Entegris, Inc. (ENTG)

How it makes money

Most revenue comes from Advanced Purity Solutions — filtration, purification and contamination-control products consumed continuously as fabs run — and the rest from Materials Solutions, the deposition materials, slurries, gases and etch chemicals used directly in chip processing. Because its products are qualified into a customer's manufacturing process, switching suppliers once a material is approved requires requalifying the whole line, which discourages change and supports steady purchases.

Revenue by segment

Entegris's materials and filters are qualified into a customer's manufacturing line through a lengthy validation process; once approved, a chipmaker is reluctant to requalify an alternative supplier for the risk and cost involved. Competitors exist for most product lines and price and performance still matter, so the advantage is narrow rather than wide.

Demand tracks the semiconductor industry's capital spending and wafer-fabrication volumes, which move in multi-year up-and-down cycles driven by chip demand and a handful of customers' capacity decisions. A slowdown in fab utilization or a pause in leading-edge capacity additions reduces Entegris's volumes with a lag of a quarter or two.

Key risks

• Customer concentration — A significant portion of sales is concentrated on a limited number of key customers, and net sales and profitability may materially decline if the company lost one or more of them.
• Semiconductor capital-spending cycles — Revenue depends on chipmakers' capacity and technology investment cycles, which have historically swung between expansion and pullback, dragging Entegris's volumes and pricing with them.
• Geographic customer concentration — A large share of revenue comes from customers in Taiwan, China and South Korea, so trade restrictions, geopolitical tension or disruption in any of those regions can directly affect sales.
• Qualification and technology-transition risk — New materials and filters must be requalified by customers each time chip technology advances; failing to keep pace with a customer's next process node could lose the business at that qualification point.

Top customers account for 50% of revenue

Entegris discloses that its ten largest customers accounted for about 50% of net sales in 2025, with TSMC alone at roughly 16%, so a slowdown at any of a handful of very large chipmakers has an outsized effect on results.