Earnings call transcript: ACM Research Q2 2025 sees revenue miss, stock tumbles

ACM Research Inc. (ACMR) reported its second-quarter 2025 earnings on August 6, revealing a mixed financial performance. The company posted an earnings per share (EPS) of $0.54, surpassing the forecast of $0.4816 by 12.13%. However, revenue fell short of expectations, reaching $215.4 million against a projected $224.3 million. This revenue shortfall contributed to a sharp pre-market stock decline of 15.48%, bringing the price down to $25.06. According to InvestingPro analysis, ACMR appears undervalued at current levels, with the stock trading at an attractive P/E ratio of 17.4x relative to its growth prospects.

Key Takeaways

• EPS exceeded expectations by 12.13%, showcasing strong profitability.
• Revenue missed forecasts by 3.98%, raising concerns about demand.
• Stock price dropped significantly by 18.04% following the earnings release.
• Gross margin improved, exceeding the target range, indicating operational efficiency.
• New product innovations suggest potential future growth.

Company Performance

ACM Research’s overall performance in Q2 2025 was mixed. The company achieved a year-over-year revenue increase of 6.4%, reaching $215.4 million, building on its impressive trailing twelve-month revenue growth of 26.21%. Despite the revenue miss, the gross margin improved to 48.7%, surpassing the target range of 42-48%. This indicates robust operational execution, reflected in the company’s "GREAT" financial health score from InvestingPro. However, net income slightly declined to $36.8 million from $37.5 million the previous year, partly due to increased operating expenses.

Financial Highlights

• Revenue: $215.4 million, up 6.4% year-over-year.
• EPS: $0.54, up from the forecasted $0.4816.
• Gross Margin: 48.7%, exceeding the target range.
• Net Income: $36.8 million, slightly down from $37.5 million.
• Operating Expenses: $63.4 million, up 38.8%.

Earnings vs. Forecast

ACM Research’s EPS of $0.54 beat the forecasted $0.4816 by 12.13%, showcasing strong cost management and operational efficiency. However, the revenue miss of $215.4 million against a forecast of $224.3 million represents a negative surprise of 3.98%, raising concerns about sales performance.

Market Reaction

The market reacted negatively to the revenue miss, with ACM Research’s stock price falling 18.04% post-earnings. The pre-market price dropped to $25.06, significantly below the last close of $29.65. This decline reflects investor concerns about the company’s ability to meet revenue targets, despite the EPS beat.

Outlook & Guidance

ACM Research maintains a positive outlook for 2025, projecting revenue between $850 million and $950 million, indicating a 15% year-over-year growth. The company is focusing on global expansion and new product contributions expected in 2026, particularly in advanced cleaning technologies and panel-level packaging. Analyst consensus remains bullish, with price targets ranging from $30 to $40. InvestingPro subscribers can access 11 additional key insights about ACMR, including detailed analysis of its growth trajectory and financial health metrics, along with comprehensive Pro Research Reports available for over 1,400 US stocks.

Executive Commentary

CEO David Wong stated, "We believe that the China WFE market will be $40 billion in the long run," highlighting confidence in market growth. CFO Mark McKechnie added, "We’re spending into the market opportunity," emphasizing strategic investments in R&D and production capacity.

Risks and Challenges

• Revenue shortfall raises concerns about demand and competitive pressures.
• Increased operating expenses could impact profitability.
• Potential US export control impacts and market share adjustments in China present risks.
• Supply chain disruptions remain a concern, despite strategic component purchases.
• Macroeconomic pressures could affect market conditions and growth prospects.

Q&A

During the earnings call, analysts inquired about shipment growth expectations and potential impacts of US export controls. The company addressed these concerns, providing insights into revenue recognition differences between US and China GAAP and progress in Taiwan and Southeast Asian markets.

Full transcript - Acm Research Inc (ACMR) Q2 2025:

Conference Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research Second Quarter twenty twenty five Earnings Conference Call. Currently, all participants are in listen only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, we’re 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 Pileo, Managing Director of the Blueshirt Group. Please, Steven, please go ahead.

Steven Pileo, Managing Director, Blueshirt Group, Blueshirt Group: Yeah. Good day, everyone. Thank you for joining us to discuss second quarter twenty twenty five results, which we released before The US market opened today. The release is available on our website as well as from our newswire services. There is also a supplemental slide deck posted in the investor section of our website that we will reference during our prepared remarks today.

On the call with me today are our CEO, David Wong our CFO, Mark McKechnie and Lisa Fang, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to slide two. Let me remind you that the 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. Certain other financial results that we provide on this call will be on a non GAAP basis, which excludes stock based compensation and unrealized gainloss 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 13.

Also, unless otherwise noted, the following figures refer to the 2025 and comparisons are with the 2024. I will now

David Wong, CEO, ACM Research: turn the call over to David Wang. David? Thanks, Steven. Hello, everyone, and welcome to ACM Research second quarter earnings conference call. We delivered another quarter of good results with strong sequential growth in both revenue and shipment, reflecting continued progress across our expanding product portfolio.

We saw momentum from our SPM, Tahoe, Plating and Furnace tool, which are helping expand our addressable market and gain market share. We also continue to make progress with new platform, including TRAC, PCVD, and panel level packaging tools, which represent important long term growth drivers. We recently announced major upgrade to our Ultra C WB wet bench cleaning tool. The technology integrate ACM patent pending nitrogen bubbling technology to generate a large size of bubble with good bubble density uniformity and enhance the etching rate uniformity in a three d structure across the wafer. I’m happy to announce that we have received repeat orders for the new Ultra C WB wet bench tool with our proprietary N2Bobbin technology.

We expect a good achievement for this tool this year and the next. The technology is also adaptable to our Ultra C Tahoe platform with a significant application potential for manufacturing advanced three d NAND, three d DRAM, three d logic devices. We believe this new technology is another example of ACM’s leadership in cleaning tools that will be good for our customers and support our growth initiatives. Our light bulb technology tool adds to early breakthrough for Tahoe and other recent product launching such as our high temperature SPM tool and panel level packaging tool for flux clean and the bevel etcher. Together, this development reinforce ACM differentiated leadership in wafer cleaning and give us confidence that we will continue to gain share in a critical segment.

We remain committed to deliver innovative new products such as this to enable our customer to meet next generation of semiconductor manufacturing challenging as demand by the artificial intelligence transformation. Now onto our business result, please turn to slide three. For the 2025, we believe revenue of $215,000,000 up 25% sequential and 6% year over year. Shipments were $2.00 $6,000,000 up 32% sequential, up 2% year over year. Gross margin was 48.7%, exceeding our targeted range of 42 to 48.

We ended the quarter with a net cash $2.00 $6,000,000 Now I will provide a detail on product. Please turn to slide four. Revenue from single wafer cleaning, Tahoe and semi critical cleaning tools grow 1% and represent 72% of total revenue. We believe our top to bottom cleaning portfolio put us in a strong position. We continue to make a technical improvement and the customer progress with our SPM tool.

Our high temperature SPM system features ACM proprietary nozzle design which prevent both liquid SPM and acid mist spat out of the chamber during SPM process. This improving particle performance reduce chamber preventative maintenance, cleaning frequency, and enhance the system uptime. We have achieved better particle control over average particle count less than 10 at this 26 nano particle size. We also believe it will show better performance than competitors offering at a particle size more than seventeen and fifty nm. In Q2, we delivered SPM and Tahoe tools to several more customers as we continue to gain market share in SPM space.

Revenue from ECP furnace and other technologies grow 23% and represent 22% of total revenue. ACM recently delivered an ECP tool to a customer which included company’s 1,500 electroplating chamber shipped. We are seeing a strong momentum for ECP tool in advanced packaging driving by demand for both front and back end plating system. We are also seeing growth interest in our new Ultra ECP APP panel level horizontal plating system. As the industry shifts from wafer to panel level packaging to support the next generation AI chips, our unique horizontal plating approach which delivers superior uniformity than vertical panel plating solution has attracted attention from the major players.

Our furnace products are building momentum supported by strong customer interest and expanded pipeline of evaluation and their engagement. We see good demand across multiple applications including high temperature NEO, especially our 1,250 degree C degree version high temperature NEO furnace. And also LPCVD, oxidation, and ALD. We believe ACM differentiated design position us to capture meaningful market share. Revenue from advanced packaging, which excludes ECP, but including service and spell was up 20% and represented 6% of revenue.

We are making good progress with our new track and the PECVD platform. Our proprietary PECVD platform with three charts per chamber give us flexibility to support a wider range of process with the same hardware. We feel good about our positioning with a plan to deliver more beta tool to a handful of customers this year and look for revenue contribution in 2026 and beyond. For TRAC, we’re in the final development phase of our 300 wafer per hour inline KF tool and we expect to deliver the beta tool to a key customer in the current quarter. To close on product, our roadmap including incremental contribution from Tahoe SPM and the Furnace tool in 2025 with the panel level packaging track and PCVD tool expected to drive growth in 2026 and beyond.

Please turn to slide six. Our first half result reflects solid execution across our product portfolio. We remain confident in the year and our long term opportunity in China. As a result, we have increased our long term revenue target for Mainland China to $2,500,000,000 versus our previous target of $1,500,000,000 The increase is based on two main factors. First, we now assuming a long term China WFE market size of $40,000,000,000 versus our prior assumption of $30,000,000,000 This is based on updated by third party global market forecast and also our view of the China semiconductor industry.

Second, we have adjusted our market share targets for product group as follows. We have reached our market share target for both cleaning and plating to 60% versus the 55% prior. This is a result of our current assessment of a customer traction and increased confidence for shear gain for new product. For furnace, TCV and track, however, we’re keeping our target at a 1510% level. Of course, we aspire to achieve better result but need more time in the market before we will formally adjust the target.

Moving to the bottom of the chart, we maintain our revenue target for the rest of the world at $1,500,000,000 We believe ACM focused on differentiated world class product, combine our global sales and the service team will deliver result with our global customer. As an example, we have a plan to deliver a several tool to The US in the third quarter. We remain engaged with our major US customer with active evaluation across a range of the cleaning process step as we continue to work towards our global goal for production orders. Bottom line, we have reached our long term revenue target to 4,000,000,000 versus our prior target of 3,000,000,000. Now I will provide update on ACM Shanghai’s proposed capital raise in China.

ACM Shanghai recently received approval from the CSRC to proceed with its proposed follow on offering on the stock market to raise up to $620,000,000 by selling less than 10% of the total share. The capital raising is a leadership, is intended to help accelerate our updated revenue targets and added to the long term foundation to support our effort to scale our product to major global customer. As the majority shareholder, we view their proposed transaction as an important step in strengthening our position in the China market and it demonstrates the long term value of our ownership stakes. Next, let me provide the update on our production facility. First is Lingang.

Please turn to slide eight. As I discussed last quarter, our state of art Lingang production and R and D center is nearly completed. The site including two production building with the first now in production and the second available for future expansion. Each of the two production building can supporting up to 1,500,000,000 of annual production capacity combined. We believe we can eventually support 3,000,000,000 of our production at Lingang for the Formula two manufacturer building.

Next, our Oregon facility. Please turn to slide nine. Recall we purchased a 40,000 square feet facility last year. We made good progress during the second quarter and we have begun upgrade on our customer demo R and D lab. We believe this will help our effort with the customer in the regime as it will let them test wafer locally on ACM tool.

We also are moving forward with a plan to add production capacity to Oregon facility. We target the 2026 for the Devon lab and production to commerce operations. Our investment in Ningang and Oregon are key enabler of our growth strategy, expanding our capacity, strengthening customer support and prepare us to scale globally. Now I will provide our outlook for the full year 2025. Please turn to slide 10.

We’re maintaining our 2025 revenue outlook in the range of $850,000,000 to $950,000,000. This is implying 15% year over year growth at the middle point. In close, our focusing remains on delivering differentiated, enabling technology that solve our global customer most critical process challenges. Now let me turn the call over to our CFO, Mark, who will review details our second quarter results. Mark, please.

Mark McKechnie, CFO, ACM Research: Yes. Thanks, David. Good day, everybody. Please turn to slide 11. Unless I note otherwise, I’ll refer to non GAAP financial measures, which exclude stock based compensation, unrealized gainloss on short term investments.

A 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 2025 and comparisons are with the 2024. I’ll now provide the financial highlights. Revenue was $215,400,000 up 6.4%. Total shipments were $2.00 $6,000,000 versus $2.00 $2,000,000 in Q2 twenty twenty four and $157,000,000 in 2025.

Strong sequential rebound in Q2 shipments led to a return of positive year over year shipment growth for the quarter. Gross margin was 48.7 versus 48.2%. This exceeded our long term business model target range of 42% to 48%. We expect gross margin to vary from period to period due to a variety of factors, including sales volume, product mix and currency impacts. Operating expenses were $63,400,000 up 38.8%.

R and D was 14.5% of sales, sales and marketing was 9.3% of sales and G and A was 5.6% of sales. For 2025, we now plan for R and D in the 14% to 16% range. This is an increase versus last quarter’s plan due to ACM’s continued focus on proprietary R and D programs. We plan for sales and marketing in the 8% range and G and A in the 5% to 6% range. Operating income was $41,500,000 down 20.2%.

Operating margin was 19.3% versus 25.6%. Income tax expense was $1,900,000 versus $9,300,000 For 2025, we expect our effective tax rate in the 10% range. Net income attributable to ACM Research was $36,800,000 versus 37,500,000.0 Net income per diluted share was $0.54 versus $0.55 Our non GAAP net income excluded $9,800,000 in stock based compensation expense for the second quarter. I will now review selected balance sheet and cash flow items. Cash, cash equivalents, restricted cash and time deposits were $483,900,000 at quarter end versus $498,400,000 at the end of the first quarter.

Net cash, which excludes short term and long term debt, was $205,800,000 versus $271,000,000 at the end of the first quarter. Total inventory net was $648,300,000 versus $609,600,000 at the end of the first quarter. Raw materials was $285,600,000 up $45,700,000 quarter on quarter. We made strategic purchases to support production plans and to mitigate any potential supply chain risk. Work in progress was $60,700,000 down $10,200,000 quarter on quarter.

Finished goods inventory was $3.00 $2,000,000 up 2,200,000 quarter on quarter. Finished goods inventory primarily consists of first tools under evaluation at our customer sites along with finished goods located at ACM facilities. Cash flow used by operations for the 2025 was 39,600,000.0 versus $51,900,000 cash flow provided by operations in the year ago period. Capital expenditures were $32,200,000 for the 2025 versus $39,700,000 in the year ago period. For the full year 2025, we expect to spend about $70,000,000 in capital expenditures.

That concludes our prepared remarks. Now let’s open the call for any questions that you may have. Operator, please go ahead. Thank

Conference Operator: you. Your first question comes from the line of Charles Hsieh with Needham and Company. Your line is now open.

Charles Hsieh, Analyst, Needham and Company: Evening, David and Mark. First question on shipment. I noticed that the shipment was up, but only up slightly on a year on year basis. I recall you guys previously said the full year ’25 shipment should be I mean, should grow. Maybe not necessarily growing faster than revenue this year, but that should grow.

But it looks to me that in the second half of the year, you have a good amount of catch up to do for a shipment to be flattish versus last year’s level. Is that still the right target for to think about shipment? Or maybe the full year number may actually come down a little bit on a year to year basis? Thank you.

David Wong, CEO, ACM Research: Hey, Charles. And our 2024 shipment was very strong, right? You’ll recall about over 02/2003, it’s 63% of their increased rate. So then we also have a lot of new product, and this year we’re contributing to their shipment this year. So I want to say their first, second half year, obviously much stronger than their first half of the year.

We’re expecting still growing for ’25, I mean, 2025 and growing is still achievable.

Charles Hsieh, Analyst, Needham and Company: Got it. So, relative to, let’s say, ninety days ago, the expectation for shipment for this year, do you see actually it’s shipment growth may be stronger than you thought ninety days ago or flattish or weaker? Any direction or color you can provide? The the reason why I asked this, may maybe it’s good to get your thoughts as well. The your US peers who have reported that so far ahead of you have been seeing China WFE upside, especially for the second half of the year.

Wonder if you are seeing the same thing or not. Thank you.

David Wong, CEO, ACM Research: Yeah, I should say our Q3 is very strong, right? We see the Q4 and there’s still some slot we’re going to fill in. And so I still see the regular outlook for Q4. So I was compelled, like you said, ninety days ago, we see the other market situation going to improve.

Charles Hsieh, Analyst, Needham and Company: Got it. Lastly, I think, Mark, you mentioned some strategic purchase you made over the last quarter. I think the news flow did suggest that The US may be working on something in terms of actual control at the subsystem level. Wonder what the what’s the ACM assessment, let’s say, supply chain risks, for the reasons of potential new export controls and how company has prepared to mitigate that risk. And any thoughts on that front would be great.

Thank you.

Mark McKechnie, CFO, ACM Research: Yeah. David, do you wanna take that first and I can add or do you want me to go ahead? Yeah. Go ahead.

David Wong, CEO, ACM Research: And, obviously, now we’re doing a multi source of their, components, right? And we’re definitely looking for the new, components and supplier in the other country than The US. And also we have also looking for the local supplier in Mainland China. And I want to say there’s a certain challenging, however, and I think we can overcome that with the multi source alternative source supplier for our key components in the tool. So Mark, you want to add on that?

Mark McKechnie, CFO, ACM Research: Yeah, Charlie, the only thing I’d add, I think it’s a good question. It’s something that we look at a lot. I mean, we have a pretty good solid balance sheet. We have a good forecast for our shipments. So we thought it was the right thing to do to kind of increase some of our strategic supplies of some key components.

So we might even do a little bit more here in the second quarter.

Charles Hsieh, Analyst, Needham and Company: Yeah.

Mark McKechnie, CFO, ACM Research: Or I’m sorry, in

Steven Pileo, Managing Director, Blueshirt Group, Blueshirt Group: the third quarter. Yeah.

Charles Hsieh, Analyst, Needham and Company: Yeah. Maybe just a quick follow-up. Because the strategic purchase, it could be for preparing for a higher demand in coming quarters, or it can be more for mitigating supply chain risks, especially the, let’s say, maybe some of the components you are sourcing currently from The US. Which one is it more for you to to Yeah. Do

Mark McKechnie, CFO, ACM Research: I mean, as of December or sorry, January 1, you can’t get parts from The US. Right? So, yeah, these are these are strategic purchase probably from from other regions. And I won’t really break out, you know, how much of it is is to mitigate the the risk or just kind of based on our our forecast. But it’s a combination of those, Charlie.

Yeah.

Charles Hsieh, Analyst, Needham and Company: Yeah. That’s thank you, Mark. I really appreciate the the insights. Thanks.

Mark McKechnie, CFO, ACM Research: Yep. You bet. You bet.

David Wong, CEO, ACM Research: Thank you, Achal. Thank

Conference Operator: you. Your next question comes from the line of Mark Miller with The Benchmark Company. Your line is now open.

Mark Miller, Analyst, The Benchmark Company: I had a question about long term borrowings. They’re up significantly over the last six months. I’m just wondering what’s going on there.

Mark McKechnie, CFO, ACM Research: Yeah, I can hit on that a bit. And then we got Lisa here in the background. But long term borrowing, we did step things up a bit. There’s controls over how we can use some of our capital from the China capital raise and what have you. Of course, we have that coming along.

So we did step up our long term borrowing a bit here in the first half of the year. Lisa, did you want to add something?

Conference Operator: Yes, in addition to that, the interest rate for deposit is much higher than borrowing in China. So we’re trying to use that kind of leverage to maximize the returns.

Mark McKechnie, CFO, ACM Research: Good opportunity to kinda take the take the lower interest rate down. Yep. Thanks, Mark. Yep.

Mark Miller, Analyst, The Benchmark Company: K. Thank you.

Mark McKechnie, CFO, ACM Research: Next question please, operator.

Conference Operator: You. The next question comes from Suji Desilva with ROTH Capital. Your line is now open.

Matt Cook, Analyst, Potento: Hi, David, Mark, Lisa. Congrats on the progress here. So milestone wise, can you talk about the customer traction outside China and what some of the milestones we would look for here? Update on those on the customer base across different parts of the world.

David Wong, CEO, ACM Research: Outside China. Outside. Yeah. Yes. Hey, Suji.

And I think we’re continually working with a key customer in Korea and also in, you know, in The US. And this moment I want to say it’ll take a little more time, however, we’re really working closely with our key customer, evaluate our differentiated cleaning technology and megasonic cleaning and we are reaching very encouraging result. Also we’re working with a Korean customer for their copper plating product and that also made the progress, right? And continuing we’re also exploring new customer in both The US and Taiwan. And I think especially our, I want to say our panel level packaging tool made a very strong attraction from Taiwan customer too.

So I want to say with our continued innovation and technology we’re providing in the market and we’re going to expand our sales revenue outside China. Especially we’re now building our R and center in Oregon and also their manufacturing. And those army center will make it easier for our cleaning, cover plating demo, and for the customer outside China. And also manufacturing, we’re doing right now prepare for the Oregon and that’s really give us a strong position and to really minimize impact of any tariff situation. So we believe our strategy, building our R and D manufacturing center in China, in Korea and in US, we’re further strengthening our position in the global market.

And we’re fully confident with our new differential product and also I want to say a lot of new future AI chip requests, a lot of new technology, which is even today nobody offer in the market. And those new demand for the technology driving will really put ACM’s product in the differential or their position. So we believe with our innovation continues going on and we’ll continue to gain attraction from the key customer in cleaning, in cover plating and panel and also other new product we’re planning too. So we still have very strong confidence, right? We’re getting to the global market.

I still want to say every customer in the world, they demand for the best technology. As we this meeting announced, we have an N2 bubbling technology, which generate large sized N2 bubble with uniformity across the entire wafer in the past. So we believe that’s what really driving their innovation requirement for their both 3DNAT and three d DRAM in the future, probably also their three d logic down the road. So that’s another word I look at our innovation technology or bring to the market. Okay, Mark, you want anything to add on that?

Mark McKechnie, CFO, ACM Research: Yeah, no David, think that was a good answer. I mean, we’re working really hard with our big U. S. Customers. We got some additional tools that are going to different organizations here in Q3 to The U.

S. So, our team is pretty active in Oregon. We’re pretty focused on getting our demo room up and running and being ready to produce tools in The US.

Charles Hsieh, Analyst, Needham and Company: Hi, Suji.

Conference Operator: Yes. Thank you. The next question comes from Edison Lee with Jefferies. Your line is now open.

Edison Lee, Analyst, Jefferies: Hey, David and Mark. How are you? Can I maybe ask you two questions? Number one is for the 2Q growth at the revenue level is 6%, which is actually below the growth rate that you are guiding for the full year. So, what was actually driving that slower growth in the second quarter?

And then for 3Q, you said that the outlook is very strong. Can you share the growth drivers coming from logic, memory, power and advanced packaging? So which areas actually you are seeing the strongest growth and which area you are seeing the slowest growth? Thank you.

David Wong, CEO, ACM Research: Yeah, you know, I mean revenue can be lumpy, right? And we’re still expecting 15% and middle point growth for the year. And also, you we’re you’re asking the Q3 driving force, I want to say still our cleaning and the cover plating is still the major driving there. And also certain product, customer requests where shipping turned to a Q2 or Q3, right? I want to say over the year we still have a whole year expecting growth, better than the Q2.

Right.

Edison Lee, Analyst, Jefferies: So in China, can you talk about the growth that you’re seeing from memory versus logic?

David Wong, CEO, ACM Research: I would say we both are our tool of sales of the memory and the logic customer, right? But you would say, which is growing faster? I don’t have a real number right now, I’ll put it in my hand. I want to say both, even looking there, long run, I want to say memory is still very strong, both the three d NAND and also this DRAM business. And of course, there’s the logic and the people are still building fabs both for mature nodes and other advanced nodes.

And I want to say that looking at the next really a few year, those market is very solid, still there.

Edison Lee, Analyst, Jefferies: Okay, great. Thanks, David.

David Wong, CEO, ACM Research: Thank you.

Mark McKechnie, CFO, ACM Research: Thanks, Edison. Yeah.

Conference Operator: Thank you. As a reminder, to ask a question, you’ll need to press 11 on your telephone and wait for your name to be announced. Your next question comes from the line of Matt Cook with Potento. Your line is now open.

Matt Cook, Analyst, Potento: Hey, David. Hey, Mark.

Mark McKechnie, CFO, ACM Research: How’s it going? Can you hear me okay?

Matt Cook, Analyst, Potento: Yes. Good. Great. So I just wanted to ask, ACM Shanghai reported its results about sixty minutes ago. Now I know that there are different accounting standards, but their numbers look a lot better than yours.

Like, the difference is bigger than we’re kind of used to. So, revenue was $270,000,000 compared to $215,000,000 for ACMR. And adjusted net income was $62,000,000 compared to about 37,000,000 that you just reported. So, Mark, could you just help understand like what’s caused the difference? I know there are different recognitions on revenue and timing.

That’s the first question, like why the results are so much better there and if there could be some kind of like if that could swing the other way Q3. And then the second question is, are shipment numbers different for ACM Shanghai? And if so, what are they in dollars? That would be great. Thank you.

Mark McKechnie, CFO, ACM Research: Yeah. David, I can go ahead and hit that and you can add if you want. In reverse order, yeah, I mean, simply the shipments are the same for both. They’re measured the same. The difference is rev rec.

And so under China GAAP, the China organization recognizes revenue upon installations And of course, U. S. GAAP is six zero six, right, where we take revenue on repeat shipments or upon acceptance when it’s a first tool shipments. So just a timing difference in the Rev Rec standards and this quarter was a little bigger than it had been in the past. Think it could be kind of a result of some of the bigger shipments that we had last year that it took a little long, the timing of the installations here in Shanghai.

And we won’t really guide how that’s going to change for the back half of the year. Q3 and Q4, I don’t think we’re going to give any specific details on that. Yeah.

David Wong, CEO, ACM Research: Yeah. Wanna add on that. Okay. You’re looking at long run, this number two numbers should be mentioned. Right?

But looking at quarterly, quarterly base, you get a sometimes US is higher, sometimes, you know, Shanghai is higher. So that’s, as Mark mentioned, different recognition of the revenue. So I want to say overall, like you said, Shanghai number looks good, but that’s only quality, quality base, right? And I want to say whole year, I mean, all along the line, this number is very matching.

Mark McKechnie, CFO, ACM Research: Hey, Matt, one other thing I could bring that I think will be important is that The US GAAP and the R and D side, we don’t capitalize anything, right? So it’s all expensed. And so there is some capitalization of R and D. I don’t know if they give out the exact mix, that’s the big differences on the operating expenses, that’s one. And then of course, ACMR, the global operation, we’ve got our cost of being a public company and then we also have our sales and marketing effort that are incremental expenses.

Yep.

Matt Cook, Analyst, Potento: Helpful. Thanks very much.

Mark McKechnie, CFO, ACM Research: You bet. Thanks, Matt. Yep.

David Wong, CEO, ACM Research: Thank you.

Mark McKechnie, CFO, ACM Research: Next question, operator, please. Yep. Operator, next question, please. I think we lost the operator here. Charles, are you able do you have a live line, Charles?

I I think Charles sure is live Yeah.

Conference Operator: Excuse me. Yeah. Thank comes to the line of Charles Shi with Needham and Company. Your line is now open.

Charles Hsieh, Analyst, Needham and Company: Yeah. Hey. Charles, hear ops. Hey. Can you hear me?

David Wong, CEO, ACM Research: Yes, Charles. I can hear you.

Charles Hsieh, Analyst, Needham and Company: Yeah. I feel obligated that to ask a question about the long term target. I think it’s important update, but I have a really question the Mainland China portion of the long term projection there. I think one key change versus your prior target was Mainland China WFE market size. You kind of raised it from $30,000,000,000 to $40,000,000,000 It does match with where China WFE numbers were trending over the last couple of years.

Last year, I believe it’s slightly above $40,000,000,000 this year, maybe around $40,000,000,000 But I think that my question is, would there be any concern, I mean, by the team, maybe you are a little bit extrapolating the peak China WFE number there from the last year’s peak run rate level into the future? Or with the confidence China WFE maintaining at this 40,000,000,000 level over the long term? Thank you.

David Wong, CEO, ACM Research: Okay, Charles. Obviously, year over year can be kind of a changing, right? Maybe 10% up and down. And, I want to say, our long term revenue is not for next year, right? Like a five year or that timeline we talk about or beyond.

So we believe that the year China WFE market will be $40,000,000,000 That’s what we talk about a long run of the goal. And you look in the expanding in China of either memory or their logic or including IGBT, it’s a lot of demand here. So that’s our confidence. We believe that the market 40,000,000,000, you you look in the five year down the road should be that number. Of course, are global market growth too.

So there’s a 40,000,000,000 we think is a reasonable target we put there. And second one I want to see that is we do have also a new product coming and we are through the last three, four year R and D, our furnace, PCVD and the track or including our latest panel level packaging tool getting into the market and all started generating revenue either this year and also next year. Second I want to mention that is we just get approved, right, from CSRC and we’ll cover second fund raising more than $600,000,000 Those fund reasons that will help ACM to accelerating the target R and D and so that will be another big factor. And third one I would mention that is ACM has been really in China market insist order differentiation, innovative technology into the market. And so I believe, you know, Chinese invent the customer still like the best technology with IP protection.

So that really put ACM in a very unique position. And this moment we have not found any local Chinese company and copy our IP, infringing our IP. So we have a very confidence ACM can maintain our differential product margin. And also I said, customer locally is really designing the best technology, which is we are providing a differential solution. So we’re much better than those people provide their similar product.

As I said, we’re providing differentiation. That’s what’s solving the future needs for the customer. So with all three automation, so we’re very confident that’s why we’re raising this you know, China market from 1,500,000,000.0 to 2,500,000,000.0. Thanks.

Charles Hsieh, Analyst, Needham and Company: Yeah, thank you. Appreciate the wonderful color.

Matt Cook, Analyst, Potento: Glad I asked.

Conference Operator: Thank you. Next question comes from the line of Jimmy Heng with JPMorgan. Your line is now open.

Mark Miller, Analyst, The Benchmark Company: Yeah. Hi, David. Can you hear me?

David Wong, CEO, ACM Research: Yes, please.

Mark Miller, Analyst, The Benchmark Company: Yeah, thank you. So I want to ask about whether you have any source of the BLD into 2026. And actually, can you also share about your estimates on the China WLD for twenty five-twenty six, either absolute numbers or Y o Y comparison? Thank you.

David Wong, CEO, ACM Research: Yeah, well, I mean, looking at ’25 and obviously, you know, report, right, show different results. And looking at Gartner, they’re pretty like lower. But you have another IC semi, they’re trying to show their very, I won’t say, different results. In other words, it’s better than the Gartner. I mean, you look in ’25, ’26, I’m still hard to predict or maybe, I mean, 10% up end or down, right?

But therefore our fading is doesn’t matter. As I said, China market still exists. They already reached about either 30% or 35% of the global number really. So with our differential technology with a new product come out and even the flat of the revenue or the WFE spending in China, we’re still expecting our growth and also high growth. As I said, our new product, PUCVD, we have a few customer, a handful customer coming to their evaluation this year.

We also put there our 300 WFE wafer per hour KF line, which is in line with the scanner where they ship out very soon, probably in Q3. And also added a new technology, as I mentioned, panel level packaging, know, has an attraction. And plus, you know, we have just high temperature anneal, twelve fifty degrees C, and that really can really shorten the anneal time for the IGBT, also other critical applications. So as I said, all these new products we put in the market will give us a strong confidence where have a growing fast even with a flat or Chinese WFE market. As I mentioned, I asked Charlie is we offer a China market with a real differentiated product and we feel confidence we can protect our IP and therefore, and we can have our, I want to say margin maintained and give the customer best of

Charles Hsieh, Analyst, Needham and Company: the choice.

David Wong, CEO, ACM Research: And so we’re not getting into that kind of similar product in price competition. As I said, the Chinese customers still demand for the best performance. If they’re choosing performance versus price, of course they’re choosing performance. So that’s why our differential product can offer such a superior better result than those people provide a similar product, right? So we think that will be our strong point.

Mark Miller, Analyst, The Benchmark Company: Yeah, thank you Doctor. Yeah,

Mark McKechnie, CFO, ACM Research: if you don’t mind, I might just add a few things on that. Just, you know, obviously, we’re not going to we don’t give our guidance for 2026 until early in the year. But you probably noticed our OpEx was pretty strong this year relative to our revenue. Even if we do the midpoint, it’s still kind of we’re growing our OpEx this year. And a big reason is we’re spending into the market opportunity, right?

I mean, David mentioned a lot of the new R and D projects, we’re also spending more on sales and marketing, but clearly that spending is kind of anticipating a good growth ahead.

David Wong, CEO, ACM Research: Yeah, I want to add on that, compared to the first tier guy, their R and D probably 10 to 12%, right? And we’ll spend 14% to 16%. And that’s really show our having invested R and D. Also with our new product come out in a speed and we have more, I call the product, a new product common ratio compared to first year global guy. And that’s why I show that our spending is higher.

So that’s why we’re spending investing in R and D and also sales and marketing and that’s really supporting our next five year growth. And we believe we spend this I mean, we spend this operation spending is very important and also supporting our long, long growth.

Mark Miller, Analyst, The Benchmark Company: Yeah, thank you, Doctor. Wang and Mark. Also want to ask about the premium equipment market share target, you led to 50% in the long run-in China. Do you think in that case, what will be the split of the remaining 40% share between other Chinese peers and international suppliers? Yeah.

David Wong, CEO, ACM Research: Wow.

Mark Miller, Analyst, The Benchmark Company: You get 60% of the share in China.

David Wong, CEO, ACM Research: It’s hard to divide who is the second, who is third, right? I mean, again, we’re actually number one in China, of course, right? Why I see that is our now product portfolio, it really almost can match 95% of our cleaning process staff. So we’re probably the widest product in the world compared even the three big guy in Global International, right? And also, as I said, our product has a lot of differentiation and pothole tool and saps, megasonic, TiVo and non violation or non damaging megasonic technology and also continue adding this announcement into bubbling right, with a special proprietary design, generate a large bubble size with uniformity.

So we’re continuing really not just our product widespread, also have another innovative approach in the better than those top tier in the world. Especially I want to mention SPM. Our SPM, as I mentioned, we have new proprietary nozzle design, can really limit all the liquid splash or know, acid and mist out of chamber. And that really can improving the small particle performance. And today, as I said, 26 nano will reach average almost five in the particle And we believe with improving the chamber environment and we should get a better result in the 15 nano, 17 nano, which is real advanced in the next step.

So particle. Anyway, want to say, we’re do our, again, differential approach with IP protection. And that’s the strong point. And we are saying we’re expanding China market. And also we’re not facing any, as I said again, we’ve got a very strong IP portfolio in China and globally.

Also we do not expect any local China people can copy our tool. So that’s a real strong confidence and we see there we’re expanding in the China market. Of course, with those differential product tests in the China market, we’ll push to the global, right? As you know, the cleaning has been more and more important for their future AI chip manufacturing because of the yield suffer. So this cleaning become more and more challenging for three d NAND, three d DRAM down the road and also three d logic, eventually people will see that.

So all the three d cleaning, we do have a product, technology ready for that. So we’re very, you know, we’re very exciting, we’re very, you know, kind of our CR technology, you know, going to spread out in all the global market.

Mark Miller, Analyst, The Benchmark Company: Yeah, I see. Thank you, Doctor. Wang. Maybe I have my next question. Can you talk more about your progress in Taiwan and Southeast Asia region?

Also for the POP testing because I think the English now thinks that net production of Taiwan foundries for POP we co op will wait until 2029 or even ’30. I think the development time for tech and manufacturing will be longer than expected. So how do you think about mass production type of the or cobot with a fine fine light space. Yeah. Not the the the large, yeah, light space for the done by the panel makers.

I mean, for the, yeah, process.

David Wong, CEO, ACM Research: Sure. Actually, PLP, this panel level packaging, we believe is the right to go for the larger size of their AI chip packaging, right? As people lay down in the panel of three ten by three ten square versus circle, their effective area increased more than 60%, right? It’s a bigger gain for the customer, especially with a large chip. Obviously, all the people get a node to three ten by three ten will probably very soon moving to large size panel.

So we believe that’s really a strategic step and the Taiwan customer taking that direction. As to the ACM, I feel we have very good product ready for that product and we already put in the market for the low pressure cannini, bevel cannini. Also I want to mention that is our horizontal rotational electroplating, it’s really a solution for this panel level, right? And why is looking at the 20 millimeter packaging, used to be vertical and you go 300 millimeter wafer, it would turn to horizontal. Now you can see our panel level, we are probably the only guy providing us the horizontal solution because our proprietary IP design.

And this year, you know, March, we got a technical award from the three d IC inside The USA. So we believe our strong positioning, this horizontal plating will position AC in very strong position for this future AI, you know, PRP market. So we see that as recently we reach our horizontal plating uniformly less than 5%. And I want to say we’re trying Mexico is less than 3%. So we’ll maintain equal performance panel square plating versus a circle, level.

That’s really driving to the panel. As you mentioned about 2029 or timing, I think that that’s really dependent on technology driving, right? And if a customer can solving the oil issue, they can speed up. Even they cannot solve it, maybe delay. So real, this is a market driven by two manufacturer technology combined together.

So I mean with our copper plating, we definitely believe that’s what we speed up, right, in the copper plating process, which is one of the major block for the people moving from 300 millimeter wafer to the panel level. And we’re glad, you know, this technology offer for the customer enabling their production line and hopefully speed up their production. That’s our confidence and also we’re engaging with the customer in Taiwan.

Mark Miller, Analyst, The Benchmark Company: Yeah, I know that you have technology leadership, you have real products and IP. I feel like the issue is now the ecosystem is not ready, so the customer might need to delay the co op mass production timeline. And meanwhile, do you think that they’re taking towards a pilot from co op to co op? Will they still stick to the original Japanese and American supplier or they could adopt new supplier for co op? Well,

David Wong, CEO, ACM Research: want say wafer level we’re engaging, right? I mean, then you’re looking at this panel level, I think we’re a much better superior product, right? Wafer level probably will offer equal and this moment I want to see that. But for the real panel level, as I mentioned, know, I mean, those last ten years, nobody can do horizontal bleeding, right? When the first guy announced the product, we can do horizontal, as I said, even today we’re about 5% uniformity.

Our next goal is 3%. I believe with a strong IP position, we should offer the best panel plating tool in the world. And again, right, that’s really exciting for our, I call it, penetration in the global market and is one of the key product we offer to enabling the technology for the customer. So we’re very, I call it, to put effort on those product development. Plus we also prepare additional other differential product and also enabling the panel level.

And we’re going announce probably in the end of this year, we’ll work on the new product too and to further get into this market. So we’re very excited about this panel level, right? It’s a way to go because our AI chip at a size of bigger and bigger. I mean, invest a lot in this product.

Mark Miller, Analyst, The Benchmark Company: I see. Thank you so much. Sorry, I may have occupied too much time, but thank you so much for the details.

David Wong, CEO, ACM Research: Thank you. Thank you.

Conference Operator: Your next question comes from the line of Yongwei Lei with UBS. Your line is now open.

Yongwei Lei, Analyst, UBS: Hi, David. Can you hear us? Can you hear me?

David Wong, CEO, ACM Research: Yes, please.

Yongwei Lei, Analyst, UBS: Thanks for taking my question. Just one quick one. Seems like your q two year over year growth even for Asia is still underperforming other, like, China peers. Any reason to hide and probably, like, due to different customer exposure? Thanks.

Steven Pileo, Managing Director, Blueshirt Group, Blueshirt Group: Good question.

Mark McKechnie, CFO, ACM Research: David, I think the question was the the growth maybe of ACM Shanghai’s revenue or even ours versus some of the China peers. Maybe the it was you know, what’s why what’s the reason for the difference?

David Wong, CEO, ACM Research: Between China, between US, or between with our with other peer?

Yongwei Lei, Analyst, UBS: Maybe between ACMR, both US and China and Shanghai versus other, like, China WSD peers. Thanks.

Steven Pileo, Managing Director, Blueshirt Group, Blueshirt Group: Linkurity versus China peers.

David Wong, CEO, ACM Research: Oh, okay. Didn’t see the other result come out, know, China up here. Obviously, looking at Shanghai, our revenue growth still looks good, right? And so I want to say we’re confident. And also this year, as I said, we’re coming to the moment of the multi product and revenue will not much contribute this year.

But with the next year we see our furnace PCVD track start contribution. Right? And also we have a new product with cleaning and continue expanding cup of 80. So I want to say we still have a very good confidence and also outlook for 2026. And this year, well, Q3 very busy and Q4 we have a couple of slots open, but we think we’ll be also, you know, filled out soon.

So in general, we still have a good confidence, you know, we’ll have a, you know, good growth still this year.

Yongwei Lei, Analyst, UBS: Thanks. Pretty clear. Thanks.

David Wong, CEO, ACM Research: Thank you.

Conference Operator: Thank you. Seeing no more questions in the queue, let me turn the call back to David Wang for closing remarks.

David Wong, CEO, ACM Research: Okay, thanks, operator, and thank you for participating on today’s call and for your support. Before we close, Steven is going to mention our upcoming investor radiation events. Steven, please.

Steven Pileo, Managing Director, Blueshirt Group, Blueshirt Group: Thanks, David. Before we conclude, I just want to give everyone a quick reminder, our upcoming investor conferences on October 21, we’re going to present at the sixth Annual Needham Virtual Semiconductor and Semi Cap One on One Conference. On August 25, we will present at the Jeffrey Semiconductor IT Hardware Communications Technology Summit at the Four Seasons Hotel in Chicago. On September 3, we’ll present at the Benchmark twenty twenty five TMT Conference in New York City. On October 7, we’ll present at the seventeenth Annual CEO Summit in Phoenix, Arizona.

Attendance at the 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. This concludes the call, and you may now disconnect. Take care.

Conference Operator: Yes. Thank you.

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