Scorpion Capital shorts Lasertec, alleges "colossal fraud"

Investing.com - Scorpion Capital released an investigative report on Wednesday labeling Lasertec Corp (TYO:6920), Japan's most actively traded stock, as a substantial fraud and a ticking time bomb.

In a post on X, Scorpion Capital said "We are short Lasertec Corp (TSE:6920) $6920, one of the largest corporate frauds in Japanese history ($23B market cap) and easily the largest outright fraud in the world by average daily volume."

Scorpion Capital accused Lasertec of concocting a textbook accounting scheme, fraudulently inflating revenue, margins, and earnings. The firm also predicts a significant impairment charge that could erase most of Lasertec's earnings since the launch of its flagship ACTIS EUV inspection machine.

The ACTIS system, according to the report, is defective with a critically flawed EUV light source and other insurmountable issues, which Lasertec allegedly concealed from investors.

Scorpion Capital also criticizes the company's alarming level of inventory, the highest of any semiconductor tools supplier globally, indicating fraudulent accounting.

The report dismisses the newly announced ACTIS A300, Lasertec's supposed next-generation EUV product, as a hoax and a cover story to hide flaws in its flagship A150 EUV tool.

In addition, investigators reportedly visited the company's new Innovation Park in Yokohama around 20 times from December 2023 to May 2024, finding a deserted facility with no visible R&D or production activity, contradicting the company's claims.

The report also suggests that Lasertec's largest customers, TSMC, Intel (NASDAQ:INTC), and Samsung (KS:005930), are frustrated to the point of TSMC stopping its purchases of Lasertec's EUV machines.