ACM Research, Inc. Class A Common Stock 2026 Q2 Earnings Call

Thank you for joining us to discuss second quarter 2026 results, which we released before the U.S. market opened today. The release is available on our website as well as from Newswire Services. There's also a supplemental slide deck posted to the investor section of our website that we will reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wang, our CFO, Mark McKechnie, and Lisa Feng, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to slide two. Let me remind you that remarks made during this call may include predictions, estimates, or other information that might be considered forward-looking. These forward-looking statements represent ACM's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially.

Those risks are described under risk factors and elsewhere in ACM's filings with the Securities and Exchange Commission. Please do not place undue reliance on these forward-looking statements, which reflect ACM's opinions only as of the date of this call. ACM is not obliged to update you on any revisions to these forward-looking statements. Certain financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation and unrealized gains and losses on short-term investments. For our GAAP results and reconciliation between GAAP and non-GAAP amounts, you should refer to our earnings release, which is posted on the IR section of our website and to slide 22. Also, unless otherwise noted, the following figures refer to second quarter 2026 and comparisons are with the second quarter 2025. With that, I will now turn the call over to David Wang.

Dave? Thanks, Steven. Hello, everyone, and welcome to ACM's second quarter 2026 earnings conference call.

The June quarter marked another period of strong execution for ACM Research. Revenue and shipment increased 36% year-over-year. Revenue growth was led by our ECP and advanced packaging product category, both of which increased more than 150% year-over-year. This strong performance reflects progress we are making in transforming ACM into a broader multi-product semiconductor equipment company. In June of this year, third-party research Frost & Sullivan published a report called the Global and China Semiconductor Equipment Market Research. They now estimate the global semiconductor equipment market exceeded $140 billion in 2025 and will grow to more than $200 billion by 2029. They also estimate the Mainland China market exceeding $50 billion in 2025 and will grow to more than $80 billion in 2029.

To fund our global operation, we have recently strengthened our balance sheet. ACM now has more than $1 billion of net cash globally. This includes approximately $300 million in the U.S. following our $150 million, which is the direct offering completed this past May. This financial strength provides a solid foundation to support our mission to become a key supplier of world-class capital equipment for the top major product of semiconductors. We believe AI is driving one of the most significant technology transitions the semiconductor industry has experienced in many years. As chip complexity and chip size continue to increase, traditional wafer level packaging approaching are reaching practical limit, creating demand for entire new manufacture technology across advanced packaging.

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

Our proprietary horizontal plating architecture is a key differentiate, delivering superior plating uniformity while addressing the demand process requirement of a next generation AI packaging. This order are important milestone for what we believe could become a significant long-term growth opportunity. I'm pleased to report today that our order book has been quite strong. For the first half of 2026, orders increased 105% year-over-year. This is a mix across all product category with a heavier emphasis on some of our new product. As with the prior years, ACM Shanghai plans to release backlog figure as of the September 30 in early October. Thanks to good execution by our operation team, we continue to expect shipment across each of our category to grow faster than revenue. We remain confident in our growth target for 2026 and beyond.

For 2026, we see a healthy backdrop for China WFE as our customer continue to scale their production capacity. We expect an extra boost for our business from a few product cycle, including our SPM and the furnaces to enable us to outgrowing the China WFE. Beyond this year, we estimate that our newer platform, including track, PECVD and horizontal panel level plating, will proceed for evaluating phase into a commercialization phase, resulting in production orders and drive our growth for years to come. In summary, we see 2026 as a big year for new product and another year of a solid growth for ACM. Now on to our business result. Please turn to slide three. Revenue for the second quarter was $293 million, up 36%. Shipment for the second quarter was $282 million, up 36%. Gross margin was 46% and operating profit margin was about 19%.

We ended the quarter with a gross cash of $1.4 billion and a net cash of $1.0 billion. Now I will provide detail on product. Please turn to slide four. Revenue from single wafer cleaning, Tahoe and semi-critical cleaning tool was $133 million, down 14%, and represent 45% of revenue. We believe ACM has built industrial broader cleaning product portfolio. Our product in this category, including SAPS, TEBO, Tahoe, backside clean, solvent clean, fabric clean, scrubber and wet etcher, and our proprietary single wafer hot SPM technology. In May, we present our proprietary hot SPM cleaning technology at 2026 Surface Preparation and Cleaning Conference. This system demonstrate fewer than 15 particles performance at a 15 nanometer particle size. Our proprietary nozzle design prevents acid mist and the chemical splashing outside chamber during the hot SPM process. This, therefore, does not require periodical DI water chamber outside clean.

For customer, this means less maintenance, better uptime and a more stable particle performance. We believe this represent the best performance in the industry. Our SPM platform is well suited for the advanced logic and memory, where cleaning requirement are becoming more demanding. Today, we also announce new capability for Ultra C Tahoe, expanding it into a broader wet process platform. Tahoe is built on our patented hybrid architecture that combine batch SPM process and a single wafer cleaning. We have added wet etching and the monitor wafer reclaim application to the Tahoe platform. This integrate multiple process that had previously required a separate standalone tool into one Tahoe platform. The expanded platform has been adopted by multiple leading semiconductor manufacturers. ACM will continue to drive world-class process performance with a focus on ESG benefit to helping make advanced semiconductor manufacture more efficient and more sustainable.

We have shipped a handful of single wafer SPM tool in the first half of this year, we are on track to ship more than in the second half of this year for more than 20 by end of this year. As a reminder, we estimate that SPM represent about 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, and we grow our repeat shipment. Revenue for ECP, Furnaces 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 benefit from larger die size and the steady increase from higher interconnector layer counts.

In memory device, we have benefit as HBM packaging demands higher level of DRAM stacking and, thus, more copper process steps. During the quarter, we shipped our 2,000th electroplating chamber. This follows our 500th chamber shipment in 2022 and our 1,500th chamber shipment in 2025. This shows how quickly our installed base has grown and how broadly customers are adopting our technology in volume production. 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, PALD, and ultra-high temperature anneal. Revenue from advanced packaging, which excludes ECP, but including service and parts, was up 253%. This including coaters, developer, etcher, stripper, scrubber, and the vacuum cleaning tool, supporting a broad range of our advanced packaging application.

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