ACM Research Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2024

There are 8 speakers on the call.

Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research Fiscal Second Quarter 2024 Earnings Conference Call. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I'll turn the call over to Mr.

Operator

Stephen Pelayo, Managing Director of The Blueshirt Group. Mr. Pelayo, please go ahead.

Speaker 1

Thank you, Desmond. Good day, everyone. Thank you for joining us to discuss Q2 of 2024 results, which we released before the U. S. Market opened today.

Speaker 1

The release is available on our website as well as from Newswire services. There is also a supplemental slide deck posted to the investor section of our website that we will reference during our prepared remarks. On the call with me today are our CEO, David Wong our CFO, Mark McKechnie and Lisa Feng, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates or other information that might be considered forward looking.

Speaker 1

These forward looking statements represent ACM's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under the Risk Factors and elsewhere in ACM's filings with the Securities and Exchange Commission. Please do not place undue reliance on these forward looking statements, which reflect ACM's opinions only as of the date of this call. ACM is not obliged to update you on any revisions to these forward looking statements.

Speaker 1

Certain of these financial results that we provide on this call will be on a non GAAP basis, which excludes stock based compensation and an unrealized gain or loss on short term investments. For our GAAP results and a reconciliation between GAAP and non GAAP amounts, you should refer to our slides pardon me, you should refer to our earnings release, which is posted on the IR section

Speaker 2

of our website and to Slide 12. Let me now turn the call over to David Wong, who will begin with Slide 3. David? Thanks, Stephen. Hello, everyone, and welcome to ACM Research Q2 2024 Earnings Conference Call.

Speaker 2

Please turn to Slide 3. For the Q2, revenue was $202,500,000 up 40%. Shipments were $203,000,000 up 32%. Profitability was good with a gross margin of 48.2% and operating margin of 25.6%. And we ended the quarter with approximately $367,000,000 of cash and time deposit with a positive cash flow from operations for the quarter.

Speaker 2

Revenue for the first half of the year was $354,700,000 up or 62%. We believe this growth rate is higher than the growth rate of China WFE and demonstrates market share gain for ACM and the contribution from new product cycles. Now I will provide detail on product. Please turn to Slide 4. Revenue from single wafer cleaning Tahoe and the semi critical cleaning product grew 36% in Q2 and represented 76% of total revenue.

Speaker 2

ACM offer what we believe is among the industrial most comprehensive cleaning portfolio. We estimate the global total available market or TAM for cleaning is close to 6,000,000,000 dollars and ACM produced product supporting 90% of all cleaning process steps in the both memory and their logic. During the last earnings call, we highlight the sulfuric peroxide or SPM portion of their cleaning market, which has been a relatively small contributor to our business, but represent a 25% to 30% of the total front end cleaning market. ACM now offer a full product line of SPM tool across all temperature range. We have already been shipped Tahoe and a single wafer tools for lower and the middle temperature SPM steps.

Speaker 2

We now have a differentiated high temperature SBM tool that we believe position us to gain market share from the current market leader. We currently have more than 10 SPM customer in production or evaluation and look forward to increase contribution to shipment or revenue as we ramping production in the next 12 to 24 months. We also expect our beveled atcher cleaning tool to contribute more revenue in 2024 and we are on track to complete evaluation of a supercritical CO2 dry cleaning tool this year and the revenue in 2025. We believe ACM cleaning portfolio including SAP, TEBO, Tahoe, Semi Critical together with SPM and Supercritical CO2 dry has achieved watercolor status. We see good opportunity for continued market share gain in Mainland China and we are confident we have what it will take to scale major customer in the international markets.

Speaker 2

Revenue from ECP, furnace and other technology grow 104% in Q2 and represent 19% of total revenue. We achieved another quarterly record in this category with nearly $39,000,000 in revenue in Q2. In plating, we are seeing strong demand for both front end wafer processing and back end packaging. We have a major new product announcement today, the Ultra ECP AP P, plating tool for the next generation fan out panel level packaging or FOP LP. We believe this is a game changing that position ACM participate in growing demand for AI solutions.

Speaker 2

Our proprietary design employee a horizontal plating method that deliver film uniformity and the precision across the entire panel. We believe ACM is among the first to employ horizontal plating for panel application and it was strengthening the market, enabling advanced packaging with some micron feature on a large panel. This technology is especially applicable to GPU and a high density, high bandwidth memory HBM. We see a large opportunity as several major semiconductor leaders have chosen panel for their AI chip packaging solution. And we continue to make good progress with our furnace product, which address more process step ranging from oxidation, anneal to LPCVD and ARD.

Speaker 2

As noted in prior call, our furnace product cycle is about 18 months behind the bidding. We believe our furnace product portfolio will benefit from increasing capacity for both memory and logic. Overall, we expect to have more than 16 furnace customers by end of this year compared to the 9 at the end of 2023. Revenue from advanced packaging, which is excluding CP, but including service and apparel, declined by 20% for Q2, but was up 13.5% for the first half of the year. This category includes a range of packaging tools such as coater, developer, scrubber, PR striper and wet etchers and also service and the spare parts.

Speaker 2

And we are exploring new product and technology to participate in our next generation of advanced packaging. We believe ACM is one of the only company that offers full set of wet tool, polished tool and a cover plating tool for advanced packaging. Last week, we announced the Ultra C Vacuum P Flux Cleaning tool for fan out panel level packaging. This is a companion tool to the ECP AP P, which I mentioned earlier and extending ACM product portfolio to the panel space. In July, we shipped our 1st ultra safe vacuum P flux tool to a new China packaging manufacturer.

Speaker 2

Putting it together, we believe those 2 panel tool including plating and cleaning market strong offering by ACM to address a fan out panel level packaging market. We believe ACM is among the first to applying horizontal plating technology into panel packaging application. And we believe our technology will help accelerate ACM's global market share gain as the interest in panel level packaging is growing rapidly at the foundry, IDM and OSAT in the U. S, Korea, Taiwan and Mainland China. Finishing up on product, we are making good progress with our TRK and PECVD platform.

Speaker 2

We believe our proprietary approach position both tools for success for Mainland China and the global customer. We shipped our beta version of PCB tool in July to a larger customer. The innovative platform is capable handling a wider variety of the PECVD process. We expect multiple evaluation this year at a number of our local customer in foundry, logic and memory and other areas. We are moving forward in the development of our TRAC tool, which has differentiated design with a focus on high throughput and low maintenance.

Speaker 2

In addition to AIF evaluation tool at a major Chinese foundry, we are also engaging with several customers for I line and kf line based lithography. We expect good progress for both PSCVD and TRAC over the next year with revenue likely in later 2025 and more notable contribution in 2026 and beyond. Moving on to customer, please turn to slide 7. In Q2, we saw broader demand from foundry, logic, power and memory, both NAND and DRAM. For the Q2 of 2024, we had a 4% 10% customer representing 58 of the revenue versus 3 customers representing 52% in the Q2 of 2023.

Speaker 2

In China, we have a leading position in cleaning with significant room to grow. We believe we have become a world class multiproduct company with competitive product in markets for plating and furnace. And we have a solid evaluation pipeline for truck and PCVD. Overall, we believe our China growth is being driven by the market share gain, new product and increased localization. In the U.

Speaker 2

S, we deliver Ultra CB backside cleaning and the barrel etch tool in the Q2 of 2024 to a large U. S. Manufacturer that qualified as the first SAPS continuing tool for revenue later last year. This demonstrates a deepened relationship, which we believe can lead to a production order across multiple product lines. And today, I'm pleased to announce we have received orders from U.

Speaker 2

S.-based wafer level packaging house for a colder developer tool. We expect to deliver this tool to the U. S. Facility in the first half of twenty twenty five. Last month, we have a greater week at the Sematon West trade show in San Francisco.

Speaker 2

We had several days of solid meeting with a number of U. S. Chip maker with fabs in U. S. And aboard.

Speaker 2

With good interest in our SAPS, TEBO, Tahoe, Supercritical CO2, dry, plating and our wet etch tools. In Europe, we are in the final stage of our qualification of Ultra C SaF5 Canadian tool at a major global semiconductor manufacturer. In Korea, we engage with multiple customers for both front end and packaging tool including single wafer and batch clean, Tahoe, ECP, furnace, ALD, PLCVD and track. We see opportunity for our tool with SK Hynix high bandwidth memory capacity product. To support growth, we made a progress on our facility expansion in China and other regime.

Speaker 2

Please turn to Slide 8. In China, our Lingang production and R and D center is nearly complete. We expect our initial production to begin in the second half of this year. In Korea, we believe a strong commitment can improve our relation with the key Korean customers. Our resources in Korea can also provide another basis to support international customers.

Speaker 2

We continue to invest in our Oregon site to add our service, support and demonstration capability for R and D and customer activity in the U. S. And Europe. In Q3, we entered into agreement to purchasing a 40,000 square feet R and D facility in Oregon with a full functional 5000 square feet clean room. The purchasing is scheduled to close in Q4.

Speaker 2

This new facility demonstrates a strong commitment to the U. S. Market, allow us to conduct R and D and demonstration of ACM technology near major semiconductor producers. Several years ago, we set a long term revenue target of $1,000,000,000 We are now closing to this level and we have made good progress with new product and international marketing. As a result, I'm happy to report that today we have set a new long term revenue target of $3,000,000,000 Please turn to Slide 6.

Speaker 2

Key reason for increase include: 1st, we have scaled our business in Mainland China and also Korea. We now ship cleaning, plating and advanced packing tool to near the other major and the smaller semiconductor manufacturers. We are amongst the top 1 or 2 local producer for each category. 2nd, we believe our product at work cost, this including our current offering and our new product roadmap. We are committed to innovation and we believe we can compete head to head with a top tier player both in China and international market.

Speaker 2

At a high level, we believe our market shift to AI is moving the market towards ACM technology warehouse. We have been investing in key technology for years and we are now seeing good interest to apply key technology to several industrial trends. Let me highlight a few. The shift of 3 d structure for NAND, DRAM and logic is driving demand for our vertical cleaning solution including TEBO and supercritical CO2, dry and also our proprietary furnace ALD design. Next, HBM require a driving demand for our TSV plating and 2.5D advanced packaging solutions.

Speaker 2

For PECVD, ACM has a very unique approach including 1 chamber with 3 trucks that allow our customer to address multiple process with the same platform. For TRAC, ACM differentiated platform is designed for high throughput and no maintenance to scanner. And therefore panel plating as we announced today, we believe ACM new Ultra ECP AP P is a game changer that will support future AI chip packaging at the panel level. 3rd, with our product line improving at scale in China and Korea, we are seeing good traction with our global customers. We have multiple tools under evaluation at several major customers in U.

Speaker 2

S, European, Korea and Southeast Asia. We are confident those can lead to volume production orders and the longer term we expect up to half our business in market beyond Mainland China. Bring it all together, our $3,000,000,000 target assuming that China will account for about $1,500,000,000 revenue and the rest of the world, which is 2x to 3x larger than China will account for other $1,500,000,000 I will now provide our outlook. Please turn to slide 9. We have raised our 2024 revenue outlook to a new to be in the range of $695,000,000 to 7 $35,000,000 versus prior outlook of $650,000,000 to $725,000,000 At the middle point, our new outlook represent 28% year over year growth compared to 23% previously.

Speaker 2

We expect shipment in the second half of the year to grow with the full year shipment growth rate outpacing revenue growth rate. We note our visibility for the year is largely driven by our current order book, anticipated new orders, and the qualification or customer acceptance of their previous ship evaluation tool to a range of the customers. We believe WFE spending in Mainland China will remain stable as the country continue to on its goal to match its production capacity with end market consumption. We are focused on gaining market share in the Mainland China, ranking our new product and expanding our business to new customer in the U. S, Korea, Taiwan, Europe and other Southeast Asia market.

Speaker 2

Now let me turn the call over to our CFO, Mark, who will review details of our Q2 results. Mark, please.

Speaker 3

Thank you, David. Good day, everyone. Please turn to Slide 10. Unless I note otherwise, I'll refer to non GAAP financial measures, which exclude stock based compensation, unrealized gainloss and short term investments. A reconciliation of these non GAAP measures to comparable GAAP measures is included in our earnings release.

Speaker 3

Unless otherwise noted, the following figures refer to the Q2 of 2024 and comparisons are with the Q2 of 2023. I will now provide financial highlights for the Q2 of 2024. Revenue was $202,500,000 up 40%. Revenue for single wafer cleaning, Tahoe and semi critical cleaning was $153,200,000 up 36.2%. Revenue for ECP, Front End Packaging, Furnace and Other Technologies was $39,000,000 up 103.8%.

Speaker 3

Revenue for advanced packaging excluding ECP services and spares was $10,300,000 for the 2nd quarter, down 20.4%, but for the first half it grew by 13.5%. Total shipments were $203,000,000 up 32%. Gross margin was 48.2 percent versus 47.6%. This exceeded our long term gross margin target of 40% to 45%. For the full year, we now expect our gross margins to be above the high end of the range.

Speaker 3

This is due to gross margins above the range for the first half and our expectations for gross margin at the upper end of our target range for Q3 and Q4. We continue to expect gross margin to vary from period to period due to a variety of factors such as sales volume, product mix and currency impacts. Operating expenses were $45,600,000 up from $36,300,000 R and D was $21,800,000 versus $19,400,000 The year over year increase primarily reflects additional personnel expenses to support our product development pipeline. Sales and marketing was $14,100,000 versus $11,000,000 and G and A was $9,800,000 versus 6,000,000 dollars For 2024, we plan for R and D in the 13% to 15% range, sales and marketing in the 7% to 8% range and G and A in the 5% to 6% range. Operating income was $51,900,000 versus 32,400,000 dollars Operating margin was 25.6 percent versus 22.4%.

Speaker 3

We had no realized gain from the sale of short term investments for the quarter as compared to a gain of $3,900,000 in the year ago period. Recall that the realized gains are included in our non GAAP earnings. Income tax expense was $9,300,000 versus $7,600,000 For the full year, we plan for an effective tax rate on non GAAP pretax income in the 15% to 20% range. Net income attributable to ACM Research was $37,300,000 versus 31,300,000 dollars Our net income per diluted share was $0.55 versus 0 point 48 dollars Our non GAAP net income excluded $14,300,000.21 per share in stock based compensation expense. We note that due to the accelerated amortization for ACM Shanghai stock option grants, we do expect SPC expense to gradually roll off in the Q3 and beyond.

Speaker 3

I will now review selected balance sheet and cash flow items. Cash, cash equivalents, restricted cash and time deposits ended the 2nd quarter at 360 $6,800,000 versus $288,300,000 at the end of last quarter. Total inventory was $602,900,000 dollars versus $581,100,000

Speaker 4

at the

Speaker 3

end of last quarter. This included raw materials and work in process of 320 $4,000,000 and finished goods inventory of $278,900,000 Finished goods inventory mainly includes First Tools under evaluation at our customers, also includes finished goods at ACM facilities. Cash flow from operations was $61,000,000 for the 2nd quarter $51,900,000 for the first half of the year. Capital expenses were $13,600,000 for the 2nd quarter, dollars 39,700,000 for the first half of the year. For the full year 2024, we expect to spend about $100,000,000 in capital expenditures.

Speaker 3

This primarily includes continued investments in our Lingang facilities, remodeling for the new headquarters for ACM Shanghai and our investments in the Korea and the U. S. Together with fixed asset expenditures. That concludes our prepared remarks. Now let us open the call for any questions that you may have.

Speaker 3

Operator, please go ahead.

Operator

Thank you. We will now begin the question and answer session. Our first question comes from the line of Suji Desilva from ROTH Capital. Please go ahead.

Speaker 5

Hi, David, Mark, Lisa. Congrats on the progress here and the guidance. For the second half, your shipments appear to be increasing. Can you talk about maybe 1% or give us some sense of how much of that shipment base is outside of China versus China? And what that will how that will increase in the mix over time?

Speaker 3

So you did point out that we expect our shipments to be a bit higher in the second half versus the first half of the year. We'd expect shipments up obviously in the Q3. In terms of the mix internationally outside of Mainland China, C. J, I would say that the substantial majority of our shipment tools will still be within China. And so we will have some shipments outside, but really a substantial majority is going to be to the Mainland China market in the back half of the year.

Speaker 5

Okay. Yes. And then specifically for the Korea customers, I know you've been shipping into the China fabs for Korea customers, but are you already shipping into Korea fab for Korean customers? And if not, what's the timing of that starting? Because that sounds like something newer as an opportunity I've heard versus kind of U.

Speaker 5

S. And Europe.

Speaker 2

Okay. So we are definitely working with a Korean customer. And so at this moment, we are now I mean, Q2, we have no shipment gold there in Korea right now. However, we do see the opportunity including also R and D tool and for their beyond the cleaning product, we're heavily engaged with our current customer. So we see that additional new product will hopefully can be shipping in the second half of this year, which is really another bigger type order product for the HVM, right?

Speaker 2

That's where we're looking for.

Speaker 5

Outstanding. That's great. And then my last question is on the high bandwidth memory supply chain in Taiwan, which has been growing very strong. Can you talk about your opportunity there, if that's soon? And who the competition today is in that market because we know with AI that's growing very fast?

Speaker 2

Okay. You mean the panel side of new product, Cixi, you mean that, is that correct?

Speaker 5

The high bandwidth memory opportunity, the supply chain there in the products, Internet and China Taiwan rather.

Speaker 2

Yes. You mean our new panel product? You talk about

Speaker 5

Yes, yes, yes. Right. The back end of the packaging.

Speaker 2

Back end of the packaging. Okay, I see. Well, for the back end packaging, we're engaging with the customer in Taiwan and also engaging with customer in the U. S, right, which announced we have received our first code developer order from 1 of the U. S.

Speaker 2

Advanced packaging house. And definitely, we have a well set of this wet tool for the advanced packaging. So we're having engaged with multiple customer in Taiwan. Meanwhile, we just announced this our panel low pressure cleaning for flux and also announced this horizontal plating for the panel. I think the 2 new product will definitely address the new trend also new of their packaging requirement.

Speaker 2

So we're engaging with multiple customer right now and in mainland China and also in Taiwan and also in the U. S. So we believe that will bring another exciting market for our new panel product. Plus, we're still engaging also developer additional new type, other type of the panel product too. So we believe that's what will bring another our revenue growth potential, right, in this product portfolio.

Speaker 5

Okay. Sounds like great progress all around. Thanks, David. Thanks, guys.

Speaker 2

Thank you, Saje.

Operator

Thank you for the questions. One moment for the next question. Our next question comes from the line of Charles Xu from Needham and Co. Please go ahead.

Speaker 6

Hi. A couple of questions. The first one, looks like you're implying a half over half largely flat for second half of the year, but the shipment is probably higher in the second half. So just want to also want to clarify when you say a shipment in the second half of the year to grow, hopefully, that's a half over half comment or that's a sequential quarter over quarter comment? That's the first question.

Speaker 3

It's a half over half. Yes, we'd expect shipments to be higher in the second half than they were in the first half.

Speaker 6

Yes, but any thoughts on the implied revenue guide for second half being largely flat versus the first half? And how should the people think about this?

Speaker 2

Actually, revenue also second half is higher than first half, right? You're looking at our middle point of the new

Speaker 3

segments.

Speaker 5

Okay. Then the second question

Speaker 6

is about the capital allocation. Definitely, the ACM Shanghai is already paying a dividend to ACM Shanghai customers. I wonder any thoughts on starting a dividend policy with the ACM Research Investors and especially when the ACM Shanghai probably going to see that lockup expiry pretty soon.

Speaker 2

Yes. Okay, good point. And we do have a dividend, right, and last year and probably will continue this dividend disputing to all the events of ACM Shanghai for near future. Then you talk about the lock off and of the ACM USA for their share in China, Shanghai. I think in this moment, our still major business from Shanghai and ACM USA definitely can sell their share.

Speaker 2

However, you can see there are a standard right now, we're keeping our share, right. The reason is that we do have dividend and also ACM USA have the cash going on and there's no reason to sell our precious share inside of China.

Speaker 6

Sorry, David. Just want to clarify when I say dividend, I mean that dividend for ACM USA shareholders, not the ACM Shanghai shareholders.

Speaker 2

Okay, okay. So the dividend we got from ACM Shanghai and will come to ACM USA. So this money I think where we reinvest into our marketing sale and also potential supporting and R and D and for all the purpose, right. So, at this moment, we believe the cash we got from dividend, the best interest for the investor USA is reinvest back to the business instead of just distribute dividend to their ACM U. S.

Speaker 2

Investor. So we think that will be our major problems for the dividends usage. And Mark, anything you want to add on that?

Speaker 3

Yes. I mean, Charles, I think it's an interesting question, but echoing what David says, we don't have any plans to pay a dividend from the U. S.

Speaker 5

Yes. Thank you.

Speaker 4

Yes.

Operator

Thank you for the questions. One moment for the next question. Our next question comes from the line of Mark Meuler from The Benchmark Company. Please go ahead.

Speaker 7

Let me say congratulations, another very good quarter. And again, you're probably the greatest growth stock that at least in my universe and hopefully the investors will respond to that more aggressively in the future. In terms of your evals going on, especially outside of China, can you give a little more color in terms of EVALs, in terms of what type tools and what countries?

Speaker 2

Okay. Sure, Mark. At this moment, we do have our Canadian tool, right, as being go to U. S. Customer.

Speaker 2

We do have 2 type of tools, one is the SAPS cleaning and another one is really the backside and also Beverly Clean, right, in the same customer. And recent was receiving another order from coated developer from U. S. At the Mount TEGNY House. And also we do have also another evaluation tool or a steel tool in there from their European customer in the evaluation.

Speaker 2

Also meanwhile, we're heavily engaged with Korean customer for copper plating, right, and tool. That's in the demo status and hopefully quickly we can shift to their production line for their final production valuation. And also we're talking with our few customer in Singapore and also in the U. S. And talk about our new cleaning capability including TEBO and Tahoe and also our I want to say that is our supercritical CO2 as really we're designed for advanced technology evaluation, especially for 3 d clean and also sulfuric acid clean.

Speaker 2

So that kind of also powerful Canadian tool we're engaging with the multiple customer right now.

Speaker 7

Okay. In terms of your margin guidance, margins have been certainly above the target range. You're guiding margins being at the top and guiding range. I assume that implies that your backlog, the margins of the tools in the backlog are at or above your target range?

Speaker 2

Mark, you want to answer that?

Speaker 3

That's right, Mark. I mean, we mentioned that for the year, our gross margins would be above the normal 40% to 45% range really because they were stronger above the range for the first half of the year and the rest of the year, we're expecting them to be at the upper end of our range. And so, yes, I mean our visibility on the margin profile for the end of the year is pretty good.

Speaker 7

Thank you.

Operator

Thank you for the questions. One moment for the next questions. Next question comes from the line of Robert Mackay from Blue Lotus. Please go ahead.

Speaker 4

Hey there. Thanks for taking my question. Am I coming in clearly?

Speaker 2

Yes. Robert, please.

Speaker 4

Okay, great. So I have a bit of a touchy question. And what I know I think it might be important is I was wondering if we have evaluated if there's any there's been some discussion regarding some further restriction on Chinese companies. I was wondering if there might be if we have evaluated what kind of impact there might be if that unfortunately does come through and what our thoughts are on that and if there's anything we can talk about in that respect?

Speaker 2

You're talking about this new rule for the export control. Is that what you mean?

Speaker 4

Yes, exactly.

Speaker 2

Okay. Well, I mean, again, right, we just heard some real market there rumor. We're carefully, I should say, watch out the new rule come out and where ACM definitely will follow the law, right? And USA law and follow Chinese law with the international business. And while we're carefully, I mean, this moment, no speculator, But I will say that if something come out, it's only not only ACM, right, another U.

Speaker 2

S. Company got impacted too. So we just want to watch out what's going on to whatever adjustment based on the new regulatory come out.

Speaker 3

Maybe the other thing that I would add to that is,

Speaker 4

we take

Speaker 3

a deep step back and we look at the China WFE, I think David's view, our view on WFE in China is that pretty stable for this year and for the years to come that the country will continue to invest in their production capacity. And so, like David mentioned, we'll monitor any of the new regulations. Of course, we'll follow the rules. But we generally anticipate WFE in China to remain pretty stable.

Speaker 4

Got it. Thanks for the clarity. In terms of our supply chain then, is there any potential impact to supply chain if there is any of these if any of these rumors do come to fruition?

Speaker 2

Supply chain at this moment, I see they're pretty stable right now, right? Obviously, we're looking for all different kind of supply chain. And for mature product, we still buy U. S. Components.

Speaker 2

And but for whatever the launch nodes, we have using non USA parts. And this moment, we're also looking for the multiple supply chain, both in other country, also inside of China. We're also qualified a local player of the components. So we definitely have a plan to secure our supply chain. And when there any new regulatory come out and we can quickly switch into other alternative choice of the supply chain.

Speaker 4

Okay, got it. That makes a lot of sense. So you have some backups. That's very good to hear. And then I had one more question, I think, is related to the private offering that we announced in January.

Speaker 4

I think we were going to some private offering with our Shanghai shares. I was just wondering if we have any update in regards to the into that private offering, if there's any progress on that front and when we can expect to hear more about it.

Speaker 2

Yes. Actually, we're in the process to the final formal application, right? But we know that the approving process in the second offering in China will take time. We estimate probably 6 months, 8 months even longer. So our permission probably we're expecting middle of next year, we might get it.

Speaker 2

And then within another 1 year of the permission we got, then we can probably see in the second offering based on market situation. Now obviously, we're expecting that time, we got our PCVD and the track system and also furnace, including our panel packaging tool getting in the market. So we're choosing the right time and or rather pricing to raising our second pump.

Speaker 4

Okay. That makes a lot of sense. Thanks. And then I had one more question. It was just about if we have any new products that we can look forward to in the second half of this year or in early 2025 that we think about or should we just wait until the announcement?

Speaker 2

Well, obviously, we announced already, right? I mean, this Q2, we announced 2 trials already. So, I want to say, we'll continue exploring a new product. And obviously, like this panel, right, we announced 2, still work on the additional other type of the panel product and for this year. And probably we're going to announce another new product when they got it ready.

Speaker 2

Meanwhile, I still say, we're still major focused on our EUCC, what they're doing right now, cleaning, cover plating, furnace, especially the furnace ALD and track and the PECVD. So our new product probably is still along this major technology and also the product. We're not going to develop other new, which is a company new more than this category I mentioned.

Speaker 4

Got it. That's very clear. Thank you very much. And also great results. Sorry for the touchy questions, but thank you very much.

Speaker 4

Yes.

Speaker 2

Thank you, Robert.

Operator

Thank you for the questions.

Speaker 2

Okay. Thank you, operator, and thank you all for participating on today's call and for your support. Before we close, Stephen is going to mention our upcoming Investor Relations events. Stephen, please.

Speaker 1

Thanks, David. Before we conclude, I just want to give everyone a quick reminder on our upcoming investor conferences. On August 27, we will present at Jefferies Semiconductor IT, Hardware and Communications Technology Summit at the Four Seasons Hotel in Chicago in the United States. On September 4, we will present at Benchmark 2024 TMT Conference in New York City. Attendance at the conference is by invitation only.

Speaker 1

For interested investors, please contact your sales representatives to register and schedule 1 on 1 meetings with the management team. This concludes our call and you may now disconnect. Bye bye.

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Key Takeaways

  • ACM Research reported Q2 revenue of $202.5 million, up 40% year-over-year, with a gross margin of 48.2% and operating margin of 25.6%, ending the quarter with $367 million in cash and positive operating cash flow.
  • The company expanded its cleaning portfolio by shipping full‐range SPM tools (low to high temperature) to over ten customers and progressing a supercritical CO₂ dry cleaning system, targeting revenue ramps over the next 12–24 months.
  • ACM unveiled the Ultra ECP APP horizontal plating tool and Ultra C Vacuum P Flux cleaning tool for fan-out panel-level packaging, positioning itself for AI chip packaging growth in the US, Taiwan, Korea, and China markets.
  • International expansion accelerated with new orders and evaluations across the US, Europe, and Korea, alongside facility investments: a Lingang production/R&D center in China, a 40,000 sq ft R&D clean room in Oregon, and enhanced Korea support.
  • The company raised its 2024 revenue outlook to $695–735 million (up 28% at midpoint) and set a new long-term revenue target of $3 billion, reflecting confidence in market share gains, product innovation, and global diversification.
A.I. generated. May contain errors.
Earnings Conference Call
ACM Research Q2 2024
00:00 / 00:00