Ichor Holdings, Ltd. Q4 FY2025 earnings call

Key Points

• Customer demand in primary served markets has continued to strengthen, with a sustained demand ramp driven by technology transitions and strategic capacity additions.
• Saw increased adoption of gate-all-around architectures, growth in high bandwidth memory, and rising capital intensity in advanced logic and advanced packaging.
• Ramping labor headcount in integration business and prepositioning inventory to address accelerating customer demand.
• Recent design wins in commercial space expected to convert into revenue growth outpacing semiconductor growth in 2026.
• Global footprint realignment: Mexico expansion complete later in 2026, Malaysia manufacturing center started last month; these locations will be high-volume manufacturing centers for Ichor branded products.
• Expect gross profit dollars to grow around twice the rate of revenues in 2026, with margin improvement by midyear.
• 2026 is a milestone year with products in place to have Ichor branded products support up to 75% of content in systems, transitioning from integration to product company.

In the fourth quarter, revenue was $224 million, above the midpoint of the outlook. For fiscal year 2025, total revenue was $948 million, up 12% year over year. The growth was driven primarily by strength in etch and deposition, partially offset by softening EUV build rates and decreased demand in certain trailing edge markets. The commercial space business grew significantly in 2025 but remained a small portion of overall revenues. Revenue contribution details weren't explicitly broken down by product segment beyond the general categories mentioned.

Guidance Details

• Q1 revenues expected in the range of $240 million to $260 million.
• Gross margins expected to be in the range of 12% to 13% for 2026.
• Q1 operating expenses projected at approximately $24 million, with full-year OpEx up ~5% from 2025.
• Net interest expense expected to be ~$7 million for 2026.
• Anticipated non-GAAP effective tax rate in 20% to 25% range.
• EPS range for Q1 $0.08 to $0.16 based on 35.1 million diluted shares outstanding.

Risks

• Uncertainties in non-GAAP financial measures and their reconciliation to GAAP.
• Risks related to global footprint realignment, including headwinds in the first half due to relocating assets.
• Sunsetting of Singapore pioneer status affecting the non-GAAP effective tax rate.
• Potential uncertainties in the digestion of inventory by customers in the litho business.

Q: Brian Chin asked about what improved since last month for Q1 revenue and how Ichor expects to grow relative to 15%-20% industry growth.

A: Phil Barros said every week they get updated forecasts with strengthening demand, coalescing around 15%-20% industry growth range and Ichor is well set up to be in or outperform that range.

Q: Craig Ellis asked about sequential growth and mix of components and gas panel.

A: Phil Barros said first half heavy on gas panel, second half growth from increased component supply; revenue still second half weighted but first half has additional demand pulling forward. On Malaysia relocation, headwinds baked into Q1 guide as facility is two miles from current facility building weldments.

Q: Krish Sankar asked to dissect Q1 growth by technology and end markets.

A: Phil Barros said majority of growth from Depenet, slight increase in non-semi business, EUV flat q/q but expected to pick up later in year; everything growing across market segments.

Q: Charles Shi asked about demand visibility and outlook for 2027.

A: Phil Barros said six-month demand window is very solid, second half of 2026 is solid, and view on 2027 is similar to customers' expectations.

Q: Linda Amwali asked about litho business and industry demand drivers.

A: Phil Barros said customer orders expected to pick up with inventory digestion by Q3, AI applications driving DRAM and NAND prices surge, foundry and logic also strong.

Q: Dave Dooley asked about inventory levels and share gain areas.

A: Phil Barros said inventory levels coming down as revenue forecast matches customer statements; share gain areas include commercial space business, non-semi machining, componentry, and gas panel.

Q: Christian Schwab asked about component gross margins and 2027 outlook.

A: Phil Barros said can't give timeline for 18%-20% gross margins yet but anticipate significant earnings leverage in 2027.

Q: Edward Yang asked about commercial space business percentage and CapEx.

A: Phil Barros said commercial space is sub 5% customer now with goal to make it 10% medium term; Greg Swyt said CapEx in 2025 was ~4% of revenue, moderating to ~3% in 2026; restructuring accruals mostly complete with minor activities left.