Sustainable Growth Advisers, LP on DISCO Corporation

SGA initiated DISCO because it controls roughly 70-80% of the market for critical cutting, grinding and thinning equipment used in semiconductor manufacturing. Its equipment becomes increasingly important as advanced packaging, HBM, hybrid bonding, silicon photonics and other AI-related architectures become more complex. A meaningful share of revenue comes from consumables, maintenance and services tied to a large installed base, creating recurring revenue and reducing cyclicality. The company also has exceptional pricing power because its processes occur after customers have already invested heavily in wafers and therefore prioritize yield and performance over equipment cost. SGA believes these structural advantages can support low-20% revenue growth and high-20% earnings growth over the next three years.