Ichor (NASDAQ:ICHR) executives told investors the company is entering 2026 with strengthening demand across its primary semiconductor-served markets and growing contributions from its commercial space business, as management works to position the organization for what it described as a sustained upcycle.
Management says demand is ramping across core semi markets
CEO Phil Barros said customer demand has continued to strengthen since the company’s prior updates in November and a January webcast. Barros said Ichor’s visibility suggests it is “operating in a sustained demand ramp,” driven by technology transitions such as increased adoption of gate-all-around architectures, accelerating high-bandwidth memory growth, and rising capital intensity in advanced logic and advanced packaging.
He also said recent design wins in commercial space are beginning to translate into “meaningful revenue,” and management expects that business could grow faster than the semiconductor segment in 2026. Barros added that the company’s fifth-largest customer is now outside the semiconductor industry, following significant commercial space growth in 2025.
Q4 results and FY2025 performance
CFO Greg Swyt said the company’s discussed P&L metrics were non-GAAP and excluded items such as share-based compensation, amortization of acquired intangibles, non-recurring charges, and discrete tax items.
For the fourth quarter, Swyt reported revenue of $223.6 million, above the midpoint of guidance but modestly down sequentially. He characterized Q4 as the “trough period” of the cycle, noting that softening in certain end markets and applications is already showing signs of recovery.
Swyt reported non-GAAP gross margin of 11.7%, which was 70 basis points above the midpoint of guidance, citing modestly better execution amid lower revenue volumes and an unfavorable product mix. Non-GAAP operating expenses were $23.4 million, producing operating income of $2.7 million. Net interest expense was $1.7 million, and non-GAAP net income tax expense was $0.4 million, resulting in earnings per share of $0.01 for the quarter.
For fiscal 2025, Barros said Ichor recorded $948 million in revenue, up 12% year-over-year, driven primarily by strength in etch and deposition. He said that was partially offset by softer EUV build rates and decreased demand in certain trailing-edge markets.
Balance sheet, cash flow, and capital allocation
Swyt said cash and equivalents ended the quarter at $98.3 million, up $6 million from Q3. Working capital improvements generated $9 million of positive cash flow; after $3 million of capital expenditures, he reported free cash flow of $6 million. DSOs were 29 days and inventory turns were 3.3.
Total debt outstanding was $123 million at year-end, down from $129 million a year ago, and the company’s net debt coverage ratio stood at 1.7, according to Swyt.
On capital spending, Swyt said Ichor spent about $36 million in 2025 (close to 4% of revenue), largely tied to the new Malaysia facility. For 2026, he said CapEx is expected to moderate to about 3% of revenue as equipment is deployed to Malaysia and machining equipment is rebalanced within North America as part of the company’s footprint changes.
Swyt also said the company recorded about $10 million of restructuring in Q4 and that “majority of that effort is now complete,” though some additional activity is expected as certain U.S. facilities are wound down. He indicated future restructuring would not be at the magnitude seen in Q4 or the full year.
Q1 2026 guidance: higher revenue outlook and margin improvement goals
Ichor guided for first quarter 2026 revenue of $240 million to $260 million. Barros said the company expects sequential growth every quarter in 2026 based on current visibility. Swyt guided for non-GAAP gross margin of 12% to 13% and operating expenses of about $24 million, reflecting seasonal payroll adjustments, audit fees, and variable compensation. He said OpEx is expected to remain relatively consistent at roughly $24 million through 2026, equating to about a 5% increase versus fiscal 2025.
Swyt guided for net interest expense of about $1.7 million in Q1 and about $7 million for 2026. He said the company expects a Q1 tax expense of about $1.1 million and assumed a 20% to 25% effective tax rate for 2026, attributing the higher rate to profit geography and the sunsetting of Singapore pioneer status in early 2026. Q1 EPS guidance was $0.08 to $0.16 based on 35.1 million diluted shares.
In the Q&A, Barros said updated forecasts have been strengthening “every week,” contributing to a more bullish view for the year. He said he expects Ichor to be in the industry’s 15% to 20% growth range “if not outperform it,” while stopping short of offering full-year company guidance.
Footprint realignment, product mix, and longer-term strategy
Barros said a major 2026 initiative is a global footprint realignment, including expanding Mexico machining capacity and ramping a new manufacturing center in Malaysia, which he described as the company’s largest facility. Mexico’s expansion is expected to complete later in the year, and Malaysia began operating the prior month. He said Ichor is relocating a portion of machining assets to these sites, temporarily reducing capacity for certain components, but said the transition will not constrain the company’s ability to support customer demand.
Barros also tied the footprint changes to margin improvement, saying the initiative should structurally eliminate key sources of margin and ramp challenges experienced in 2025. He said that beginning in Q2, gross profit dollars are expected to grow “around twice the rate of revenues,” with meaningful margin improvement expected by mid-year. In discussing prior materials that outlined a path to 15% gross margin, Barros suggested modeling a progression through the year with improvement into the second half.
On mix, Barros told analysts the first half of 2026 is expected to be “heavy gas panel related,” while the second half should see more growth and margin contribution from increased component supply. He said EUV was expected to be “pretty well flat” quarter-over-quarter in Q1, with improvement anticipated later in the year, though he noted some uncertainty and said inventory digestion at that customer could extend into roughly Q3 with potential uptick in Q4.
Barros also reiterated a product strategy aimed at deeper vertical integration. He said that by year-end 2026, Ichor expects to have products in place supporting up to 75% of the content within the systems it makes, advancing its transition “from an integration company to a product company.”
Regarding the commercial space business, Barros said it is currently a “sub 5% customer” and management’s medium-term goal is to make it a 10% customer. He added that the business is accretive to the company’s overall margin profile but declined to provide specific margin figures.
About Ichor (NASDAQ:ICHR)
Ichor Holdings Ltd. is a global supplier of critical subsystems used in the fabrication of semiconductor devices. The company specializes in the design, engineering and manufacturing of gas delivery systems, vacuum pumps and abatement solutions that manage process gases and by-products in wafer-processing tools. Its modular subsystems are designed to integrate with lithography, etch, deposition and cleaning equipment, helping to ensure precise control of gas flow, pressure and purity throughout the chip-manufacturing cycle.
Founded in the mid-1980s and headquartered in Fremont, California, Ichor has expanded its footprint across Asia, Europe and North America.
