Q2 2026 ACM Research Inc Earnings Call

August 7, 2026

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the ACM Research Q2 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.

Speaker #1: Later, we will conduct a question-and-answer session. Instruction will be provided at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time.

Speaker #1: Now, I will turn the call over to Mr. Stephen Pillay, Managing Director of The Blue Shirt Group. Stephen, please go ahead.

Speaker #2: 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.

Steven Pelayo: Good day, everyone. Thank you for joining us to discuss Q2 2026 results, which we released before the US 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. 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.

Speaker #2: There is also a supplemental slide deck posted to the investor section of our website that we will reference during our prepared remarks. On the call with me today are CEO Dr. David Wong, our CFO Mark McKechnie, and Lisa Fang, our CFO of our operating subsidiary, ACM Shanghai.

Speaker #2: Before we continue, please turn to slide 2. Let me remind you that remarks made during this call may include predictions, estimates, or other information that might be considered forward-looking.

Speaker #2: 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.

Speaker #2: 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.

Steven Pelayo: 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 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 13. Also, unless otherwise noted, the following figures refer to Q2 2026. Comparisons are with the Q2 2025. With that, I will now turn the call over to David Wang. David?

Speaker #2: ACM is not obliged to update you on any revisions to these forward-looking statements. 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.

Speaker #2: 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.

Speaker #2: Also, unless otherwise noted, the following figures refer to the second quarter 2026, and comparisons are with the second quarter 2025. So, with that, I will now turn the call over to David Wong.

Speaker #2: Dave?

Speaker #3: Thanks, Stephen. 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.

David Wang: Thanks, Steven. Hello everyone. Welcome to ACM's Q2 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. 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, will grow to more than $200 billion by 2029. They also estimate the Mainland China market exceeding $50 billion in 2025, that will grow to more than $80 billion in 2029.

Speaker #3: Revenue and achievement increased 36% year over year. Revenue growth was led by our ECP and advanced packaging product categories, both of which increased more than 150% year over year.

Speaker #3: This strong performance reflects the progress we are making in transforming ACM into a broader, multi-product semiconductor equipment company. In June of this year, third-party research firm Plus and Solvent published a report called "Global and China Semiconductor Equipment Market Research."

Speaker #3: 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 will exceed $50 billion in 2025 and grow to more than $80 billion in 2029.

Speaker #3: 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.

David Wang: 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 US, 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. 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 manufacturing technology across advanced packaging.

Speaker #3: following our 150 million registered 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 to the top major products of semiconductors.

Speaker #3: 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 approaches are reaching practical limits.

Speaker #3: Creating demand for an entirely new manufacturing technology across advanced packaging, 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 wet process technology.

David Wang: 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 am pleased to announce that we have received order from two advanced packaging customers for our panel level horizontal plating tool, addressing both 510 by 515 millimeter and the 310 by 310 millimeter panel size. 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 regions.

Speaker #3: 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 orders from two advanced packaging customers.

Speaker #3: For our panel-level horizontal plating tool, we're addressing both 510 by 515 millimeter and 310 by 310 millimeter panel sizes. One is a production order from an existing customer in mainland China, and the second is an evaluation system for a new customer in Asia.

Speaker #3: We believe ACM will be among the first companies to deliver horizontal panel-level plating systems to multiple customers across multiple regions. Our proprietary horizontal plating architecture is a key differentiator, delivering strong, superior plating uniformity while addressing the demanding process requirements of next-generation AI packaging.

David Wang: Our proprietary horizontal plating architecture is a key differentiator, 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. I am pleased to report today that our order book has been quite strong. For H1 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 30 September 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.

Speaker #3: This order is an important milestone for what we believe could become a significant long-term growth opportunity. I'm pleased to report today that our order book has been quite strong.

Speaker #3: For the first half of 2026, orders increased 100%, 105% year over year. This is a mixed across all product categories with a heavier emphasis on some of our new products.

Speaker #3: As with the prior years, ACM Shanghai plans to release backlog figures as of the September 30 in early October. Thanks to good execution by our operations team, we continue to expect achievements across each of our categories to grow faster than revenue.

Speaker #3: We remain confident in our growth target for 2026 and beyond. For 2026, we see a healthy backdrop for China WFE, as our customers continue to scale their production capacity.

David Wang: 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 furnace, to enable us to outgrowing the China WFE. Beyond this year, we are 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 solid growth for ACM. Now on to our business result. Please turn to slide three. Revenue for Q2 was $293 million, up 36%. Shipment for Q2 was $282 million, up 36%. Gross margin was 46%, and operating profit margin was about 19%.

Speaker #3: We expect an extra boost for our business from a few product cycles, including our SPM and furnace, to enable us to outgrow the China WFE.

Speaker #3: Beyond this year, we are estimating that our newer platform, including Track PCVD and horizontal panel-level plating, will proceed from the evaluating phase into a commercialization phase, resulting in a production order and driving our growth for years to come.

Speaker #3: In summary, we see 2026 as a big year for new products, and another year of solid growth for ACM. Now, on to our business results.

Speaker #3: Please attend to slide 3. Revenue for the second quarter was $293 million, up 36%. Shipment for the second quarter was $282 million, up 36%.

Speaker #3: Gross margin was 46%, and operating profit margin was about 19%. We ended the quarter with gross cash of $1.4 billion and net cash of $1.0 billion.

David Wang: 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 the semi-critical cleaning tool was $133 million, down 14%, and represent 45% of revenue. We believe ACM has built industry's broadest cleaning product portfolio. 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 clean technology in 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.

Speaker #3: Now I will provide details on products. Please refer to slide 4. Revenue from single wafer cleaning, pothole, and semi-critical cleaning tools was $133 million, down 14%, and represents 45% of revenue.

Speaker #3: We believe ACM has built industrial brothers cleaning product portfolio. Our products in this category include safetable pothole backside cleaning, solvent cleaning, baffle cleaning, scrubber, and wet etcher.

Speaker #3: And our proprietary single wafer hot SPM technology. In May, we presented our proprietary hot SPM cleaning technology at the 2026 Surface Preparation and Cleaning Conference.

Speaker #3: This system demonstrates fewer than 15 particles performance at a 15 nano particle size. Our proprietary nozzle design prevents acid mist and chemical splashing outside chamber during hot SPM process.

Speaker #3: Therefore, it does not require periodical DI water chamber outside cleaning. For customers, this means less maintenance, better uptime, and a more stable particle performance.

David Wang: For customer, this means less maintenance, better uptime, and a more stable particle performance. We believe this represents the best performance in the industry. Our SPM platform is well suited for the advanced logic and memory, where cleaning requirements 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. We have added wet etching and the multi-wafer reclaim application to the Tahoe platform. This integrated 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 stable, sustainable.

Speaker #3: We believe this represents the best performance in the industry. Our SPM platform is well suited for the advanced logic and memory while cleaning requirements are becoming more demanding.

Speaker #3: Today, we also announced a new capability for Ultra-C Tahoe, expanding it into a broader wet process platform. Tahoe is built on our patented hybrid architecture that combines batch SPM process and single-wafer cleaning.

Speaker #3: We have added wet etching and modern wafer reclaim applications to the Tahoe platform. This integrates multiple processes that had previously required a separate standalone tool into one Tahoe platform.

Speaker #3: 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, benefiting advanced semiconductor manufacturers by making them more efficient and stable. We shipped a handful of single wafer SPM tools in the first half of this year, and we are on track to ship more in the second half, for a total of more than 20 by the end of this year.

David Wang: We have shipped a handful of single wafer SPM tool in H1 of this year, we are on track to ship more than, in H2 of this year, for more than 20 by end of this year. A reminder, we estimate that SPM represent about one-third 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, we grow our repeat shipment. Revenue for ECP, furnace, and other technology grow 168% and represent 44% of the revenue mix. Growth was driven by momentum on both front and back-end plating tool. In logical device, we have benefited from larger die size and the steady increase from higher interconnector layer counts.

Speaker #3: As a reminder, we estimate that SPM represents about one-third of the total cleaning market. We have had a very little revenue today for the SPM tool, and with this major product cycle, we expect our overall cleaning revenue to rebound as our customer qualifies the first tool and we grow our repeat achievement.

Speaker #3: Revenue from ECP furnace and other technology grew 168% and represents 44% of the revenue mix. Gross was driven by momentum on both front- and backend plating tools.

Speaker #3: In logic devices, we benefit from larger die sizes and a steady increase in higher interconnector layer counts. In memory devices, we benefit as HBM packaging demands higher levels of DRAM stacking, and thus, more and more copper process steps.

David Wang: In memory device, we have benefited as HBM packaging demands higher level of DRAM stacking, 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 customer are adopting our technology in volume production. 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, PLD, and ultra-high temperature anneal. Revenue from advanced packaging, which excludes ECP, including service and parts, was up 153%. This including coaters, developer, etcher, stripper, scrubber, and the vacuum cleaning tool, supporting a broad range of advanced packaging application.

Speaker #3: 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. It shows how quickly our installed base has grown and how broadly customers are adopting our technology in volume production.

Speaker #3: We had a larger contribution from furnace in the quarter, but 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, PLD, and ultra-high-temperature anneal.

Speaker #3: Revenue from advanced packaging, which excludes ECP but includes service and parts, was up 153%. This includes coaters, developers, etchers, strippers, scrubbers, and vacuum cleaning tools.

Speaker #3: Supporting growth across a broad range of advanced packaging applications. We are particularly pleased with our global progress here, with active deployment in Singapore and North America across a range of these tools.

David Wang: 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 the Track platform, and we have made significant progress in 2026. Our proprietary one chamber, three chucks architecture for PECVD performed well in our Lingang mini lab early this year. We shipped the secondary tool to our new customer in Q1, and we anticipate this qualification by year-end. The story is similar to our Track platform. Indeed, our high throughput KrF Track tool is progressing through customer evaluation. We anticipate production qualification by year-end. We see strong interest in both standalone tools and configured to integrate with the scanners.

Speaker #3: We are making good progress with our new track and PCVD platform. We remain confident that we have the right approach for our PCVD and track platform, and we have made significant progress in Q2 2026.

Speaker #3: Our proprietary one-chamber, three-chuck architecture for PCVD performed well in our Lingang Mini Lab earlier this year. We shipped a secondary tool to our new customer in Q1, and we anticipate this qualification by year-end.

Speaker #3: The story is similar to our track platform. Indeed, our high-throughput KIF track tool is progressing through customer evaluation, and we anticipate production qualification by year-end.

Speaker #3: We see strong interest in and configured to integrate with the scanners. For both PCVD and track, we are hard at work with the development effort with several key customers.

David Wang: 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 results in production order in the near future. Please turn to slide five. This quarter, we have updated our market assumption with the latest WFE data from the Report One report I mentioned earlier. This results in a $1 billion increase to ACM, the global SAM about $22 billion. Please turn to slide six. There are no changes 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.

Speaker #3: We are optimistic that our tool performance can meet or exceed our customer requirements and result in a production order in the near future. Please send those, slide five.

Speaker #3: This quarter, we have updated our market assumptions with the latest WFE data from the report I mentioned earlier. This resulted in a $1 billion increase to ACM's global SAM, to about $22 billion.

Speaker #3: Please send those slides. There are no changes to our long-term revenue target of $4 billion. This is still based on market share assumptions for each of our product categories, which gets us to about $2.5 billion from mainland China and $1.5 billion from the global market.

Speaker #3: We adjusted some of our assumptions based on China WFE now at about $50 billion. We continue to assume a robust WFE environment over the next several years for the global market.

David Wang: We continue to assume a robust WFE environment over the next several years for the global market. The magnitude and the timing of our growth will be impacted by the overall spending trajectory of our customers and our market share gains. Next, let me provide an update on our production facility. First, on Ningbo. 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 facilities can support up to $3 billion in annual output. With our strong order book, we are fortunate to be ready to scale the second facility. Next, our Oregon facility. Please turn to slide nine. In Oregon, we remain on track for a US-based demo center with multiple tools in world-class cleaning room environment starting later this year.

Speaker #3: The magnitude and the timing of our growth will be impact by the overall spending trajectory of our customer and our market share gains. Next, let me providing an update on our production facility.

Speaker #3: First, on Lingang, we turn to slide eight. The first building is in volume production, and we plan to open the second building later this year.

Speaker #3: Together, the two facilities can support up to $3 billion in annual output. With our strong order book, we are fortunate to be ready to scale the second facility.

Speaker #3: Next, our Oregon facility—pretend to slide nine. In Oregon, we remain on track for a US-based demo center with multiple tools in a world-class cleanroom environment, starting later this year.

Speaker #3: 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.

David Wang: This is important for our global customers, 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 2026. This includes about 10 customers in five countries. It is clear that leading global chip makers can benefit from our innovative products. Although it is still early days 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 provide our outlook for full year 2026. Please turn to slide 10. Based on our H1 performance and the improved visibility, we have raised the middle point of our full year revenue guidance.

Speaker #3: As we said last quarter, we expect to have more than 20 tools installed at customer sites outside mainland China by the end of 2026.

Speaker #3: This include about 10 customer in five country. 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 engagement are growing and we are confident that our global sales and service team will deliver good results.

Speaker #3: Now I will provide our outlook for full year 2026. Please turn to slide 10. Based on our first-half performance and the improved visibility, we have reached the midpoint of our full-year revenue guidance.

Speaker #3: We now expect full-year 2026 revenue of $1.125 billion to $1.175 billion, versus the prior range of $1.08 billion to $1.175 billion. This new range implies 25 to 30 percent year-over-year growth.

David Wang: We now expect a full year 2026 revenue of $1.125 billion to $1.175 billion, versus the prior range of $1.08 billion to $1.175 billion. This new range implies 25% to 30% year-over-year growth. We also expect a shipment 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.

Speaker #3: We also expect shipment growing growth to outpace revenue growth in 2026. Now let me turn the call over to our CFO Mark, who will review details of our second quarter result.

Speaker #1: Thank you, David, and good day, everyone. Please turn to slide 11. Unless I note otherwise, I'll refer to non-GAAP financial measures, which include 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.

Mark McKechnie: Thank you, David, and 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 Q2 2026, and comparisons are with Q2 2025. I'll provide financial highlights. Revenue was $292.9 million, up 36%. Revenue for single wafer cleaning, Ultra C Tahoe, and backside clean 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.

Speaker #1: Also, unless otherwise noted, the following figures refer to the second quarter of 2026, and comparisons are with the second quarter of 2025. I'll now provide financial highlights.

Speaker #1: Revenue was 292.9 million of 36%. Revenue for single wafer cleaning Tahoe and semi-critical cleaning was 133.0 million, down 14.2% and represented 45.4% of sales.

Speaker #1: David noted this included very little contribution from some of our newer products. As normal, SPM will be reflected first in our shipments, followed by revenue contribution in later quarters.

Speaker #1: Revenue for ECP front end and packaging furnace and other technologies was $128.5 million, up 167.7%, and represented 43.9% of sales. Revenue for advanced packaging, excluding ECP services and spares, was $31.4 million, up 153.3%, and represented 10.7% of sales.

Mark McKechnie: 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 H1 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 H1 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%. In 2026, we expect shipment growth to outpace revenue growth. Gross margin was 46.0% versus 48.7%. Gross margin was above the midpoint of our long-term target model. We maintain our 42% to 48% long-term target range, and product mix can cause fluctuations on a quarterly basis. Operating expenses were $78.5 million, up 23.9%.

Speaker #1: 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.

Speaker #1: This compares to three 10% customers representing 40.9.9% 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.

Speaker #1: Total shipments were $281.5 million, up 36.4%. In 2026, we expect shipment growth to outpace revenue growth. Gross margin was 46.0% versus 48.7%. Gross margin was above the midpoint of our long-term target model.

Speaker #1: We maintain our 42% to 48% long-term target range, and product mix can cause fluctuations on a quarterly basis. Operating expenses were $78.5 million, up 23.9%.

Speaker #1: R&D was 13.9% of sales. Sales and marketing was 7.7% and G&A was 5.2%. For 2026, we plan for R&D in the 16 to 18% range sales and marketing in the 8% range and G&A in the 5 to 6% range.

Mark McKechnie: R&D was 13.9% of sales and marketing was 7.7%, and G&A was 5.2%. For 2026, we plan for R&D in the 16% to 18% range, sales and marketing in the 8% range, and G&A in the 5% to 6% range. Operating income was $56.3 million versus $41.5 million. 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% to 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. Net income per diluted share was $0.61 versus $0.55. On to the balance sheet and cash flow items.

Speaker #1: Operating income was $56.3 million versus $41.5 million. Operating margin was 19.2% as compared to 19.3%. Income tax expense was $13.5 million versus $1.9 million for Q2 2026.

Speaker #1: We expect our effective tax rate to be in the 10% to 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 interest.

Speaker #1: Net income per diluted share was $0.61 versus $0.55. Now, 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.

Mark McKechnie: Cash, cash equivalents, restricted cash, and time deposits were $1.36 billion at the end of Q2. Net cash, which excludes short-term and long-term debt, was $1.0 billion. This includes about $300 million of net cash on our US balance sheets. Total inventory net was $783.1 million. 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.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: Cash used by operations was 6.4 million and capital expenditures were 65.4 million. For the full year 2026, we continued to expect capital expenditures of about 175 million.

Speaker #1: That concludes our prepared remarks. Now let's open the call for any questions that you may have. Operator, please go ahead.

Speaker #2: Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press *11 on your telephone and wait for your name to be announced.

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.

Speaker #2: Please stand by while we compile the Q&A roster. Now, first question coming from the lineup. Sujita Silva with Rod Capital. Your line is now open.

Speaker #3: Hi David. Hi Mark. Hi Lisa. Congratulations on the progress here. Great diversification. Going on, so it's really good to see. You got it. Yep.

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

Mark McKechnie: Thank you.

David Wang: Thank you.

Suji Desilva: 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?

Speaker #3: So David, I mean, the global tools shipped to 200. It's a great number. What geographies are you seeing the largest shipments today in? And maybe what geographies do you expect the best growth opportunity near term in as you scale out beyond China?

Speaker #4: Yeah. Actually, we see there, especially I want to say our first half of this year, we have almost like a close to 1,200 go to Singapore.

Mark McKechnie: Yeah. Actually, we see there, especially I want to say H1 of this year, we have almost close to a dozen tools go to Singapore, right? One of their packaging house there. Also have a tool in there 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 US. 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.

David Wang: Yeah. Actually, we see there, especially I want to say H1 of this year, we have almost close to a dozen tools go to Singapore, right? One of their packaging house there. Also have a tool in there 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 US. 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.

Speaker #4: Right? One of their packaging house there. Also have two in their Rani in one of their foundry in the Singapore too. So we do see Singapore as the opportunity for tool there.

Speaker #4: Of course, we do have a customer continuing in the U.S. And as I mentioned, we're going to finish the building of our demo room, demo lab in Oregon.

Speaker #4: With that demo lab start using, we're going to attract more of our interest and also attention into our differential technology. So this way we can provide you more of a demo capability for customer in a global.

Speaker #3: Cool. Great. And then my second question is, given that you now have a significant amount of cash in the US, 300 million, maybe if you, David, or perhaps Mark, what are the some of the plan do you see use of those proceeds?

Suji Desilva: Great. My second question is, given that you now have a significant amount of cash in the US, $300 million, maybe if you, David, or perhaps from Mark, what are some of the planned use of those proceeds? Is it expanding capacity? Which regions, perhaps even inorganic activity? Any color would be helpful there.

Speaker #3: Is it expanding capacity, which regions, and perhaps even inorganic activity? Any color would be helpful there.

Speaker #4: Yeah. Obviously, with this cash preparation, it'll show our determination and also our confidence in expanding the sales activity outside mainland China. As I mentioned, our long-term goal is still $1.5 billion for revenue outside China.

Mark McKechnie: 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 US, also Taiwan, Singapore, Asia, also Europe, right? That's a bigger opportunity. 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.

David Wang: 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 US, also Taiwan, Singapore, Asia, also Europe, right? That's a bigger opportunity. 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.

Speaker #4: That's exactly for that goal. We prepare our funding and also our activity. So those funding sources are basically supporting our activity, definitely in the US and also in Taiwan.

Speaker #4: And there's Singapore, Asia, also the Europe, right? It's a bigger opportunity we see a lot of demand come out for those especially for our differential technology continuing plating and also where R&D for the even new PCBD and the furnace.

Speaker #4: So it's really exciting. As I mentioned, AI is really driving a lot of new demand for innovative technology. So we believe whatever is developed in Shanghai can really be spread out to benefit all customers globally, right?

Speaker #4: It's our goal here.

Speaker #3: Okay, that's very helpful. And then my last question: I know you guys have been diversifying your customer base, and you have 110% customer focus globally, but I'm curious—in China, how levered are you to what's going on with CXMT and the DRAM market?

Suji Desilva: Okay, that's very helpful. 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 and other areas whether you're very strong, but the DRAM effort there is growing very strongly. I'm curious how much leverage you have to that opportunity.

Speaker #3: Understanding AI is a playing field for you and other areas where you're very strong, but the DRAM effort there is growing very strongly. I'm curious how much leverage you have to that opportunity.

Speaker #4: Well, I really cannot comment with too much detail with any each customer, right? But looking overall, if you look at the Frost & Sullivan report, right, it showed a very strong demand and WFE market growth in China, right?

Mark McKechnie: Well, I really cannot comment too much detail with each customer, right? By looking at overall, you look in the

David Wang: Well, I really cannot comment too much detail with each customer, right? By looking at overall, you look in the

David Wang: For Frost & Sullivan, their report showed a very strong demand and WFE market growth in China. First of all, I want to say China is a bigger market for the oldest application, AI including. It's a huge market there, and therefore they can support a lot of cheap manufacturer in here. In the same way, they demand a lot of WFE equipment, right? 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. All our PECVD furnace and etchant system, we started development from 2000 or 2001 on 2019. In those timeline, we're really focused on the technology, focused on differentiation. Through the four or five year, our R&D team hard working.

Speaker #4: First of all, I want to say China is a bigger market, right, for the oldest application, AI included. So it's a huge market there.

Speaker #4: And therefore, they can supporting a lot of chip manufacturer in here. In the same way, they demand a lot of WFE equipment, right? So that's what we see opportunity here.

Speaker #4: And with ACM, I said we have multiple real products in the timeline. Especially this year, we call 2026 a big year for products, with new products coming out to the market.

Speaker #4: And all our PCBD furners and the track system we started development from 2000 or 2001 or 2019. In those timeline, we are really focused on their technology, focused on differentiation.

Speaker #4: So, through the four or five years, our R&D team has been working. We got some really exciting results, and some of them are obviously very close to the top tier in performance.

David Wang: We got some real exciting result. Some of them, obviously, very approaching to the top tier performance. Something we see even better than top tier performance. That's really our confidence. With this new product come out, we can further sustaining or increase our high growth rate, and for our revenue in the market, China. Of course, those new product, after qualify in the China market, will also eventually 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.

Speaker #4: And something we see even better than top tier performance, right? So that's really our confidence we can with this new product come out, we can further sustaining or increase our high growth rate and for our revenue in the market China.

Speaker #4: Of course, those new product after qualify in a China market will be also eventually will sell to the global market. So it's a lot of exciting for next few year.

Speaker #4: So our revenue will not only come from cleaning and copper plating anymore. New products will join our revenue growth, so this will be a very exciting year for the next few years.

Speaker #3: Yeah, that's very helpful color, David. Thank you, and congratulations to you and the team on the strong execution here. Thanks.

Suji Desilva: Yeah, that's very helpful color, David. Thank you, and congratulations to you and the team on the strong execution here. Thanks.

Speaker #4: Thank you.

David Wang: Thank you, Suji.

Speaker #2: Thanks, CG.

Mark McKechnie: Thanks, Suji.

Speaker #1: Thank you. Our next question in the queue comes from the line of Charles Lee with Needham & Company. Yolanda Snowen.

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

Speaker #5: Hi, thanks for taking my question. Maybe the first one—I know that you don’t really guide the quarter, but can you kind of walk us through how Q3 and Q4 are shaping up?

Charles Shi: Hi. Thanks for taking my question. Maybe the first one, I know that you don't really guide the quarter, but can you walk us through how the Q3, Q4 is shaping up? You have probably a very big beat in Q1 and then 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.

Speaker #5: You have probably a very big beat in Q1 and then 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.

Speaker #5: So 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.

Speaker #5: Thank you.

Speaker #4: Yeah. As I mentioned, in our script, right, we do have the first half-year PO receiving, and there has been an increase of over 100%, right?

David Wang: Yeah. As I mentioned in our script, we do have, the H1, our PO receiving in there has been increased 100%, more than 100%. It's real indication have real demand and also a large backlog. Some of those tools, 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? There's little bit constraint for supply there. We're 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.

Speaker #4: It's a real indication that there is real demand and also a large backlog. Some of those tools, obviously, when you try to deliver in Q3 or Q4, will probably have to wait to be delivered later.

Speaker #4: So now we are really trying to increase our capacity, and obviously, now the components have been—I want to say, everybody demands components, right?

Speaker #4: So there's a little bit constraint for supply there. So we are kind of looking at Q3, Q4 revenue. I think it really how we excursion our order manufacturing and also how we qualify ship the deferred revenue or the tool.

Speaker #4: So I want to say we're still very positive about our projection for whole year, right? We are this why we are increase our low side and now we expecting our whole year revenue 25 to 30% range.

David Wang: This is why we are increased our low side, and now we expecting our whole year revenue, 25% to 30% range. I think we're pretty confident for this forecast.

Speaker #4: I think we're pretty confident for this forecast.

Speaker #5: Yeah. Thanks. Maybe another question from Mark. Mark, I noticed that the range for SG&A as a percent of revenue kind of revised down a little bit.

Charles Shi: Yeah. Thanks. Maybe another question for Mark. Mark, I noticed that the range for SG&A, as a % of revenue revised 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. 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.

Speaker #5: Compared with the last quarter. So I guess I mean based on your midpoint of your guidance, your overall opex may actually come in a little bit lighter than you previously expected.

Speaker #5: I'm wondering what is the reason for the slight opex cut for this year because I 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 Lingan.

Speaker #5: And wondering the opex savings relative to what you previously thought, is it related to some of the timing of that R&D center and any color would be great.

Speaker #5: Thank you.

Speaker #2: Yeah. Charles, there's not a lot to read into that. I mean, R&D, we're looking 16 to 18% G&A. I said 5 to 6 and sales and market around 8.

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

Speaker #2: So it's really just tightening up at the estimates now that we're halfway through the year. But not a meaningful change. From where we were at the beginning of the year.

Speaker #2: Yeah.

Speaker #4: All right. Thank you.

Charles Shi: All right. Thank you.

Speaker #2: Yeah.

Mark McKechnie: Yeah.

Speaker #4: Thank you.

David Wang: Thank you.

Speaker #1: Thank you. Our next question comes from the line of Jimmy Huang with JP Morgan. Yolanda Snowen.

Operator: Thank you. Our next question coming from the line of Jimmy Huang with JP Morgan. Your line is now open.

Speaker #6: Yeah. Hi, David. Mark, congrats for the results. Can you hear me?

Jimmy Huang: Yeah. Hi, Jimmy Huang. Congrats for the results. Can you hear me?

Speaker #4: Yes, Jim. I can hear you.

David Wang: Yes.

Mark McKechnie: Yes.

Speaker #6: Yeah. Yeah, sure. So obvious yeah. So obvious China's manufacturing capacity build is very robust and structural. You also have a very solid product portfolio for WLP and POP.

Jimmy Huang: Yeah.

David Wang: We can hear you.

Jimmy Huang: Yeah, sure. 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? Yeah.

Speaker #6: Do we have any guidance or expectations for advanced factory equipment shipment growth rate for this year, and next year? Yeah.

Speaker #4: Okay. Well, we do not put a number, right, for the shipment this year. But definitely, also because of strong—I want to say—the backlog and our shipment, and definitely we will grow, out of growth, our revenue, right?

David Wang: Okay. Well, we do not put a number, right, for the shipment of this year. Definitely, we also, because of strong, I want to say the backlog, and our shipment definitely will outgrow our revenue, right? It will be a very strong shipment this year. Again, as I mentioned, also, we see the shortage all industry for some components. Used to be you can buy four months, sometime you have to get probably longer deliver. Anyway, we're trying to managing 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.

Speaker #4: So it's very will be very strong shipment this year. Again, as I mentioned, also we're kind of a short we see the shortage all industry for the some components.

Speaker #4: And it used to be you can buy four months sometime. You have to get a probably longer deliver. Anyway, we're trying to managing those supply chain.

Speaker #4: And make sure those components are coming on time. That may be the one thing I want to say might impact the whole year's shipment.

Speaker #4: But I still feel this year's shipment is still pretty good.

Speaker #6: Yeah, I see. So, do you have any nice—all the intact guidance, all the intact expectations—for your advanced factory equipment for this year?

Jimmy Huang: Yeah, I see. Do you have any nice order impact guidance, order impact expectations for your advanced packaging equipment for this year? Another question is that for AUO says every 10,000 wafer capacity build for 2.5D wafer level packaging. What's ACMR content value based on your product offerings at this moment? I think some like equipment companies, they could have this kind of sharing for investors to understand your progress. Yeah.

Speaker #6: And another question is that for all sales areas 10K wafer capacity built for 2.5D wafer level packaging, what's ACMR's content value based on your product offerings at this moment?

Speaker #6: I think some equipment companies, they could have this kind of sharing for investors to understand your progress. Yeah.

Speaker #2: Yeah. I don't quite understand the yeah. Maybe ask that again.

Operator: Yeah. I don't quite understand the, maybe ask that again.

Mark McKechnie: Yeah. I don't quite understand the, maybe ask that again.

David Wang: Can I hear your question again? I might get it lost there, cover send. Can you repeat again?

Speaker #4: Can you see a question again? I'm not going to lost a couple of sentences. Can you repeat again?

Speaker #6: Yeah. Yeah, sure. I mean, like for I mean, all sales for the wafer capacity I mean, for the advanced packaging capacity build such as 2.5D, I mean, every 10K capacity build plus the potential contribution to ACMR based on your product offering, do we have any sharings on that?

Jimmy Huang: 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.

Speaker #6: Yeah.

Speaker #2: Yeah. He's just looking at the intensity of when our customers spend on 10,000 wafers per month—how much will that drive our equipment sales?

Mark McKechnie: 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 giving.

Speaker #2: I don't think we're really yeah.

Speaker #4: I couldn't say there depend on which line build, right? Maybe let's put this way. The cleaning market, right, you can see that I want to say there a couple of cents.

David Wang: Well, I couldn't say there, depend on which line you build, right? Maybe let's put it this way. The cleaning market, right? You can see that the, I want to say, cover sand. Cleaning market today, probably in the whole fab spending, occupy 5% to 7%, depends on advanced fab or mature fab, right? A fab.

Speaker #4: Cleaning market today, probably in the whole fab, spending occupies 5% to 7%, depending on advanced fab or mature fab, right? But if you look really for the future, I want to say, with advanced fabs coming on, cleaning is becoming more and more important.

David Wang: You're looking really for the future, I want to say, advanced fab, a fab going on, cleaning become more and more important. Some people even projecting cleaning continue market need to grow. It might be even come to 10% eventually. Cleaning become more and more difficult and the more of material loss control, particle size get smaller. Also the drying method become maybe, from the IPA to the supercritical CO2 dry. Anyway, I see that market grow as number one. Second one is copper plating. It's clearly, actually four or five years ago, we said copper plating to be the $1.5 billion. That time, nobody really believe it, right? Now is almost at $1.5 billion already. With all the future backside of the power and HBM layer of the DRAM stacking going on. There's a lot of plating tool demand come out, right?

Speaker #4: And some people even projecting cleaning continual market growth. It might be even come to 10% eventually. Because cleaning become more and more difficult and more of a material loss control particle size get a small smaller so also the drying method become maybe from the IPA to the supercritical CO2 dry.

Speaker #4: So anyway, I see that market growth as number one. Second one is copper plating. Clearly, actually, four or five years ago, we said copper plating would be the $1.5 billion.

Speaker #4: That time nobody really believe it, right? Now it's almost 1.5 billion already. With all the future backside of the power and HBM layer of the DRAM stacking going on.

Speaker #4: So there's a lot of plating to demand come out, right? And more important this panel market also demand a lot of plating tool too.

David Wang: More important, this panel market also demand a lot of plating tool too. ACM is really pioneer in a panel level electroplating, right? This is probably, I want to say, this is the first time ACM really stand in the top, and for the horizontal plating technology end market, I want to say, offering. That really give us a bigger growth potential for this existing market. Further than that is the furnace and PECVD track. We see the also big potential there too. That's why I want to say ACM, in a real good, exciting period. We're expecting continued growth for cleaning and copper plating, and also with our new product, furnace, PECVD track come out, will further reinforce our revenue growth, right? That's why I said the next few year, really exciting year for our growth.

Speaker #4: So, ACM is really a pioneer in their panel-level electroplating, right? So, I want to say this is probably the first time ACM has really stood at the top.

Speaker #4: And for the horizontal plating technology and market I want to say offering so that's really give us a bigger growth potential and for this existing market.

Speaker #4: And further than that is the furnace and PCBD track. We see also big potential there too. So that's why I want to say ACM is in a really good, exciting period.

Speaker #4: And we expecting continual growth for cleaning and copper plating and also with a new product furnace PCBD track come out will further reinforce our revenue growth, right?

Speaker #4: So that's why I said the next few year really exciting year for our growth.

Speaker #6: Yeah. Thank you, Dr. Wong. So I think for China, I think they are building a lot of COWOS like 2.5D advanced factoring capacity. As far as I know, they are probably still use a lot of TSMC baseline tool members including way processing tools and other stuff.

Jimmy Huang: Yeah. 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? Yeah.

Speaker #6: Are we trying to get more market shares, more qualifications here? And how's our progress in China's COWOS like 2.5D capacity build?

Speaker #4: Yeah. I mean, you're looking at our actually plating growth, right? 156% and also our packaging tool growth also, right? It's really shooting indication a lot of new demand for the 3D packaging, right?

David Wang: Yeah. If you look in our actually plating growth, right, 156%, and also our packaging tool growth also, right? It 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? Also copper plating, right? It's really good, I want to say, growth for the 2.5D or 3D packaging. Right. Also, 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.

Speaker #4: And the 3D packaging becomes more and more important, for all the devices, right? So we see that growth potential here. ACM is well positioned for that with our cleaning and with our coater/developer.

Speaker #4: With all this PR stripper and also copper plating, right? So it's really a good, I want to say, growth for the 2.5D or 3D packaging.

Speaker #4: Also, I want to say panel also growth too, right? Panel level packaging is another big one. So it's very exciting for I see the 3D packaging going on.

Speaker #4: Which is a good product.

Speaker #6: Yeah. Yeah. I think it's quite exciting that we just announced that we have the third POP ECP tool evaluation system shipped to a customer in Asia.

Jimmy Huang: Yeah. 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 results 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 to 12 months? Yeah.

Speaker #6: And regarding the progress, when could the evaluation results come out? Is there any probability that we could receive the first purchase order from these customers in maybe the next few quarters, or the next 6 to 12 months?

Speaker #6: Yeah.

David Wang: Yeah. Obviously, you mentioned that the panel now is very hot, right? In all Asia.

Speaker #4: Yeah. Obviously, you mentioned that the panel now is very hot, right? In all of Asia—looking at mainland China, Taiwan, Korea, and even Singapore, right? It's very, very hot.

Jimmy Huang: Yeah

David Wang: looking at Mainland China and Taiwan, Korea, and even Singapore, right? It's very, very hot.

Speaker #4: And everybody believes that will be the ultimate solution for the large AI chip, whether it's CoWoS, HBM, or whatever packaging in large chip sizes. So we do see that trend.

David Wang: 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 515by 510, which are more large size, as Intel probably pioneer now. Also, we're also positioned for 310 by 310, which is leading by TSMC approach, right? It's a lot of exciting. I want to say, we're prepared for both markets.

Speaker #4: Obviously, we're positioned for 5-15 by 5-10, which is more large size, as Intel is probably the pioneer now. And also, we're positioned for 3-time by 3-10, which is led by TSMC's approach, right?

Speaker #4: So there's a lot of exciting I want to say we're prepared for both market.

Speaker #6: Yeah, I see. Thank you so much. That's all my questions. Thank you.

Jimmy Huang: Yeah. I see. Thank you so much. That's all my questions. Thank you.

Speaker #4: Thank you.

David Wang: Thank you.

Operator: Thank you. As a reminder, to ask a question, please press star 11. Our next question coming from the line of Christian Schwab with Craig-Hallum Capital. Your line is now open.

Speaker #1: Thank you. And as a reminder to ask a question, please press star 11. Our next question coming from the line of Christian Schwab with Craig Hallam Capital, your line is now open.

Speaker #5: Hey guys, it's Ben Tech Solon for Christian here. Great quarter. Exciting stuff going on at ACMR. My first question is, what is any commentary any initial commentary?

Ben Texel: Hey, guys, it's Ben Texel 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?

Ben Taxdahl: Hey, guys, it's Ben Texel 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?

Speaker #5: I know it's kind of early on 2027 visibility. I get new products and strong orders, but anything else or what exactly should we be thinking about for 27?

David Wang: Wow.

Mark McKechnie: Focusing on 2026, right? Yes.

Speaker #5: It's not 26, right? Yeah. Yeah.

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

Speaker #4: Well, I still see that a lot of fab we see, right, in the local China. It's in real still in the multi-year expansion, right?

Speaker #4: And clearly this year we see many fab open. And also we see that there are some fab will definitely beyond 2027 and growth. As I said, probably markets here strong, bigger, right?

Speaker #4: So we're very excited about even I said this proster Sullivan, they give a report, right, by year, 2029, their China market beyond 80 billion.

Speaker #4: Well, I mean, that's really—I'm liking that number, but this is exciting, right? Anyway, I want to say it's growing in the next few years, in the local market here.

Speaker #5: And 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, so that'll kind of flow into next year as well.

Mark McKechnie: 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, so that'll kind of flow into next year as well. Yeah, 2027 is starting to shape up pretty, as a good growth year.

Speaker #5: So yeah, 27 is starting to shape up pretty it's a good growth year.

Ben Texel: Great.

Ben Taxdahl: Great.

Speaker #2: Great.

David Wang: Also, just to mention, we made the progress, right, with all the Track system, PECVD.

Speaker #4: Also, I want to mention we made the progress, right, with all the track system, PCBD. And we see that those both product take off.

Mark McKechnie: Yeah.

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

Speaker #4: And obviously, we're probably will become leading supplier local supplier and for the track system. I know the PCBD quite a bit of competitive there, but our one chamber three chalk is real unique.

Speaker #4: Platform and we see there's certain special big market requirement for this PCBD too. So anyway, we're both excited about this new product.

Speaker #2: Great. Just one other question. Any update on the Shanghai listing?

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

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

Mark McKechnie: The Hong Kong, right?

Speaker #5: Or the Hong Kong, right?

Mark McKechnie: The Hong Kong, right?

Mark McKechnie: Hong Kong.

[Company Representative] (ACM Research): Hong Kong.

Mark McKechnie: Sorry, yes. Yep. Sorry.

Speaker #2: Or sorry, yes. Yep. Sorry.

Mark McKechnie: Sorry, yes. Yep. Sorry.

Speaker #5: Yeah.

Mark McKechnie: Yeah.

Speaker #4: Well, I would say really we cannot comment too much on Hong Kong listing, right? I can only tell that April timeline we announced we're going to do that.

David Wang: Well.

Mark McKechnie: No update.

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

Speaker #4: And that's the only information I can tell you right now. Eventually, maybe sometime later in the future, we may disclose more.

Speaker #2: Perfect. Thanks, guys. That's all I’ve got.

Ben Texel: Perfect. Thanks, guys. That's all I got.

Ben Taxdahl: Perfect. Thanks, guys. That's all I got.

Speaker #5: Yeah. No, thanks for asking. Yeah. Thanks.

Mark McKechnie: Yeah. No, thanks for asking. Yeah, thanks.

David Wang: Okay, thank you.

Speaker #4: Okay. Thank you.

Operator: Thank you. We have a follow-up question from Jimmy Huang with JP Morgan. Your line is open.

Speaker #1: Thank you. And we have a follow-up question from Jimmy Flan with JP Morgan. Your line is open.

Speaker #6: Yeah. Thank you. Thank you, David. Hi, David Mark. We talk about component shortage. There are also a lot of component parts price. We're rising component cost impact ACMR's gross margin.

Jimmy Huang: Thank you. Thank you, David. Hi, David Mark. We talk about component shortage. There are also a lot of component price hikes. Do arising 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?

Speaker #6: If so, in which potential quarters or timelines? And what kind of options does your company have to pass this cost through to your customers?

Speaker #6: Yeah.

David Wang: Well, I mean, probably this is a global point, right? Looking at our supply, probably either, honestly, major supply are components from Japan, right? Some in Korea. Definitely is a lot of growing, so 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 this is still, looking at this year, global component supply is still tight, right? 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, right? That's why we have to really manage it well in H2, make sure our supply catch our demand.

Speaker #4: Well, I mean, probably this is a global point, right? Looking at our supply probably either on some major supply or components from Japan, right, or some in Korea.

Speaker #4: Definitely it's a lot of growing. So there's a shortage there. We see that can happen. So something we still switching to the local supplier.

Speaker #4: And here, it looks better. But anyway, I want to say that as I look into this year, global component supply is still tight. Even some mechanical parts, some sliders, even robots—for example, the components—they are hard to get on time.

Speaker #4: We see that really booming, right? That's why we are really managing well in the second half of the year to make sure our supply catches our demand.

Speaker #5: Yeah. Really, you kind of take a look at it. I mean, no change to our gross margin target, 42% to 48%. So we're comfortable with where we are.

Mark McKechnie: Yeah. Really, you take a look at it. No change to our gross margin target, 42% to 48%. We're comfortable where we are. We have a good amount of raw materials, right, 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.

Speaker #5: We have a good amount of raw materials, right, that we had been purchasing we stocked up on some raw materials. So what we have in stock and kind of our outlook, we don't see any significant impact on gross margin.

David Wang: Yeah. We prepare a certain path in the end of last year, right? Because we are predicting

Speaker #4: Yeah. We prepare certain parts. And the end of last year, right, because we are predicting this year is very heavy year. So we are certain our vendor did something special for us.

Mark McKechnie: Yeah

Jimmy Huang: Yeah

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

Speaker #4: That will help us right now.

Speaker #6: Yeah. But the demand is very robust and the supply is quite tight. So, is it possible that we could pass through this incremental cost for rising component cost to our customers?

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

Speaker #6: Or is it not a key priority of your business?

Speaker #4: Wow. It's hard to tell right now, right? Probably. I mean, we're not at risk of price increases right now, at this moment, right? Also, I want to say our vendor supply— not many people are raising prices.

David Wang: Wow. It's hard to tell right now, right? Probably. We're not at risk pricing right now.

Jimmy Huang: Yes.

Mark McKechnie: Yes.

David Wang: This moment. Right. I want to say our vendor supply, not many people raising price. Some are raising, but not much. The only thing that is they probably delay the shipment, right? They cannot tell you, maybe used to be send to you in 4 months, maybe they need 6 months. That's happened. They didn't increase our price. Our key supplier, no.

Speaker #4: Some are raising, but not much. The only thing they say is there's probably a delayed shipment, right? They cannot tell you. Maybe it used to be sent in four months.

Speaker #4: Maybe they did six months. That's happened. But they didn't increase our price. Our key supplier, no.

Speaker #6: I see. And my second follow-up question is regarding our manufacturing capacity bills outside the mainland China. Are we going to build more capacity in the stats or in other HR regions if we receive more international orders?

Jimmy Huang: 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 States or in other Asia regions if we receive more international orders? Yeah.

Speaker #4: Yeah. You know that we do have our manufacturer, I want to say, a facility and a capability in Korea, right? So that's really starting to play.

David Wang: Yeah. You know that we do have our manufacturer, I want to say a facility and a capability in Korea, right? That's really start to pay. Some tool we ship to US will be made there. Actually, now is made in Korea right now. Some future tool what we're shipping to Taiwan and Singapore will be also made probably in Korea, too. Right? I said, as really more of a revenue growing in the US or in other region, we can also probably propel a secondary manufacturer site, too. We're really in that, I want to say consideration and a direction.

Speaker #4: And some tool will ship the US will be made actually made now is made in Korea right now. And also some future tool probably shipping to Taiwan.

Speaker #4: And or Singapore will be also made probably in Korea too. Right? And also, I said it's really more of a revenue growing in the US or in other region, we can also probably prepare secondary manufacture side too.

Speaker #4: So we're really in that I want to say consideration and a direction.

Jimmy Huang: 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.

Speaker #6: I see. And regarding your further funding for this kind of capacity manufacturing capacity expansion, would you need to dispose some steps in ACM Shanghai or you don't consider that option?

Speaker #5: Yeah. So I mean, we're pretty comfortable with our balance sheet, right? David mentioned we have 300 million dollars on our US balance sheet. So part of that was kind of a war chest to show our customers that when we get the production orders, we can support that.

Mark McKechnie: Yeah. We're pretty comfortable with our balance sheet, right? David mentioned we have $300 million on our US 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. No.

Speaker #5: And so we don't have any near-term plans to scale out of our any more of our Shanghai shares.

Speaker #6: Yeah. Thank you so much, David and Mark, if I can hear. Thank you.

Jimmy Huang: Yeah. Thank you so much, Dave and Mark. It's very clear. Thank you.

Mark McKechnie: Yeah. You bet.

Speaker #5: Yeah. You bet.

Speaker #1: Thank you. Our next question coming from the lineup. I've been to a NIF with Daiwa Capital Markets. The line is now open.

Operator: Thank you. Our next question coming from the line of Bintun Li with Daiwa Capital Markets. Your line is now open.

Speaker #7: Hey, thank you for letting me on. I have a first congratulation on your new orders, 100%. That's very impressive. Can I ask in terms of by segment, can you rank which one is the strongest?

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

[Analyst] (Daiwa Capital Markets): Hey. Thank you for letting me on. First is congratulations on your new orders, 100%. That's very impressive. Can I ask, in terms of by segment, can you rank which one is the strongest, for DRAM, HBM, NAND, and the logic? Thank you.

Speaker #7: For DRAM, HDM, NAND, and the logic. Thank you.

Speaker #5: In terms of our order strength, David, he's asking yeah. I don't we didn't break it out, but David in the prepared all of our customer base and across our products.

Mark McKechnie: In terms of our order strength, David, he's asking. Yeah. We didn't break it out, but 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.

Speaker #5: A little bit stronger in some of our newer products, but we didn't break it out by end markets.

Speaker #7: Yeah. Well, obviously, we see their strong memory and also strong logic, right? Both. Okay. Thank you, David and Mark. Next question is about our cash flows.

David Wang: Yeah. Obviously, we see they're strong in memory-

Mark McKechnie: Yeah

David Wang: Also strong in logic, right? Both.

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

[Analyst] (Daiwa Capital Markets): Okay. Thank you, Dave and Mark. Next question is about our cash flows. It looks like we have a very strong tailwind from the industrial side and also our new product launches going ahead. In terms of operating cash flows and CAPEX, how should we think about that? Thank you.

Speaker #7: It looks like we have a very strong tailwind from the industrialized and also our new product launch is going ahead. So in terms of operating cash flows and CAPEX, how should we think about that?

Speaker #7: Thank you.

Speaker #5: 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.

Mark McKechnie: 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.

Speaker #5: But the whole the plan is in growth mode, you make these investments and then you get we harvest those over the next several years.

Speaker #5: So this year, we'll probably burn some cash. Obviously, putting a capital to work on our new production facilities, on our facilities outside in Oregon and what have you.

Speaker #5: But longer term, we see it obviously, it's a positive cash flow operation.

Bintun Li: Perfect. Thank you.

[Analyst] (Daiwa Capital Markets): Perfect. Thank you.

Speaker #7: Okay. Thank you.

Speaker #1: Thank you. Seeing there no more questions in the queue, I will now send a call back over to Stephen Pelayo for closing remarks.

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.

Speaker #4: 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 the Needham 7th annual virtual semiconductor and semi-cap one-on-one conference.

Steven Pelayo: Okay, great. Before we conclude, I just want to give everyone a quick reminder of our upcoming investor conferences. On 20 August, we will participate in Needham's Seventh Annual Virtual Semiconductor and Semi Cap One-on-One Conference. On 25 August, we'll present at the 2026 Jefferies Semiconductor, IT, Hardware, and Communications Technology Conference at the Four Seasons Hotel in Chicago. On 13 October, 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.

Speaker #4: On August 25th, we'll present at the 2026 Jefferies Semiconductor, IT Hardware, and Communications Technology Conference at the Four Seasons Hotel in Chicago. On October 13th, we will present at the 18th annual CEO Summit Conference, in conjunction with Semicon West in San Francisco.

Speaker #4: 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.

Speaker #4: With that, this concludes the call. And you may now disconnect.

Operator: Ladies and gentlemen, that does end our conference call today. Thank you for your participation. You may now disconnect.

Q2 2026 ACM Research Inc Earnings Call

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