-business investment and cash reinvestment.
• Ongoing execution of shareholder returns, cross-shareholding sales, and structural reform of low-profit businesses.