Ichor Holdings: Chip Spending Slowdown Provides Buying Opportunity

Dec. 05, 2018 10:00 AM ETIchor Holdings, Ltd. (ICHR)14 Comments
Laidy Vasquez profile picture
Laidy Vasquez


  • The company experienced a 43% growth rate over the past twelve months and has averaged near a 40% growth rate since 2015.
  • Ichor has managed to increase its market share due to the innovation and quality of its products and the acquisition of some companies such as IAN engineering in April 2018.
  • The share price is worth north of $19 based on my fundamental analysis and the revenue declines appear temporary in the semi conductor industry.

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The Opportunity

Ichor Holdings (NASDAQ:ICHR) has a great strategy with standards of innovation and quality, that has seen the company maintain a constant growth in the fluid delivery/chipset supplier marketplace. The company has increased their cash flows, EBITDA and expanded their margins by capturing a large growth opportunity in the semiconductor industry.

The stock has fallen nearly 50% from all time highs reached at the end of January and it appears the share price was benefiting from record revenues in the semiconductor suppliers industry, which translated into higher revenues for Ichor for most of 2018. The big drop in Ichor's share price appears to be the result of a temporary slow down in spending because of a slow down in semiconductor manufacturer capital expenditures. This spending reduction is a great opportunity for investors to acquire a high growth company at a significant discount.

Business Overview

Ichor is a company dedicated to design and manufactures fluid delivery subsystems for semiconductor capital equipment. Ichor generates turnkey process equipment and complete solutions in the marketplace with value added manufacturing, these solutions are provided with complete systems integration services that enable full outsourcing of design and production requirements for non-essential equipment in the medical, aerospace, oil and gas, pharmaceutical, power generation, and other industries.

Ichor is continuing the expansion of it's capabilities, trying to offer production facilities suitable for its customers' supply chain strategies. The company has expanded into new products and new markets such as an acquisition of "IAN" that allowed the company to have a greater presence in Asia.

This article was written by

Laidy Vasquez profile picture
Fundamental analyst with knowledge of the fixed income markets, variable income and derivatives, extensive knowledge in corporate finance. Focus on top down analysis in the technology and construction industries. Experience in all aspects of the Bloomberg Terminal, manage the Bloomberg Lab at Univeridad EAFIT in Medellin, Colombia. Aspiring CFA candidate and currently in a research role with a boutique investment firm.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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