Despite the global economic downturn, there continues to be a persistent shortage of photomasks due to high demand from Chinese chip fabless and foundry companies. Key players in photomask production, including Toppan, Photronics, and Dai Nippon Printing, are maintaining factory operation rates at 100% and some Chinese chip companies are even paying extra to expedite delivery. Photomasks, made from quartz blank masks with circuit patterns, are essential in the lithography process for imprinting circuit patterns on wafers, particularly for advanced chips that require thinner circuit patterns, necessitating more photomasks.

The shortage has been exacerbated by factors such as the increasing number of fabless chip companies in China due to US sanctions and the launch of the DUV 7nm process by Chinese foundry SMIC, which requires additional masks compared to EUV for multi-patterning. Furthermore, the growing popularity of AI chip companies, inspired by technological advancements like ChatGPT, has contributed to the demand for photomasks.

Both Toppan and Dai Nippon Printing have indicated strong demand for photomasks in their recent earnings reports, with Toppan planning to expand its photomask production capacity through global facilities. However, industry sources suggest that the increased capacity may not sufficiently meet demand, leading to an inevitable price rise in photomasks next year.