ACM Research Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 7, 2026

Key Takeaways

  • Positive Sentiment: Strong second-quarter execution: Revenue and shipments each rose 36% year over year to approximately $293 million and $282 million, respectively, while operating margin remained about 19%.
  • Positive Sentiment: New products and advanced packaging drove growth: ECP, furnaces and other technologies grew 168%, while advanced packaging revenue excluding ECP, services and spares increased 153%; ACM also received panel-level plating orders from two customers.
  • Positive Sentiment: Improved outlook and order momentum: First-half orders increased more than 105% year over year, prompting ACM to raise the low end of its 2026 revenue guidance to $1.125 billion-$1.175 billion, implying 25%-30% growth.
  • Positive Sentiment: ACM reported more than $1 billion in global net cash, including approximately $300 million in the U.S., to support international expansion, production capacity and customer support; management expects more than 20 tools installed outside mainland China by year-end.
  • Negative Sentiment: Execution risks remain: Single-wafer cleaning revenue declined 14%, component supplies are tight and some delivery times have lengthened, while inventory reached $783 million and 2026 capital expenditures are expected to be approximately $175 million.
AI Generated. May Contain Errors.
Earnings Conference Call
ACM Research Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the ACM Research second quarter 2026 earnings conference call. Currently, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session. Instruction will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to Mr. Steven Pelayo, Managing Director of The Blueshirt Group. Steven, please go ahead.

Steven Pelayo
Managing Director at The Blueshirt Group

Good day, everyone. Thank you for joining us to discuss second quarter 2026 results, which we released before the U.S. market opened today. The release is available on our website as well as from Newswire Services. There's 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, Dr. David Wang, our CFO, Mark McKechnie, and Lisa Feng, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to slide two.

Steven Pelayo
Managing Director at The Blueshirt Group

Let me remind you that remarks made during this call may include predictions, estimates, or other information that might be considered forward-looking. 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 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.

Steven Pelayo
Managing Director at The Blueshirt Group

Certain financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation and unrealized gains and losses on short-term investments. For our GAAP results and reconciliation between GAAP and non-GAAP amounts, you should refer to our earnings release, which is posted on the IR section of our website and to slide 22. Also, unless otherwise noted, the following figures refer to second quarter 2026 and comparisons are with the second quarter 2025. With that, I will now turn the call over to David Wang. Dave?

David Wang
David Wang
CEO at ACM Research

Thanks, Steven. Hello, everyone, and welcome to ACM's second quarter 2026 earnings conference call. The June quarter marked another period of strong execution for ACM Research. Revenue and shipment increased 36% year-over-year. Revenue growth was led by our ECP and advanced packaging product category, both of which increased more than 150% year-over-year. This strong performance reflects progress we are making in transforming ACM into a broader multi-product semiconductor equipment company.

David Wang
David Wang
CEO at ACM Research

In June of this year, third-party research Frost & Sullivan published a report called the Global and China Semiconductor Equipment Market Research. They now estimate the global semiconductor equipment market exceeded $140 billion in 2025 and will grow to more than $200 billion by 2029. They also estimate the Mainland China market exceeding $50 billion in 2025 and will grow to more than $80 billion in 2029.

David Wang
David Wang
CEO at ACM Research

To fund our global operation, we have recently strengthened our balance sheet. ACM now has more than $1 billion of net cash globally. This includes approximately $300 million in the U.S. following our $150 million, which is the direct offering completed this past May. This financial strength provides a solid foundation to support our mission to become a key supplier of world-class capital equipment for the top major product of semiconductors.

David Wang
David Wang
CEO at ACM Research

We believe AI is driving one of the most significant technology transitions the semiconductor industry has experienced in many years. As chip complexity and chip size continue to increase, traditional wafer level packaging approaching are reaching practical limit, creating demand for entire new manufacture technology across advanced packaging.

David Wang
David Wang
CEO at ACM Research

ACM predicted a shift from wafer level to panel level packaging more than five years ago and began investing early in horizontal panel level plating and other panel level wire process technology. We believe the market is now coming to us and has begun to validate those investments. Today, I'm pleased to announce that we have received order from two advanced packaging customers for our panel level horizontal plating tool, addressing both 510 mm by 515 mm and the 310 mm by 310 mm panel size.

David Wang
David Wang
CEO at ACM Research

One is a production order from existing customer in Mainland China, and the second one is the evaluation system for a new customer in Asia. We believe ACM will be among the first company to deliver horizontal panel level plating system to multiple customer across multiple region. Our proprietary horizontal plating architecture is a key differentiate, delivering superior plating uniformity while addressing the demand process requirement of a next generation AI packaging. This order are important milestone for what we believe could become a significant long-term growth opportunity.

David Wang
David Wang
CEO at ACM Research

I'm pleased to report today that our order book has been quite strong. For the first half of 2026, orders increased 105% year-over-year. This is a mix across all product category with a heavier emphasis on some of our new product. As with the prior years, ACM Shanghai plans to release backlog figure as of the September 30 in early October. Thanks to good execution by our operation team, we continue to expect shipment across each of our category to grow faster than revenue. We remain confident in our growth target for 2026 and beyond.

David Wang
David Wang
CEO at ACM Research

For 2026, we see a healthy backdrop for China WFE as our customer continue to scale their production capacity. We expect an extra boost for our business from a few product cycle, including our SPM and the furnaces to enable us to outgrowing the China WFE. Beyond this year, we estimate that our newer platform, including track, PECVD and horizontal panel level plating, will proceed for evaluating phase into a commercialization phase, resulting in production orders and drive our growth for years to come. In summary, we see 2026 as a big year for new product and another year of a solid growth for ACM. Now on to our business result.

David Wang
David Wang
CEO at ACM Research

Please turn to slide three. Revenue for the second quarter was $293 million, up 36%. Shipment for the second quarter was $282 million, up 36%. Gross margin was 46% and operating profit margin was about 19%. We ended the quarter with a gross cash of $1.4 billion and a net cash of $1.0 billion. Now I will provide detail on product. Please turn to slide four. Revenue from single wafer cleaning, Tahoe and semi-critical cleaning tool was $133 million, down 14%, and represent 45% of revenue. We believe ACM has built industrial broader cleaning product portfolio.

David Wang
David Wang
CEO at ACM Research

Our product in this category, including SAPS, TEBO, Tahoe, backside clean, solvent clean, fabric clean, scrubber and wet etcher, and our proprietary single wafer hot SPM technology. In May, we present our proprietary hot SPM cleaning technology at 2026 Surface Preparation and Cleaning Conference. This system demonstrate fewer than 15 particles performance at a 15 nanometer particle size. Our proprietary nozzle design prevents acid mist and the chemical splashing outside chamber during the hot SPM process. This, therefore, does not require periodical DI water chamber outside clean.

David Wang
David Wang
CEO at ACM Research

For customer, this means less maintenance, better uptime and a more stable particle performance. We believe this represent the best performance in the industry. Our SPM platform is well suited for the advanced logic and memory, where cleaning requirement are becoming more demanding. Today, we also announce new capability for Ultra C Tahoe, expanding it into a broader wet process platform. Tahoe is built on our patented hybrid architecture that combine batch SPM process and a single wafer cleaning.

David Wang
David Wang
CEO at ACM Research

We have added wet etching and the monitor wafer reclaim application to the Tahoe platform. This integrate multiple process that had previously required a separate standalone tool into one Tahoe platform. The expanded platform has been adopted by multiple leading semiconductor manufacturers. ACM will continue to drive world-class process performance with a focus on ESG benefit to helping make advanced semiconductor manufacture more efficient and more sustainable.

David Wang
David Wang
CEO at ACM Research

We have shipped a handful of single wafer SPM tool in the first half of this year, we are on track to ship more than in the second half of this year for more than 20 by end of this year. As a reminder, we estimate that SPM represent about 1/3 of the total cleaning market. We have had very little revenue today for the SPM tool, with this major product cycle, we expect our overall cleaning revenue to rebound as our customer qualify the first tool, and we grow our repeat shipment. Revenue for ECP, Furnaces and Other Technology grow 168% and represent 44% of the revenue mix.

David Wang
David Wang
CEO at ACM Research

Growth was driven by momentum on both front and back-end plating tool. In logical device, we have benefit from larger die size and the steady increase from higher interconnector layer counts. In memory device, we have benefit as HBM packaging demands higher level of DRAM stacking and, thus, more copper process steps. During the quarter, we shipped our 2,000th electroplating chamber. This follows our 500th chamber shipment in 2022 and our 1,500th chamber shipment in 2025. This shows how quickly our installed base has grown and how broadly customers are adopting our technology in volume production.

David Wang
David Wang
CEO at ACM Research

We had a larger contribution from furnace in the quarter, it's still just a small part of our overall revenue mix. We continue to improve the technology breakthrough across key applications, including LPCVD, oxidation, thermal ALD, PEALD, and ultra-high temperature anneal. Revenue from advanced packaging, which excludes ECP, but including service and parts, was up 253%. This including coaters, developer, etcher, stripper, scrubber, and the vacuum cleaning tool, supporting a broad range of our advanced packaging application.

David Wang
David Wang
CEO at ACM Research

We are particularly pleased with our global progress here, with active deployment in Singapore and North America across a range of these tools. We are making good progress with our new Track and PECVD platform. We remain confident that we have the right approach for our PECVD and Track platform, and we have made significant progress in 2026. Our proprietary one chamber, three tracks architecture for PECVD performed well in our Lingang mini lab early this year. We shipped their secondary tool to our new customer in Q1, and we anticipate this qualification by year-end. The story is similar to our Track platform.

David Wang
David Wang
CEO at ACM Research

Indeed, our high throughput KrF Track tool is progressing through customer evaluation, and we anticipate production qualification by year-end. We see strong interest in both standalone tools and configured to integrate with the scanners. For both PECVD and Track, we are hard at work with the development effort with several key customers. We are optimistic that our tool performance can meet or exceed our customer requirements and result in production order in the near future. Please turn to slide five.

David Wang
David Wang
CEO at ACM Research

This quarter, we have updated our market assumption with the latest WFE data from the Report One report I mentioned earlier. This result in a $1 billion increase to ACM, the global SAM about $22 billion. Please turn to slide six. There are no changing to our long-term revenue target of $4 billion. This is still based on market share assumption for each of our product category, which gets us to about $2.5 billion from mainland China and $1.5 billion from the global market. We adjusted some our assumption based on China WFE now and about $50 billion.

David Wang
David Wang
CEO at ACM Research

We continue to assuming a robust WFE environment over the next several year for the global market. The magnitude and the timing of our growth will be impacted by the overall spending trajectory of our customer and our market share gains. Next, let me providing update on our production facility. First, on Lingang. Please turn to slide eight. The first building is in volume production, and we plan to open the second building later this year. Together, the two facility can support up to $3 billion in annual output. With our strong order book, we are fortunately to be ready to scale the second facility. Next, our Oregon facility. Please turn to slide nine.

David Wang
David Wang
CEO at ACM Research

In Oregon, we remain on track for a U.S.-based demo center with multiple tools in world-class cleaning room environment starting later this year. This is important for our global customer, and we believe it will help us to secure production orders. Our global business is beginning to scale. As we said last quarter, we expect to have more than 20 tools installed at a customer site outside mainland China by the end of this 2026.

David Wang
David Wang
CEO at ACM Research

This includes about 10 customers in five countries. It is clear that leading global chip makers can benefit from our innovative product. Although it is still early day for our global deployment, our engagements are growing, and we are confident that our global sales and the service team will deliver good results. Now I will providing our outlook for full year 2026. Please turn to slide 10. Based on our first half performance and the improved visibility, we have raised the middle point of our full year revenue guidance.

David Wang
David Wang
CEO at ACM Research

We now expect a full year 2026 revenue of $1.125 billion-$1.175 billion, versus the prior range of $1.08 billion-$1.175 billion. This new range implies 25%-30% year-over-year growth. We also expect the shipment growing growth to outpace revenue growth in 2026. Let me turn the call over to our CFO, Mark, who will review details of our second quarter results.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Thank you, David, good day everyone. Please turn to slide 11. Unless I note otherwise, I'll refer to non-GAAP financial measures, which exclude stock-based compensation, unrealized gain loss on short-term investments. Reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. Also, unless otherwise noted, the following figures refer to the second quarter of 2026 and comparisons are with the second quarter of 2025.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

I'll now provide financial highlights. Revenue was $292.9 million, up 36%. Revenue for single wafer cleaning, Tahoe and semi-critical cleaning was $133.0 million, down 14.2% and represented 45.4% of sales. David noted this included very little contribution for some of our newer products. As normal, SPM will be reflected first in our shipments, followed by revenue contribution in later quarters. Revenue for ECP, front-end and packaging, furnace and other technologies was $128.5 million, up 167.7% and represented 43.9% of sales.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Revenue for advanced packaging, excluding ECP, services and spares was $31.4 million, up 153.3% and represented 10.7% of sales. We saw a good improvement in our customer concentration. During the first half of 2026, our 10% customer mix has improved to just one customer at 12.7% of our revenue mix. This compares to three 10% customers representing 49.9% of our mix for the first half of 2025. While this can vary by period, we consider the reduced concentration as positive as it represents a broadening of our customer base. Total shipments were $281.5 million, up 36.4%. 2026, we expect shipment growth to outpace revenue growth.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Gross margin was 46.0% versus 48.7%. Gross margin was above the midpoint of our long-term target model. We maintain our 42%-48% long-term target range, and product mix can cause fluctuations on a quarterly basis. Operating expenses were $78.5 million, up 23.9%. R&D was 13.9% of sales. Sales and marketing was 7.7%, G&A was 5.2%. For 2026, we plan for R&D in the 16%-18% range, sales and marketing in the 8% range, and G&A in the 5%-6% range. Operating income was $56.3 million versus $41.5 million.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Operating margin was 19.2% as compared to 19.3%. Income tax expense was $13.5 million versus $1.9 million. For 2026, we expect our effective tax range in the 10%-12% range. Net income attributable to ACM Research was $44.5 million versus $37.3 million. Non-GAAP net income excluded $6.6 million in stock-based compensation expense and the $69.6 million of unrealized gain on short-term investments and its effect on non-controlling interests.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Net income per diluted share was $0.61 versus $0.55. Onto the balance sheet and cash flow items. Cash, cash equivalents, restricted cash, and time deposits were $1.36 billion at the end of the second quarter. Net cash, which excludes short-term and long-term debt, was $1.0 billion. This includes about $300 million of net cash on our U.S. balance sheet. Total inventory net was $783.1 million.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

This consisted of raw materials net at $406.1 million, work in progress net at $89.0 million, finished goods inventory net at $287.9 million, which primarily consists of first tools under evaluation at our customer sites, along with finished goods located at ACM's facilities. Cash used by operations was $6.4 million and capital expenditures were $65.4 million. For the full year 2026, we continue to expect capital expenditures of about $175 million. That concludes our prepared remarks. Let's open the call for any questions that you may have. Operator, please go ahead.

Operator

Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A roster. First question coming from the line of Suji Desilva with Roth Capital. Your line is now open.

Suji Desilva
Suji Desilva
Analyst at Roth Capital

Hi, David. Hi, Mark. Hi, Lisa. Congratulations on the progress here. A great diversification going on, so it's really good to see.

David Wang
David Wang
CEO at ACM Research

Thank you.

Suji Desilva
Suji Desilva
Analyst at Roth Capital

You got it. Yep. David, the global tools shipped to 200, it's a great number. What geographies are you seeing the largest shipments today in? Maybe what geographies do you expect the best growth opportunity near-term in as you scale out beyond China?

David Wang
David Wang
CEO at ACM Research

Yeah. Actually, we see there, especially I want to say first half of this year, we have almost close to 1,000 tools go to Singapore. One of their packaging house there. Also have a tool, and they're running one of their foundry in Singapore too. We do see Singapore as the opportunity for front-end tool and also packaging tool there. Of course, we do have a customer continuing in the U.S. As I mentioned, we're going to finish the building of our demo lab in Oregon. With that demo lab started using, we're going to attract more of interest and also attention into our differential technology. This way, we can provide more of a demo capability for customer in the global.

Suji Desilva
Suji Desilva
Analyst at Roth Capital

Well, great. Then my second question is, given that you now have a significant amount of cash in the U.S., $300 million, maybe if you, David, or perhaps Mark, what are some of the planned use of those proceeds? Is it expanding capacity? Which regions and perhaps even inorganic activity? Any color would be helpful there.

David Wang
David Wang
CEO at ACM Research

Yeah, obviously, with this cash preparation, it'll show our determination also our confidence, right? Expanding the sales activity outside Mainland China. As I mentioned, our long-term goal is still $1.5 billion for the revenue outside China. That's exactly for that goal, we prepare our funding and also our activity. This funding basically supporting our activity, definitely U.S. and also Taiwan and Singapore, Asia, also the Europe, right? It's a bigger opportunity.

David Wang
David Wang
CEO at ACM Research

We see a lot of demand come out for those, especially for our differential technology, cleaning, plating, and also we're R&D for the even new PECVD and the furnace. It's really exciting. As I mentioned, AI really driving a lot of new demand for the innovation technology. We believe whatever developer in Shanghai can be really spread out to benefit for all the customer globally, right? It's our goal here.

Suji Desilva
Suji Desilva
Analyst at Roth Capital

Okay, that's very helpful. Then my last question, I know you guys are diversifying your customer base, and you have 110% customer focusing on global, but I'm curious, in China, how levered are you to what's going on with CXMT and the DRAM market? Understanding AI is a plating play for you in other areas where you're very strong, the DRAM effort there is growing very strongly. I'm curious how much leverage you have to that opportunity.

David Wang
David Wang
CEO at ACM Research

Well, I really cannot comment too much detail with each customer, right? Looking at overall, you look in the Frost & Sullivan, their report, right, show the very strong demand and WFE market grow in China. Right? First of all, I want to say China is a bigger market for all this application, AI including. It's a huge market there, and therefore they can supporting a lot of chip manufacturer in here. In the same way, they demand a lot of WFE equipment, right? That we see opportunity here. With ACM, I say we have a real multiple product in the timeline, especially this year, we call our 2026 as a big year for product, new product come out to the market.

David Wang
David Wang
CEO at ACM Research

All our PECVD furnace and track system, we started development from 2000 or 2001, you know, on 2019. In those timeline, we are really focused on the technology, focused on differentiation. Through the four or five year, our R&D team hard working. We got some real exciting result. Some of them obviously, very approaching to the top tier and performance. Something we see even better than top tier performance, right?

David Wang
David Wang
CEO at ACM Research

That's really our confidence. With this new product come out, we can further sustaining or increase our high growth rate. For our revenue in the market, China, of course, those new product, after qualify in the China market, will also eventually will sell to the global market. It's a lot of exciting for next few year. Our revenue will be not only come from cleaning and the copper plating anymore. New product will join our revenue growth. This will be a very exciting year for next several year.

Suji Desilva
Suji Desilva
Analyst at Roth Capital

No, that's very helpful color, David. Thank you, congratulations to you and the team on the strong execution here. Thanks.

David Wang
David Wang
CEO at ACM Research

Thank you, Suji.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Thanks, Suji.

Operator

Thank you. Our next question in queue coming from the line of Charles Shi with Needham & Company. Your line is now open.

Charles Shi
Charles Shi
Analyst at Needham & Company

Hi. Thanks for taking my question. Maybe the first one, I know that you don't really guide the quarter, can you kind of walk us through how the Q3, Q4 is shaping up? You have probably a very big beat in Q1 and now in Q2, and, I think if I look at the consensus estimates for Q3, Q4, those numbers probably need to come down a little bit. Wondering if the revenue timing or shipment timing has some change, over the course of the last 90 days and, maybe I'll have a follow-up on the PM now related items. Thank you.

David Wang
David Wang
CEO at ACM Research

Yeah. As I mentioned in our script, right? We do have our first half-year, our PO receiving and there has been increased 100%, more than 100%, right? It's real indication, have real demand and also a large backlog. And some of those tool, obviously, we try to deliver Q3, Q4, and some of the tool probably we're waiting for probably deliver later. Now we really try to increase our capacity and, obviously now the components has been, I want to say everybody demand for components, right?

David Wang
David Wang
CEO at ACM Research

There's little bit constraint for supply there. We are kind of looking at Q3, Q4 revenue. I think really how we execution our order manufacturing and also how we qualify, ship the deferred revenue or the tool. I want to say we're still very positive about our projection for whole year. This is why we increased our low side, and now we're expecting our whole-year revenue, 25%-30% range. I think we're pretty confident for this forecast.

Charles Shi
Charles Shi
Analyst at Needham & Company

Yeah. Thanks. Maybe another question for Mark. Mark, I noticed that the range for SG&A, as a percentage of revenue, kind of revised that down a little bit compared with the last quarter. I guess, based on your midpoint of your guidance, your overall OpEx may actually come in a little bit lighter than you previously expected.

Charles Shi
Charles Shi
Analyst at Needham & Company

I'm wondering what is the reason for the slight OpEx cut for this year? If I recall correctly, one of the reasons you raised the OpEx range, I think at the beginning of the year, was related to the build-out of the R&D lab, R&D center in Lingang. Wondering, the OpEx savings relative to what you previously thought, is it related to some of the timing of that R&D center? Any color would be great. Thank you.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah, Charles, there's not a lot to read into that. R&D, we're looking 16%-18%. G&A, I said 5%-6%, and sales and marketing around 8%. It's really just tightening up of the estimates now that we're halfway through the year. Not a meaningful change from where we were at the beginning of the year.

Charles Shi
Charles Shi
Analyst at Needham & Company

Yeah. All right. Thank you.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah.

David Wang
David Wang
CEO at ACM Research

Thank you.

Operator

Thank you. Our next question coming from the line of Jimmy Huang with JPMorgan. Your line is now open.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Yeah. Hi, David, Mark. Congrats for the results. Can you hear me?

David Wang
David Wang
CEO at ACM Research

Yes.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yes.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Yeah.

David Wang
David Wang
CEO at ACM Research

We can hear you.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

China's advanced packaging capacity build is very robust and structural. You also have a very solid product portfolio for WLP and PLP. Do we have any guidance or expectations for advanced packaging equipment shipment growth rate for this year and next year?

David Wang
David Wang
CEO at ACM Research

We do not put a number for the shipment of this year. Definitely, because of strong backlog. Our shipment definitely will outgrow our revenue. Right? It will be a very strong shipment this year. As I mentioned, also we're kind of a short. We see the shortage all industry for some components. Used to be you can buy four months, sometimes you have to get probably longer delivery. Anyway, we're trying to manage those supply chain and make sure those components come in on time. That's maybe the one thing I want to say might impact our whole year shipment. I still feel this year's shipment is still pretty good.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Do you have any nice order impact guidance, order impact expectations for your advanced packaging equipment for this year? Another question is there for offset every 10,000 wafer capacity build for 2.5D wafer level packaging. What ACMR content value based on your product offerings at this moment? I think some equipment companies, they could have this kind of showing for investors to understand your progress.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah, I don't quite understand. Maybe ask that again.

David Wang
David Wang
CEO at ACM Research

Can you say your question again? I might get it lost there. Can you repeat again?

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Yeah. Sure. I mean for the advanced packaging capacity build, such as 2.5D. On their every 10,000 capacity build, what's the potential contribution to ACMR based on your product offering? Do we have any sharings on that? Yeah.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah. He's just looking at kind of the intensity of when our customers spend on 10,000 wafers per month, how much will that drive our equipment sales? I don't think we're really-

David Wang
David Wang
CEO at ACM Research

I couldn't say there. It depends on which line you build, right? Let's put it this way. The cleaning market, you can see that, I want to say, covers SAM. The cleaning market today, probably in the whole fab spending occupies 5%-7%, depending on advanced fab or mature fab. Right? A fab. You're looking really for the future, I want to say, advanced fab going on, cleaning becomes more and more important. Some people even projecting cleaning market needs to grow. It might even come to 10% eventually.

David Wang
David Wang
CEO at ACM Research

Because cleaning becomes more and more difficult, and the more of a material loss control, particle size gets smaller. Also, the drying method becomes maybe from the IPA to the supercritical CO2 dry. Anyway, I see that market grow as number one. The second one is copper plating. It's clearly, actually four or five years ago, we said copper plating to be $1.5 billion. At that time, nobody really believed it. Right? Now it is almost at $1.5 billion already. With all the future backside of their power and HBM layer of their DRAM stacking going on. There's a lot of plating tool demand coming out. Right?

David Wang
David Wang
CEO at ACM Research

More important is panel. The market also demands a lot of plating tools too. ACM is really a pioneer in their panel-level electroplating, right? This is probably, I want to say, this is the first time ACM really stands at the top for their horizontal plating technology and market, I want to say, offering. That really gives us a bigger growth potential for this existing market.

David Wang
David Wang
CEO at ACM Research

Further than that is the furnace and PECVD track. We also see big potential there too. That's why I want to say ACM is in a real good, exciting period, and we're expecting continued growth for cleaning and copper plating and also with our new product, furnace, PECVD track coming out, will further reinforce our revenue growth, right? That's why I said the next few years, really exciting years for our growth.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Thank you, Dr. Wang. I think for China, I think they are building a lot of CoWoS like 2.5D and manufacturing capacity. As far as I know, they probably still use a lot of TSMC baseline tool vendors, including wet processing tools and other stuff. Are we trying to get more market shares, more qualifications here, and also progress in China's CoWoS like 2.5D capacity build?

David Wang
David Wang
CEO at ACM Research

If you look in our actually plating growth, right, 156% and also our packaging tool growth also, right? It's really show the indication a lot of new demand for 3D packaging, right? The 3D packaging become more and more important and for all the devices, right? We see that growth potential here. ACM well-positioned for that, with our cleaning and with our coater/developer, with all this, the PR stripper, right, and also copper plating, right? It's really good, I want to say, growth for the 2.5D or 3D packaging. Right. I want to say panel also grow too, right? Panel-Level Packaging is another big one. It's very exciting for, I see the 3D packaging going up, which is good for our product.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

I think it's quite exciting that we just announced that we have the first PLP ECP tool evaluation system shipped to a customer in Asia. Regarding the progress, when could the evaluation result come out? Any possibility that we could receive the first purchase order from these customers in the next maybe few quarters or the next 6-12 months?

David Wang
David Wang
CEO at ACM Research

Obviously, you mentioned that the panel now is very hot, right? In all Asia-

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Yeah.

David Wang
David Wang
CEO at ACM Research

...looking at Mainland China and Taiwan, Korea, and even Singapore, right? It's very, very hot. Everybody believe that will be their ultimate solution for their large AI chip or this CoWoS, HBM, whatever packaging, in large chip size. We do see that trend. Obviously, where we're positioned for 510 mm by 515 mm, which is more large size, as Intel probably pioneer now. We're also positioned for 310 mm by 310 mm, which is leading by TSMC approach, right? There's a lot of exciting, I want to say. We're prepared for both market.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Yeah, I see. Thank you so much. That's all my questions. Thank you.

David Wang
David Wang
CEO at ACM Research

Thank you.

Operator

Thank you. As a reminder, to ask a question, please press star one. Our next question coming from the line of Christian Schwab with Craig-Hallum Capital. Operator.

Ben Taxdahl
Ben Taxdahl
Analyst at Craig-Hallum Capital

Hey, guys, it's Ben Taxdahl on for Christian here. Great quarter. Exciting stuff going on at ACMR. My first question is, what is any commentary, any initial commentary? I know it's kind of early on 2027 visibility. I get new products and strong orders, anything else, or what exactly should we be thinking about for 2027?

David Wang
David Wang
CEO at ACM Research

Wow, that's 2026 I see that. Well, I still see that there a lot of fab we see, right, in the local China is in real still in the multi year expansion. Right? Clearly this year, we see many fab open, and also we see that there are some fab will definitely be on 2027 and grow. As I said, probably market here strong, bigger, right? We're very excited about, even I said this, Frost & Sullivan, they give a report, right? By year 2029, their China market beyond $80 billion. Well, I mean, that's really I'm liking that number, this is exciting, right? Anyway, I want to say it's growing in next few year in the local market here.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

We have, obviously, some of our new platforms that could kick in. I would also say some of the orders we get this year, we're not going to be able to support all those this year.

David Wang
David Wang
CEO at ACM Research

Yeah.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

That'll kind of flow into next year as well. Yeah, 2027 is starting to shape up pretty as a good growth year.

Ben Taxdahl
Ben Taxdahl
Analyst at Craig-Hallum Capital

Great.

David Wang
David Wang
CEO at ACM Research

I just mentioned we made the progress, right, with all the track system, PECVD.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah.

David Wang
David Wang
CEO at ACM Research

We see that those product take off. Obviously, we're probably will become leading supplier, local supplier, and for the track system. I know the PECVD, quite a bit of competitive there, but our one chamber three chuck is real unique platform. We see there's certain special big market requirement for this PECVD too. We're both excited about this new product.

Ben Taxdahl
Ben Taxdahl
Analyst at Craig-Hallum Capital

Great. Just one other question. Any update on the Shanghai listing?

Mark McKechnie
Mark McKechnie
CFO at ACM Research

The Hong Kong, right?

Ben Taxdahl
Ben Taxdahl
Analyst at Craig-Hallum Capital

Sorry, yes. Yep, sorry.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah.

David Wang
David Wang
CEO at ACM Research

Well.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

No update.

David Wang
David Wang
CEO at ACM Research

I say really we cannot comment too much on Hong Kong listing, right? I can only tell that April timeline we announced. We can do that. That's the only information I can tell you right now. Eventually, maybe sometime later in the future, we may discuss more.

Ben Taxdahl
Ben Taxdahl
Analyst at Craig-Hallum Capital

Perfect. Thanks, guys. That's all I got.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yes. No, thanks for asking. Yeah.

David Wang
David Wang
CEO at ACM Research

Okay. Thank you.

Operator

Thank you. We have a follow-up question from Jimmy Huang with JPMorgan. Your line is open.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Yeah. Thank you, David. Hi, David, Mark. You talk about component shortage. There are also a lot of component price hikes. Will rising component costs impact ACMR's gross margin? If so, on which potential quarters or timelines, and what kind of options does your company have to pass this cost to your customers? Yeah.

David Wang
David Wang
CEO at ACM Research

Well, probably this is a global point, right? Looking at our supply, probably either our major supply are components from Japan or some in Korea. Definitely, it's a lot of growing. There's a shortage there. We see that happen. Something we're still switching to the local supplier, and here it looks better. Anyway, I want to say, looking at this year, global component supply is still tight. Even some mechanical parts, some sliders, even robot, for example, the components, they're hard to get on time. We see that they're really booming. That's why we have to really manage it well in the second half of the year, make sure our supply catch our demand.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah, really, you take a look at it, no change to our gross margin target, 42%-48%. We're comfortable where we are. We have a good amount of raw materials that we had been purchasing. We stocked up on some raw materials. What we have in stock and our outlook, we don't see any significant impact on gross margin.

David Wang
David Wang
CEO at ACM Research

Yeah. We prepare certain paths in the end of last year. Because we are predicting-

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Yeah.

David Wang
David Wang
CEO at ACM Research

...this year is a very heavy year. We are certain our vendor did something special for us that will help us right now.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

The demand is very robust and the supply is quite tight. Is it possible that we could pass through this incremental cost of rising component cost to our customers? Or it's not a key priority of your business?

David Wang
David Wang
CEO at ACM Research

Well, it's hard to tell right now. Probably, I tell you, we're not at risk pricing right now.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yes.

David Wang
David Wang
CEO at ACM Research

This moment. I want to say, our vendor supply, not many people raising price. Some are raising, but not much. They only say that they probably delay the shipment. They cannot tell you, maybe it used to be sent to you in four months, maybe they need six months. That's happened. They didn't increase our price, our key supplier, no.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

I see. My second follow-up question is regarding our manufacturing capacity builds outside of mainland China. Are we going to build more capacity in the U.S. or in other Asia regions if we receive more international orders?

David Wang
David Wang
CEO at ACM Research

You know that we do have our facility and a capability in Korea. That's really start to pay, and some tool we ship to the U.S. will be made there. Actually, now it's made in Korea right now. Also some future tool, probably shipping to Taiwan and Singapore, will be also made there, probably in Korea, too. Also, I said, as really more of a revenue growing in the U.S. or in other region, we can also probably prepare a secondary manufacturer site, too. We're really in that, I want to say consideration and direction.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

All right. I see. Regarding your further funding for this kind of manufacturing capacity expansion, would you need to dispose some stakes in ACM Shanghai, or you don't consider that option? Yeah.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah. We're pretty comfortable with our balance sheet. David mentioned we have $300 million on our U.S. balance sheet. Part of that was a war chest to show our customers that when we get the production orders, we can support that. We don't have any near-term plans to scale out of any more of our Shanghai shares.

Jimmy Huang
Jimmy Huang
Analyst at JPMorgan

Yeah. Thank you so much, David and Mark. It's very clear. Thank you.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah. You bet.

Operator

Thank you. Our next question coming from the line of Bintuo Ni with Daiwa Capital Markets. Your line is now open.

Bintuo Ni
Analyst at Daiwa Capital Markets

Hey. Thank you for letting me on. First is congratulations on your new orders, 100%. It's very impressive. Can I ask, in terms of by segment, can you rank which one is the strongest, for DRAM, HBM, and then the logic? Thank you.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

In terms of our order strength, David, he's asking. We didn't break it out. David, in the prepared remarks, mentioned that they were across all of our customer base and across our products. A little bit stronger in some of our newer products. We didn't break it out by end markets.

David Wang
David Wang
CEO at ACM Research

Yeah. Well, obviously, we see they're strong in memory-

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah.

David Wang
David Wang
CEO at ACM Research

...also strong in logic, right? Both.

Bintuo Ni
Analyst at Daiwa Capital Markets

Okay. Thank you, David, Mark. Next question is about our cash flows. It looks like we have a very strong tailwind from the industrialize and also our new product launches going ahead. In terms of operating cash flows and CapEx, how should we think about that? Thank you.

Mark McKechnie
Mark McKechnie
CFO at ACM Research

Yeah, I think this year on the cash flow side, we're still obviously heavily in growth mode. We're spending on our CapEx, and what have you. The plan is, in growth mode, you make these investments, and then we harvest those over the next several years. This year we'll probably burn some cash, obviously, putting capital to work on our new production facilities, on our facilities outside in Oregon and what have you. Longer term, obviously, it's a positive cash flow operation.

Bintuo Ni
Analyst at Daiwa Capital Markets

Perfect. Thank you.

Operator

Thank you. Seeing there are no more questions in the queue, I will now turn the call back over to Steven Pelayo for closing remarks.

Steven Pelayo
Managing Director at The Blueshirt Group

Okay, great. Before we conclude, I just want to give everyone a quick reminder of our upcoming investor conferences. On August 20th, we will participate in Needham's seventh Annual Virtual Semiconductor and Semi Cap One-on-One Conference. On August 25th, we'll present at the 2026 Jefferies Semiconductor, IT, Hardware, and Communications Technology Conference at the Four Seasons Hotel in Chicago.

Steven Pelayo
Managing Director at The Blueshirt Group

On October 13th, we will present at the 18th Annual CEO Summit Conference in conjunction with SEMICON West in San Francisco. Attendance at these conferences are by invitation only. For interested investors, please contact your respective sales representatives to register and schedule one-on-one meetings with the management team. With that, this concludes the call and you may now disconnect.

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