ACM Research, Inc. Q1 FY2020 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to ACM Research First Quarter 2020 Earnings Conference Call. Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Mr. Gary Dvorchak. Thank you. Please go ahead.

Good morning, everyone. Thank you for joining us on today's call to discuss ACM Research first quarter 2020 results. We released results after the U.S. market closed last night. The release is available on our website, as well as through newswire services. There is also a supplemental slide deck posted in the investor portion of the website that we will reference during our prepared remarks. On the call with me today are CEO, Dr. David Wang; our CFO, Mark McKechnie; and Lisa Feng, the CFO of our Operating Subsidiary, ACM Shanghai. Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates, or other information that might be considered forward-looking. These forward-looking statements represent ACM's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under the risk factors and elsewhere in ACM's filings with the Securities and Exchange Commission. Please do not place undue reliance on these forward-looking statements, which reflect ACM's opinions only as of the date of this call. ACM is not obliged to update you on any revisions to these forward-looking statements. Certain of the financial results that we will provide on this call will be on a non-GAAP basis, which excludes stock-based compensation. You should refer to our press release for our GAAP results and reconciliations between GAAP and non-GAAP amounts. With that, let me now turn the call over to David Wang, who will begin with Slide 3. David?

Thanks, Gary, and welcome, everyone, to today's call. I hope that each of you and your families are staying safe and healthy in light of the COVID situation. Our hearts go out to those who have been personally impacted by the pandemic. I also want to thank all the healthcare workers around the world who are fighting the virus on the frontline and saving lives. To support the effort in February, we donated 30,000 masks and 300 full-cover hazmat suits to Wuhan. More recently, we donated 10,000 masks to New York and California. Despite the virus impact, we had a busy and productive first quarter. Our first priority was the safety of our employees. After that, we focused on making progress in growth for the year. We achieved customer acceptances for demo tools, introduced new products, and delivered solid financial results. We are moving forward with key strategic actions that support our mission to become a major supplier of capital equipment to the semiconductor industry. Now some highlights for the quarter on Slide 3. We are pleased with our financial results. We delivered $24.3 million in sales, up 19% year on year. Shipments were $12 million. We delivered double-digit revenue growth, even though some shipments were delayed from Q1 into Q2. Spending was up as expected. We invested and focused R&D to support new product introduction. We increased sales and marketing to penetrate new customers, and we had higher G&A to prepare for our STAR Market IPO. We ended the quarter with a solid balance sheet with $52 million in cash and another $59 million in restricted cash from last year's private equity withdrawal. Please turn to Slide 4. During the quarter, we achieved a major milestone with our Tahoe product. On last quarter's call, we reported positive results for Tahoe in a production environment at the lead customer. I'm now excited to report that Tahoe achieved first two acceptances at that customer, resulting in revenue recognition in Q1. This represents a great achievement for ACM and for the industry. Tahoe is a unique platform compared to other single-wafer SPM cleaning tools. Tahoe offers the same or even better performance while using only a fraction of the sulfuric acid. Sulfuric acid is an environmental problem for the entire industry. Our tool is one of our solutions that delivers good performance, benefits the environment, and reduces operational costs with significantly less chemical use. Even more exciting, today we report that we received a repeat order for Tahoe from this lead customer. We plan to deliver the tool for revenue in the coming quarters. The environmental advantages of Tahoe put us in a great position to engage with new potential customers in Taiwan, North America, and Europe. We expect more momentum from Tahoe, including orders for additional demo tools as the year progresses. Our customers are happy with our current products and are pushing us to provide more tools for cleaning and for other manufacturer steppers. In response to the demand, I have a few exciting new products to share with you today. Please turn to Slide 5. Yesterday, we introduced the latest addition to ACM's cleaning product line, three new semi-critical wet cleaning tools for front and backside wafer processes. The new tools are first, the Ultra C b for the backside cleaning; next, Ultra C wb for automated wet bench; and the third, Ultra C s for scrubber. These new tools expand our opportunity to even more clean steps at our major customers, and we estimate they will add approximately $800 million to ACM's total available market opportunity. While these are semi-critical cleaning steps, these tools feature the same high-quality that our customers expect from us. We are off to a great start with these tools. We have already delivered a number of them as demo tools to current customers with some already recognized for revenue and some still in qualification. Next, turn to Slide 6. For another major announcement, the Ultra Furnace. This broad platform is our entry into dry processing applications. This opens another large market for ACM beyond wet processing. In our view, innovation in vertical furnace technology is still required for the industry as it progresses to more advanced manufacturing nodes. That is why ACM is entering the market. We have been hard at work on the furnace for more than two years, in a joint development project of our world-class technology teams in China and Korea. The two teams developed a new hardware platform that combines our premium proven software and a proprietary control system. The Ultra Furnace delivers reliable control of pressure, gas flow rate, and temperature. The Ultra Furnace is optimized to deliver high-performance batch processing of up to 100 12-inch wafers that initially supports low-pressure chemical vapor deposition processes, also known as LPCVD. With additional development work, the furnace tool can be expanded to address oxidation, annealing processes, and could cater to atomic layer deposition processes. We delivered our first Ultra Furnace demo tool to a key customer in the first quarter and expect qualification by the end of this year. Please turn to Slide 7. This represents ACM's view of the market opportunity addressed by our full product line. You are all familiar with our core single-wafer wet cleaning products, SAPS, TEBO, and Tahoe. We estimate this product line represents a $1.5 billion market opportunity for ACM. We estimate our four recently announced products, the ECP, the SFP, Stress Free Polishing, and Semi-Critical Cleaning and vertical furnace products, extends our reach by another approximately $3.5 billion, taking us to up to $5 billion in total market opportunity. ACM is committed to gaining market share through innovation and new products. We have a multiyear product roadmap, and we are committed to further developing our technology across current and new product lines to address the technical challenges faced by our customers at more advanced nodes in the future. Turn to Slide 8. We are confident in the opportunity to expand beyond our current base of five major customers. We believe every major semiconductor manufacturer can benefit from our technologies. We began to broaden our sales team last year with the addition of new sales managers in the U.S. and Singapore. In early April, we announced the appointment of Jim Straus as vice president of sales for North America. Jim brings to ACM nearly 30 years of sales and business development experience in semiconductor capital equipment. He has a track record of success selling to the top five global IC manufacturers. We're excited to have Jim on board. He will lead our effort to expand the adoption of our core technology at major IC manufacturers in North America. Now an update on two major strategic efforts for 2020. Please turn to Slide 9. First, our land agreement. In December, we announced an agreement to acquire land rights in the Lingang Region of Shanghai, 30 miles from ACM headquarters in Shanghai. This will be the future site of our fully owned R&D and production facility. Negotiations are in the final stage. We expect to reach an agreement very soon. If an agreement is reached, we would expect to start construction late this year with the goal to begin initial production in late 2022. Second, we are making steady progress on the Shanghai STAR Market listing. We are on track to submit ACM Shanghai's IPO application in mid-2020. We are hopeful for a timely review by the Shanghai Stock Exchange and registration by the China Security Regulatory Commission. If all goes well, we will be pricing the transaction by the end of the year. We are confident that the IPO will raise ACM's profile in Asia and improve ACM's standing with local customers and the supply chain. The STAR Market IPO would also inject sizable capital into our China and global operations, which we believe will be favorably valued. This will help take ACM to the next level, enabling us to accelerate our long-term business plan at a critical stage in our development. Before I turn it over to Mark, I would like to update you on the COVID-19 situation and discuss our 2020 outlook. I'm happy to report that all of our staff are back to work at both of the Shanghai facilities, as shown on Slide 10, and at our Korean R&D center. The Shanghai regime has stabilized further since our last call with no new local COVID-19 cases. All our production lines have returned to 100% staffing. We are working closely with our supply chain to ensure timely deliveries. Most importantly, we are working hard to expand our capacity to handle additional loading for the rest of the year. Since the outbreak, we have been in constant contact with our customers, in particular, YMTC, whose first factory and its center of operations are in Wuhan. They are fully committed to scaling production. We happily report that Wuhan has officially opened, and we are on track for delivery to YMTC in the second quarter and beyond. Our other customers in less affected cities have also returned to work in an ordinary fashion. Operations appear to have returned to normal. Please now turn to Slide 11. As we look ahead, we remain optimistic. Let me share our current outlook, which is unchanged from last quarter. Q1 revenue and shipments expectations were impacted by the COVID-19 pandemic with parts of our business shifting from Q1 to Q2. Our internal forecast for repeat orders and first tool deliveries remains largely unchanged for the full year. Our visibility is supported by firm orders, customer forecasts, and tools awaiting acceptance. Accordingly, we reaffirm our full-year 2020 outlook. We expect revenue to be in the range of $130 million to $150 million. This will represent 30% annual growth at the mid-point. Our outlook is based on a couple of key assumptions. First, the COVID-19 situation further improves in China and stabilizes in the rest of the world. Second, the low end of revenue range assumes muted DRAM recovery and limited revenue contributions from new customers. To conclude, I would like to thank our customers, partners, and shareholders for their continued support and confidence in ACM Research. I also want to thank our employees for their hard work and dedication during this challenging time. We are executing on our strategy. We are investing in R&D to enhance current products and to develop new products. We are building our global sales and marketing resources to penetrate new customers in new regions, and we are scaling production capacity to support our long-term growth plan. I will now turn the call over to Mark, who will discuss financial results in more detail.

Thank you, David, and good day to everyone. We're off to a solid start here in 2020. Unless I note otherwise, I will refer to non-GAAP financial measures. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release. Turning to Slide 12. For the first quarter, revenue was $24.3 million, up 19%. Q1 revenue and shipments were impacted by the COVID-19 related shutdowns. Revenue growth was driven by an increase in front-end equipment, partly offset by a decrease in back-end assembly and packaging equipment. Total shipments were $12 million versus $14 million in the year-ago quarter and $25 million in the fourth quarter of 2019. Total shipments included deliveries for revenue in the quarter and deliveries of systems awaiting customer acceptance for potential revenue in future quarters. We expect shipments to rebound in Q2 and Q3. Gross margin was 42.2% versus 43.2% in the prior-year period. Gross margin was within our long-term target of 40% to 45%. Gross margin varies on a quarterly basis due to a variety of factors such as sales volume and product mix. Operating expenses were $8.4 million, up 43%. The increase in operating expenses was related to higher R&D on new products, sales-related activities, preparation for the China STAR Market IPO, and COVID-19 related spending to ensure the safety of our operations. Operating income was $1.9 million versus $3 million in the year-ago period. Operating margin was 7.8% versus 14.6%. Net interest income was $0.2 million versus a net expense of $0.1 million in the year-ago period, due primarily to increased interest income earned on larger cash and restricted cash balances. Net income attributable to ACM Research was $2.4 million versus $2.6 million last year. This included a net benefit of $0.6 million in Q1 of 2020 versus the net expense of $0.1 million in Q1 of 2019. That factors a normalized tax rate of 12% and removes the realized operational income or loss from foreign exchange fluctuations in each period. Net income per diluted share was $0.11, compared to $0.14 in the same period last year. This includes a net benefit of $0.03 for the tax and foreign exchange items for the quarter versus a $0.01 expense in the same quarter last year. Now, I'll review the balance sheet items for the end of Q1. Cash and equivalents were $52.3 million, down from $58.3 million in Q4. The decline was primarily due to a reduction of short-term borrowings, offset by positive cash flow from operations and other items. Restricted cash was $58.7 million, down slightly from Q4 due to exchange rate fluctuations. Short-term borrowings were $3.9 million, down from $13.8 million at the end of Q4. Total inventory was $45 million, finished goods inventory decreased to $11.6 million from $19.3 million at the end of the last quarter and $13 million in the year-ago quarter. The quarter-on-quarter decline reflects the net effect of first tool shipments and customer acceptances in the period. Cash flow from operations was $3.8 million for the first quarter, and capital expenditures were $0.1 million. To conclude, we are participating in the growth of major new IC fabs, we're ramping production, and we continue to develop and deliver innovative products. We're optimistic about our opportunities in China and expansion outside of China in spite of the disruptions caused by the COVID-19 pandemic, and we remain committed to achieving our mission to become a major player in the semiconductor equipment market. So, let's now open the call for questions that you may have.

Your first question comes from the line of Quinn Bolton from Needham & Company. Please ask your question.

Congratulations on the results and great to hear that everyone's well and operations are back to 100%. David, I wanted to start with kind of the introduction of the new tools. It sounds like you significantly expanded the product line over the last quarter or so in the semi-critical clean and the furnace. Can you give us some sense on just the timing of revenue acceptance for those new platforms? It sounds like some of the semi-critical clean may have already been accepted as revenue. And I think you mentioned the furnace first eval tool accepted by the end of the year. But just hoping you could share a little bit more color on the new platforms.

Okay. Thank you, Quinn. As we noted, this call has been a heavy quarter where we announced quite a bit of product. I'll give you our strategy regarding the Ultra Furnace. ACM has been working on the wet process tool for a long time. However, our goal to become a major player represents one major step as we get into the dry process step. This tool, as I mentioned, has been delivered to customers. We're expecting to qualify and record revenue probably by the end of this year. Regarding further semi-critical cleaning tools, I mentioned some of them, especially the backside cleaning tool, have been recognized as revenue, and some are still in the qualification phase. With respect to the scrubber tool, we just shipped the first tool in Q1 of this year. So, we hope this will be recognized by the end of this year. As for the auto bench tool, some have been recognized, while others are still in the qualification process. Again, all these new tools we hope will contribute some revenue, though some may extend beyond this year. We also expect to continue to receive repeat orders from customers regarding their semi-critical cleaning products. As for the furnace, we anticipate repeat orders or other new orders from customers by the end of this year or next year.

Great. Thanks, David. That leads into my second question, perhaps for you or for Mark. If I look at the first-quarter revenue of $24 million, you had shipments of only $12 million. So it looks like you must have had multiple new customer tools or new platforms accepted for revenue. You mentioned the first revenue acceptance for Tahoe. Congratulations on that. Is the difference that the first acceptance for the wet bench and the backside cleaning tool, that being the delta between shipments and what was recognized as revenue in the first quarter?

Yes, I can speak to that, and maybe Mark can add something too. Actually, in Q1, we had quite a few more acceptances from tools we shipped last year. This resulted in the first tool recording revenue. Even accounting for the $12 million in new tools we shipped, some are recorded as revenue upon shipment and some of them are still at the customer’s site. So that's probably the number you can think about in total. Mark, would you like to mention anything about that?

Yes, you bet. So, Quinn, I think you're thinking about it the right way since we did talk about revenue from the acceptance we received for Tahoe and some of the new semi-critical tools. As David stated, our Q1 efforts focused really on acceptances and new products, firming up the year’s outlook. The acceptances were indeed favorable. Tahoe is something we're proud of, and we expect the shipments to rebound pretty substantially in Q2 and beyond.

And then last for me, Mark, on the Tahoe repeat orders. Can you give us some sense? I know that's a pretty high ASP platform. Were these multiple units, any sense of how large that repeat order was on Tahoe? Thanks.

We're not disclosing much more than just a good repeat order from our lead customer, and we do expect some orders and demand for demo tools for Tahoe from the current customer base.

Yes, to add on that, we do have a couple of deliveries secured from repeat customers this year. We are targeting two additional new tools for Tahoe for new customers, and we hope to report more on that in the next quarter's earnings call.

Your next question comes from the line of Patrick Ho from Stifel. Please ask your question.

Thank you very much and congrats on the nice quarter, and most like us, here, everyone is well. Maybe for you, Dave or Mark. As it relates to COVID-19, your gross margins held up very well given the dynamics in the quarter, especially with some, I guess, evaluation tools being recognized in revenue. Can you just give specifically any incurred costs on the gross margin line, whether it was manufacturing innovation, supply chain, procurement of parts, or even logistics? How that may have impacted gross margins and whether that continues into the June quarter?

David, do you want to start and I can finish or...?

Yes. Sure, that's good. Okay. Thanks, Patrick. I think, as we mentioned before, our gross margin is in the range of 40% to 45%, and that's still the range we're talking right now. We believe this range can be achieved for the near term over the next few years. The reason for that is we balance our penetration into the market and our profitability. After we get our major leading tools established, the margins can increase beyond 45% consistently. At this moment, you can see that as we introduce the semi-critical cleaning tools, some of them have a lower margin, while others still maintain good margins. So, as more revenue flows in and we penetrate the customer base, we're aiming for that 40% to 45% range. Mark, anything you want to add?

Yes. Regarding COVID-related expenses, in our prepared remarks, we pointed out that we incurred some additional expenses in our G&A line. We didn't specify anything major on our cost of goods sold, so there wasn't a significant impact from COVID-related spending. As David mentioned, we are confident in the 40% to 45% gross margin range moving forward. Thanks.

Great. And maybe as my follow-up question in terms of the ramp through the rest of the year. Obviously, there’s likely to be some pent-up demand coming from your customer base. You talked about expanding your manufacturing capacity to meet that. I guess, how much incremental cost are associated with that? And also, will you be able to get that expanded capacity in place as fast as possible given probably the demand that's helping?

Okay, Patrick, very good question. As we reported in the last earnings call, we see Q2 being better than Q1, also very strong in Q3. In fact, Q3 has recognized revenue shipments and many first tools. This poses a challenge for us to train people quickly and get the first facility into production for larger volumes. The next aspect to consider is the supply chain. We are monitoring our supply chain carefully. So far, we have not observed any significant delays or major concerns within the supply chain. However, we are closely watching how COVID may impact deliveries of components or systems, especially in the Q3 timeline. Our procurement team will work diligently with our partners along the supply chain to ensure timely deliveries and avoid impacting our shipments in Q3 and Q4. Mark, do you have anything to add?

Yes. The only thing I’d add is that since our last call, we had our first quarter, and things played out similarly to our planned expectations. We feel better about the year going forward than we did when we reported last quarter. We've worked to firm up our year outlook, we secured key acceptances, and we are actively engaging with our supply chain. So, we feel confident we will be able to deliver product, though any major disruption in the industry is something we would have to plan around. Overall, we’re confident with our outlook at this point.

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

Hi David, Mark, Lisa. Good to hear the team is doing well and safe, and congratulations on the results here. So the new products you've announced, can you talk about the average selling price range for those products relative to the SAPS and TEBO products you already have in the market?

Okay. Each product has a different configuration. Looking at the scrubber, it's much lower than our typical chemical cleaning tool. They are only around $1 million for the scrubbers. The auto bench averages between $2 million and $2.5 million. As for the backside cleaning tool, it runs between $3 million to $3.5 million per chamber tool.

Hey, Suji, sorry to cut in. So that’s for the VM, the new semi-critical tools. But David, if you look at the portfolio of the furnace, the SFP, and the ECP products, maybe you could say a little bit about the pricing on those as well.

Okay. So regarding our other products, our front-end tools are about $4 million, and the back-end tools vary based on the configuration from as low as $2 million to as high as $4 million. The SFP tool sold for basic applications is roughly about $3 million on average.

Great. Okay. Thanks. That’s very helpful. And looking at the shipments, I think you discussed it a little, the linearity over the years points towards the first quarter being lower than the third, and the March quarter typically seems to be low. Could you explain if that dynamic still applies for this year, or have COVID circumstances changed that?

Yes. David, do you want me to answer that? I can give a good answer there.

Yes. Actually, in the fourth quarter, obviously, in China, there’s the Lunar New Year, right? Associated with that, typically, the workforce goes home and comes back again, even in a normal year. You can see that generally, Q1 is a light quarter. Following that, Q2 sees higher volumes than Q1. Q3 and Q4 are contingent on market conditions and customer requirements. So, yes, typically, Q1 is a light quarter.

Okay. Very helpful. And have your lead times to the tool deliveries to customers stretched out at all with the COVID disruptions?

So far, we're still okay, right? In fact, for repeat orders, we still maintain the four-month timeframe for some new tools, leading to a typical timeframe on the order of about four to five months. That's pretty standard for our delivery times. We've not encountered supply-component related delays but are monitoring delivery times closely over the next couple of quarters.

Your next question comes from the line of Christian Schwab from Craig-Hallum. Please ask your question.

Thank you. Congratulations on a great start to the year and the new products. David, could you tell us about the Tahoe repeat order? Was the customer excited about that? Was the customer more excited about the better performance of the tool or the environmental positive impacts?

Actually, Christian, they’re both, right? First, obviously, outperformance is number one; they are more concerned about performance. They are more focused on expected performance as it meets production standards. We've achieved equivalent performance when compared to their single-wafer SPM process in line with their expectations. They are looking for high data quality and yield data. Furthermore, the reduction in chemistry consumption is significant, as we noted, with university-grade reductions of over 80% in the use of sulfuric acid. That has been substantial. Cost savings and less environmental pressure are also reasons for their confidence. They want to ensure we deliver two tools this year, which shows they are very happy with this data and the performance.

And in the data that they have, sometimes new customers like this would be willing to let you use that to show to new customers outside of them. Is that the case with this customer or not?

Well, I mean, the customer gave me two repeat orders so they’re logical in spending larger amounts to show new clients, right? They are very happy with the performance. Second, we have achieved great results with 90-nanoparticle data for their production line. It may not be an immediate need, but they want to ensure the technology can extend into the future advancements of 40nm processes or even further. Thus, our 90-nanoparticle performance looks great. They’re comfortable with this tool's extendability to future advanced manufacturing nodes.

Perfect. And then my last question is related to the recent Department of Commerce regulations. Is there any chance that any of that will impact you guys?

Well, okay, it's a good question. So far, we have not seen any impact. We sell to customers in domestic markets as well as in China or outside of China in Korea. So, we are following the regulations, both within China and U.S. export law requirements. However, we have a very good position. As a U.S. company, we can operate in China. This gives us a flexible structure. Additionally, we are expanding our manufacturing capability into Korea, which gives us flexibility to maneuver amid any trade tensions. We have a solid structure and positioning compared to local competitors and bigger firms regarding this trade situation. Mark, anything to add?

I think you covered that well. We anticipate trade war tensions will persist and be volatile. We'll do our best to plan around it as needed. We're committed to following all regulations, but at this point, we don’t foresee any immediate impact on our outlook.

Your next question comes from the line of Donnie Teng from Nomura. Please ask your question.

Thank you, everyone, for taking my question, and congratulations on a good result in the first quarter. My first question is a housekeeping question. So if we look at your shipment sales and actual sales, the first-quarter actual sales were better than our previous expectations, but the gap between shipment and actual sales is quite big. Can we say that the second-quarter actual sales may be relatively flat, or it may not grow significantly compared with the first quarter? What kind of shipment growth magnitude should we expect in the second quarter? It looks like the shipment growth could be quite strong in the second quarter.

A good question, Donnie. At this juncture, we don’t provide guidance for upcoming quarters, right? The scale and volume, deliveries that may occur one month or two can significantly affect our projection accuracy. Therefore, we typically don’t give precise future projections. However, I can confidently say that Q2 is looking much better than Q1 in terms of both revenue and shipment. Furthermore, we expect an even stronger Q3 with many first tools on the line. Also, as mentioned earlier, we are preparing our capacity to handle larger orders, not just the repeat orders but also many first tools that will come in Q2 and Q3.

Sure. Just a quick follow-up on the numbers. You mentioned the new products, right? Can we have a rough idea of what kind of gross margin would be compared with our current corporate average level for those new products?

The new products, I would say, maintain an average gross margin in line with the current range of 40% to 45%. The exact figures will of course vary based on specific configurations and customer requirements.

Thank you. My second question pertains to the customer orders. I will break down your customers into three categories. One is China customer; second, Korea customer; and the last is global leading customers. So for the China customers, are you seeing any early pull-in for their orders due to potential restrictions from the U.S. commerce? And regarding your Korean customers, are you perceiving any early signals of potential DRAM capacity expansion in the near future? Lastly, for global potential leading customers, could you provide an update on your progress there? Thank you.

Good, a long question. Okay, let's address each segment. For domestic customers, demand remains strong. As I noted, domestic customers in China have long-term strategic investment plans continuing even through COVID-19, and they’re following pre-established plans. The impact is most related to market demand or market circumstances. Regarding Korean customers, we haven't seen DRAM capacity expansion yet but have observed a demand for technology migration because our tools cater to small geometry advancements. We're carefully monitoring this situation. As for Taiwan customers, yes, we see that as the next major penetration market. We're also focusing on U.S. customers with fabs in China, and we're diligently working to strengthen our ties with top-tier customers. We are confident that they need our technology, and we're positioned steadily at a critical point to support our growth with substantial resources.

Your next question comes from the line of Jeff Su from Morgan Stanley. Please ask your question.

It's Charlie Chan from Morgan Stanley. First of all, yes, great to hear everything is going well. My first question centers around the opportunity of your new product. On your slide, Page 7, you noted that SAPS and TEBO represent around 50% of your total addressable market. With those new products, what would your total addressable market be now? Is it still around $3 billion or more than that?

Yes, that's correct. Currently, we value our new products, including semi-critical cleaning products, at around $800 million to our total market. In total, we've estimated about $5 billion in market opportunity, which includes the new products and existing offerings.

Okay, David. Thanks. Your current liquidity is quite differentiated, I would say, given the megasonic technology. But for those new businesses in the furnace and Ultra C, do you have kind of specific technology differentiation, and who are the main competitors in this area?

There are notable players in the semiconductor equipment space, like Dell, Kokusai, and Hitachi, providing strong competition in the furnace category. We believe there is ripe innovation needed as the market in China continues to rise, along with strong demand for close support from customers. Customers are seeking localized R&D and engineering support as they have country-specific requirements. Therefore, we are positioned well to step into this dry process market and help with future innovations as technology moves forward. This will also benefit our wet process tools and vision of the future.

Got it, David. Along those lines focused on the batch furnace side, it's primarily memory customers who use it. Do you see any risk of memory companies shifting to single wafer processes, or do you think they will stick to batch for a long time?

That’s a good question. Many believe that single-wafer processing is the future. With LPCVD, there are benefits to single-wafer processing, which offers better uniformity and quality. However, batch processes still hold their advantages in throughput. Even with ALD, there are potential slow processes tied to the single-wafer route. Therefore, certain processes will still be served adequately by batch processes. Overall, we see a significant market potential remaining in batch processing, and hence our interest in developing further products in this sector. As for advanced logic and foundry customers outside of China and Korea, they look for metrics from our technology that can improve yield and produce material improvements in manufacturing. They are focused on achieving superior quality for their production.

There are no further questions at this time. I would like to hand the conference back to Mr. David Wang for closing remarks.

Thank you, operator, and thank you all for participating in today's call and for your support. Before we close, Gary is going to mention some upcoming investor relations events. Gary, please.

Thanks, David. On May 27th, ACM will attend the 17th Annual Craig-Hallum Institutional Investor Conference, which will be a virtual conference. Then on the 28th, we'll participate in the Cowen and Company 2020 Virtual Technology, Media, and Telecom Conference. Attendance at those conferences is by invitation only. So please contact your respective sales rep if you would like to schedule one-on-one meetings with us. This concludes the call. You may now disconnect. Thank you.