Companies that sold picks and shovels during the gold rush reaped the biggest piles of treasure. Ichor Systems (NSDQ: ICHR) makes the picks and shovels used to produce the incredibly complex chips that power cellphones, solar panels and thin-screen TVs. Although not a sexy business, it’s very profitable.

The newly public company, which hit the market last December, offers investors a diversified way to play the rapid development of more complex chips. Its sophisticated pumps and fluid delivery systems are an integral component of semiconductor-making equipment.

Ichor earnings grew 53% in 2016, partly due to the company acquiring Ajax. Robust growth is expected to continue this year, with estimates logging in 36% earnings growth in 2017 and a more subdued 8% in 2018. My $20 target applies a conservative price-to-earnings ratio of 10 to 2018 estimates.

Target:  $20

Buy Ichor up to $16.

Ichor sells its equipment to companies that make semiconductor manufacturing equipment. The past few years have showcased several mergers of semiconductor manufacturing companies that have consolidated their customer base. Ichor has two very large customers. Lam Research accounted for 57% of revenue, and Applied Materials accounted for 38%.The increasing complexity of fluid and gas delivery in making semiconductor chips is helping boost demand for Ichor’s products. Any error in gas or liquid delivery while making these exquisitely delicate chips results in manufacturing blips and lower production yields. Improving yields is the Holy Grail for chip manufacturers and a critical element in their equipment purchasing decisions.

CEO Tom Rohrs, who has been with Ichor since 2012, brings oodles of experience in dealing with semiconductor equipment customers. His previous stints at Hewlett Packard, Silicon Graphics and customer Applied Materials give him a unique perspective in knowing what drives the purchasing decisions for equipment manufacturers.

The company is already setting a high bar for expectations. After issuing preliminary fourth-quarter guidance in early January, Ichor delivered better-than-expected numbers on Feb. 9 and increased estimates for the March quarter.

Ichor expects to report $145 million in revenue for the March quarter, almost double the $73 million reported last year. That growth rate will slow given that the results were compared against the second quarter of 2016, when Ichor purchased Ajax Custom Manufacturing. Yet even without that acquisition, revenue grew in the high 20% range last year.

Investors can trace back the chain of demand to heavyweights like Intel, which just announced it would spend $12 billion on new equipment this year, higher than previous estimates of $9 to $10 billion.

Lam Research, Ichors’ largest customer, just reported a fabulous quarter. After beating revenue and earnings estimates, it raised them for the next quarter. Lam’s CEO Martin Anstice summed up his optimism with this forecast: “Looking ahead to 2017, the combination of healthy end-demand in established business segments and new application drivers is setting the course for another year of industry growth and outperformance for Lam.”  

Ichors’ customers are benefiting from new iterations of chips like 3D NAND chips and tiny 7 nanometer chips that Intel and Micron are developing. Pump up your portfolio with a great way to play the success of new and improved semiconductor chips.