ACM Research, Inc. Q4 FY2025 Earnings Call

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to Mr. Steven Pelayo, Managing Director of Blueshirt Group. Steven, please go ahead.

Good day, everyone. Thank you for joining us to discuss fourth quarter and fiscal year 2025 results, which we released before the U.S. market opened today. The release is available on our website as well as from newswire services. There is also a supplemental slide deck posted to the Investor Relations section of our website that we will reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wang; our CFO, Mark McKechnie; and Lisa Feng, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to Slide 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 financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation and unrealized gain or loss on short-term investments. For our GAAP results and reconciliations between GAAP and non-GAAP amounts, you should refer to our earnings release, which is posted on the IR section of our website and to Slides 14 and 15. Also, unless otherwise noted, the following figures refer to the fourth quarter and fiscal year 2025, and comparisons are going to be with the fourth quarter and fiscal year 2024. I will now turn the call over to David Wang. David?

Thanks, Steven. And hello, everyone, and welcome to ACM's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. I'm pleased with our fourth quarter results, which capped off a solid year of execution. Revenue grew 9% in the fourth quarter and 15% for the full year. We continue to execute well across our core business. We made a lot of progress with new product platforms, and we strengthened our position in China and globally. Investment in AI and data center infrastructure is reshaping the global semiconductor demand, shifting capital towards advanced logic, memory, and advanced packaging. The industry is looking to key suppliers for new technology, many of which have not yet been invented. ACM's differentiated technology portfolio has aligned well with these high-value process steps and the market is now coming to us for solutions. A good demonstration is the recent momentum with several key global customers outside the Mainland China market that we announced in today's press release. First, we announced that we have delivered multiple single-wafer cleaning tools to the Singapore facility of our Asia-based foundry customer. This marks ACM's first tool installation in Singapore, a key milestone for ACM. Second, we announced that we are receiving multiple orders for our advanced packaging tool from 3 global customers. This included orders for multiple-wafer level advanced packaging systems from a leading global OSAT customer based in Singapore, with deliveries scheduled for the first quarter of 2026. A panel-level advanced packaging vacuum cleaning tool from a leading global semiconductor packaging manufacturer based outside Mainland China, also scheduled for delivery in the first quarter of 2026, and multiple-wafer level packaging systems from a leading North America-based technology customer with delivery scheduled later this year. Now on to our business results. Please turn to Slide 3. For the fourth quarter of 2025, we delivered $244 million in revenue, up 9%. For the year 2025, we delivered $901 million in revenue, up 15%. Top-line growth of 15% was better than growth for the overall China WFE market, which third-party estimates as generally flat for 2025. We consider this a good result, especially since our 2025 revenue includes very little contribution from our new products. We expect a strong product cycle in 2026 from SPM cleaning and our furnace product as we made very good technical progress for this new product across our customer base. We also made good progress with our supercritical CO2 dry, Track, panel-level plating, and PECVD, which we expect to contribute more in 2026, but more in 2027 and beyond. Shipments for 2025 were $854 million versus $973 million. Remember, 2024 shipments increased 63% over the year. So we had a tough comparison. We also had some shipments of new products pushed into 2026. Importantly, we expect 2026 shipment growth to be higher than our 2026 revenue growth. Gross margin was 41% for the fourth quarter and 44.5% for the full year. Q4 gross margin was slightly below our long-term target range of 42% to 48%. We attribute the Q4 level to product mixing, including a few semi-critical products with a lower margin due to competitive pressure and also higher seasonal inventory provisions. We expect lower gross margin to be temporary. We believe our new product ramp, combined with the product design and supply chain initiative will enable us to deliver the best products at a lower cost. There's no change to our long-term target model range of 42% to 48%. Moving on, we ended the year with a net cash balance of $845 million versus $259 million at the year-end of 2024. This balance sheet provides the foundation to continue our effort to develop world-class tools for the leading global semiconductor manufacturers. Before I review our product, I will provide our view on competitive dynamics in China and how we will win in this environment. We have recently seen a flood of new local entrants to the China capital equipment industry. In many cases, there are 5 or more players going after a single point product, all with very similar design and performance. We believe we will compete and win in China market because, number one, we have a differentiated technology with many products that are virtually the best in the world. Two, we have a deep portfolio of IP with strong protection in China; and three, our local customers demand the best technology in order to compete in the global market. Now I will provide details on our product. Please turn to Slide 4. Revenue from single-wafer cleaning, Tahoe, and semi-critical cleaning tools was $626 million, up 8% in 2025 and represented 69% of total revenue. We now estimate our cleaning portfolio addresses 95% of the applications and process steps, and we are working on developing remaining solutions that will bring us to 100% in 2026. We believe ACM now has the widest coverage of cleaning tools, far more extensive compared to all competitors. The 8% year-over-year growth in 2025 included very little contribution from our newer cleaning line. We expect this new product, including single-wafer SPM, Tahoe, and N2 bubbling wet etching to contribute more meaningfully to our 2026 revenue. As the industry moves to more advanced nodes, we expect increased demand for high-performance cleaning tools. The increased adoption of multiple patterning is driving higher layer counts, potentially impacting yields and requiring more cleaning steps with higher cleaning efficiency. We believe this plays right into ACM's strength. For example, our proprietary N2 bubbling etching technology is uniquely positioned in the market. We are seeing increased interest for advanced 3D NAND applications where larger bubble size and uniformity control will become more critical as the industry moves to 300 layers and above. In SPM cleaning, customers recognize the advantages of our proprietary nozzle and chamber design. We believe our platform outperforms leading competitors in small particle cleaning performance. We made a significant technical progress at the end of 2025 with our new SPM nozzle design. We achieved a 50 nanoparticle size count of under 20, which we believe is the best-in-class performance for the industry. Our unique nozzle design does not require any routine chamber DI water cleaning. This is significant for customers because it not only delivers a better cleaning environment for the chamber but also increases uptime of our equipment. As a result, I'm pleased to report today that we have received a strong repeat order for our SPM cleaning tools from a major customer for delivery to module fab in 2026. We are also seeing very strong interest for our unique SPM technology from numerous global customers because they are not satisfied with the performance of their current plan of record tool. Our supercritical CO2 dry tool integrates ACM's proprietary cleaning IP while reducing CO2 consumption by approximately 40% as compared to competitors. This results in process efficiency with lower operational costs. We made a successful in-house demo for multiple Logic and memory customers at the end of 2025. We have already received a demo purchase order for evaluation tools from 2 customers for delivery mid-2026, and we expect to deliver additional tools to multiple customers later this year. In Mainland China alone, we estimate the incremental market opportunity for this next-generation cleaning product is nearly USD 1 billion. We remain confident in our long-term objective to achieve approximately 60% of the market share in China cleaning market, and we expect cleaning to outgrow the China WFE this year and in the year ahead. We estimate our market share for ECP in China is now more than 40%, and we remain confident in our long-term goal to achieve 60% or more. Our front-end tools represented about 70% of the mix for the year, including our MAP, MAP Plus, ECP 3D, and ECP G3 products. ECP back-end tools accounted for about 30% of the mix, including our ECP AP product line. In Q4, we delivered our first Ultra ECP AP horizontal panel-level electroplating tool to an industry-leading large panel fabrication customer. Our customer prefers ACM's preferred horizontal plating solution over competitors' vertical plating approaches due to much better plating film uniformity and significantly less cross-contamination between multiple plating chemicals. We expect growing customer interest in our panel-level solution as the industry looks for higher throughput and lower costs to support advanced packaging solutions for multiple large die sizes and HBM AI chips. As discussed earlier, we received orders from 3 global customers for both wafer-level and panel-level packaging tools. Our furnace tools are under various stages of evaluation by many customers. Revenue from the furnace was relatively small in 2025, but we expect a more meaningful contribution in 2026. We made several technical breakthroughs for LPCVD, ALD, and PEALD in 2025. We see good demand across multiple applications, including high-temperature neo, especially the 1,350-degree version, LPCVD, ALD, and PEALD. We believe ACM's differential design positions us to capture meaningful market share. Revenue from advanced packaging, which excludes ECP but includes service and spare parts, was up 45% in 2025 to $76 million and represents 8% of revenue. This includes coater, developer, etchers, strippers, scrubbers, and vacuum cleaning tools. We believe ACM is the only company to offer a full portfolio of wet process tools and world-class plating products for advanced packaging. We think this combination is very powerful. It provides ACM with valuable insights into the challenges of next-generation packaging as AI drives the industry towards 2.5D and 3D integration. We are making solid progress with our new Track and PECVD platforms. Last September, we delivered our high-throughput 300 WPH KrF track tool for evaluation at a key customer. We expect mass production qualification in 2026 for this tool, and we anticipate this will lead to demand from additional customers, including both stand-alone and fully integrated systems in line with the lithography tool. We believe our high throughput design positions this platform to compete effectively with the current suppliers. In Q4, we delivered our first Ultra Lith BK system. This milestone represents the first customer deployment of our Track series following early demonstration and validation. It also marked our entry into the display panel market, a new segment that requires high-volume manufacturing and strong performance stability. We anticipate developing our proprietary PECVD platform. Our design has 3 tracks per chamber, which we believe is the only one in the world. This provides flexibility for a wide range of processes with the same hardware. We feel good about our positioning as the team works through the technical details with a few tools in our Lingang mini lab running wafer tests and custom demo wafers. We expect to ship multiple EVA tools in the near term. In summary, our innovation engine contributes to driving differentiated solutions across a broader growing portfolio. As AI drives a more complex semiconductor process, customers are turning to ACM as a trusted partner to help solve their increasing challenges. Next, let me provide an update on our production facility. First, on Lingang, please turn to Slide 8. Our Lingang production and R&D center is now our primary production center. The first building is in volume production and the second provides capacity for future expansion. Together, the 2 facilities can support up to $3 billion in annual output. During 2025, we made good progress on our mini line and Lingang. We have enhanced our process development capability and now support on-site customer evaluation in fab-like conditions. Our mini line includes ACM tools and tools from other players and metrology tools. We believe the mini line will accelerate our internal product validation, shorten R&D and qualification cycles, and strengthen collaboration with key customers as we introduce next-generation platforms. Next, our Oregon facility, please turn to Slide 9. We are accelerating investment in Oregon with operations expected to begin in the second half of 2026. This facility will allow customers to evaluate our technology and test their wafers locally, and it will serve as our initial base for production in the United States. Our global customers are encouraged by our commitment, which we believe will help them to choose ACM as a key supplier to scale production. We remain very pleased by the success of the ACM Shanghai team, which continues to be a key supplier to the semiconductor industry in Asia. ACM Shanghai has also proven to be a great source of capital and financial flexibility for ACM. In September 2025, ACM Shanghai completed a private offering of ordinary shares, generating approximately $623 million in net proceeds. In February 2026, we completed the sale of approximately 4.8 million ACM Shanghai shares at RMB 160 per share, generating approximately $111 million in gross proceeds. ACM Shanghai has also been a good source of dividends in 2023, 2024, and 2025. We received dividends net of tax of $19.2 million, $28.5 million, and $29 million, respectively. Our major ownership in ACM Shanghai remains a strategic asset. It enhances our financial flexibility and supports disciplined execution as we continue expanding globally. Taken together, our expanding product portfolio, increased manufacturing capacity, and strengthening capital position give us confidence in our long-term strategy. Now turning to our outlook for the full year 2026. Please turn to Slide 10. In mid-January, we introduced our 2026 revenue outlook in the range of $1.08 billion to $1.175 billion. This implies 25% year-over-year growth at the mid-point. We reiterate this outlook today. Since our founding in California in 1998 and the establishment of ACM Shanghai in 2005, we've been building a globally competitive semiconductor equipment company grounded in innovation and differentiated technology. Our leadership in cleaning and electroplating created a strong foundation, and we are now expanding across Furnace, Track, and PECVD as we broaden our multiple product portfolio. In Asia, we are recognized as a leader in wafer cleaning and plating, and we are engaging with global customers across the U.S. and Europe. With continued progress across SPM, Tahoe, supercritical CO2 dry, Furnace, Track, PECVD, and panel-level packaging, we believe we are entering a new phase of a product cycle that will drive sustained growth. We have the customers, the products, the capacity, and the capital to execute our global business plan, and we remain committed to our long-term target of $4 billion in revenue. Now let me turn the call over to our CFO, Mark, who will review details of our fourth quarter and full year results. Mark, please.

Thank you, David. Good day, everyone. Please turn to Slide 11 and 12. Unless I note otherwise, I'll refer to non-GAAP financial measures, which exclude stock-based compensation and unrealized gain/loss on short-term investments. Reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. Also, unless otherwise noted, the following figures refer to the fourth quarter and full year of 2025 and comparisons are with the fourth quarter and full year of 2024. I will now provide financial highlights. Revenue was $244 million for the fourth quarter, up 9.4%. For the full year, revenue was $901.3 million, up 15.2%. Full year revenue was in line with our original guidance set a year ago and slightly above the updated range announced on January 22. Fourth quarter revenue for single-wafer cleaning, Tahoe, and semi-critical cleaning was $159.9 million, up 3%. For the year, this category grew by 8.1%. Fourth quarter revenue for ECP, Frontend Packaging, Furnace, and other technologies was $64.1 million, up 23.9%. For the year, this category grew by 32.1%. Fourth quarter revenue for Advanced Packaging, excluding ECP, services, and spares, was $20.5 million, up 23.8%. For the year, this category grew by 45.3%. I will now provide revenue mix by customer type for 2025. Starting this year, rather than disclosing specific customer names, we are now disclosing revenue by customer type once a year. For each customer type, this includes products, services, and spare parts. We've included the mix table on Slide 7 of our presentation. For 2025, our revenue mix by customer type was split among Foundry, Logic, and Other, 59%; Memory, 27%; Packaging, and Wafer Processing, 14%. In 2025, we had 4 customers contributing over 10% of sales, including our top customer at 16.9%, next at 13.5%, then 11.6%, and 10.2%, for an aggregate total of 4 customers representing 52.2% of total sales. For 2024, we had 4 customers above the 10% mark also, for a total of 52.2%. Total shipments were $228 million for the fourth quarter, down 13.5%, and $854 million for the full year of 2025, down 12.2%. David noted we had a tough comparison versus a strong 2024 when shipments increased 63% year-over-year. We also did have some shipments for new products pushed into 2026. We expect a 2026 shipment growth rate to be higher than our 2026 revenue growth rate. Gross margin was 41.0% for the fourth quarter and 49.8%. For the full year, gross margin was 44.5% versus 50.4% in 2024. Q4 gross margin was slightly below our long-term target model. Adding to David's earlier remarks, gross margins were down 8.8 percentage points year-over-year on a quarterly basis. This was due to product mix and margin pressure concentrated in a few semi-critical products, which contributed about 5 points of headwind and a higher level of inventory provisions that contributed about 4 points of negative impact. As David noted, we expect the lower gross margins to be temporary. We believe our new product ramp, combined with supply chain initiatives will enable us to deliver the best products at a low cost, and there is no change to our long-term target model range of 42% to 48%. For modeling purposes, we expect gross margins to be at the lower end of this longer-term target range for the first half of 2026, with an anticipated lift in the second half due in part to contributions from newer products, which generally have higher gross margins. Operating expenses were $70.6 million for the fourth quarter, up 21%. For the full year, operating expenses were $258.4 million, up 34%. For 2025, R&D was 15.1% of sales, sales and marketing was 7.8% of sales, and G&A was 5.8% of sales. For 2026, we plan for R&D in the 16% to 18% range, sales and marketing in the 7% to 8% range, and G&A in the 6% range. Operating income was $29.5 million for the fourth quarter versus $52.8 million. Operating margin for Q4 '25 was 12.1% as compared to 23.6%. For the full year, operating margin was 15.9% as compared to 25.6%. Long term, we look to grow our R&D spending in line with revenue, but we expect to show operating level leverage in SG&A with spending growth below our revenue growth level. Income tax expense was $6.6 million for the fourth quarter versus $17.3 million. For the full year, income tax expense was $13.3 million versus $35 million in 2024. For 2026, we expect our effective tax rate in the 8% to 10% range. Net income attributable to ACM Research was $17.3 million for the fourth quarter versus $37.7 million. For the full year, net income attributable to ACM Research was $110.2 million versus $152.2 million. Net income per diluted share was $0.25 for the fourth quarter versus $0.56. For the full year, net income per diluted share was $1.61 versus $2.26. Our non-GAAP net income excluded $6.4 million of stock-based compensation expense for the fourth quarter and $33.6 million for the full year. I will now review selected balance sheet and cash flow items. Cash, cash equivalents, restricted cash, and time deposits were $1.13 billion versus $441 million at year-end 2024. Net cash, which excludes short-term and long-term debt was $845.5 million versus $259.1 million at year-end 2024. The $585.4 million increase in net cash for 2025 included $623 million net raised in the private offering by ACM Shanghai in 2025. Total inventory at year-end was $702.6 million versus $676.4 million at the end of the third quarter. Raw materials were $349.7 million, up $23.5 million quarter-over-quarter. We made additional strategic purchases to support production plans and to mitigate any potential supply chain risks. Work in process was $61.4 million, up $1.9 million quarter-over-quarter. Finished goods inventory was $291.6 million, up $0.9 million quarter-over-quarter. Finished goods inventory primarily consists of first tools under evaluation at our customer sites along with finished goods located at ACM's facilities. Cash provided by operations was $33.9 million for the fourth quarter. For the full year 2025, cash used by operations was about $10 million. Capital expenditures were $58 million for the full year 2025. For the full year 2026, we expect to spend about $200 million in capital expenditures. This includes continued investments in Lingang, including the mini line and the second production facility, fixed assets for the business, and investments in Oregon, along with other items. That concludes our prepared remarks. Now let's open the call for any questions that you may have. Operator, please go ahead.

Our first question will come from Charles Shi with Needham & Company.

I believe you gave pretty good color on shipment versus revenue growth this year. So I have a question since you mentioned about new products probably going to be a bigger driver this year for growth. And wonder if you can give us some color, let's say, excluding the new products, what's the growth, either shipment or revenue expected to be excluding all the new products for the — maybe — I think maybe I'm talking about the existing product lines in cleans, plating, etc.

Okay. Thank you, Charles. And actually, you know that we — as we said, we made quite a big progress, right, in the SPM process. Generally speaking, SPM products represent 25%, 30% of the cleaning market. And this market in the last couple of years, were not much touched. And as I said, last 2025, we made very good progress both into special module design for the high temperature and also Tahoe product. So we're getting very aggressively into this market. And again, this is a very high-margin product and many customers, both in Mainland China and outside China, are suffering from particle issues with this high-temperature SPM process. And we think with our proprietary design model, we can control a very good environment, which will reduce particle size, thus enhancing our market growth in cleaning. Secondly, I want to note that our N2 bubbling proprietary bubbling wet etching technology is crucial for the 3D NAND silicon nitride etching process, which we believe our proprietary technology covers today's demand for 300 layers; moreover, we believe as people move to 400 or even 500 layers, they will face challenges concerning uniformity on the wafer top or wafer bottom. So we're using large bubble size and uniform distribution in the tank. That will really enhance the etching uniformity from the top to the bottom of the wafer. Therefore, we believe there's significant demand in the market in China, while we also see growth in the global market. Thirdly, I also mentioned that our supercritical CO2 Dry has also made substantial progress, right? And we have 2 tools scheduled for delivery in the first or second quarter of this year. We also have additional interest coming in. Again, since the supercritical CO2 with our proprietary design, we have reduced the CO2 chamber size by about 40%. This gives us a competitive advantage in terms of lowering consumable costs. With all this cleaning product combined, we believe also expansion in the future could represent over $1 billion market potential for us. So we're still very excited about our continued expansion in the cleaning product segment in the China market, plus also trust in our strong differential technology in the global market.

Maybe a question on profitability. So you reported last year, you gave some color about this year. But I believe if my math is right, your operating margin will compress last year from maybe close to 26% in '24 to 16% in '25. But this year, based on your what you guided about gross margin, what you guided about R&D, SG&A, it doesn't look like operating margin can rebound. It feels like operating margin probably more or less the same or even coming down a little bit depending on how the gross margin trends for the remainder of the year. So I wanted to get some sense of how — what's the reason for operating margin being under pressure for almost 2 years? And how do you plan to address this and maybe try to expand the operating margin from here?

Yes, actually, that's the case. Looking at gross margin, we are probably at the top of the equipment company in China for gross margins over the last few years. And as you said, Q4 of last year was the first time our gross margin fell below our targeted range of 40% to 48%. As we explained, there are maybe 3 factors. One is product mix; we had 1 or 2 products, which are semi-critical tools, that faced pricing pressure from competitors. The next point is the inventory provisions. However, we believe this year, as our new products come in, including the 3 products already mentioned, will definitely enhance our margins. Furthermore, we also believe our inventory provisions will be greatly reduced. So with that, we still have confidence we will meet our long-term target gross margin range of 42% to 48% in this year and beyond. More than that is, as you noted, we invested quite a bit in R&D last year. It used to be around 13%, 14% of sales; last year, we reached about 16%. We probably will maintain that level for now. Why? The next few years, AI is driving a lot of demand for new technology, and all first-tier companies outside China are increasing their R&D spend. So we'll continue to invest in that, which we know may impact our operating margins slightly, but it's worthwhile to spend money now. The opportunity is large, and many customers show strong demand for new technology, much of which is not invented yet. This really gives ACM a good opportunity with our innovation capabilities and different technology development. For example, the horizontal plating is one good illustration of our strategy. It's worth spending more R&D and possibly a few percent down on operating margins, which we believe will lead to long-term growth. We're working for the investors' interests and also for ACM's market growth in the coming years.

Yes, David, I might add a few things. I think that was a good overview. But Charles, summarizing it up, we're investing into the $4 billion market opportunity. There are a number of products that we've been investing in that haven't scaled yet, but we expect them to scale over the next few years. It's the right strategy to invest in that. You're right about the operating margin for 2026 coming in at the mid-teen level, similar to what it was here in 2025. Moving out a few years, our target is to keep those gross margins at that target range and then grow our top line faster than our OpEx. I think you can see some leverage in the out years.

Our next question will come from the line of Edison Lee with Jefferies.

Congratulations on the results. I just have 2 quick questions. Number one is that for the fourth quarter, the margin is a little bit low, and the revenue growth also is a little bit slow, and then your shipment, I think, declined on a year-on-year basis. So how much of that is just product mix and seasonality? And when do you think these numbers will actually start improving in 2026? And then the second question is about the USD 111 million you raised by selling down ACMS. Can you shed some light as to how you would actually utilize that proceeds?

Okay. So let's answer your first question, right? I think that if you look at the — I just mentioned the last couple of years, our major growth engine has been cleaning and copper plating, right? Even the cleaning market, I said, there's one important product, which is SPM process that has not been fully tapped yet. As I mentioned last year, near the end of last year, Q4 last year, we made substantial progress with this special nozzle design. We believe our performance is outperforming top-tier tools. So we anticipate this growth to continue. Our cleaning market in China is around 35%, and we aim to expand that to 50% or 60% in the next few years. The copper market sits at 40%, and we are striving for over 60% market share in China as well. Additionally, we have made significant progress in differentiated PECVD, Track, and Furnace technologies over the last 4 to 5 years. We are now seeing their market entry, and this combined with our tools with differentiated technology and developed IP gives us confidence. It also helps our production internal demonstration through the use of the Lingang mini line, which has shown positive impacts on our internal development speed. So altogether, I can confidently say that our existing product and new product launches will drive high growth profiles over this year and the coming years. We remain optimistic even if the WFE market in China is flat; we expect higher growth rates due to our new product introductions.

Yes, Edison, for Q4, you probably remember last call; we mentioned that Q4 and the overall year came in at the midpoint of where we started the year, maybe a little bit better. And don't forget, we had 2 things. Our newer products didn't kick in much in 2025. And we did have customer push-outs from Q4 into 2026. So those were the 2 factors affecting Q4. For 2026, we're anticipating a linearity similar to 2025, where the first half will account for about 42% to 43% of revenues and the second half will be around 57% to 58%. I would estimate Q1 to be about 18% to 20% of the full year mix.

Sorry, Mark, can you hear me?

Yes.

Before we move on to the use of proceeds, can you also comment on what you said about, I think, some products having some pricing pressure, which I think partially accounts for lower margin in the fourth quarter?

Yes, there's not much to add to what I said there. Or what David and I have both said. There were a couple of semi-critical products that had particularly low margins that hit us in Q3 and Q4. And as David mentioned in the prepared remarks, we are very focused on developing world-class tools. We think there will also be a bigger provision in the back half of the year, so we think the overall provision for 2026 probably will be smaller than it was in 2025, and it will likely be more balanced throughout the year.

Okay.

So you want me to touch on how we will utilize the proceeds, right?

Yes.

Well, obviously, we have a second offering in China, right? That money will mainly focus on R&D again, our expansion for their manufacturing. We are decorating a second building this year, which will allow us to manufacture up to $3 billion in annual output. We are also putting funds into the mini line, as I mentioned, which will significantly speed up our internal R&D and debugging tool development, and also can facilitate joint development with our customers. So it is prudent to utilize those funds effectively. The proceeds we obtained from the sale will primarily support our global marketing and sales efforts. We recognize considerable opportunities in the global market. As I mentioned, we have some differential technology that may be the only solution for their AI challenges. We think our products will really attract attention from global customers. Therefore, we will invest in building a strong international sales channel; we already have a manufacturing base in Korea. However, given the ongoing geographic tariffs, we are also keen to minimize any tariff impacts. This has led us to begin assembling tools in the U.S. This will alleviate concerns regarding fluctuating tariffs and their potential impact on our revenue. Our goal remains straightforward: we strive to meet all regulatory and compliance requirements while maximizing investor interests and building a global company.

Our next question comes from the line of Jimmy Huang with JPMorgan.

Can you hear me?

Yes, please.

Congrats on the good results. I want to ask about the delivery of single-wafer cleaning tools to a Singapore gas foundry. What would be the potential size of shipments in terms of units or dollars this year or next year?

Yes. Very good question. Actually, we have some tools currently in the installation process, right? These tools will be qualified and go into production this year. With that, we definitely anticipate more cleaning tools to be delivered. Moreover, we do have copper plating tools as well. This will significantly increase our presence in the Asian market. We see this as a milestone, and we are not only looking at customers in Singapore; we have customers in Korea and also potentially in Taiwan. So we are very confident we will expand quickly in the Asia market. Additionally, we are also focusing on the U.S. market and have received advanced packaging tool purchase orders, which we should deliver by the end of this year. We see great potential in the U.S. market as the production of AI-driven technology depends on our technological contributions. ACM possesses the necessary technology to aid in their production lines and we believe it will serve us well.

Yes. So for the Singapore business, how likely are we to penetrate the Singapore gas memory makers in the next few years? My second question is for advanced packaging. We are making great progress. But for Taiwanese foundries and OSATs leading the panel-level packaging for AI GPUs, could we talk about our POP progress with potential Taiwanese players? Do we have any order forecasts or purchase orders from Taiwanese potential customers?

Yes. Actually, we are engaging with a few key customers, right, regarding large size panels and also other sizes. We have very good exposure to these customers. By the way, on April 7 and 8, we are attending the panel conference in Taiwan. In that conference, we will be the keynote speaker discussing horizontal plating and our vacuum cleaning technology. This will generate a lot of excitement and interest. I have heard that panel product or equipment currently face challenges, except for plating, which has become a bottleneck for their production expansion. We believe our horizontal plating will fit their strategy perfectly since we are the only supplier of horizontal plating tools currently. We are witnessing significant interest, not only in the Taiwan market but also in Korea and Singapore. We are excited about this opportunity.

Yes. But do you know the periods or quarters in which it will be more clear whether we will have any order forecasts or purchase orders for this POP equipment?

Well, let's put it this way: we announced that we do have purchase orders from outside Mainland China already, right? I mean, we mentioned that. And we are continually expanding more, right? So again, I want to say this year, we have confidence in cash additional purchase orders for our bevel, vacuum cleaning, and horizontal copper plating, not only in Taiwan but also opportunities exist in Korea and Singapore. So we are very excited.

Maybe I can squeeze in my last question about the investor FAQ that ACM has disposed of a small portion of stake in ACM Shanghai. How do we think about further such disposals in the future? You mentioned that U.S. international capacity builds will require more funding. Will we dispose of more stakes in ACM Shanghai in the future?

Repeat the question again. I'm sorry. Can you repeat again?

He's asking, are we going to sell more of our ACM Shanghai?

I see. I see. Okay. We sold 1.3% already, right? And we got proceeds of about $111 million. We do have options for raising money. We can raise in the U.S., we can raise in Shanghai. We're very flexible in our choices. At this moment, I want to say our Shanghai stock still seems undervalued considering our growth. So we may consider the timing and pricing before deciding whether to sell additional shares. Additionally, we can also raise money in the U.S. Therefore, we are flexible in our fundraising. We will continue investing more in the global market, and we have no concerns about sources of funds. We are confident in our funding strategy.

Thank you. Seeing no more questions in the queue, let me turn the call back over to Steven Pelayo for closing remarks.

Okay. Great. Before we conclude, I just want to give everyone a quick reminder on our upcoming investor conferences. On March 9, we will participate virtually in Loop Capital Markets' Seventh Annual Investor Conference for one-on-one meetings. On March 23 and 24, we will present at the 38th Annual ROTH Conference in Dana Point, California. Attendance at the conference is by invitation only. For interested investors, please contact your respective sales representative to register and schedule one-on-one meetings with the management team. This concludes the call, and you may now disconnect. Take care.

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.