Ultra Clean CEO Says Chip-Tool Part Shortage May Last 'A Quarter Or Two' — But No Shipment Missed
CEO James Zhao said the company has kept pace with demand even as a controller shortage constrains the industry.
Ultra Clean Holdings, which makes subsystems and parts for semiconductor equipment, expects a shortage of mass flow controllers to "continue for a quarter or two," CEO James Zhao said on the company's third-quarter earnings call Tuesday. Zhao and CFO Mike Keogh both stressed that the company has missed no shipments, as revenue hit a record $759 million.
Shortage, but no missed shipments
Asked by a Needham analyst about the mass flow controller shortage, Zhao said the constraints may continue for a quarter or two before the industry addresses them collectively. He said Ultra Clean has no controller business of its own and is working closely with customers and suppliers.
Zhao said the company keeps capacity one to two quarters ahead of forecast demand and builds safety stock. "We do not miss a single module of subsystems that are needed for our customers' quarter," he said.
Keogh told an Oppenheimer analyst the company was not gated by anything last quarter and did not miss a shipment. He said fourth-quarter guidance already accounts for where supply risk may come from.
Record quarter, heavy inventory
Revenue rose 17.7% from the prior quarter and 48.8% from a year earlier, Keogh said. Adjusted earnings were $1.15 a share, and the company guided to fourth-quarter revenue of $800 million to $860 million and EPS of $1.11 to $1.35. Its two largest customers made up 61% of revenue.
The cost of keeping pace shows in cash. Operating cash flow was negative $42.3 million, which Keogh tied to working capital needed for timely delivery. Inventory rose $93.4 million from the prior quarter to $723.3 million as the company pre-ordered critical components and held elevated safety stock.
Ultra Clean sold 2.2 million shares under its at-the-market stock program in the first week of the fourth quarter at an average $78.45, receiving $169.1 million in net proceeds. It used part of that to pay off its revolving credit facility, and $193 million remains of the $400 million program. It ended the quarter with $270.9 million in cash.
Doubling capacity in Asia
Zhao said the company plans to double its vertically integrated manufacturing capacity in Malaysia and Thailand next year, to make more critical components in-house and gain control over supply. Keogh said it expects about $4 billion of revenue capacity in the first quarter and anticipates investing roughly $80 million to $100 million through 2027 and 2028 to go beyond $5 billion.
Zhao said customers describe 2027 as solid, with wafer-fab equipment spending now expected above $200 billion.
Sources
- Ultra Clean Holdings Non-GAAP EPS of $1.15 beats by $0.21, revenue of $759M beats by $31.45M (NASDAQ:UCTT) | Seeking Alpha — seekingalpha.com
- Ultra Clean Holdings, Inc. (UCTT) Stock Price, News, Quote & History - Yahoo Finance — Yahoo Finance
- Ultra Clean Reports Third Quarter 2026 Financial Results — prnewswire.com
