- Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen. Thank you for standing-by. Welcome to the ACM Research Third Quarter 2022 Earnings Conference Call. Currently, 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

also website, Lisa, Newswire today. on call supplemental We investor The available us a released release Thanks, for before Services. the XXXX our third today's good is during Thank to website morning, posted you as and our deck U.S. through joining to quarter of results remarks. portion discuss There's that well results. as everyone. reference market we'll slide on prepared opened the our

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

please continue, turn X. Slide to we Before

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

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

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

David Wang

and restriction everyone, earnings will to of afternoon, cover subject updated that quarter trade Thanks, welcome new Department I Gary. the to by in and Industry in U.S. with parts ECCN restrict meet Based of for The Bureau conference October. issued export U.S. certain XXXX Good on activities assessment, and call. persons. U.S. items including equipment China preliminary third export and controls, from our controls start the the U.S. or new Security ACM's policy advanced facility the to tools parts tools for export the parameters. U.S. node delivered Commerce

currently X% Some the of certain our tool have shipment of and some to reproduced components our sourced XX% from ECCN will as U.S. in be impact categories. tool

provide Let me more detail.

some to node this customer be export have restriction. impact advanced to Shipment facility. our of due U.S. of may facility First,

policy customer advanced level restricted The mature other POD production the with As and their occurs. (ph), not node, to technology nodes. POD apply defined where facility as does

However, they campus. even when are on same the

may Shanghai number those control Second, need if ACM a control tools This be also include from parts a Shipments number, parameter a list. of export of tool our products impact, need the commerce or may ECP tool from one cleaning plan our to this first new ECCN U.S. not on does certain ECP tools, WLP tools, and copper most to our introduce. other and Server or or specifically metal we products of plan It platform platform printing. support we that introduce. include new products of product tools, the classification

products process nodes and ECCN the new facilitating with from in the servicing at involved or shipment number. U.S. strict Third, is policy advanced least

Therefore, Korea and employee R&D from We new person have Shanghai in no teams. our U.S. the (ph). impact policy is the U.S. minimal

parts activity the or supporting Shanghai new facilitation, of not we highlights. of that in do mature third nodes, Shanghai parts tool person include I be can with that to have Slide activities. believe in restricted shipped implemented U.S. category U.S. U.S. however concerning are Please not U.S. turn believe have X. even on shipment to persons. ACM now not We that ECCN restricted impact compliance the quarter move the USA And protocols services and We will ACM tool enrollment policy the persons enrollment. and do shipment will not

we growth And a time manufacturing in operating going last over XX.X%. $XXX.X months a and at in is was In good gaining logic, with furnace of our first the and for with tools the Gross outside XXXX. of launched capability in XX% foundry XX% million third And Europe tier and cash in cash, the potential the GAAP XX%, a a evaluation This U.S. our mix XX% Our period XX% we nodes accounted contributed and to We new The operating for tool factory ARD a making ahead. cleaning is margin ECP the XX% was We a U.S. were China-based of our was -- furnace QX, new $XXX well. traction furnace grow with new XXXX, and of portfolio. compared delivered ARD margin for China. flagship grew our product (ph) the revenue for progress which XX. of first-nine manufacturer margin company. regions. to versus record two qualification contributed tools GAAP large other together first -- initiatives made were and results million the XX.X% furnace and quarter XXX% product. advanced and our one sales. ECP ended extension a million, had grow of our targeting target we evaluation TEBO. cleaning series with tool Shipments quarter memory of tool our customers Mainland, year. products manufacturer are based ARD driven manufacture and equivalents, application and the growing last and critical furnace restricted top the line major the $XX semiconductor Revenue to for year. is XXX% faster our up nearly $XXX the We of three by customer, non- our a with deposit. same From XX.X%. sales and was million to strong from

traditional We next to to performance half single-wafer higher a Furnace product about and present expect ARD the significant represent their with tools than proprietary ARD ARD ARD. make furnace contribution We a compelling ARD between single-wafer proposition. expect of can offers our starting ACM’s a the year throughput value market. and good ARD total furnace with furnace ARD first that narrow believe technology gap technology

committed for operation the I middle Lingang in on is to also new plan to are in this the we China close valley our China. announce, production new city of will Shanghai, us we to headquarter our with Next, headquarter purchasing attract investment new and provide to full of and help stability talent. initial market R&D (ph) the ZhangJiang, want in new XXXX. production for center a and Construction and remains track a of and employee grow facilities. We're in gear

are selecting of expand production also and Korea. We site R&D stage facility South a final in in our to

of on opportunity planned double this Lastly, later are we new introduction track market year. for to two our with categories, product addressable upcoming

to new U.S. the want more from impact future business Now restrictions. on I of thought provide

industry new as base. Shanghai to expect some of is We and customer with new its meeting as committed regulation pause to demands policy. adjusts complying a temporary the the ACM customer

of chain ensure maximum source our tools. to our compliant managing supply We to are shipment actively components

For recover. and of less for XX-layer and been business mature above expect above DRAM. XX-nano devices, fairly Most XD quicker logic a our nodes, or has we NAND and XX-nano

China's nodes. even mature up This is position participate forward, expect nodes at capacity consumption as marketed mature are we continue to the lower China we opportunity. or Looking than to strongly speed in our this made and in China much customer because in is

in in more compliance new For effort of U.S. customers. expert the ACM nodes, is fabs advanced to with advanced to leading that remain control. to global we committed focusing its bring edge full technology market participating

progress good sale and our with U.S. teams. support We expanding and are global European and customer the making

We Please will are facility turn to semiconductor X. to be major our production provide I R&D also a Slide worldwide accelerating several and customers. to of now South second provide supporting to players close sight our outlook. in Korea and

of among spending of the of the of of million outlook of XXXX first reflects revenue million the stability ramping a key of policy, trade $XXX from chain on of company's range the now versus things, million scenario As for with the expect various acceptance we We new range the policy outlook. lowered other and result to the customer U.S. and full in $XXX tool revenue upper previous supply XXXX a production China. and $XXX timing pandemic new The respect COVID-XX our and chain in assuming the $XXX field our U.S. constraints, range to evaluation end constraint, impact of trade have year the million. supply

Mark? CFO, our to third over call reveal the of results. who turn me our quarter detail let Now Mark, will

Mark McKechnie

to Please for measures, includes which non-GAAP the XX.X%. was to otherwise, versus Thank I now our single-wafer loss prior the to which $XXX of $XX.X turn Total financial technologies advanced was Revenue prior $XX.X earnings to higher technologies tools, packaging, XX% was versus you, SAPs, up of X. due the for was packaging, in excludes financial million year compensation $X.X ECP, comparable reconciliation ECP, up and renminbi exceeded services A primarily I'll year was shipments provide for cleaning everyone. dollar million change release. due ECP, XX.X% and David, the a versus from Revenue furnace included cleaning front-end U.S. period. million, highlights I'll Revenue Semi-Critical gross unrealized margin trading Revenue of and currency a was securities. measures range stock-based $XX.X these GAAP XX.X%, Unless other Slide $X.X a good and in measures non-GAAP furnace is excluding positive refer on day, to note million. normal Tahoe year. million. quarter. to third impact and ago This TEBO, were in $XX The $XXX.X in versus rate. our million million million. versus for period expected and XX%. other spares increased million Gross margin exchange $X.X to and mix the

previously quarter. of cash XXXX. $X.XX $XXX.X to of be the top net a versus compared The deposits to promotional and exchange the of the on a income Shanghai. the due a not Other year $XXX.X to Net transactions raw XXXX. and up $XX.X as million of million. the attributable was in from was engineers working gross Net net company's primarily loss margin ACM to $XXX.X at in items. the million. period to period. excluded benefit million. Unrealized of effective million market period. ago which compared was other and million. review third vary additional was $XX.X factors $X.X The of growth sale used year of net assumes currency million million and impacts. product $X.X tax together shares was new million ACM built generated in which the $XX.X the expenses to to currency is included for our of XXX, large per nine gross capitalization value The proceeds quarter. share requirement continue million securities to from in based the gains versus mark $X.X Operating securities prior million. impact balance selected ago tax restricted to on was income Lingang reflects marketing quarter working and quarter diluted end is at $X.X in million research construction product and period. personnel of million of contributed million such SMIC results. on development, versus operating was expect income margin owned Income is for of versus variety in the and X, experimental This material of cash other million. trading recognized and overturned finished Total will ended trading are tax year to equivalents, was January all to in XXXX with higher tools sale the compared leverage which amortize portion expense loss The shares, reflects XX, of sheet expenses the has from tax and million denominated income due and for We deductible the $X.X Research due be from XXXX expenses $X.X diluted $XX.X Realized ago to to million to the $X.X income million net change on $XX.X increase Operating at volume, quarterly XX.X%. capital versus purposes. in value million per under to the of end, rate code was income income factors for market inventory, and was IRS a cash now The $X.X facilities. at $X.X to months second non-GAAP provision QX goods processes operations SMIC, September due to sales $XXX.X capitalize was increased mix $XX.X R&D sales rule by share effective year $XX.X rates of R&D will foreign the million became $XXX.X margin CapEx $XXX.X the This million. tools time period expense gain inventory end of $X.XX Net end versus line. Operating Cash, of million million period. costs higher the I due were $XX.X and due XX.X% due last from was to Higher to was

spend on headquarters full our the total new prepared for million in plan That we ZhangJiang. the fourth Lingang There facilities. in additional other million CapEx be year, remarks. CapEx in For $XX our concludes closed to to be may should quarter and $XX

open go the any for call questions you please may Operator, that let's Now have. ahead.

Operator

you. Company. from Needham coming the At Bolton this and be Quinn question of Thank first [Operator Instructions] will time,

is line Your open.

Quinn Bolton

might Is export Hey, and impact having questions, of guidance, midpoint range and contain million for you can potential of you the or know versus Mark. it impact strong facilities affected the on the between just, some new give I of could And I that much give near advanced some what I it's second the us revenue the of us your are business get ECCN couple classifications? of One, on the the that the but that lot line questions. from for tools sort U.S. looks in DRAM, percent NAND then your certainly think I'm a is is the it the of shipments. the us -- by a how down. Obviously, shipments million? is XXXX $XXX parts but Is XXXX? at and/or -- what impact the ‘XX as you be controls new to could due fourth the what on tools of like the how David you questions, sense haven't China, look question big quarter parts an are much the guess of that XXXX, export driving of as contain the on for to long sorry, you affected what given impact you the or of Congratulations sense split $XX that hopefully, Sorry take term controls at? affected? XXX-layer be --

David Wang

I I Okay. too (ph) early this for moment, first revenue I Well, handle At give give to looking can't it's restriction, think advanced cover get let at that at a say and actually projection January there, maybe much detail moment. will mean, of our I me slowed mention one the Mark plan production year probably we forecast normally it definitely this want it, too next some can down. timeline. nodes this right? probably still

global of and kind imports in the their -- I nodes has China and almost script, a market. However of lot as of consumption the in chip, XX% China mature chips. mentioned

potential to up see what also XX-nano, car this I and So mature even possibly for fab and gave is using XX-nano also nodes, a lot of right? up. think products this potential still the commercial the grow speed we a what there's the lot and added, electrical build of we continue So a and

at where this be technology, (ph) mostly know for to our those market. real this moment, who and kind of also position service proving So

So will therefore, even that – to sold see some I and advanced continue is And nodes would will node up. grow that mature get revenue the speed down.

new channel and probably we view Then market, put growing talking time, year. that's combination market the in So also we're and this of by products pace here. have soon I online same there still to a that our for at increase a very still in say introduced and ACM together, two I end the right? That's is

in add modern stream portfolio, we also we it with I So product giving the give have market. more in product and -- us XXXX for us new of probably two on the product. also the And this That's – the revenue ‘XX. product XXXX, new a call, also keeping in our recently -- ARD of I announced our why that's product call furnace the and revenue the to

nodes China? confidence high what together in the international fab to and in on are trying [indiscernible] right, very So we the matures participation have advanced and very we Korea R&D market and what's engineer key market, R&D But Korean also this Korean meanwhile, have and do with -- record especially and for we expanding you also We also for our real grow. for have node, -- the our the and building facility. to engineer preparation the in right,

question. will reason, you And do service Did R&D that global still we want I entire and give still I' are industry. their for for and servicing the for the first So can a the customer. differentiated say, we product

Okay, that? want question you add Mark, anything or to to cover on you want second

Mark McKechnie

-- Thanks, Yeah. can David. No. I Yeah,

to be hard to Quinn's impacted the been flexibilities second where think more products got percentage, at a going majority right. position was by But others small some And pretty spending as to of percent the a it's can our -- has of in overall But mature I what our we've ship I lot where nodes. question in going customers, ACMs but a good everyone we might we're knows, think can't. advanced right? of them. I the measure, about business tools our so nodes were it's

certain we from players. if get tools it David as the pause to in So they can't Their other would for remarks. instance mentioned a expect for spending, prepared bit,

together, as of kind we'll out always give David guess there all but in. do their it to we'd expect noted, I it year, XXXX the adjusts as a at to of So growth. be looking for not half the first we're to and the beginning -- the like guidance bringing industry we're the bit licenses planning And works get some a in of pause we

As nodes, that instance, fabs on, mature have right. that for work don't the customers buildings the

what fab. with you can compliant And have so them would a call they

So of we're anticipate David the to of hitting as of from and year and the expect those support through of the customers carrying the a some some watching the noted, bigger we'd it year. of that spending quarter to pause that next closely, customers, the but half mature start we'd this into being But kind through move nodes as it some we industry able year. the first

Quinn Bolton

as follow-on. Great. a And just

Okay. Go ahead.

David Wang

Yeah.

add me parts, -- right, on Let the our ratio. U.S.

We a XX% have are normally U.S. proud that right. components, X%,

actually wherever not, we're our if convenient not product (ph) the clearly, So ECCN category. is

U.S. the mature still So use nodes with to for revenue customer, a parts we and stay involve major parts U.S. out can in right. our firstly of and also

property, building to cannot any as staff for tool parts for get Chinese U.S. have their matter activity a to, and As our or we moment, Chinese engineer those advanced then this on nodes

to fast any supplier, with as they do it how they other reaction have And But a maybe there their to parts And really other Yeah, to quickly we in this probably how time. is can or China and vendor or I common year, found supplier, however, two. on a probably have take locally. taking be So said, can some changing. depends year also this will area. be something choosing compliance

come were kind the that -- a but -- can impact you it's As is see you say, much U.S. as back. compare pretty minimized, we'll of guide other parts

Quinn Bolton

David. And one and clarification, final Mark

cannot the are fall trying cobalt get Is a where new ECCN those ECCN. free may of ECP line. to ACM ECP the you mentioned I'm of that under would just For where the for affected components. you of tool, And tools under (ph) rest are the classifications the are the one shipments sense then I restrictions? right? think what are not also that for source parts and it only two be, So U.S. you instance, the platforms

David Wang

this probably really obviously. in Yes. this copper said, Actually, is China, like, cobalt, It's In right. a expecting not you higher plating X-nano, revenue right. do moment, targeting I

other nodes of is Even XX and plating a words. copper -- So like right? lot in [indiscernible] above, all XX-nano the plating, still is XX-nano XX-nano, those copper in

ECCM. should another plating So new copper okay, all can in be does right? say, can I there, Our product introduce ECCN, in still is not our we And right.

have And we parts really our other So said in about new I we in as this even product, ECCN. U.S. again, talk the case, saw out.

parts say, range, XX% right, almost U.S. Our probably like would I probably, that.

be working time. can those right, still And other And of to and found gather with it it needed think to [indiscernible]. qualified So will possibly and be vendor be we choice. term either the take however, obviously, terms qualified,

Quinn Bolton

Understood. David. Mark. you, Thank you, Thank

Mark McKechnie

Quinn. Thanks, Yes.

David Wang

Quinn. Thanks,

Operator

Thank you. from will Desilva [Operator ROTH of Our next be coming question Capital. Instructions] Suji

Your line is open.

Suji Desilva

Congrats or And toward readiness it Hi, edge obviously a nodes? for Korea, it footprint are tools on R&D David. of to executing very Mark. the you similar leaning is and guys of planned in there in remaining for timetable Hi, shipping be mix to tough Korea the will Can already steps it about more the or Shanghai talk here. tools? is the leading environment that What is ready? out

David Wang

we the have XXX Korean, people and right. in subsidiary was that Korean almost in since or And XXXX, today Korea, the Actually, Okay. can employees R&D. Good. which XX% started hire we we

future in also have but a dryer, So tool. copper manufacture we square most X,XXX let's manufacture meters a And facility. we portions some tool Korea can say, about portion furnace, ARD and and made in in convenient in Actually our rule Korea well also the made and China. also right, can plating have

two not in manufactured And can our Korea. new also products them introduced have yet. two do products. we And those new given have I on, going time As be

right. license. base Of manufacturer manufacturer final also by another we're land also Korea, the in also we center or [indiscernible] for the the finding R&D one building Korean think that, secondary in -- way, I phase government for So the

Korean this a the of positioned tool, and with in sell back make to the to we're U.S., or to well Korea made right. call prepare I I also China will a to sell course, the market, and sell can have the preparation, the, Taiwan also -- So tool it, to European think to

think of our and vendor, manufacturing nodes, more more China, So have product advanced to to at work research Korean effort customer right. have in we a R&D here I with we two and top also this the in and one their moment, to and Korea one the player do and also

to So anything and the be us to that's second want for real center going expanding add their Mark, global market. that? on

Mark McKechnie

No.

I us it I I our guess and I center, maybe mean, think have just pretty an that'll our I'd production some attractive you international is mentioned so business. you there. hit help second international that, customers drive to think of

Suji Desilva

Thanks, acceptance. prepared now else more spoke on there the of is of Is taking about export there something right that is And you Okay. or off-shoot going for I in remarks, generally? tools controls question with my around second simply an think first longer Dave. kind the reassessment

Mark McKechnie

first Suji, don't said about acceptance. tools longer taken for anything I think specific we've

think U.S. I when we mention delayed yeah. David outlook, supply constraints new the he on the to didn't attributed acceptances, policy, it but anything and about chain commented

Suji Desilva

may guys. that. I right. Thanks, misheard Okay. All have

David Wang

Suji. you, Thank

Operator

will coming Please from Instructions] of be Christian Thank go [Operator Our ahead. Schwab you. Craig-Hallum final question (ph).

Christian Schwab

a us -- where you us funds of you some program? Good of can we morning. there use refresh Hey. a and Can Is meaningful the stock to States. afternoon the on do just can of just is, use and United Can the good just the to significant bring Mark, way the buyback back tell all cash some balance? and that cash you or whether

Mark McKechnie

Speakers] Yeah. David. Yeah. Hey, Christian. I'll -- Go he's [Multiple Christian. Maybe ahead. asked, Hi,

David Wang

right. It with covers away can something, stay you cash, maybe

are the well in Well, Okay. cash basically, most we have proceed.

market And minority those and right. do is subsidiary you tempered last belong money have We year, XX.X% the IPO investing to there. some other have of

we their USA, directly cannot right. to this shareholder put major cash back So as

So we do cannot that.

U.S. didn't to generating Anything anything, to year, further a Mark, some China last we R&D time this in and as do that? really on, will we you important we enhance And can back U.S. to to and to well, it going and when exploring -- but LX However, we want trying else? dividend in cash not to market. sales And considering what also we we're in effort profit want were put our can we buyback European do option necessarily (ph) share, we consider. and back have that's add U.S. on still and bring

Mark McKechnie

Christian, in I by our our geography Yeah, so we break out can. cash queues.

And the end we the It was so at in June, million $XX of million almost $XXX had China. U.S. Mainland in

cash to plan to We the our But major We're noted, in potential Kong we use cash as South customer. and also Korea. had some U.S. David pretty and a grow that tools Hong of a business. evaluating couple

to programs that good small Christian. it. run in not And place, is us so with different customer do cash. services allow necessarily we've but Thanks, long so we're cash got a development that planning to and anything team to some pretty That's term and marketing

Christian Schwab

my Thanks, Great. Those guys. questions. are

David Wang

you. Thank

Operator

Instructions] of coming go next ahead. Thank from Robert you. be [Operator Blue Lotus. Our Please question will

Robert McKay

hear Hi, me? David. you Can

David Wang

Yes.

Mark McKechnie

Robert. Hey, Yeah.

Robert McKay

the equipment. Like, that? And some you good and percentage for yeah, Yeah. clarify to of different parts results. Thanks your Thanks. Great. what percentage in congratulations of question. Okay. for types tools? U.S. in of to Would and taking on clarification I other tools get wafer-cleaning just want parts U.S. on my example, able your are the

David Wang

XX% some the [indiscernible] of And parts And we right. from purchased on said we cleaning pump, those Yeah. do some kind that tool depends were X%, type. U.S. have and their did I typically, And,

terms wise. brand X%, of XX% in it's about so the And

Robert McKay

Okay. it. Got

these saying what licenses parts correct? so to And or get that I'm do is I'm just need understanding? that Is

David Wang

and equal. that's an categories, actually two there's Yes. Well, right,

nodes and, tool ARD you Our those also the also is list, nodes -- a So also if it's ECCN, tool. only license, not tools, not need which right in And and and not license. ECCN. parts tool, Those for the -- tool facility. a you furnace apply you're we some ECCN the customer the either mini advanced do number, need mature of tool is using some like portion within plating license the are cobalt okay? the is ECCN copper and is shipping we which not for

Robert McKay

right. All it. Got

So the if the parts, necessary if tools, so you're license even the saying, for U.S. they wafer-cleaning come there's from no

example, need for to part. correct? your license, that the Is want get a doesn't supplier So to if ship they you

David Wang

[Multiple mature Yeah, above make to sure… nodes Speakers] for

Mark McKechnie

Hey, clarify. just and let Robert me David,

going a tools of I for going mean, and or areas. there's license lot other to general regulatory in requirements So China to

And so added hasn't is policy tools. cleaning that and restrictions point for new any tools certain for the this additional

the products be exports would clear, so I of this to to would for new tools just going nodes that would be that going And for that new added to -- be of be into wanted and platform. exports policy going into products advanced additional restrictions

David Wang

that clear, is gone. Hello, Robert? your answer question, Did Oh, he Robert?

Mark McKechnie

I lost Yeah. think Robert. we

David Wang

gone. He is

Operator

[Operator question Robert coming another from Instructions] in We [Multiple Lotus. Speakers] of Blue McKay have

Robert McKay

guys call. hear notes. public there you now? connection sure me I in lost I'm Yeah, someone took Can the else

didn't but sure catch I it, someone took else I'm notes. So

of So Research what understand the that have I for business? guess next in U.S. the my I Chinese complicate about Because be, U.S. the would course, subsidiary. ACM your headquartered then you question headquarters? is Does things

any Thanks. business of there's of from impact kind if negative overview? wondering Just kind your specific

David Wang

China? in want question. you So U.S., I impact impact to the asked your clear in

Robert McKay

Sure. Yeah.

it. let So just clarify me

the I meant, just was fact rules, phrase if the this. -- I in think headquarters your that me BIS U.S.? in wondering the let any So from impact there's kind to terms of just how Does that of are

of of to just your the make rules BIS So in extra U.S. terms due any you subject regulations headquarters? kind to to

David Wang

so right, only a headquarter At for Europe, actually get is this the and for moment, U.S. [indiscernible] or promoting for go they tool basically And conducting impact right? question. our activities, anything their made sales Because good in it Well, nothing China in marketing, for U.S. tool Korea. the made don’t and those And to of think tool right? European and Okay. should activity. USA say impact only or I right? there, So that's for in the China, market, outside China

Robert McKay

Right.

And ECP other for it. was about Okay. Got your the tool. question then

ECP. only it's understand I for the for So cobalt plating

example, under you've XX-nanometer -- cobalt that tools there's just ECPs no ECP, for, the are not that so and And other those cobalt wafer-cleaning mature wafer-cleaning, tools for saying that you correct? Is that for for like were not sorry, are requirements license are that for shipped

David Wang

Yes. correct. That's

Robert McKay

Great. Okay.

David Wang

Yeah.

correct. are You

Robert McKay

also And for Yeah. Go forward going Does stream mean revenue your think Okay. no that there I be the furnace. would for to ahead. from Because then furnace, furnace? then it think remarks… applies furnace I

David Wang

import any or revenue servicing, yes. And probably U.S. add in involved, like can a directly And either which we a person, those category the we the whatever for can that shipping is those thing seen also right -- and (ph), have said, of are consideration U.S. ARD from not tool easily for you it's furnace Actually, And second and category. parts altogether. part right?

they what So And CEO, a well, that's with marketing a devote decision all and sales (ph) the our have they to have Chinese team. operation case our there. responsibility sales everything people VP,

parts. they itself, been cannot That's care, they have involve. right? take So A but using different person non-USA U.S.

Robert McKay

it. Got

for Okay. Fair and any then there or is the you that suppliers that could that And Chinese Chinese any tool. enough. so parts need tool that supply for corners

would or domestically be that think against the So I regulation?

David Wang

question. the Actually, a good or country. using we other deposit using are where maybe be It's can Yes.

from well Korea Some also and too, say from parts. you that the some Japan. of from So parts need to those -- some are what qualify parts it's some We can and from right? Europe, take part China some we kind qualification, can time. we -- in Is right,

Robert McKay

it. Got Okay.

then think then lineup? supply you for vast majority the of requalify can view product your So you in maintain do that products theoretically non-U.S. chain parts like with your your and

David Wang

some do and right we we're be say, changing now can should that I still parts quickly. evaluating see

parts then, our you we is you say, one consider path, customer that to rework And the and time and tool, know, typical right. new like, qualify, now right. need to But to time with and the months qualification to some the with we they should process, just work reaching, take I if normally, or the typical time change one That's year, in qualify right? So that's parts. you a parts the qualify six to that also day ever qualify then have supplier

Robert McKay

Okay. Got it.

had. very it's to sort information. questions these difficult That's thanks Okay. good the through for all and regulations. helpful the results I Congratulations answering I on all Yeah. know

So yes, thank you.

Mark McKechnie

Robert. Thanks,

David Wang

you. Thank

Operator

you. open? Tseng, line Please, our your minute, coming [Operator one Chaolien have while Instructions] question Credit Thank is from are is next Suisse. We

Chaolien Tseng

me? hear you Do

Mark McKechnie

hear Yeah. you. We can

Chaolien Tseng

you, Mark. Okay. Great. Thank

the logic side, first side, market question regarding, in from in my China. So is potential understand I [indiscernible] a is market that big very

like, NAND how next mean, mean, DRAM. to fab I [indiscernible] over I XX-nanometer will curious first the expand you very say, continue about, and also Do Chinese I'm expect So years. customers few

I maybe because think is argument issues. the products NAND that one construction the of DRAM because for this of and

expansion China two, next over So to have set market three may years? very continue this customers is the the one, good potential now that worried

David Wang

we're DRAM And right smaller not their obviously It's XX-nano moment, niche to sell the early right. to conclusion getting or give assessing too DRAM some now. in a only say there's XX-nano their dimension lot above They're business. any is and still market, niche Well, will and market still a and I there a DRAM of there. right market,

see for comment I moment. does So of right. We in at application. I know XD node, other kind really. application just have but of a don't that I the cannot this don't know know, won't don't any I in DRAM a And another really speak yet customer, XX-layer, I as large NAND,

comment? cannot sorry, And

Chaolien Tseng

Thank you, David.

Another over the -- the question past finished mean, lockdown. – that, after or for is I kind so the of finished me few the Shanghai months

the ahead two past on do I of, new the On the development, the slow of R&D side, you of that expectation development. see what mean, in terms versus product of first, still quarters mean, product kind kind I in

a supercritical could side about you you. our share towards wafer-cleaning progress. little that, is thing bit drive on Thank more the that Another

David Wang

product process. also sure new all possibly end and clean the The we're for ship. as product, good is meet And new is is we're the progress. do we customer stage addressable also testing real doing this pretty product and critical new right. two for capacity customers. we're ratio the or okay, year, well, year a very market. requirements other category think and think I it's like, a are our product, product, three a almost and right? think it, product new make real our It's for dry spec high I drying I by trouble effort, I a shipping in and we a which of in Well, call to probably, we This still want regarding But the COX coming much final Okay. like two there,

they And so to is market market. try bring Chinese from and very hard our the engineer -- this working

Chaolien Tseng

average is because because ahead, Thank the and margin -- margin furnace pretty you. about end the potential And is higher to the David, margin one gross thinking I'm gross you. more I'm second minutes. more side back the possibility our gross question any versus Mark margin good. just I sure the already on quarter few there if of Thank range. is long-term first our discussed looking ECP missed you or gross not there corporate any that’s is the will on be

David Wang

I have Also, And also, tool, to have there right, the bench double Well, also also last really the also the have do of why range depends there as our is a in auto higher for combination XX%, right. the margin, And XX%, a we combination And the are something you're again low to quarter end want margin driving. we right? application tool, ratio. cleaning do margin like, AOP rating of copper right. -- right, tool (ph) right? in still strong So it our a have still in tool, say right. tool, margin, on And that gross is higher does front on

really it's So dependent combination.

and the say is our future. margin XX%, still I near So XX% for still

Chaolien Tseng

Thank it. Thank David. Got you. you, Okay.

David Wang

Thank you.

Operator

will Chan next [Operator Charlie Morgan Stanley. Instructions] question from of coming be The

open. Your line is

Charlie Chan

Thank Mark. David. you. Hi, Hi,

thanks all, and Yes, all of for through. is walking a for environment this thanks us very the clarifications. First challenging

at is outside cyclical need year. essentially impact. you Do China all question going withdrawing China least Thank memory foundry right? plan in XX% next the are into by be you CapEx if So my your know to mature But at about nodes? efficiency, mature some that you. see to are cost of the first recently? do I is CapEx, fabs, to fabs any still And think impact really customers able low you look cutting nodes plan

David Wang

next point nodes I and is view, of also really but Yeah. of kind device. I say, I Actually, recall right, more power rare a of near as to Charlie, wouldn't I retail, quite And said, the products, even quarter just consumption say level China future, electrical car high couldn't the consume still of recently right. mature lot

lot made in of products, not our right. enough So still which mature a or China, is nodes

own really and going nodes And so is more of requirements. for increase that point of a view to mature their and China meet production then

requirement now view, fab the reason the out still to is years that see of is China, I to because can meet of are a build, real markets right most right? going of in the here. is right, such point market from few So that next That's

So the fab, their they they build can can product. sell

that due still from nodes. China So of mature have I point positive a view, market very for to view

high, develop fabs couldn't we're market a from right I in there's car two long bigger product another market and Also of year. I'll quarter the potential three do we looking think, a It's view, of now. can the power can that. real real of right. But matter after driving, the be China, electrical lot I that's As device them next either quarter, tell, quarters, next, a one all the or have

Charlie Chan

right, and before, we there is this I view. your respect meaning Yeah. see. free with term correlated cash But I I still long totally the flow. did knew by, just CapEx

from pricing So seeing wafer mature what right in there's pressure nodes. we're now, just some

to the U.S. its a And upside the still really nodes. or second do question is But you’re worried for entire CapEx free I'm at cash that efforts chain there supply China as long minimize on my some will will term point catch So -- the a dependency. efforts could take flow I agree about mature that and your about up decline anyway, is plan.

So want that some qualify said on components locally. or you you China you U.S. do even -- Germany to Japan,

customer have want to do. research, that's land vehicle production tools, with your those comply or AP should you your be Meaning, My more [indiscernible]. sell companies or products? a How without critical countries ICP, if do a the together still U.S. rule? your nanometer to tools, still cars the how question the line [indiscernible] tool tool is ASMLs that materials, do think applied that, complete way or by the that I here critical

David Wang

Okay.

Let that. me clear

Charlie Chan

Do miss I Yes. anything?

David Wang

clarify me let Well, that.

advanced the for node for mature node? mentioned or You

Charlie Chan

the Advance I'm your but export nodes, asking? fine, it right, should advance nodes, node something perspective because that rule or perspective, the technology I mature is think be from nanometer

David Wang

Yeah.

will has nodes in anticipate I down, and A tool, also the made U.S. critical right. you of, slow now. like, right, critical think lot we do said, the right mature parts

And to so another easily Europe. other hard find in or systems really even those Japan right, in as in replacement tool,

that so And be can there.

that. with that yes, So I -- agree

time, a the I really also advanced with on has not same sell the X-nano, -- or that sell to for XX-nano too, only XX-nano, trying X-nano, want to ACM And at also international like nodes. more see we And we product, to are the we're right. differential So nodes on mature right. we the -- market is focused focus to

So we're advanced going market. can product the differential outside to their in have into nodes. way, also for and focus China market And this a get global we in the

Charlie Chan

I see that's very, very reasonable.

you the of the David on So opportunity. node equipments to more are last expect competition question, local that from maybe you if Mark all local Because want price to kind or Do now right your comment. more guys mature reduced focused to they you reasonable continue Mark, the R&D line. What be launch scale, a assumption but peers? Thank kind revenue for And spend margin the I coming operating the would to given product years? of secondly, new you. believe

David Wang

Okay.

-- was think Mark Let me will question answer. answer for the the the the first question, second I

Okay. right. real XX% are going they connect didn't ACM product, now mentioned nodes we right. And position even above, cleaning mature mature nodes, to two years you right. ago our almost I we mature me, think or almost bench Well, are nodes, auto and for launching Also, do

have think the do I come moment, for mature market have nodes. have potential out And marketer copper do obviously we very mature nodes. contribution right. two well new Plus, will or nodes. huge we mature those which needed plating of for Those tool we also also this products for for very, So a a [Indiscernible], kind and positioned we're

production, and terms the got in right. will two customers mature customers part there's they faster to also the difficult for or a on So also this from tool ramping their to first, I say still And choosing want to local can and looking the only use they or way, for of competitor, nodes, not price make. the low machine say have

one qualify they up another. Now vendor

enough this semiconductor good one easy. it's make effort. So player is focusing like four choose. two them really maybe, player or three. is got on still there that the I customer any to for chip. or for player, tool for the a a two not to If probably different three product, and And Maybe think we the maximum same They

relationship customer position, So XX, with we're year XX a over -- and our also XX fabs our and technology and on multi pretty comfortable relationship a the customer. of right? also commitment, Also XX,

So we're pretty okay with in the China. competitive position

second maybe you. Mark, question for Okay,

Mark McKechnie

Yeah.

You bet.

about operating the question the think I margin kind was outlook. of

we're as about So this $X term. talked we've targeting that the certainly are a believe longer growth lot know, target us. before, longer -- look, you revenue still billion ahead of technology but medium We We company. there's over of

growth. for planning we're So

talk For David but it not next for about overall top the that And planning line. depends call, course, growth. on it year, we're our operating mentioned next margin, the QX of We'll on for year. in we're general, guiding

just but did so, QX. here And we XX% in

year, like kind have XX% next floor a a depending for you you'd If annual what to be of we'd kind of looking of revenue are at on level.

they So target growth hope modest with next see growth, be we reasonable kind good would year, would some of that and with a leverage.

Charlie Chan

So Mark, I -- I'm it get not you sure if right.

can you're get growth, right? next moderate still XX% year. operating both that some Is you said over margin So you comfortable

Mark McKechnie

given target. mean, a kind We're I'd target. have going but a XX% it in of we call annual margin to a lot target. I we'd generally that year, There's call operating a depends. Yes, of best a that factors.

Charlie Chan

Fair and all David for Thanks the Mark. answers, Okay. enough.

David Wang

Okay. Thank you, Charlie.

Operator

[Operator coming Mark Miller from Instructions] Our Company. be of Benchmark will question next

Your line is open.

open. is line Your

David Wang

Hey, Mark.

Mark Miller

Okay. had a on There question. that. was I a glitch just

that you was change was attribute attributed You I the sales I restrictions? year-end somewhat. to your and percent just total was new down several did what just wondering of wondering factors. to that

David Wang

the And or there's still have are other a buying should constraint -- U.S. should supply shipment, also, control those people ship of what And compliance we right? -- pushed the like to something the Well, don't right, we probably, portion are now from found Okay. there our you of parts, say the We -- know, in I off. is, with some the It's right? parts, say, parts I there's do for source, have parts, that's That's a even I source. chain. a different right? tied delay really the non-USA constraint like that so

So QX. impact maybe that’s things put revenue together that's our in all a two

Mark Miller

you plating restrictions impact Did tool. say the furnaces? would indicated You ECP also your

David Wang

right. Furnace very not furnace. dependent is special ARD, No, all type, for will it's be right. It's specific

Mark Miller

one question. just And final What was Okay. stock-based compensation? housekeeping

Mark McKechnie

Mark? question, your was What

Mark Miller

was the compensation? What stock-based

Mark McKechnie

the $X.X Stock-based quarter. it's comp, million for

Mark Miller

Yeah.

David Wang

Mark. you, Thank

Mark McKechnie

Thanks, Mark.

Operator

[Operator over queue. turn the Wang no closing more questions are to would the There call remarks. like for in David I Instructions] to back

David Wang

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

Mark McKechnie

guys. Thanks, Great.

Operator

Thank call. have you good your rest for joining conference today's concludes a day. and all of This

disconnect. may all You

ACM Research (ACMR) 4 Nov 222022 Q3 Earnings call transcript