Item 1. Business
ITEM 1. BUSINESS
Unless expressly indicated or the context requires otherwise, the terms “Ichor,” “Company,” “we,” “us,” “our,” and similar terms in this Annual Report on Form 10-K refer to Ichor Holdings, Ltd. and its consolidated subsidiaries.
We were originally incorporated as Celerity, Inc. (“Celerity”) in 1999. Ichor Holdings, Ltd., an exempt limited company incorporated in the Cayman Islands, was formed in March 2012. We completed the initial public offering of our ordinary shares in December 2016.
We use a 52- or 53-week fiscal year ending on the last Friday in December. The following table details our fiscal periods included elsewhere in this Annual Report on Form 10-K. All references to 2024, 2023, and 2022, including the quarters thereto, relate to our fiscal periods as so detailed.
Fiscal Period Period Ending Weeks in Period
Fiscal Year 2024: December 27, 2024 52
First Quarter March 29, 2024 13
Second Quarter June 28, 2024 13
Third Quarter September 27, 2024 13
Fourth Quarter December 27, 2024 13
Fiscal Year 2023: December 29, 2023 52
First Quarter March 31, 2023 13
Second Quarter June 30, 2023 13
Third Quarter September 29, 2023 13
Fourth Quarter December 29, 2023 13
Fiscal Year 2022: December 30, 2022 52
First Quarter April 1, 2022 13
Second Quarter July 1, 2022 13
Third Quarter September 30, 2022 13
Fourth Quarter December 30, 2022 13
Company Overview
We are a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment. Our 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. Our gas delivery subsystems deliver, monitor, and control precise quantities of the specialized gases used in semiconductor manufacturing processes such as etch and deposition. 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 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 for the commercial space, aerospace, defense, medical device, and general-industrial industries. 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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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 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 allows OEMs to leverage suppliers’ highly specialized engineering, design, and production skills while focusing their internal resources on their own value-added processes. Outsourcing enables OEMs to reduce their costs and development time, providing growth opportunities for specialized subsystems suppliers like us.
Our goal is to be a leading supplier of fluid delivery subsystems and components to OEMs engaged in manufacturing capital equipment to produce semiconductors and to leverage our technology and products to expand the share of our addressable markets. To achieve this goal, we engage with our customers early in their design and development processes and utilize our deep engineering resources and operating expertise, as well as our expanded product portfolio, to jointly create innovative and advanced solutions that are designed to meet the current and future needs of our customers. We believe this approach enables us to design products that meet the precise specifications our customers demand, allows us to be the sole supplier of these subsystems during the initial production ramp, and positions us to be the preferred supplier for the full lifespan of the process tool.
The broad technical expertise of our engineering team, coupled with our early customer engagement approach, enables us to offer innovative and reliable solutions to complex fluid delivery challenges. With over two decades of experience developing complex fluid delivery subsystems and meeting the constantly changing production requirements of leading semiconductor OEMs, we have developed expertise in fluid delivery that we offer to our OEM customers. With an aim to provide superior customer service, we have a global footprint with many facilities strategically located in close proximity to our customers. We have long standing relationships with top tier OEM customers, including Lam Research, Applied Materials, and ASML which were our largest customers by sales in 2024.
We generated revenue of $849.0 million, $811.1 million, and $1,280.1 million in 2024, 2023, and 2022, respectively. We generated net income (loss) of $(20.8) million, $(43.0) million, and $72.8 million, calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) in 2024, 2023, and 2022, respectively, and $5.9 million, $12.3 million, and $104.9 million on a non-GAAP basis in 2024, 2023, and 2022, 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, GAAP net income, and a reconciliation of the differences between non-GAAP net income and GAAP net income.
Our Competitive Strengths
As a leader in the fluid delivery industry, we believe that our key competitive strengths include the following:
Deep Fluids Engineering Expertise
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 works with our customers’ product development teams, providing our customers with technical expertise in fluid delivery system design.
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Early Engagement with Customers on Product Development
We seek to engage with our customers and potential customers very early in their process for new product development. We believe this approach enables us to collaborate on product design, qualification, manufacturing, and testing in order to provide a comprehensive, customized solution. Through early engagement during the complex design stages, our engineering team gains early insight into our customers’ technology roadmaps, which enables us to pioneer innovative and advanced solutions. In many cases, our early engagement with our customers enables us to be the sole source supplier when the product is initially introduced.
Long History and Strong Relationships with Top Tier Customers
We have established deep relationships with top tier OEMs, including Lam Research, Applied Materials, and ASML. Our customers are global leaders by sales in the semiconductor capital equipment industry. Our existing relationships with our customers have enabled us to effectively compete for new fluid delivery subsystems for our customers’ next generation products in development. We leverage our deep-rooted existing customer relationships with these market leaders to penetrate new business opportunities created through industry consolidation. Our close collaboration with our global customers has contributed to our established market position and several key supplier awards.
Operational Excellence with Scale to Support the Largest Customers
With over 20 years of 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. We will continue to add capacity as needed to support future growth. In addition to providing high quality and reliable fluid delivery subsystems and components, one of our principal strategies is delivering the lead-times that provide our customers with the required flexibility needed in their production processes. We have accomplished this by investing in manufacturing systems and processes and an efficient supply chain. Our focus on operational efficiency and flexibility allows us to reduce manufacturing cycle times in order to respond quickly to customer requests.
Capital Efficient and Scalable Business Model
Our business requires modest levels of capital investments to support production capacity and new product development. The amount of necessary investment fluctuates over time depending on business outlook, new product strategy, and timing of introductions. In 2024, 2023, and 2022, our total capital expenditures were $17.6 million, $15.5 million, and $29.4 million, respectively, representing 2.1%, 1.9%, and 2.3%, of sales, respectively. The semiconductor capital equipment market has historically been cyclical. We have structured our business to reduce fixed manufacturing overhead and operating expenses to enable us to grow net income at a higher rate than sales during periods of growth.
Our Growth Strategy
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:
Grow Our Market Share within Existing Customer Base
We intend to grow our position within our existing customers by continuing to leverage our specialized engineering talent, early collaboration approach with OEMs to foster long-term relationships, and expanded product offerings. Each of our customers produces many different process tools for various process steps. At each customer, we are an outsourced supplier of fluid delivery subsystems and components for a subset of their entire process tool offerings. We are constantly looking to expand our market share at our existing customers. 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.
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Grow Our Total Available Market and Share of the Market with Expanded Product Offerings
We continue to work with our existing customer base on additional opportunities, including machined products, proprietary components, and chemical delivery systems and components as a few of our important potential growth areas. Our internally developed proprietary components can be integrated into our existing fluid delivery systems as well as our next generation gas panel. We believe that the industries we serve have a growing need for the unique expertise we offer in precision machining, fluid mechanics, controls, and the component needed for next generation processes. For example, as semiconductor devices become more complex, atomic layer deposition (“ALD”), etch, and chemical vapor deposition (“CVD”) require more precise gas control, with faster response times, tighter repeatability, and cleaner, more corrosion-resistant systems. By leveraging our existing customer relationships and strong history of solving these challenges, we believe this will grow market share. We have expanded our served customer base with expanded product offerings through both internal development and opportunistic acquisitions. This has enabled us to manufacture and assemble the complex products and precision machined components for the semiconductor equipment market, including at our existing customer base, as well as for the commercial space, aerospace, defense, medical device, and general-industrial industries.
Expand Our Total Customer Base within Fluid Delivery Market
We have expanded our customer base to include a leading lithography system manufacturer and a leading ALD system manufacturer. We continue to actively engage with new customers that are considering outsourcing their gas and chemical delivery needs and we continue to expand our components business.
Our acquisition of IMG Companies, LLC and its subsidiaries (“IMG”) in November 2021 further expanded our total customer base with new customers in the medical, aerospace, and defense sectors.
Continue to Improve Our Manufacturing Process Efficiency
We continually strive to improve our processes to reduce our manufacturing process cycle time, increase our ability to respond to short lead-time and last-minute configuration changes, reduce our manufacturing costs, and improve our inventory efficiency requirements in order to improve profitability and make our product offerings more attractive to new and existing customers.
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Our Products and Services
We are a leader in the design, engineering and manufacturing of critical fluid delivery subsystems and components. Our product and service offerings are classified in the following categories:
Gas Delivery Subsystems
Gas delivery is among the most technologically complex functions in semiconductor capital equipment and is used to deliver, monitor and control precise quantities of the vapors and gases critical to the manufacturing process. Our 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. Our 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
Our 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, we also manufacture 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.
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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, as well as non-semiconductor applications including in the aerospace, commercial space, defense, medical device, and general industrial markets. We offer 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 us the ability to supply our customers with components used in our 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. 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 device.
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Customers, Sales, and Marketing
We primarily market and sell our products directly to equipment OEMs in the semiconductor equipment market. We are 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 2024, two customers with individual sales over 10%, Lam Research and Applied Materials, accounted for a combined 73% of total sales. We do not have long-term contracts that require customers to place orders with us in fixed or minimum volumes, and we generally operate on a purchase order basis with customers.
Our sales and marketing efforts focus on fostering close business relationships with our customers. As a result, we locate many of our account managers near the customer they support. Our sales process involves close collaboration between our 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 our account managers and customer support team who ensure we are aligned with all of the customer’s quality, cost, and delivery expectations.
Operations, Manufacturing, and Supply Chain Management
We have developed a highly flexible manufacturing model with cost-effective locations situated nearby the manufacturing facilities of our largest customers. We have facilities in the United States, Singapore, Malaysia, the United Kingdom, Korea, and Mexico.
Operations
Our product cycle engagements begin by working closely with our customers to outline the solution specifications before design and prototyping even begin. Our design and manufacturing process is highly flexible, enabling our customers to make alterations to their final requirements throughout the design, engineering, and manufacturing process. This flexibility results in significantly decreased order-to-delivery cycle times for our customers. For instance, it can take as little as 20 to 30 days for us to manufacture a gas delivery system with fully evaluated performance metrics after receiving an order.
Manufacturing
We are ISO 9001 certified or compliant at our manufacturing locations, and our manufactured subsystems and modules strive to adhere to strict design tolerances and specifications. We operate clean rooms at our facilities in Singapore, Oregon, Texas, and Korea that meet Class 100 and Class 10,000 standards for customer-specified testing, assembly, and integration of high-purity gas and chemical delivery systems at our locations. 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 aid us in delivering our products on a just-in-time basis, regardless of order size or the degree of changes in the applicable configuration or specifications.
We qualify and test key components that are integrated into our subsystems and test our fluid delivery subsystems during the design process and again prior to shipping. Our quality management system allows us to access real-time corrective action reports, non-conformance reports, customer complaints, and controlled documentation. In addition, our senior management conducts quarterly reviews of our quality control system to evaluate effectiveness. Our customers also complete quarterly surveys which allow us to measure satisfaction.
Supply Chain Management
We use a wide range of components and materials in the production of our gas and chemical delivery systems, including filters, mass flow controllers, regulators, pressure transducers, substrates, and valves. We obtain components and materials from a large number of sources, including single source and sole source suppliers.
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We use supplier-consigned material and just-in-time stocking programs for a portion of our inventories to effectively manage our component inventories and better respond to changing customer requirements. These approaches are designed to reduce our inventory levels and maintain flexibility in responding to changes in product demand. A key part of our strategy is to identify multiple suppliers with a strong global reach that are located within close proximity to our manufacturing locations.
Technology Development and Engineering
We have a long history of engineering innovation and development. We continue to transition from being an integration engineering and components company into a gas and chemical delivery system and subsystem leader with product development and systems engineering, as well as integration expertise. Our industry continues to experience rapid technological change, requiring us to continuously invest in technology and product development and regularly introduce new products and features that meet our customers’ evolving requirements.
We have built a team of fluid delivery experts. Our engineering team consists of engineers and designers with chemical, mechanical, electrical, software, systems, and manufacturing-engineering expertise. Our engineers are closely connected with our customers and typically work at our customers’ sites and operate as an extension of our customers’ design team. We engineer within our customers’ processes, design vaults, drawing standards, and part numbering systems. These development efforts are designed to meet specific customer requirements in the areas of subsystem design, materials, component selection, and functionality. The majority of our sales are generated from projects during which our engineers cooperated with our customer early in the design cycle. Through this early collaborative process, we become an integral part of our customers’ design and development processes, and we are able to quickly anticipate and respond to our customers’ changing requirements.
Our engineering team also works directly with our suppliers to help them identify new component technologies and make necessary changes in, and enhancements to, the components that we integrate into our products. Our analytical and testing capabilities enable us to evaluate multiple supplier component technologies and provide customers with a wide range of appropriate component and design choices for their gas and chemical delivery systems and other critical subsystems. These capabilities also help us anticipate technological changes and the requirements in component features for next-generation gas delivery systems and other critical subsystems.
Competition
The market for our products is very competitive. When we compete for new business, we face competition from other suppliers of gas or chemical delivery subsystems, and in some cases with the internal manufacturing groups of OEMs. While many OEMs have outsourced the design and manufacturing of their gas and chemical delivery systems, we would face additional competition if in the future these OEMs elected to develop and build these systems internally.
The fluid delivery subsystem market is concentrated, and we face competition from Ultra Clean Technology, with additional competition from other suppliers. The chemical delivery subsystem, weldments, and precision machining industries are fragmented, and we face competition from numerous smaller suppliers. In addition, the market for tool refurbishment is fragmented, and we compete with many regional competitors. The primary competitive factors we emphasize include:
• customer relationships;
• early engagement with customers;
• large and experienced engineering staff;
• design-to-delivery cycle times; and
• flexible manufacturing capabilities.
We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that could adversely affect sales of our current and future products. In addition, the limited number of potential customers in our industry further intensifies competition. We anticipate that increased competitive pressures may cause intensified price-based competition and we may have to reduce the prices of our products. In addition, we expect to face new competitors as we enter new markets.
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Intellectual Property
Our success depends, in part, upon our ability to develop, maintain, and protect our technology and products and to conduct our business without infringing the proprietary rights of others. We continue to invest in securing intellectual property protection for our technology and products and protect our technology by, among other things, filing patent applications. We also rely on a combination of trade secrets and confidentiality provisions, and to a much lesser extent, copyrights and trademarks, to protect our proprietary rights. As of December 27, 2024, we had 81 granted patents and 95 pending patent applications, of which 38 and 27, respectively, were filed in the U.S. The expiration dates of our granted patents range from 2027 to 2042. 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. In addition, we do not believe that the loss or expiration of any single patent or group of related patents would materially affect our business.
We develop intellectual property for our own use in our products, as well as for our customers. Intellectual property developed on behalf of our customers is generally owned exclusively by those customers. In addition, we have agreed to indemnify certain of our customers against claims of infringement of the intellectual property rights of others with respect to our products. Historically, we have not paid any claims under these indemnification obligations, and we do not have any pending indemnification claims against us.
Human Capital Resources
As a global industry leader, we recognize that our success is driven by the talent, dedication, and well-being of our employees. We are committed to being responsible corporate citizens, fostering a workplace that is safe, inclusive, and rewarding. Our employees are the foundation of our company, and our core values of innovation , collaboration , honesty , operational excellence , and reliability define our culture, shape our decisions, and guide our actions. We embrace diverse backgrounds and perspectives, fostering an environment that supports continuous personal and professional growth. Below, we outline key initiatives that reflect our dedication to sound human capital management practices.
Workforce
As of December 27, 2024, we employed approximately 1,820 full‑time employees and 560 contingent/temporary workers. Our workforce strategy is designed to balance flexibility with stability, allowing us to adapt to evolving business needs and geographic demand.
Total Rewards
We are committed to attracting, engaging, and retaining top talent by offering competitive and equitable compensation and benefits. Our pay-for-performance philosophy aims to ensure that employees are recognized and rewarded based on their contributions, while also upholding our commitment to pay equity across gender, race, and ethnicity. Our compensation structure includes a mix of fixed and variable pay, tailored to business and functional needs. For key leaders and high-potential employees, we provide equity-based long-term incentives aligned with our strategic objectives. Our benefits portfolio includes locally competitive health and wellness programs, retirement savings plans with company contributions, and a discounted employee stock purchase plan. We also invest in holistic well-being initiatives that support employees’ physical, emotional, and financial health. In 2024, we continued our employee cash spot bonus and continuous improvement programs to recognize and reward outstanding contributions.
Learning and Development
We believe in empowering our employees through continuous learning and career development. Our multi-faceted approach includes tuition reimbursement, digital learning platforms, on-the-job training, and leadership development programs. We invest in preparing the next generation of leaders. Our structured performance management framework, which is comprised of goal-setting, quarterly check-ins, and annual evaluations, ensures ongoing growth and alignment with business objectives. In addition, we support employee resource groups that foster connection, inclusion, and a sense of belonging.
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Health and Safety
Providing a safe and engaging work environment is a top priority. Our manufacturing sites implement a “Caught You Safe” program to reinforce a culture of safety. We actively seek employee feedback through annual engagement surveys, skip-level meetings, and open communication forums. Our professional human resources team ensures employees have access to guidance and support, including a confidential whistleblower hotline for reporting concerns. In alignment with global regulatory standards, we implement best practices to safeguard the health and well-being of our workforce and communities.
Through these initiatives, we remain committed to fostering a high-performing, inclusive, and resilient workforce that drives our company’s long-term success.
Environmental, Health, and Safety Regulations
Our operations and facilities are subject to a variety of federal, state, and local regulatory requirements and laws, as well as foreign laws and regulations. These laws and regulations include regulations related to employment, tax, product, anti-bribery, environmental, waste management, and health and safety matters, including those relating to the release, use, storage, treatment, transportation, discharge, disposal, and remediation of contaminants, hazardous substances, and wastes, as well as practices and procedures applicable to the construction and operation of our facilities.
We believe that our business is operated in substantial compliance with applicable laws and regulations. In 2024, compliance with the governmental regulations applicable to us, including environmental regulations, did not have a material effect on our capital expenditures, earnings, or competitive position.
However, in the future we could incur substantial costs, including cleanup costs, fines or civil or criminal sanctions, or third-party property damage, or personal injury claims, in the event of violations or liabilities under these laws and regulations, or non-compliance with the environmental permits required at our facilities. Potentially significant expenditures could be required in order to comply with environmental laws that may be adopted or imposed in the future. We are not aware of any threatened or pending environmental investigations, lawsuits, or claims involving us, our operations, or our current or former facilities, nor do we expect to incur material capital expenditures related to compliance with regulations during 2025.
Available Information
Our internet address is ichorsystems.com . We make a variety of information available, free of charge, at our Investor Relations website, ir.ichorsystems.com . This information includes our Annual Reports on Form 10‑K, our Quarterly Reports on Form 10‑Q, our Current Reports on Form 8‑K, and any amendments to those reports as soon as reasonably practicable after we electronically file those reports with or furnish them to the SEC, as well as our Code of Business Ethics and Conduct and other governance documents.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file documents electronically with the SEC at sec.gov .
The contents of these websites, or the information connected to those websites, are not incorporated into this Annual Report on Form 10-K. References to websites in this Annual Report on Form 10-K are provided as a convenience and do not constitute, and should not be viewed as, incorporation by reference of the information contained on, or available through, the website.
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