Disco - Company History

In May 1937 Sekiya Mitsuo, who had been working at the naval arsenal in Kure, Hiroshima, left to set up a sole proprietorship making and selling industrial grinding wheels: Daiichi Seitosho, the “No. 1 Abrasive Works.” Kure was a naval port thick with munitions plants, and the main job was wheels for polishing shells. Sekiya was not an engineer but a manager who hired craftsmen and ran a shop — a late entrant that struggled for orders and stayed a small wartime subcontractor until the surrender.

What saved it afterwards was a single sideways step in application: from wheels that polish to wheels that cut. Disco moved into abrasive blades for slicing the magnets inside watt-hour meters, mastered cutting them at 1.2 mm intervals, and took effectively the entire domestic market for the job. In November 1958 it reincorporated as a joint-stock company and moved its head office to Shiba in Minato, Tokyo. Some twenty years after founding, the ultra-thin cutting know-how acquired in that unglamorous niche was the technical ancestor of everything that came later.

In 1965 the pen maker Pilot asked for a precision wheel able to cut the slit in a fountain-pen nib. Other manufacturers offered joint development and development funding; Sekiya Kenichi turned them all down and built it alone — a resinoid wheel just 0.14 mm thick, extraordinarily thin for the day. Disco took almost the whole domestic market for nib machining, and for the dozen-odd years until ballpoints displaced fountain pens that one line carried the company’s earnings. The refusal to co-develop is where the habit of grinding technology in-house, rather than handing it out, first shows.

In 1968 it began developing ultra-thin wheels to cut silicon wafers, and in December 1969 opened DISCO ABRASIVE SYSTEMS in the United States, close to the chipmakers gathering in Silicon Valley. That was not a smooth advance. Sekiya Kenichi later recalled a joint venture set up outside San Francisco with the US sales arm of Japax to cut silicon, which collapsed because no machine existed that could make use of the wheel: “In the end it came to withdrawal.” The conclusion he drew was that Disco would have to carry all three — the abrasive, the machine, and the application — inside one company. The three bars of the corporate logo stand for that trinity.

So the wheel maker became a machine maker. A precision cutting machine followed in September 1970 and, in February 1975, the dicing saw for semiconductors. In April 1977 the company dropped the abrasive-shop name and became Disco — a word that carries both dicing and disc. A Singapore office opened in February 1979 and DISCO SEIER AG in Switzerland that September, with Helmut Seier. By the end of the decade Disco had direct sales in America, Southeast Asia and Europe at once — the semiconductor industry was starting up in all three simultaneously, and in a business where setup adjustment and consumables carry the profit, proximity to the customer is the profit.

In January 1980 Disco added a precision surface grinder, putting “grind” alongside “cut” in its own machine line. By that year its dicing saws held roughly 60% of the world market, with Texas Instruments, Motorola and Fairchild among the customers. The position came from digging deep into one drab process step — cutting the wafer — where the large equipment makers had no reason to follow. A German subsidiary opened in 1982. In 1984 the founder stepped aside and his son Sekiya Kenichi became the second president, with Sekiya Shinji as vice-president; the same year Disco entered industrial diamond tools, and in October 1989 its shares were listed over the counter on the Japan Securities Dealers Association market.

Then the detour. Through the 1980s Disco developed a semiconductor diffusion furnace — a heat-treatment tool for the front end of chipmaking, a different process and a different customer base from dicing — and in 1992 it quit, writing off about $39.5M (¥5bn) of development spending accumulated over a decade. Coming on top of a slump in semiconductor demand, it produced the first bottom-line loss in the company’s fifty-five years and the first serious retrenchment in its history: pay cuts, overtime restrictions, an early-retirement scheme. Fixed costs taken on outside the core came back as dead weight the moment demand turned.

The lesson, though, was not spoken for years. Sekiya Kenichi first talked publicly about having strayed from the company’s base technology in 1995, and the business domain was only put into words — “cut, grind, polish” — in 1997. From 1996 he had been rebuilding the company’s values from scratch with outside researchers and a team of about ten younger executives, having concluded that rapid growth had left his own management ranks working from different assumptions.

In 1997 Disco enacted Disco Values: a management constitution limiting investment to the three fields of cutting, grinding and polishing, and stopping new ventures outside them. Bolted onto it was an internal currency, Will, under which the expense budget available to each department and each employee expands when ordinary profit rises and contracts when it falls. The rules went out first as a pocket card; by July 2002 they had grown, through further argument, into 203 items across eleven themes — management, making, money, selling. The aim was the soil rather than the plant. “If the soil is rich, beautiful flowers bloom and much good fruit is borne. We should put more effort into corporate culture — the soil of management,” Sekiya Kenichi said. What the furnace had exposed was the absence of any criterion for deciding which businesses to be in; writing the values down was the attempt to supply one.

Constraint did not slow development; inside the three verbs it deepened. Disco moved from the over-the-counter market to the First Section of the Tokyo Stock Exchange in December 1999, launched a laser saw in August 2002 as the successor technology to the abrasive blade, and a fully automatic grinder/polisher in November 2003, automating the “polish” step. A new head office and R&D centre opened in Omorikita, Ota, in November 2004. By the year to March 2006 sales were $592.5M (¥69bn) at a 20.2% operating margin, and by March 2007 they had reached $731.9M (¥86bn) — a mid-sized equipment maker already earning like a much larger one.

In January 2007 the company set itself a target that sounds modest and was not: to stay in the black even at the bottom of the cycle by 2010. The deadline never arrived. The test came early.

Mizoroki Hitoshi, a non-family president since 2001, was still in charge when the financial crisis evaporated demand for semiconductor equipment: sales for the year to March 2009 fell about 42%, from $886.5M (¥92bn) to $567.7M (¥53bn), and operating profit shrank to roughly $1.1M (¥100m). Yet Disco stayed out of a net loss — the exact opposite of what the same kind of external shock had done in 1992. Will did much of the work automatically, narrowing spending authority as profit narrowed, so the floor cut costs without being told to; what was not luck was that the 2007 target had been translated into operating-margin and expense levels and pushed down into company-wide procedure. In April 2009 Sekiya Kazuma took over as president, the family’s third generation after his father Kenichi; he later called the surviving profit “a fluke.”

Recovery was quick — $703M (¥62bn) in the year to March 2010, $1.2B (¥100bn) the year after — and Kazuma set out the design plainly: keep enough flexibility to match shipments to the market, and hold an operating margin high enough to serve as a financial buffer. In 2011 Will accounting was extended down to the individual. By around 2010 the world share of dicing saws had risen from the 1980s’ 60% to roughly 70%, as chip production shifted toward TSMC, Samsung and Chinese makers. Disco met that shift without moving manufacturing offshore: buildings went up at Chino in Nagano (2010), at the Kure works in Hiroshima (2012) and again in 2015, a Nagano site was opened in 2018, and production stayed concentrated in three domestic locations — Ota, Hiroshima and Nagano — with the Hiroshima works still descended from the town where the company began.

The narrow constitution then met the widest market in the company’s history. Sales for the year to March 2018 reached $1.5B (¥167bn), and for March 2022 $1.9B (¥254bn) at a 36.1% operating margin — a level of profitability unimaginable in 1997. The Haneda R&D centre opened in March 2022 and the listing moved to the TSE Prime Market that April. With generative AI now pulling hard on advanced packaging, Kazuma has kept every plant in Japan and aimed record investment at them — rebuilding the Haneda centre in 2024, buying about $334.1M (¥50bn) of research property in 2025 — on the reasoning that a chipmaker ramping its most advanced product picks the supplier with the deepest knowledge of the process, and that concentrating, not dispersing, is how that knowledge is kept. Sales for the year to March 2026 were $2.8B (¥437bn).