Ichor Holdings Stock

Ichor Holdings, Ltd. (Ichor) engages in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment.

The company’s primary product offerings include gas and chemical delivery systems and subsystems, collectively known as fluid delivery systems and subsystems, which are key elements of the process tools used in the manufacturing of semiconductor devices. The company’s gas delivery subsystems deliver, monitor, and control precise quantities of the specialized gases used in semiconductor manufacturing processes, such as etch and deposition. The company’s chemical delivery systems and subsystems precisely blend and dispense the reactive liquid chemistries used in semiconductor manufacturing processes such as chemical-mechanical planarization, electroplating, and cleaning. The company also provides precision-machined components, weldments, electron beam (‘e-beam’) and laser-welded components, precision vacuum and hydrogen brazing, and surface treatment technologies, and other proprietary products. This vertically integrated portion of the company’s business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively.

Fluid delivery subsystems ensure accurate measurement and uniform delivery of specialty gases and chemicals at critical steps in the semiconductor manufacturing processes. Any malfunction or material degradation in fluid delivery reduces yields and increases the likelihood of manufacturing defects in these processes. Most original equipment manufacturers (‘OEMs’) outsource all or a portion of the design, engineering, and manufacturing of their gas delivery subsystems to a few specialized suppliers, including the company. Additionally, many OEMs are outsourcing the design, engineering, and manufacturing of their chemical delivery subsystems due to the increased fluid expertise required to manufacture these subsystems. Outsourcing these subsystems has allowed OEMs to leverage suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes.

The company has long standing relationships with top tier OEM customers, including Applied Materials, Lam Research, and ASML, which were the company’s three largest customers by sales in 2023.

Growth Strategy

The key elements of the company’s growth strategy are to grow its market share within existing customer base; grow the company’s total available market and share of the market with expanded product offerings; expand the company’s total customer base within fluid delivery market; and continue to improve the company’s manufacturing process efficiency.

Products and Services

The company is a leader in the design, engineering and manufacturing of critical fluid delivery subsystems. The company’s product and service offerings are classified in the following categories:

Gas Delivery Subsystems

The company’s gas delivery systems consist of a number of gas lines, each controlled by a series of mass flow controllers, regulators, pressure transducers, valves, and an integrated electronic control system. The company’s gas delivery subsystems are primarily used in equipment for ‘dry’ manufacturing processes, such as etch, chemical vapor deposition, physical vapor deposition, epitaxy, and strip.

Chemical Delivery Products and Subsystems

The company’s chemical delivery products and subsystems are used to precisely blend and dispense reactive chemistries and colloidal slurries critical to the specific ‘wet’ front-end process, such as wet clean, electro chemical deposition, and chemical-mechanical planarization (‘CMP’). In addition to the chemical delivery subsystem, the company also manufactures the process modules that apply the various chemicals directly to the wafer in a process-and application-unique manner to create the desired chemical reaction.

Weldments and Specialty Joining

The company’s complete offering of weldments support the delivery of gases through the process tool. The company has developed both automated and manual welding processes to support world class workmanship on all types of metals needed to support fluid delivery within the semiconductor market. The welded assemblies are used in both wet and dry processes, non-semi applications, including aerospace and defense, medical, and general industrial markets. The company offers a wide range of specialty joining technologies, including orbital, tungsten inert gas, e-beam, and laser welding, as well as hydrogen and vacuum brazing.

Precision Machining

Precision machining provides the company the ability to supply its customers with components used in the company’s gas delivery systems and weldments, while also providing custom machined solutions throughout customers’ equipment. Many of these items are used downstream of the gas system and in process-critical applications. The company’s precision machined products can be used in both wet and dry applications and include both small- and large-format machining applications. Machined components are also provided to other critical non-semiconductor markets, including aerospace and medical.

Customers, Sales, and Marketing

The company primarily markets and sells its products directly to equipment OEMs in the semiconductor equipment market. In Japan, the company utilizes a value-added reseller to market and sell the company’s chemical delivery system. The company is dependent upon a small number of customers, as the semiconductor equipment manufacturer market is highly concentrated with five companies accounting for over 70% of all process tool revenues. For 2023, the company’s three largest customers were Applied Materials, Lam Research, and ASML which accounted for a combined 82% of sales, respectively.

The company’s sales and marketing efforts focus on fostering close business relationships with the company’s customers. As a result, the company locates many of its account managers near the customer they support. The company’s sales process involves close collaboration between the company’s account managers and engineering and operations teams. Account managers and engineers work together with customers and in certain cases provide on-site support, including attending customers’ internal meetings related to production and engineering design. Each customer project is supported by the company’s account managers and customer support team who ensure the company is aligned with all of the customer’s quality, cost, and delivery expectations.

Intellectual Property

As of December 29, 2023, the company had 74 granted patents and 85 pending patent applications, of which 36 and 27 were U.S. patents, respectively.

Competition

The company face competition from Ultra Clean Technology.

History

Ichor Holdings, Ltd. was founded in 1999. The company was incorporated in 1999.