Q1 2023 ACM Research Inc. Earnings Call
<unk> lease upon the CFO of our operating subsidiary ACM Shanghai.
Before we continue please turn to slide two 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 day.
This call ACM is not obliged to update you on any revisions to these forward looking statements.
Certain of the financial results that we provide on this call will be non-GAAP on a non-GAAP basis, which excludes stock based compensation and an unrealized gain or loss and trading securities for our GAAP results and reconciliations between GAAP and non-GAAP amounts you should refer to our earnings release, which is posted on the IR section of our website and look at slide 12.
With that let me now turn the call over to David Wang who will begin with slide three David.
Thanks, Gary.
And welcome to the ACM Research first quarter 2023 earnings conference call.
Please turn to slide three for.
For the first quarter revenue was 74 3 million offer a 76% from the same quarter of last year shipments were 89 million up 33% from the same quarter of last year.
Gross margin was 53, 8% and non-GAAP operating margin was 14, 7%.
Our operation in the first quarter were impacted by the silver factors, including St.
<unk> policy.
Chinese new year holiday supply chain challenges related to the U S restriction and some delayed it deliver to certain customers.
We expect our business to.
To improve in the second quarter was expected a acceleration and a third and fourth quarter.
Avi with products, please turn to slide four.
We've had a good growth from our Canadian tourists and increased contribution from our ECP furnace and other technology with the continued strong product cycle from ECB of products.
We're more than one third of our first quarter sales.
Single wafer Konini Tahoe, and semi critical cleaning growth, 41% driven by a single wafer cleaning tools and strong mature nodes demand in China.
<unk> is one of the brothers cleaning product portfolio in the industry covering nearly 90% of all cleaning process steps.
Recently introduced several important new Canadian tourists, including the federal editor tool and a high temperature STM single wafer cleaning tool, which is important for our international efforts in Q1, we received the customer qualification of our single wafer wet etch tool.
S&P and photos and other technology grow 117%.
In this category was driven primarily by ECP product cycle with some contribution from phone us a higher temperature, aneel and <unk> furnaces, including silicon nitride and nobody ever.
Bended to multiple customer and are in qualification.
But the most packaging, excluding ECP service and spare parts growth off a small base last year and represent about 15% of the sales.
This category, including a range of packaging tools, including colder developer scrubber, PL steeper and wet etch <unk> and.
And our service and spare parts.
<unk> is only company that offers both a full set of web tools and in the months leading to US. We believe advanced packaging will continue will become more important as industry looks for packaging innovation, such as two five D and.
Three D in Apollo and a fan out to drive a higher performance.
Our product line is very well suited for the mature nodes and empowered devices investment we see in the near term for China. We see continued investment in 2845 nano and above nanometer.
In front end fab capacity as China has committed to close the gap between consumption and production of semiconductors.
We also see the ramp up of EV production in China as the driving of China based investment in both power devices and other 28% and 45 nano devices.
Is this a mature node expansion environment, we expect solid growth from our Canadian tourists, especially auto bench, which is well suited for those applications.
It is up on products I feel great about both RP CBD and truck platforms.
Our Canadian plant plating, and furnished product line RP.
<unk> CBD and the truck platform.
Proprietary technology, not a weedy, while making them winter with a major customer in both in China and outside China.
We are in active discussion with our key customers. They are accepted to our new approach and in technology.
<unk> and the wafer throughput.
Although we do not expect that revenue in 2023, we plan to deliver a thorough evaluation tool to key customers. This year.
ACM has built a scaled business in cleaning and we have strong product cycle from ECP furnace and other technologies.
With a track on the <unk>, we're moving from proof of concept during the last year to accept to active evaluation with our key customers.
At this point, we now believe our differentiated technology can go head to head with any of the major players.
Moving onto customer pretend to slide five.
I am pleased with our position with China, China based customer and the progress, we're making with potential new customers in other markets.
In China, we believe ACM tool are now used by nearly all their semiconductor manufacturers our sales and service teams are working to expand that.
Deployment of each of our major product lines across our growing customer base.
We continue to go to gain traction from second and third tier semiconductor manufacturers, including power analog Cmos image sensor compound semiconductors, Mems and other devices.
In the U S. The evaluation of a key potential customer is progressing well and we remain optimistic.
Optimistic that this could lead to production orders.
In Europe , we announced an order for our first evaluation tool for top tier customer first.
First quarter. The tour is a plan for deliver in.
The early Q4 this year and we are beginning to build a local service team to support the effort.
To support our growth initiatives, we continue to add a facility in China and other regions present to slide six.
I will start with the update.
Update on China construction of an income production and R&D Center is on track for initial production in the second half of this year, we took ownership our new headquarter for ACM Shanghai in sound Young this quarter and plan to moving later this year.
This is an important addition for US now that we believe will provide the stability for employee help us attract new talent and allow us to invest.
What cost an in center to speed up the development of our tools.
Next in Korea.
We have a strong base of more than 70, R&D engineers and more than previous thousands square feet of this R&D and <unk> and the production facility.
Korea co develop our furnace track on a piece of your products together with our Shanghai R&D team.
As I've noted in previous calls we have increased our commitment to Korea.
We believe our strong commitment to Korea, we improve our relationship.
We're also adding resource in the U S to support ongoing evaluation and additional sales activities in the first quarter, we leased that facility Oregon.
Add to our service support and as demonstration capability for R&D and customer activities in the region.
As noted on our call last quarter for 2023.
We expect to spend about 100 million capex.
This including continued investment in our Linden facility remodeling for our new headquarter of ACM, Shanghai, and our investment in Korea, and the U S.
Following this important investments we believe are major spending projects will be complete for next several years.
I will now provide our outlook for the full year 2023 prints into slide nine.
<unk> reaffirmed our 2003 revenue outlook to be in the range of <unk>.
515 too fast.
Yeah.
First tool on the evaluation in a field.
Now, let me turn the call over to our CFO , Mark who are reveal details for our first quarter results Mark. Please.
Thank you David Good day, everyone. Please turn to slide 10.
Unless I note, otherwise I'll refer to non-GAAP financial measures, which exclude stock based compensation unrealized losses on trading Securities reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release.
Recall that our operations last year in the first quarter of 2022 were impacted by the Shanghai Covid restrictions as David noted our operations in the first quarter of 2023 were impacted by China's relax corporate policy Chinese new year holiday supply chain challenges related to the U S restrictions concerns delayed.
<unk> to certain customers.
I will now provide financial highlights for the first quarter revenue was $74 3 million versus $42.2 million in the first quarter of last year total shipments were 89 million up 33% Rev.
Revenue for single wafer cleaning tools and semi critical cleaning was $36 6 million up 41% to $26 million in the first quarter of last year.
Revenue for ECP furnished in other technologies was $26 6 million.
17% from $12 2 million in the first quarter of last year.
Revenue for advanced packaging, excluding ACP services spares was $11 million up 183% from $3 9 million.
Gross margin of 64% up 46% up from 46, 9% from the prior year period.
This exceeded our normal expected range of 40% to 45%. The high gross margin was primarily due to a favorable product mix with a particular, a strong mix of our higher margin products and a wider mix of lower margin products for the quarter.
We expect gross margin to continue to vary from period to period due to a variety of factors such as sales volume product mix and currency impacts.
Operating expenses were $29 2 million versus $27 7 million in the year ago period.
This was due primarily to higher sales and marketing and G&A costs, partly offset by lower R&D costs.
Operating income was $10 9 million, representing 14, 7% operating margin versus an operating loss of $7 9 million in the year ago period.
We recorded a realized gain of $4 million from the sale of a portion of ACM Shanghai shares of Smic's credit quarter.
Recall that the realized gains are included in non-GAAP earnings.
Net income tax expense was $2.9 million compared.
Compared to income tax benefit of $4 million in the year ago period.
As a result of the change in section 160, 174 of the U S insurer internal revenue code of 1986 as amended alright.
Alright that became effective in January one 2022, our effective tax rate has increased primarily due to the new requirement to capitalize and amortize previously deductible R&D expenses.
Net income attributable to act CF research this $9 9 million versus a net loss of <unk> 6 million in the year ago period, net income per diluted share strategic sense compared to a net loss per diluted share of a penny.
In Q1 of 2022.
I will now review selected balance sheet items cash cash equivalents restricted cash and time deposits was $381 7 million at the end of the first quarter versus $429 million at the end of the last quarter.
Total inventory was $473 3 million at the end of the first quarter up from $393 million at the end of last quarter. This includes finished goods inventory of $195 7 million working process of $74 4 million and raw material $203 2 million.
Capital expenditures for the first quarter were about $15 million, which includes spending on our vanguard facilities normal maintenance spending and as David mentioned, the purchaser land in South Korea.
That concludes our prepared remarks, let's open the call for any questions that you may have operator. Please go ahead.
Certainly as a reminder, if you have a question at this time. Please press star one one on your telephone one moment for our first question.
And our first question comes from the line of Quinn Bolton from Needham <unk> Company. Your question. Please.
Hey, guys. Congratulations on the nice results and continued strong outlook I guess first maybe David and Mark can you just give us your sense of of spending in the China market, both on sort of the mature nodes, but also including power semiconductors silicon carbide or you see.
Continued strength in those nodes.
And how sustainable do you think that spending is.
Okay.
Well actually looking at a real electric vehicle growth market in China in the pre D are very.
We're promising right and a lot of or Chinese people lives driving electrical car because the module ASP of the gas spending so we see that market to grow and also there are using much more silicon base of their power devices versus sitting on my right. So we see that in public 12 inch wafer.
Fab and also demanding for the GBP or power devices is extent accelerating so we see that market will be steady Guo also lets see the multiple fab multiple customer.
So Amy for this as you know a very high potential market. You'll also see that as also our future growth and for both Canadian tool and cover bleeding tool and furnace, including P. C V D. In the future even attract so we see that are wildly when a major driving offered a much.
Obviously, 28, and 45 nano or the other Mems devices also we sort of grew up in Asia and Baidu in the future a few years.
Yes.
Thanks for that color, David and Mark.
I know you have been putting a lot of working capital into inventory.
Over the past couple of years balance.
Balance is now up to almost 500 million I guess.
Is there a point, where you start to throttle back on on inventory I guess I was.
Particularly surprised by the increase in finished goods your shipments weren't up.
Is that meaningfully but wondering if you could just give us your kind of latest thoughts on.
As you approach $500 million of inventory on the balance sheet.
Does that balance start to level out for a period of time.
Yes, hey, thanks, Quint on that so.
For the quarter Q1 shipments were down right.
There were a number of reasons for that that we talked about right.
Yes, the relaxation of the Covid restrictions.
A lot of employees enterprise customers.
Cut the illness in December and January Chinese.
Chinese new year.
Adjustments to the U S restrictions as well.
And some delays.
No.
That led to a lower shipment number.
And so.
Our overall inventory uptick as you know, it's it's raw materials work in process and finished goods inventory.
We expect our shipments to rebound pretty nicely in Q2 and beyond so.
That's one driver for the inventory.
And I think you'll also note that.
Finished goods inventory.
Most of that.
Includes.
The evaluation tools that are at our customers. So we had an increase quarter on quarter from that.
We also did have an increase quarter on quarter of finished goods inventory that said that was not shipped to the customer so.
For those reasons.
To answer your question we.
We do anticipate the.
Inventory.
And ill elevated levels this quarter.
We would anticipate that.
It's been kind of a high watermark should be coming down as we move forward.
Great. Thank you Mark.
Thank you one moment for our next question.
And our next question comes from the line of <unk> de Silva from Roth Capital. Your question. Please.
Hi, David Hi, Mark so.
Gross margin in the quarter was above.
Trend I'm curious.
Can you remind us what the segments are above trend that are driving that and I know non single wafer clean is doubling year over year is that a pace that could continue and where the gross margin implications there.
Yes, I didn't ask Louie. This is our gross margins will depend on product combination right. It really depends on how much of a portion of the high margin product versus the low margin product. So I still think our margins still there'll be 40% to 45%.
And the reason for that and we're still driving our product.
And for all other.
Canadian staff.
Advanced the single wafer versus also the older bench.
For their ECP level also phone Anna backend also too. So that's what is the way I think it was still probably within a range of steel 40, 45, and maybe until lay down op CBD in the track and they become a mature, especially while the spending to the international market, Brian that might be changing but for the near future.
I think a 40 to 45 is simply demand through the range of our product portfolio and now.
Okay.
Thanks, David and then.
You raised the full year expectation to.
The customer delays that you saw in <unk> that those are those are normalizing recovering as expected right now or do you expect any lingering impact into 2023 numbers around.
Covid or U S geopolitical challenges in China.
Yeah, Theres, a certain delay right and I think that both have some DNA from their advanced nodes and also the formula delay further mature notes two however, I think those are.
The later schuman with fingers steel will be probably happened.
Either you know something happens to the end of this year, maybe it's something we have maybe next year.
Also I want to see that is there.
We see also on the new customer coming right. So looking to hold this year, we sit at our shipment is still record high.
It's a real promising and however, those are revenue will come from most new customer right. So there so that that the reason was to maintain our revenue as we projected.
Oh.
<unk> property by second Accordingly, though we have a more clear picture.
And then we'll start to you know, possibly changing based on the new.
Our readout for the next six months or beyond.
Okay. That's very helpful. David Thank you guys.
Thanks, a J.
Thank you one moment for our next question.
And our next question comes from the line of Charlie Chan from Morgan Stanley . Your question. Please.
Hi, David Hi, Mark.
Good.
Evening or a good good morning.
So my first question is.
Still about your first quarter.
Revenue.
I'm wondering what is kind of the.
Instead, the factor that you guys. We all know there is a.
Chinese new year physically policy, but I'm, just wondering what kind of.
Instead it event.
I feel like.
In terms of the full year.
Our target quarterly run rate should be $90 million to $100 million.
It seems like you know it is kind of like.
My initial fall can you give us that more extended mentioned out on that.
Yeah, Let me, let me say something may market at a more actually Chinese first quarter always lower range and obviously as the Chinese new year and this year more specialty theres, a colby relaxing and which has an impact in our operation and also.
Our supply chain too.
So I look at the first quarter and so we think it's still pretty good quarter, while compared with a year ago right. I mean, you have got even worse I know that but I'm looking at the second quarter, obviously will be strong and we see the third and fourth quarter humans join a strong right. So that's why we're still saying Hey first quarter result.
And natural and normal.
And we see more of our growth in the next year.
For the quarter.
Yes, Charlie Charlie the only thing I'd add is if you looked at last year, maybe the first half of the year was about <unk>.
Typically first half of the year as a 35% to 40% than in the second half of the year the remainder.
So this year.
The first half.
It would be in the 35%.
That sort of similar range with the back half.
The resting.
We talked a few quarters ago.
The restrictions on the advanced nodes first hit.
We are continuing to see.
Pause right as the overall supply chain and our customers adapt to comply with the.
The rules and so thats impacting the first half as well.
Okay, Yes.
That sort of pause of the.
Shipping too.
Thanks, Ed.
That is something that.
Yeah.
We didn't fully capture that.
The.
Fair interpretation I think we captured that yes, I mean that was again, we had talked about that.
At the end of last year and so.
That was spend anticipated.
Yes.
Some delay or there assuming the rate and first within customer.
And probably also and you know give us minor impactful and also their revenue in Q1 too, but those are Shimon, maybe we think maybe it may be resumed in Q4 or Q3 timeline. When we don't know yet is depends on the market.
So that's okay.
I call, they're not fully clear at this moment.
Okay. Okay, yes.
Sorry, Schaefer for asking.
All of those details because I feel like companies are growing well.
<unk> Steven.
So I thought.
It should because of the first quarter revenue shortfall.
Sure.
That's all clear now.
The second question actually relates to the first first line.
So if you put a little bit.
Mid to long term perspective, I mean, the opportunity for China.
No more <unk> power semi analog.
<unk> end market.
Shared.
And then just in terms of the.
Claiming to take it thank you Jim.
Capex.
Can you give us some comparison between the maturing notes.
Versus the.
Leading edge for Kimberly <unk> claim.
Cleaning needs at 10% of the mature node being 5% of leading edge, you said that right way to think about.
The the opportunity.
Yeah, I don't see that as steel, we'd see there plenty there none of them are 45 with someone who is still a major mature nodes driving right and with WCS people's needs for their power devices, which are almost like 60 80, not nominal devices for them.
I apologize, but so.
I want to say in the future makes the next to the year one year two year, we see a lot of or fab building. Two production. There you know this is a power devices.
So we see that is due to a major driving eight and fortifying and also you know power devices are looking at a real tool I should say 28 anomalies or 80% of the Canadian tool.
<unk> 45 above and also including our policy of items that probably 80% is the auto bench right. It's the reverse.
Our product portfolio in both copper both application.
So.
As you say, obviously I see a lot of or demand for all of the bench and the people moving in fortifying and also they are in power devices right.
The license business, but we see that in the Mako casino growth, which is the older bench by the way. We're just bring the market two to three years ago. So we see that add another driving force for our revenue growth.
Okay. Thanks, and my last one is about your.
Sure.
Supply chain and also being down facility. So suddenly you guys mentioned that the long term gross margin may have upside keybanc.
The CVD and check contribution, but how about being down.
<unk>.
In your previous earnings call you had said Linda.
Can help you to improve the equal.
Gross margin as it fits to stay location.
Okay.
Yeah, I think they're obviously.
Even in <unk> CBD they have a higher margin product also you know kind of a low margin product right, including track too. So we're probably balance.
Our customer and also our product portfolio and this moment I feel the same maintain 40, 45% is a range.
And I think all of that until we really have a high margin and high high quality product be prudent in our market.
Can be beyond 45, but at the moment I understand maintaining our gross margin 40 to 45 right. That's there right now.
Near future our gross margin.
Ben Homebuilding Gong.
Linda.
Hey, guys scale.
Yeah, I think we're definitely well probably start production you now and the end of this year and also they can add more automation for our.
Our assembly production as long along with sleep.
<unk> added more value right.
Our gross margins, but a niche or one year two year I don't know really it's really have the real bankers, it's the fab Ronnie seamlessly and around a full scale.
Okay.
At <unk> showed around.
Some more of a cost maybe.
I don't think much not much difference.
Right.
I see I see.
Okay, Thanks, David and Mark.
All I have for now thank you.
Thank you.
Yeah.
Thank you one moment for our next question.
And our next question comes from the line of Christian Schwab from Craig Hallum. Your question. Please.
Great.
Thanks for taking my questions and congratulations on the continued extremely strong revenue growth.
Outlook.
Versus WMC.
I'm wondering number one your thoughts there's rumors in the marketplace that.
<unk> is going to do a large IPO who's historically been.
Customer of yours that could bring in many billions of dollars.
If that does occur.
How should we think of that as such.
Something very positive for you over time.
Yeah.
So we see there the convener globe and obviously, they're also one of our major customer and wherever product cleaning and all kinds of.
Got a Canadian pool and be evaluated also in production from six M. P.
Plus also copper plating.
Including future, we're bringing laying it off owners and even PUC really down the road. So we see that six and P. Well armed with a major driving force of Buffy to future revenue.
Okay Fantastic and then you know as far as the total available market you know that you guys have talked about.
Getting to a $1 billion worth of business I'm, just just in mainland China.
China and then the rest of the world with Upsides I mean.
We've got our first evaluation tool in Europe that you've talked about.
And the local service team that's going in you know you just announced you know that you have a local service team.
You know in Oregon, you know, obviously next to Intel very large U S manufacturer.
At what point.
What would you have to see.
No.
Just start including the rest of the world, which as you know Ken exercise of China.
For long term.
Revenue objective.
Yes, I think there are at this moment I still say, we're still major cells also from China right is clear right now.
However, we do see all the things you product.
Obviously cleaning even Clos are trading.
And in the future we believe our furnace and also appears to be D will get into the outside China, I actually working with a customer in Korea activity on a multi product and for the rest of the world, including you know, Taiwan U S and also the.
Europe , and this moment primary and Panini and we see also some people interest accounting says I'll cover played into it.
And as the time, moving and as I've said, a panacea to more in the global market and we're seeing more of her opportunity for people buying in not only our axon and cleaning or by also rest of the Canadian tool.
And part of the copper plating tool right. So so I don't know market well outside mainland China still in a process in a way, but we think eventually we.
Without the range of products with a breakthrough.
Our major customer in their outside China.
How long until ACM targeting a half revenue come from mainland China off revenue come from our site in China, and that's our strategic goal to grow ACN to be their major player in this market.
Fabulous, Thank you for that clarity and then.
I think it was last conference call you know there seems to be you know.
Applied materials is talking about you know everybody has seen strength in China right by materials, you guys lay out anybody who's got a presence there.
Seeing tremendous strength.
But I think you know the consumption and production closing of the gap.
I think you know you mentioned.
I think it was last quarter that you know in the mature node slash power et cetera.
But it would probably take at least three years.
<unk> closed the gap to that I remember that correctly.
Yeah, obviously, we see them until now.
Okay.
Hi, operator, I think we lost David audio.
I guess, the iron was hot wait sorry.
Good evening.
You May now, yes, yes, we can hear you now maybe.
Maybe start over to David for <unk>.
Christian's question was about the gap.
Chinese semiconductor production versus consumption.
Yeah, Okay, I see that the obvious demand for their you know mature nodes 28 45.
There's still a gap between their consumption rate was mostly in the major fabricated in China right that gap will gradually reduce as the more fab buildout and more important as the that also this electric vehicles driving more demand new demand come off and for their for the China market and we see that another new driving.
For us and for their 28 45 and also the power devices.
So that's the probably two driving force why is the new demand another one real reducing the gap between their.
<unk>.
Meeting China versus the consumption rate.
Great no other questions. Thanks, guys.
Thank you.
Thank you one moment for our next question.
And our next question comes from the line of Mark Miller from Benchmark. Your question. Please.
Thank you for the questions.
Just wondering if you could give us.
Our impression or whats your estimating you had the sale the purchase order for the saps tools from Europe , you're setting up support for U S customer in Oregon.
In terms of your sales projections for this year.
What percent do you think will come from outside of China.
Well Mark it's very hard to give you a precise with you right and there we're working very closely with them in a major customer.
We also continue to increase our investment right you know ourselves the marketing team and 17th payment in China.
I think it was stealing their marketing exploration and I call. This stage.
I think well have to be you know gather initial product qualify that going to repeat the order like are there multiple other right now you've got there may be other new programming other product getting too so I still see that it will take time and there so you're looking at all.
I think it still will be an extra few year majority of them come from mainland China market, but we see the market globe, including Korea U S, Taiwan and in Europe .
Just a moment real hard to give you percentage versus a year right because it depends on how we progress Lee.
Our successfully our key make of the cells and then solid effort in the outside of mainland China.
Number of semi firms have done very well supplying EV manufacturers in China I'm, just wondering you mentioned that.
An opportunity for you I'm just wondering could you also kind of give me an impression of.
What percent of sales.
This year related to EV sales.
Oh I have to give you a precise number but I can say, we see our field production line is plenty in the building process audience expanding process and for this the real EV market right, which is including.
Our power devices analog and also there are 45 funny donato aiming for their automobile.
Our market too so it's a clear trend in the China fab and they are they're very anxious to be also these are the getting our propel for growth for the EV market in China.
Thank you.
Thank you.
As a reminder, if you have a question at this time. Please press star one one on your telephone one moment for our next question.
And our next question comes from the line of Donnie Teng from Nomura. Your question. Please.
Hi, David and Mark can you hear me.
Yes.
Hi, Congrats on the strong first quarter results first question is regarding to your product mix in the first quarter.
So cleaning tool.
The percentage of going toward declined quite significant year on year, So which means the landmark cleaning tool progress is pretty strong.
But previously I think your targeted like the wafer cleans still accounted for.
A therapy portion of this year's sales, but the first quarter. It looks like it has been shrinking a lot.
Are you changing your target this year and shall we expect more non wafer cleaning tools sales.
Contribution.
<unk> significantly improved tissue.
And how this will have the impact with the gross margin. Thank you.
Yeah, well actually the first quarter I look into detail product mixing Ray and then I guess as you know our cleaning tool is at the lower end 70 around 65% when I look at a real forecast. This year, we think of that 65% property is not a whole year number.
I still say, probably our clini stay probably 70% range and this year is still a major <unk>.
We now see that we see other.
Our oh the bench growing.
Pretty.
Quickly and also there is also demand for single wafer cleaning tools. So.
As you'll still say, probably 70% is a whole year a range. Obviously I can say you know furnace in Stockholm and.
A corner.
Electroplating or two.
But that ratio I think part of 70 and the right right right approach, it's not a 55%.
Okay got it.
Just a follow up so for the ECP and <unk> successful tools all of the major cosmos similar to the wafer cleaning tools or are they all may be different categories.
Pre demand I should say, obviously cover play D. The more lightweight and balls thrown in the backend and their actual copper plating cell. So far you know eight in all of the major if people still buy what do you find even somehow devices also buy copper plating tool. So hospitals you can see our you know.
Advanced packaging right audio getting probably so we still see a common Canadian steel continues well and for their telephone out there for the coming year and you know on the coming next year right.
Alright.
The Korean market.
And also path, we see there a furnace has been defending customer and multiple customer right now and so we'll see that it can be another driving force.
If our non Canadian product category.
Okay.
<unk>.
My second question is regarding to the Kosmos right, So fall a leading man.
Makers maker in China.
Are you still seeing they are spending the capacity or they are now more like to do some more clarification on the domestic equivalent production line and the the the incremental capacity expansion maybe need to wait until all the domestic women.
Maybe like a small production line qualification being passed and to continue the expansion.
For the.
Hynix originally there.
Industry report mentioned the bolt up behind this is Jose during two extend the Wuxi fab.
To increase some legacy Knowles capacity.
Are you seeing any signs of Jaime is going to expand the capacity in China again.
Okay.
We have now see them sign right. Obviously, you can see that in our DRAM market continue really a software ranked pricing whatever well now here, we have not heard anything about it on like you said, they're you know hynix spending Wuxi fab at this moment.
Okay.
Hum on the NAND maker, the leading NAND maker in China.
Well because we are obviously, we have sometimes delay chairman right you know what.
The reason they put in their expansion.
In terms of when they can restart in the expanding we read on all right. It's really I mean.
We were the only ones they explain this moment.
And this one obviously to have the real feel other missing puzzle.
And we don't know yet when they can you kind of finish that.
Understood. So just a follow up so for the strong first quarter sales and Sherman.
Who are the major drivers behind the strong sales. Thank you.
My last question.
Oh, okay.
It's very hard to give you that presumably right normally we gave with our customer.
Percentage and at a yearly basis, Mark will give we will give them humbly on yearly basis, but at.
At the end of the year.
I tried to give you the quarter are at this moment and obviously as that is there.
Or I can see this is still existing customer.
And also have them last year was sort of new customer become material and a repeat order rate and some new customer. We're also facing a strong demand by cannot cangiano revenue into Q1 right not translations owns you'll see that.
So that's the major of the existing.
Existing customer a major contribution.
Understood. Okay. Thank you Mark.
Thank you.
Thank you one moment for our next question.
And our next question is a follow up question from Mark Miller from benchmark.
Thank you for the follow up I'm, just wondering what was stock based compensation was around $2 million during the quarter, Yes market reserve.
It's $2 1 million for the quarter.
Okay. Thank you.
Okay.
Thank you this.
This does conclude the question and answer session of today's program I'd like to hand, the program back to David Wang for any further remarks.
Yeah.
Okay.
Okay. Thank you operator, and thank you all for participation on today's call and for your support before we close Gary is going to mention our upcoming Investor relations events Gary Please.
Hey, Thanks, David So on May 31, we'll present at the 20th annual Craig Hallum Institutional Investor Conference in Minneapolis attendance at the conferences is invitation only for clients of the Craig Hallum. So please contact them.
To register and requests one on one meetings with us.
So this concludes the call you may all now disconnect.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
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