ACMR - Earnings call transcript Q3 2020

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Operator

All right. Good day, ladies and gentlemen. Thank you for standing by and welcome to the ACM Research Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

are call. we reminder, a recording today's As

If this time. any objections, disconnect at you may you have

Now, turn Mr. Managing Director ahead. I Gary of Mr. will The the call Blueshirt Group. Dvorchak, go to please over Dvorchak,

Gary Dvorchak

you, yesterday. on call We The us released release Thank for after the XXXX third today's Good investor is Thank to day you deck portion Andrea. U.S. joining prepared quarter results Newswire discuss results. everyone. our our market services. as There's posted website to supplemental a remarks. on we the available that from slide of our website will as also during closed well reference

Shanghai. call with the Lisa Dr. McKechnie; our CEO, and David ACM Wang; Feng, the On our today CFO, of Mark me our CFO are subsidiary, operating

Slide Before turn continue, please to X. we

remind for remarks include be considered this call you and information represent me statements the judgment forward-looking during that ACM's that may other made current future. forward-looking. might estimates predictions, Let These

on financial excludes securities. gain which to value of not on basis, fair this provide a an we actual that the statements, revisions liability ACM subject be are of Factors in they Certain to to a However, the change forward-looking this described ACM's and place under unrealized Commission. do ACM's financial compensation, you undue non-GAAP filings these risks only a Securities is and opinions not cause that to results of differ on reliance Risk elsewhere Please the loss any with call update reflect obliged these and of uncertainties materially. Those Exchange a are the trading in and forward-looking statements. stock-based which on relating could will as results risks call. to date

let GAAP Slide begin our posted that, which For to X. our results now earnings over to who the our and should will turn with release, Wang, refer David website. call on IR is With between me of the and non-GAAP section you reconciliations amounts, David? GAAP

David Wang

Gary, you, to everyone and call. today's welcome Thank

product third were greater to Our on XX% with and We strategic quarter record new XX%. our $XX launching and another a good shipments results, of a up at delivered growth grow balance up were and profitability, and million, represent results operating revenue progress Both XX%, Revenue quarter shipments XX% product margin. level. $XX.X million, gross strong with financial initiatives. margin

growth We ended as We products million invest profitable we R&D to $XX cash. with are the in to committed for global continue delivering of sales and quarter and new marketing.

$XX sheet SMIC had also highlights, on STAR in We a X. from will discuss now balance million to Market XD of IPO. please our investment I operational our security Slide turn recent

moment revenue in had third lead third continues a out of our both new We've customer in Tahoe Tahoe existing tool, strong to products and the quarter. making delivered environment. to We another Our our shipment production customers, foundry customer. newer our

tools We acid. continue leading performance delivered customers. ECP Tahoe shipments two unique customers. perspective ap combinations delivered sulfuric to less We order committed see strong interest packaging strong using new XX% from while for our current to of repeat and

tool at backend performance a metal that area. uniform provides more a a by Our is layer better Ultra ECP ap XD notch putting

TSV remove customer. process our is wider filling We efficiency, a for foundry that technology a chips, existing also In advanced leading TEBO lead as the with to our aspect higher XD critical We tool, to customer we technology a applications, PRE in node. more September, for delivered of the upgrade, including new stacking a tool – significant tool is process [indiscernible] the had delivered moving a window. second-generation of that customers ECP XD Ultra enhanced gap production ECP member high-density offers which particle delivered first of of Xd China, front to high a ratio end

States adoption for the Also TEBO. where important accelerate expect milestone We first of week, in an and XD and two device protection revenue last qualification is United Office damage-free Patent This this technology patent. acceptance. announced position and advanced will decades. the TEBO, leadership Trademark patent recognition sophisticated semiconductor we for This help cleaning structures megasonic with we upon approved tool TEBO for strengthens our our nearly expect fundamental

bench, Our sprayed third China-based SAPS-II power includes and customer our semi-critical, tool. wafer cleaning including auto quarter did multiple, backside tool to manufacturer. shipments, first cleaning in first scrubber, are IC and newest Their tool, tool analog wet also

and expect at team platform our Over tool Look new several this the acceptance beyond ECP team. tool of to has innovating vertical our graph flagship training engineering tool, I'm years, added be many and expand SFP events. revenue offering XXXX furnaces. We past and cleaning our polish product, likely in achievement. to proud to

Now X. Slide turning to

those application DRAM, analog to will power XD portfolio current foundry, our product are opportunity. NAND, spans opportunity. ACM, For you billion our the and reveal portfolio the devices. of and I market total new estimate We This product market $X addresses

Our core and cleaning with starting our $X TEBO tool semi-critical product. billion $X.X by for market estimate single-wafer billion And fluid cleaning We SAPS, cleaning cleaning product, address market for flagship cleaning this XX% about wafer as products. market our the tool served ACM Tahoe. of

stress-free from and furnace from Our each the products. products add $X.X ECP including newer $X a vertical billion, polishing billion $X.X million

new market by gaining line and We expanding winning product are customers. focused share our on

Our many extends in the years future. roadmap

products. unwavering of an commitment to discussion for you Slide have expand to our market customer our X opportunity We Could turn base. with new

XD customers major and five front-end NAND. foundry have in DRAM, We across

wafer semiconductor buying those represent our stage Naturally of still and of early capacity we them new a product And fraction to customers. major to middle and Many can opportunity full are We significant We assembly of every believe have as several manufacturer portfolio. benefit ACM. for newest and in capacious alone customer add power our back-end are multi-year our a a believe manufacture device. packaging from and technology. only expect customers we continue analog customers

America, are turn Please X. with to actively engaged customers year, we a call, and number in Taiwan. first previous Slide potential on discussed we of As North new

adding remains, our Shanghai, September Shanghai third We second second R&D, regional headquarter in factory of We and of our are and for growth from the $XXX this at including prototyping support ACM our development year. actively to factory quarter capacity our long-term trends, than the the of in products. production capacity production increased began at facility SG&A production and second floor newer of and in to XXXX more the open production near-term and This million our which $XXX million. capacity

ground have in year July is our We middle our XXXX. and of to R&D which begin floor Lingang of space become center, and production employee Our facility, production on increase plan long-term facility solution this housing, Lingang by five-folds. we'll broke the to will providing by capacity

XXXX our to discuss discuss important few like would Before items. outlook, I

short refused in report that October. [indiscernible] the the in by address made to want release We I and was made allegations in comments we’re press early responsible seller published the X fully our First, October report.

Commission. a of were statements documentary spending the included and interview Shanghai, of asset the past which with on the performed XX-page findings work, report of general banker, Shanghai, reveal. management our the all opinions, detailed our few decided by the weeks, includes the release most easy for report. fully team Most CDO, allegations team, China has the facts, a filters items CWN, risk the delivered will Shanghai Stock Over team point, team this China auditor on items, now customers, the all ACM point of has IPO basis. industry, report This the we Exchange ACM a At allegations. performed and IPO in of and report point suppliers of from The comprehensive for other to complimentary the meeting item, including we a refuse contradictionary a mainly short seller review their a and lag as the

happy questions after We take to any are call. the

formal on Stock long submitted application process listing with market May, Shanghai late month listed in later Regulatory ACM question our update IPO the approved the listing in At we at subject China year-end. price answer XXXX, too approval this registration, later expect September, committee Exchange the Second, timely and to to Market and Shanghai of Commission. and and this point, reveal a Stock registration the launch through STAR Security IPO is application. Commission, the by we After submission

over like XXXX Slide turn discuss the to to outlook. now our I to would call Mark, I Before X. Please turn

forward, business we're remain beyond. optimistic prospects XXXX for as we excited the follows. growth our opportunities, and our we updated by and XXXX Looking our about have XXXX remainder Accordingly, outlook of year full

year-on-year now $XXX million, We have at growth. point that middle revenue XX.X% range $XXX the the revised at reached be point, prior $XXX XX% $XXX million implied for compared in middle our revenue represent end and to to million fourth the to growth revenue the range range. of between of quarter million, represents low the We revenue expect

the Our is outlook assumptions. based XXXX several for key of on remainder

not stable First, in on basis the worsen a months. does COVID-XX global situation in remains and China coming

fab Second, investment Chinese continues. industry semiconductor

range NAND revenue muted good assumed the from and lobbying [ph] the recovery. Third, DRAM customers and growth foundry

QX Our limited assuming outlook contributions SMIC. from also in

outlook our and results is sheet of successful Our a execution strategy. balance of

to the Our capacity is our providing growth factory. strong

investor new Our the products spending profitability R&D and deliver expects. our that

new support the as major a continued our building growth Mark customers, conclude, I and work their and to the sales and to like our panacea global for partners To our for resources hand semiconductor we We’re confidence in support ACM and I to results detail. in long-term employees become capacity marketing for dedication. would hard discuss more and customers Research. want their equipment we will production to our plan mission to shareholders to over our call continue scaling industry. are global their the thank new now regions, supplier financial also thank in I to

Mark McKechnie

third included of which day, value David, non-GAAP in results measures you, stock-based compensation, refer financial financial earnings Unless non-GAAP the liability, of unrealized these Slide Turn strong comparable had measures and to gain I to to We financial in release. I'll GAAP good fair note our quarter. change in measures, securities. reconciliation A X. Thank is otherwise, trading everyone. and excludes in

For and also by shipments quarter. the back-end our $XX tools. one major We million from year for third were of ago $XX quarter, the million, Total of customers. of our last $XX.X back-end a million in versus revenue equipment quarter demand XX.X%. in front-end up customers, was driven $XX and contribution three revenue Growth our strong and front-end had solid million was

on to was in scale of industry. important of of deliveries awaiting Gross recognized Gross deliveries variety potential Operating As expenses David revenue within systems new mix. XX.X%. products, record year-on-year margin versus for acceptance product revenue versus STAR Operating include expenses income million, shipments volume R&D increase IPO. marked due long-term target noted, quarterly and margin up the Gross of XX%. million, as driven margin shipments to on our and basis of Market XX.X% was varies G&A margin for were was to XX%. this factors, to The which higher well Total a a quarter, XX.X%. quarters. in the by as XX.X% the XX.X%. $XX.X level Operating XX% related sales customer was future another such higher as demonstration up $XX.X is quarterly was

line. exclude some in results operating stock-based items. Now Non-GAAP additional below compensation details the two

in a The non-cash fair loss first, million. financial value liability $X.X non-operating is of of change book

quarter's restructured no comply on and in The will after longer agreements it which to beyond. – with of the through last equity our was IPO. became our investments PE terminated related to statement was QX investment described July a prior impacts Market As warrant, the of IPO. XXXX to ACM number our in private was an liability The liability XX impact in balance in the item and call equity sheet with issuance the XX-Q a and income filings, STAR

investment. gain original The of trading mark-to-market the price. securities gain the unrealized our at in the investment on reflects SMIC $X from million the is increase quarter-end, Second was value and IPO from

Other was working rate. given a a benefit valuation or exclude million. year-on-year results year. million expense significant the of interest income $X.X the line. This $X.X until sell was expense Other when $X.X gain a of bottom approximately due item the will is million to this impacted unchanged shares. million primarily from is Tax XXXX during million. $X.X Net was a that expenses We we realized our $X.X our realize last non-GAAP global resulted fluctuations to swing from from other The if on XXXX exercises, gains release was benefit of doing favorable by had and versus on losses of capital option included results tax our part that benefit caused large The impact allowance. also the currency in $X.X which quarter. million QX versus

in interest tax million Net for of $X.X non-GAAP was was Our $X.X periods. tax effective have versus million well. $X.XX tax income you fluctuations discussed quarter model items Research to exclude on The million item can at $X.X benefit the as versus a investors. income line rate held share ACM apples-to-apples factors. quarterly to XX% this in X.X% a currency minority can $XX.X was interest for encourage versus net and $X.X third tax of rate benefit We XXXX. the XXXX of income net diluted If currency big model items for Shanghai normalized a Net XX% per to a of versus This future a $X basis million for Non-controlling XX% We suggest net the vary and attributable comparison million. is $X.XX $X.XX. we above contributed number proxy as of the $X.XX. in line million. versus as PE analysts about by ACM

up of QX. The quarter-on-quarter and primarily provided operating $XX.X line to credit. at million due activities cash increase net equivalence million, the was we and balance end on end draw $XX.X sheet Cash Now the were of the at higher QX. our from our items by reviewed of

our sheet the investment. addition balance, million from goods is were last share of on finished change $XX purchase $X million of as In a tools year $XX.X goods land carried housing. This from million on locked a at the Totaled recognition. as end future and to the $XX.X million inventory at billion represents up QX. is was at that $X.XX rights for we includes a were balance quarter related end cost in balance quarter. total to initial $XX.X $X of million of total and million, increased ACM’s date. $X.X quarter-on-quarter spent for borrowings net the the to current customers to Year-to-date, been $XX up last from have securities first the related pending we’ve at deposits investments. This customer end the of the SMIC Short-term finished valuation. of The revenue a million we inventory million, Note of $XX.X up had on million asset $XX employee from inventory trading Lingang increase million for that shipped also our sheet acceptance treated for cash

total million of million to in new in full fourth facility anticipate $XX $X million In addition, spending $XX Lingang we’ve year. and we of To are in growth fabs. the $X.X quarter related capital to conclude, housing the for IC We expenditures. spent million CapEx million Lingang a another CapEx participating of employee for the $XX major total of

develop We and to are and production, ramping deliver innovative continue products.

in about are equipment player our the our market. expansion and achieving to remain mission committed we a outside We to semiconductor and in major optimistic opportunities China of become China,

you Let’s that ahead. open the call please now may have. questions for Operator, go any

Operator

Nicolaus. the now . we’ll first Thank session from you. Ho the ahead. gentlemen, question-and-answer Patrick Our Ladies and Stifel comes [Operator question from begin Instructions] Please of line go

Patrick Ho

in you of your you revenues maybe localization potentially discuss shift XXXX and you accelerated effects you come for chip a discussions rise you’ve environment, quarter. Thank seeing September posted at business? as shipments of strong of effort? that’s tensions on you a and very a more David, as in helping terms quarter you you’re they geopolitical look whole? – that on how Can the And the the off customer obviously first very Are much, with makers as seeing congrats as your nice outlook. and an whether market the to

David Wang

Hi, Okay. thank you. Patrick,

indication trend year. – we year, And half also continued as strong – the we achievement, see also have in QX. of QX, There that next the we first very Okay. this quarter good given we have the a and

early January. of as normally projection next However, year, normally give by we

furnaces. customer also And and also new have seeing revenue those we above fab we’re QX. new major a I’ve I guidance by – base do see of end in products we’ll this year And semi-critical community do also some recovery are million qualifying recent including real, wherever their here $XX is from next of also those really their by also end QX, point the see also time. last our probably, Again, have tool the these fab. year. and see So – contribution – product, the were expansion opportunity customer next do – continuing other month, we that adding at top ECP, either we’re deferred we Tahoe, our our vertical the customer cleaning and about of

anything Mark, to that. So add on

Mark McKechnie

I think, have covered you question. it you well. Patrick, if another

Patrick Ho

question for my Mark, follow-up you. more

for inventory were up units. your inventories the mentioned to evaluation building went of So you you primarily some due

Given that bit procure about a parts the just demand. it where lines, disruption supplies standard companies to and talked core the – product equipment of increase key as chain for little of other just do related in color COVID inventory of comfortable in has the How building procurement feel enough, parts. a chain to any given basically there's the bit your supply you a inventory general whether and for you have you you're give that need supply up opened ability in to whether still parts little building of can Or well? the

Mark McKechnie

for demo so the – a of uptick the Patrick. first call Yes, out question, you on lot Thanks Yes. the did from tools. was inventory yes,

And factor we that tools and of tools really big – number a four take that customers quarters, those revenue we'd on are a was to range So typically carry our that of expect two those are costs evaluating. them. to a and

built some a The really a overall inventory good tightness. we be in don't but of done suppliers. really was that any some our that additional we built of we’re quarter. like next – ramp any feel because that. In of working just expect there's times have longer, terms to see may really potential lead we're chain, up the did work with We front items. got inventory, with little closely it's on our We always I

Patrick Ho

Thank Great. you.

Mark McKechnie

Patrick. Thanks,

David Wang

you, Thank Patrick.

Operator

you. Thank

Our the next Chan question Please from go Stanley. Morgan comes from Charlie ahead. of line

Charlie Chan

afternoon. Hi, good Good morning.

future. say, your citation you would had a reports. I again, And So [indiscernible] that congratulations for great about

that I was very think helpful.

So leading accounts. at updates logic foundry, customers on as progress was usual, line some and are fill some I you top Thank you. here? the us to I the out your Can give for TEBO memory those still U.S.

David Wang

of and leading with there very and we’re another America. still say, should in qualification. is Taiwan. probably customers, confidence, for progress continuing tier us work Again, and Tahoe be say customers also one tool of we TEBO year customer. of to in exciting hopefully cleaning especially, demo both America penetrate North And the our XX in in also Great. I year, mentioned receive I and our for leading next tool. about premium the with And this will the by Meanwhile, And year. be year And multiple familiar I deliver that tool you we’d can also we that some And another with in has tool to be said, reason customer a next entry six North also have we're months the and tool. and and the they're for as making demo end flash to other there working talking in Taiwan customer you we're will top our probably probably Taiwan

we’ll deal So on again, time is and that going progress.

Charlie Chan

good. Okay,

tailwind must needs merger? think have for to that flash there's the mix. high a I Do the of business you is in So And to you since disclosed. that your customer high announced you this spend big the the M&A that kind entails you after lead NAND constituted certain think

David Wang

Yes, definitely right.

I there's of of will not our a I right, rapidly, a of it the and obviously, to inter-fab all fab news, M&A. anyway locating the that properly years customer, very that even their also But because in I happening of and or heard possible a really needs this finish completion take couple time heard think China.

Wuhan. our positive we of the PC us, lot build and So in one we into good fine see up, to a XD NAND, plus our get for in process this have

a and XD in lot our process very also with fabs the So manufacture semi path contributed process. future we our familiar even tool three are also I And XD as business. NAND and mentioned, cleaning

for sign us. So it's good

Charlie Chan

time think And challenges, had heard for I Thanks. to defer because for CapEx. the of SMIC to billion for already for because know click but a on one they it's too year. there next do year question is in could be project project being, if China around follow-up first to the China some also this comparison year, about going terms I CapEx the ROI could Okay. of new about the that And China some $X so you $X the be scrutiny to was want you to has low. cannot when I XXXX, there some size them CapEx speaker be were billion our be the to made going for tough that example, this a next larger

the to what will size And growth? XXXX China compared what about this think CapEx to year? you to mean XXXX So would for you that Thanks.

David Wang

Okay.

So a far, and new our and XTC customer including I customer, revenue too. and like Huahong also even think customer

see We have why continue that's year. plan case year we And and in very this of next half first indication for the next good there, spending. good

might And node. yet, the the that We but and moment it's XX on, which something supplier – loose are that expansion, as got getting progress. watching XX we – improve ACM features all. there the and all you we expecting don't At us an are can can we’re And to Regarding, was nanometer see for assured released what's they to license [indiscernible] the know moment, nanometer nice I to obviously, the be not probably those SMIC, of is we going you really to Beijing. this expected their right. this this and to if give involvement

right? progress, out keeping So we're like cautiously watch

Charlie Chan

you is not here. I'm But your cap about talk this that And for the what of market expanded Okay. subsidiary IPO? sure can lastly, if China

David Wang

question. good a That's

expectation for influence interest. and in the Rather There'll anyway have market, and all a looking that, a IPO, semiconductor – is a at the one say than right. We on be and look news multiple you was of really for company S&P thing, a our non-stock know and at period. in us for a be year ratio good sensitive company but I you equipment past it bad can’t the a comment the right. are you're in I to bad U.S. us pricing our other should market stock pricing but that and in cap we good

Charlie Chan

Okay. Got very you you. Thank much.

Operator

Thank you.

Our line comes next your ROTH question Capital. question. ask from Please Suji of the Desilva from

Suji Desilva

David, Hi, Mark, progress congratulations hi whole on here.

success a specific on is segment couple looking of So the you've had product, maybe C in questions, Tahoe that Ultra longer? at aggressively, Foundry that the the take memory customer base will or

David Wang

Actually Tahoe that three one. repeater order our are this or the first all right, customer. we comes product good. Okay, fundraiser XX%, product, – including shipping And with

this we And order. good And through also like do engagement with so the to had a and keep product. why they two and have like multiple additional they I That's memory give customer it and customer Foundry a into conversation too. another

we by way. I well, to can multiple So the customer Foundry bid,

consumption, it's powerful a performance. that benefit it tool, terms or will time of also a the more, well the our at customer chemistry, provide same a good think in we XX% give control is So and

was tool. customers year. expecting a good that more for we're for So to next that it also revenue give contribution expecting And

Suji Desilva

new is, partnership U.S. you quarter, any update you the Okay. announced OEM us update last could also two those And Thanks. customer my on quarter, the there? China that question follow-up analog announcements last

David Wang

Yes.

Okay.

highly those I in process. there performance the where cleaning and that terms analog our as customer, of of got and OEM customer like our year delivering benefit this devices, we’re where capability, it’s I and customers quality. U.S. power think we’re said, be also, next to there, QX I customers, another qualifying the especially, tool a to one what new a have just tool – have probably to the there I in think And a and And and they delivery cleaning. add I to their do having in in-house we we already we’ll few hope

working So, we’re well. very

Suji Desilva

Great. Thanks, guys.

Gary Dvorchak

Suji. Thanks,

Operator

you. Thank

of Our Nomura. comes next ahead. from question Please Teng the Donnie go from line

Donnie Teng

my for and My is David the morning, your question Good question. evening. you Thank to first XXXX taking assumption Good guidance. regarding of Mark.

about because the have contribution shipping from limited equipment is suppliers not any I in on think, to or received I callers SMIC. the not QX U.S. are reason government’s assumption? this you mentioned assumes So equipment X.X, outlook more your some Can The material SMIC. notification in all

So, have SMIC is QX you. we we a bit behind? are limited Thank other just in or curious little reason too any conservative about if contribution to assume, from

David Wang

range. deliver and Okay. We’ll have QX maybe, XX% a this know. QX peer we for the so XX% mix see, all consider good next SMIC far that really in SMIC. year, or schedule, so year, our contribution and standpoint Actually, But far to is seen on far don’t not right. we keep while for for in the request we’ve another in so to would

see the said And and carefully maybe, – to how a progress. over next so that as matter year, much where just I cautious they can their expansion watch probably

for year, put the project in the for moment SMIC much not this cautiously next to the too our next year’s will I’m in projection going thing changing, but Maybe, next we’re anyway, for year. contribution So comp projection. revenue

Donnie Teng

Okay.

So, David, sorry.

rephrase you just what say. I’d So,

QX. quite So, and QX SMIC have basically gained at shares in we meaningful

received not? investing anything, schedule. long you probably, as mean any momentum temporarily recognition maybe to clarify is receive down, QX, thing the capacity in slowing we as would are does like they due – into customers’ U.S. if just But that we to another SMIC continuously So is ship notification have don’t I So, the wondering sales ACMR can have from into extension? government that or still

David Wang

technology are right there I again, been me Shanghai, developed as in has IT and say about think product our Let clean XXXX-XXXX.

and law you see deliver So, with control in really export kind that their control export U.S. I if the should in that’s say, I work can to later, couldn’t but on consulting our of also based we SMIC the comment lawyers U.S.

Donnie Teng

equipment said you. margin, kinds equipment we our already in the regarding different we XX% to to on could My I the question But diversified range. has of like Okay. target now XX% of margin is have second a elaborate Thank you have level know that on as is Mark pipeline. gross kind quite gross more long-term what

we give color different So, on you. margin kinds the gross Thank should more by could how equipment? of you us rank

Mark McKechnie

David, me or take? to answer you do want that Yes. want to do you

David Wang

high detail. and We’ll level really give its maybe more

Mark McKechnie

Yes.

David Wang

say into here pod then tool Tahoe. look a is the single as high bench obviously, people technology. I pretty margin you mature waiver should called that our tool and cleaning I at auto it I and in a look they’re more semi-critical, and

a margin. for also community have good And margin. this and the way backside a scrubber they So, lower low that’s therefore margin pretty

and covering the I you place tool, also a That’s backend the call frontend margin. for cleaning fine, it the say the but Yes. their their the the right. – competing premising a connection is range frontend because a of in for packaging from that have let’s be And house, pretty to Regarding margin. than medium – very furnace. margin of also packaging, vertical regular lower for in I would should frontend. go packaging advanced their

so you’re layout mix. on that called, of, if from the may product different the And the basically quarter, wise. margin I Again, every to combination kind

going years target. customer, do they our still to it’s want say as go by crafts our XX% -term, margin too revenue high some would but is and a astounding I And versus high right. as lower. more as add? still project to that’s in are and higher, advanced XX% anything we also near margin go portfolio Mark, all really that’s a next And So need, their but be XX% product. make balance, team bad in you timeline sometimes the XX%, why few some premier between there, can margin

Mark McKechnie

David. Thanks, Yes.

them lot just You be don’t big more our some products, provide, too to We like to of me ACM, the there’s some of type covered tool most I summarize every we picture than mean, others. are innovation. offering points. in going

So, very Tahoe, range. and margins ECP. innovation good us balance tools, cleaning like will deliver and cost but we some have Those our try the than margins gross well with really semi-critical good said, get for SAPs, as flagship margins that a to the they're David structure TEBO, of we lower good to flagships, strong but in

Donnie Teng

and you, Great. Thank David Mark.

David Wang

Thank you.

Operator

Thank you.

question. question your Charlie ask Chan from and Please from Needham Company. Next comes

Charlie Chan

Donnie’s year. to question, gave about question David on evening, that profile maybe – good asked on Hi morning, My exposure comment demand the a us, direction qualify this of you Thanks. follow have how Any I this direction much to great. probably a of quick would SMIC. SMIC picture Mark a a you provide to be a – us and heard you revenue year? you bit of up little qualitatively, help or are. do good Can first where of quantitative depending SMIC

David Wang

is Okay. and so the backing range. obviously on actually range depending terms year, fourth the than the this this XX%, maybe, likes last the This the XX%, revenue years, coming our two in ending that's increased from – increase should SMIC year. that’s is XX%, year we probably that quarter less XX% Probably say from of about right, last SMIC, saw I range also revenue year’s from percentage,

Charlie Chan

Thank Great, helpful. you. really that's

a question question my three-part market is the actually So really next about demand outlook.

about you like And gain is spending year last plus your customer, share year, X.X domestic leading it's additional really share So XXXX the year, China. a slight said you, for than SK do their up is you strong opportunity of looks about some have It we one to my see that your rate this last XX domestic China there’s billion outperformed year. domestic looking market at like do that growth much and revised XX% about Hynix, WFE next Chinese you double-digit expect from kind you WFE outlook, customers? those among likely about the But know growth the question gained but is from lower of billion exactly market in customers?

David Wang

Okay.

Let's will Hynix, domestic next too. from Probably we the also there right. Then for Korea. do see And are in order command pickup in China appeal and in in demand QX expecting strong had go fab, their we we on are we see we and year, both also and DRAM DRAM pricing on this Hynix some expecting other expansion customer reasonable there. very year China,

and top product a our And we're Taiwan, active in we regions, continue, have in is also also customer XPC say, have And with customer product China, that, hard also customer mainland a devices new devices anode working China, and beyond real customer in it we even, year maybe mentioned as become I devices or other customer we line, their revenue customer. next newest And for [indiscernible]. our we also this do their the customer either you see in power additional beyond As customer to new see their couldn't in Huawei, DRAM pipeline. new U.S.

ourselves goal globally, ACM China So right. customer mainland is our believe to product inside balance the try China, we and real or outside the be would benefit

So I year. say for next that's visibility should – our

Charlie Chan

Great.

or seeing up it expect year or you fab us more Hynix that? to will So spending the bit China uncertainty you next do a maybe around of little just increase of see still revenue let's generic SK more do lot what very make a answered, of you maybe inside a follow quick

David Wang

didn't next there, right. any continuous look that Well, into And if year, you I far I trend again, glean see changing no see and So continue, year, situation will I bigger glow. think slowdown. this

market. expecting first So half expecting even year. a good And completely in also – moment but in ACM mentioned, grow next China, grow domestic have I And we continue too. a we're a have the as to mainland outside indication China most glorious

Mark McKechnie

I Charlie. add. might Hey,

Charlie Chan

Yes.

Mark McKechnie

Hey major you year. just And think for mentioned year. general I that that new sort see perspective. new to of of delivering lot tailwind at I we're big customer don't our year. recovery are plan from planning add early share some customers next our just would Charlie, And kind then of next of growth mind, middle would We to picture stages. David to as tools a We're in a point our opportunity DRAM this gain some if with products. We for a a good

finished worth about million revenue. the we I David of $XX have goods mentioned inventory it's think

there's year. a optimism drive that things growth So of next lot our for that

Charlie Chan

below up last my either Patrick you Maybe the of well slightly Charlie understand, me at think stay of Mark. color of above inventory, question field if or I peer the which the for as of evaluation inventory your but probably your ahead days. Do Thanks on in I the following either still have units since group I many or your peers. the high phase. finished XXX I still inventory, what parts just slightly the But seeing see I to see path the your as are kind a in high just go we you of relative number you speculate customers, timeframe that goods in that Why XXX days? of remain you how high to new products aspect? growth end in want especially at a could the the existing that new kind look to products wonder within range, end days that that and down for understand trend over

David Wang

or existing to the everything, more a the months typical at mature called try should tool to for existing timing comment a say because I Maybe yield verify six and right, or new even customers new to second or customer notifications, the and existing go tool time, one-year, then tool. or one the And new the to those you tool, but either and kind new of took send is customer really qualification. most, mature customer, need

So we’re right, those product in new our one-year, example. one of especially we'll kind again and normally give so of vertical again expansion and furnace,

end next quantify probably year so moving a of are a if – the we timeline. expecting first year, this tool we're – maybe about this We by QX by QX year, and can the now one-year tool

some your that's really last this, finished and continual this again, the revenue process, new extending – future the with ticket. of year I year goods. it's her we or a their, defer impact that's a products that including probably But also again, So called have

product we but Mark, it’s think a re-facilitating anything the – will out. just that Hey up, see the all mature, As on have of become we shrinking that? and staggering time, going is I more time or when

Mark McKechnie

No. the the at We again, because goods, look Yes, bet. I'd acceptance. finished generally are looking thing positive goods, our customers our that I four is, Thanks, a at right? Yes. as for add you Charles, two and inventory I'd quarters David. encourage it'll to at you without to one indicator products. the mean, demo-tools be that it's us to look new get finished

the internal at them you've that count we we'll when the, of out break so our mentioned. And to And models against the will days. that comp look kind peers

On inventory the if very with it. our efficient general – internally, we're take and you

around add big we ramp We We'll will ahead. – if build quarters. move a it it coming to we'll see

appropriate And at so we levels. think inventories our are

Charlie Chan

Yes.

for my and for that color question. Thank you. Okay thanks

Mark McKechnie

you Thank

Operator

you. Thank Great.

your next question Our question. from Cowen from Krish Company. Please comes Sankar and ask

Krish Sankar

Hi. Thanks you my for David, taking had and a David Yes. Mark. first. question for question; I

I get Is opportunity kind then you you spoke about of been I'm for the of where diminishes? to how – large an logic are in there with Just potential publicized about you up. you that, how a to with longer gaining it foundries. struggled You takes cost customer, outsourcing and think U.S. follow the to upside to be curious curious, just it's going kind and qualified? traction manufacturing have The for

David Wang

that Mark, you address or... Okay. want to

Mark McKechnie

Yes. can No, hit I that.

you opportunity. it's for little So, you better. Krish a in logic about the sooner winning a Obviously the think asked me get, significant But bit big a customer. pretty we

we there. think it's here the that we'd – so, there really demo quarter tool or But overall – And whether opportunity love the last year. the on opportunity or much so changes had don't based to in

Krish Sankar

That's product in we customer Thank the adoption you furnace or you. it. little in year, bit a the guys talk follow-up, about earlier are Got just either helpful. you terms very And that in then as where can introduced a when momentum? of

David Wang

momentum. existing So, customer yes our

Krish Sankar

wanted the yes. to I furnace, Yes. about know

David Wang

okay. Yes, Okay.

furnace product in We first additional expecting the we or probably next this and mentioned, interest that see QX have qualification end that regular call and do demand call I right the tool. new I that As either year. we'll this we're existing a call progress from of delivered tool or QX also had I year customer the and year

stability, control furnace, one product batch something key software a in to challenge for furnace. the stability The confidence of or state the supplier bidding we and add to more or With a year, control a the the goes and customer, inside about system in got software system, product. if local strong added order the the general they’re regular the very the customer. expecting that's value you control can the wafer proving all the we figure, over also also also software the reason have has the customer confidence vertical be loss those to expecting wrong, a control at benefit big in our is in software last furnace our system, be control product tool cleaning very vertical mature, also we’re has beginning add and to it call really and XXX been the because stability software and to add I our new So is our can like than – because for have really repeat worry

probably of get moment now adding – billion, demand product spending we’re another a and going temperature to on expectation this utility more and and this again have we tried so At $X.X that will have revenue to they high in. very see basic and again, app into we’ll get ARB business, in also good possibly to we’re So we year, we'll as a and have good technology billion right, for neo we’re good the from market, we product. $X.X future, next

Krish Sankar

David. Thanks, Mark. Thank,

Mark McKechnie

Christian. Thanks,

Operator

you. Thank

closing for the no call questions back As further queue, Mr. I'll more to turn are now David the there in Wang remarks.

David Wang

for you on operator Okay. and thank your Thank call today's you, support. participating all for and

Gary – Before events events. Gary, going is please. releases we to mention upcoming some close,

Gary Dvorchak

your the contact of technology be November you these On at XX, virtual we'll virtual conference. respective we'll one-on-one you representatives conference. us. XX, to please on Craig-Hallum On attend virtual November disconnect. you. David. call, meetings conferences the so November the all with so all XX, participate And at want in may Alpha-Select any conference. thanks, we'll the now Technology schedule Benchmark Thank This Hey only, one-on-one invitation Attendance is by if sales concludes ROTH’s

ACM Research (ACMR) 6 Nov 202020 Q3 Earnings call transcript