What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-03-05 · 39 added, 36 removed, 241 unchanged (24% of the section changed)

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The following table details our fiscal periods included elsewhere in this report.

All references to fiscal years or quarters relate to our fiscal period as so detailed.

All references to 2021, 2020, and 2019, including the quarters thereto, relate to our fiscal period as so detailed.

Fiscal Period

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December 27, 2019

Fiscal Year 2017:

December 29, 2017

Fiscal Year 2016

December 30, 2016

Company Overview

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Our 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.

We also manufacture precision machined components, weldments, and proprietary products for use in fluid delivery systems for direct sales to our customers.

We also provide 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 our business is primarily focused on metal and plastic parts that are used in gas and chemical systems, respectively.

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Any malfunction or material degradation in fluid delivery reduces yields and increases the likelihood of manufacturing defects in these processes.

Most OEMs outsource all or a portion of the design, engineering, and manufacturing of their gas delivery subsystems to a few specialized suppliers, including us.

Additionally, many OEMs are also increasingly outsourcing the design, engineering, and manufacturing of their chemical delivery subsystems due to the increased fluid expertise required to manufacture these subsystems.

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 us.

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 the suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes.

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We generated revenue of $1,096.9 million, $914.2 million, and $620.8 million in 2021, 2020, and 2019, respectively.

We generated net income of $33.3 million, $10.7 million, and $57.9 million in 2020, 2019, and 2018, respectively.

We generated non-GAAP net income of $59.0 million, $28.3 million, and $75.1 million in 2020, 2019, and 2018, respectively.

We generated net income of $70.9 million, $33.3 million, and $10.7 million on a GAAP basis in 2021, 2020, and 2019, respectively, and $97.7 million, $59.0 million, and $28.3 million on a non-GAAP basis, respectively.

See Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Results for a discussion of non-GAAP net income, an accompanying presentation of the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States, net income, and a reconciliation of the differences between non-GAAP net income and net income.

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Deep Fluids Engineering Expertise

We believe that our engineering team, comprised of chemical engineers, mechanical engineers, and software and systems engineers, has positioned us to expand the scope of our solutions, provide innovative products and subsystems, and strengthen our incumbent position at our OEM customers.

Many of our engineers are industry veterans and have spent a significant portion of their careers at our customers, bringing first-hand expertise and a heightened understanding of our customers’ needs.

We believe that our engineering team, comprised of chemical, mechanical, electrical, software, and systems engineers, has positioned us to expand the scope of our solutions, provide innovative products and subsystems, and strengthen our incumbent position at our OEM customers.

Our engineering team acts as an extension of our customers’ product development teams, providing our customers with technical expertise that is outside of their core competencies.

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Operational Excellence with Scale to Support the Largest Customers

Over our 20-year experience in designing and building fluid delivery systems, we have developed deep capabilities in operations.

Over our 20‑plus year experience in designing and building fluid delivery systems, we have developed deep capabilities in operations.

We have strategically located our manufacturing facilities near our customers’ locations in order to provide fast and efficient responses to new product introductions and accommodate configuration or design changes late in the manufacturing process.

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Our Growth Strategy

Our objective is to enhance our position as a leader in providing fluid delivery solutions, including subsystems, components, and tool refurbishment, to our customers by leveraging our core strengths.

Our objective is to enhance our position as a leader in providing fluid delivery solutions, including subsystems, components, and legacy tool refurbishment, to our customers by leveraging our core strengths.

The key elements of our growth strategy are:

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We believe that our early collaborative approach with customers positions us to deliver innovative and dynamic solutions, offer timely deployment and meet competitive cost targets, further increasing our market share.

Through our acquisition of a precision machining operation in December 2020, an intellectual property (“IP”) purchase of developed flow controller technology in 2019, and our acquisitions of a weldment company and a precision machining company in 2017, we significantly expanded our served customer base and also entered the market for chemical delivery subsystems for wet process tools where we had only limited engagement in the past.

Using this and our existing engineering capability, we developed a liquid delivery module and was qualified on a wet process equipment system at one of our largest customers who is a market leader in this space.

Through our acquisition of IMG Companies, LLC and its subsidiaries (“IMG”), a precision machining and specialty component manufacturing company, in November 2021, our acquisition of a precision machining operation in December 2020, an intellectual property (“IP”) purchase of developed flow controller technology in 2019, and our acquisitions of a weldment company and a precision machining company in 2017, we significantly expanded our product offerings within our served customer base, including entering the market for chemical delivery subsystems for wet process tools where we had only limited engagement in the past.

Using this and our existing engineering capability, we developed a liquid delivery module for use on a wet process equipment system that met the specifications of, and was qualified by, one of our largest customers and a market leader in this space.

Grow Our Total Available Market and Share of the Market with Expanded Product Offerings

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The acquisitions allow us to manufacture and assemble the complex plastic and metal products and precision machined components for the semiconductor equipment, including our existing customer base, as well as medical device, and general-industrial industries, while providing us exposure to and growth opportunities in the Korean and Japanese semiconductor capital equipment market.

Through our acquisition of IMG in November 2021, we have opened up adjacent opportunities within semiconductor capital equipment, including large format machining, hydrogen brazing, and e‑beam and laser welding.

Additionally, our acquisition of IMG gave us entrance into new sectors, including medical, aerospace defense, and scientific research, which require our critical machining and joining expertise.

Expand Our Total Customer Base within Fluid Delivery Market

We have expanded our customer base and are currently a supplier of gas delivery systems for a leading lithography system manufacturer, a leading ALD system manufacturer, and Korean process tool OEMs.

We have expanded our customer base and are currently a supplier of gas delivery systems for a leading lithography system manufacturer, a leading atomic layer deposition (“ALD”) system manufacturer, and Korean process tool OEMs.

Our acquisition of IMG further expands our total customer base with new customers in medical, aerospace, and defense.

We continue to actively engage with new customers that are considering outsourcing their gas and chemical delivery needs as well as expanding our components business.

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The image below shows a typical wet-process front end semiconductor tool, with a chemical delivery subsystem and corresponding application process module highlighted:

Weldments and Specialty Joining

Our complete offering of weldments support the delivery of gases through the process tool.

We have 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.

The welded assemblies are used in both wet and dry processes, non-semi applications including aerospace and defense, medical, and general industrial markets.

We offer a wide range of specialty joining technologies including orbital, tungsten inert gas (“TIG”), e‑beam, and laser welding, as well as hydrogen and vacuum brazing.

Precision Machining

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Many of these items are used downstream of the gas system and in process critical applications.

Our precision machined products can be used in both wet and dry applications.

Our 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.

We were originally incorporated as Celerity, Inc.

(“Celerity”) in 1999.

Our business of designing and manufacturing critical systems for semiconductor capital equipment manufacturers operated as a stand-alone business until 2009 when Celerity sold the business to a private equity fund.

Our business of designing and manufacturing critical systems for semiconductor capital equipment manufacturers operated as a standalone business until 2009 when Celerity sold the business to a private equity fund.

Francisco Partners (“FP”) acquired the business in December 2011 and formed Ichor Holdings, Ltd., an exempt company incorporated in the Cayman Islands, in March 2012 to serve as the parent company as part of a restructuring to accommodate the expansion of our business in Singapore and Malaysia.

We completed the initial public offering of our ordinary shares in December 2016.

We have grown through opportunistic acquisitions, which include:

In April 2012, we acquired Semi Scenic UK Limited to provide refurbishment services for legacy tools.

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(“Ajax”) for $17.6 million to add chemical delivery subsystem capabilities with existing customers.

We completed the initial public offering of our ordinary shares in December 2016.

In July 2017 we acquired Cal‑Weld, Inc.

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In December 2020, we acquired certain operating assets and assumed the operations of a business in Nogales, Mexico for $5.0 million to increase our precision machined component manufacturing capacity.

In November 2021, we acquired IMG for approximately $270.0 million to increase our precision machining capacity and capabilities with existing customers, as well as increase our served customer base.

We intend to continue to evaluate opportunistic acquisitions to supplement our organic growth.

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We operate Class 100 and Class 10,000 clean room facilities for customer-specified testing, assembly, and integration of high-purity gas and chemical delivery systems at our locations in Singapore, Oregon, Texas, and Korea.

We operate additional facilities in Malaysia, Oregon, Texas, and California for weldments and related components used in our gas delivery subsystems, and we operate facilities in California and Malaysia for critical components used in our chemical delivery subsystems.

We operate facilities in Minnesota and Mexico for precision machining of components for sale to our customers and internal use.

We operate additional facilities in Malaysia, Oregon, Texas, and California for weldments and related components used in our gas delivery subsystems, and we operate facilities in Oregon and Malaysia for critical components used in our chemical delivery subsystems.

We operate facilities in California, Minnesota, and Mexico for precision machining of components for sale to our customers and internal use, as well as specialty joining and plating technologies.

Many of our facilities are located in close proximity to our largest customers to allow us to collaborate with them on a regular basis and to enable us to deliver our products on a just-in-time basis, regardless of order size or the degree of changes in the applicable configuration or specifications.

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We have historically focused our patent protection efforts in the United States.

As of December 25, 2020, we held 52 patents, 24 of which were U.S.

patents and 14 of which were acquired as part of our IP purchase of developed flow controller technology in May 2019.

As of December 31, 2021, we had 58 granted patents and 31 pending patent applications, of which 27 and 21 are U.S.

patents, respectively.

While we consider our patents to be valuable assets, we do not believe the success of our business or our overall operations are dependent upon any single patent or group of related patents.

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Human Capital Resources

In order to be a successful company, we believe that we must be a good corporate citizen, socially responsible, and recognize that our employees are our most important asset.

As a globally successful company, we believe that we must be a good corporate citizen, socially responsible, and provide a safe and thriving environment for our employees, who we consider our most important asset.

All employees of Ichor are committed to a set of core values that define company culture, represent what we believe, and guide our actions.

We recognize and value each person’s diverse background and unique skill set and seek to foster an environment that encourages personal growth and professional development.

We continue to further increase our commitment to diversity, inclusion, and equity through specific policies, practices, employee and manager training, and demonstrated executive leadership.

We continue to extend our commitment to diversity, inclusion, and equity through specific policies, practices, employee and manager training, and dedicated executive leadership.

Below are details demonstrating our commitment in this area.

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Of our total workforce, approximately 90 are engineers, 80 are engaged in sales and marketing, 2,240 are engaged in manufacturing, and 130 perform executive and administrative functions.

Our voluntary attrition was 12%, reduced from 15% from the prior year.

Our employees are not unionized, and we have no participation in works councils.

We have not experienced any material work stoppages at any of our facilities, with the exception of temporary shutdowns at certain of our facilities in the first half of 2020 due to the COVID‑19 pandemic.

We have not experienced any material work stoppages at any of our facilities, with the exception of temporary shutdowns at our Malaysia facility in June and July 2021 due to the COVID‑19 pandemic.

We believe our relationship with our employees to be good.

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For our leadership and key talent, we provide equity based long-term compensation to create retention and incentive towards the company’s strategies and objectives.

We provide benefits that are locally competitive, including retirement and savings plans with company contributions, health and welfare plans aimed to provide protection to employees, and in some instances, protection for employees’ families, and we provide a discounted employee stock purchase plan.

We provide benefits that are locally competitive, including retirement and savings plans with company contributions, health and welfare plans aimed to provide protection for employees, and in some instances, protection for employees’ families, and we provide a discounted employee stock purchase plan.

We invest in wellness programs to promote physical, emotional, and financial well-being.

In 2020, we expanded our employee cash spot bonus program to recognize employee contributions in improving quality and operational cost savings.

In 2021, we continued our employee cash spot bonus program, which recognizes employee contributions to our business.

Learning and Development

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We facilitate “skip level” sessions, periodically survey employees, and use other communication forums to allow employees to express their opinions and concerns to management.

We maintain a "whistle blower" hotline available to all employees for communicating concerns, including those around health and safety.

We maintain a professional Human Resources department and provide a "whistle blower" hotline available to all employees for communicating concerns, including those involving health and safety.

During the COVID‑19 pandemic, we took necessary steps to ensure the health and safety of our employees and extended communities by following and often exceeding CDC and other government health organization guidelines from around the world.

We adopted remote working as a new norm for office staff and made a significant investment in our IT infrastructure to enable uninterrupted virtual communication.

For factory workers, we adopted strict guidelines to maintain safety of our workforce and business continuity.

We adopted a policy to support remote and hybrid working options for office staff and made a significant investment in our IT infrastructure to enable uninterrupted virtual communication.

For factory workers, we maintain strict guidelines to uphold safety of our workforce and business continuity, including health screenings, social distancing protocols, the use of personal protective equipment, and in certain regions testing protocols.

Community Involvement

We have expanded our charitable contributions this past year to include educational scholarships specifically earmarked for under-represented minority groups attending college.

We continue to support foodbanks and other local charities in the communities in which we operate.

We continued our charitable contributions this past year to include educational scholarships specifically earmarked for under-represented minority groups attending college.

We invest in local community colleges in the regions where we live and work to support the education and development opportunities supporting the advancement of manufacturing skill sets, such as machinists and welding.

We support local foodbanks and other local charities in the communities in which we operate.

Environmental, Health, and Safety Regulations

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business