ACM Research, Inc. (ACMR) Q2 2026 Earnings Call Transcript

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the ACM Research Second Quarter 2026 Earnings Conference Call. Currently, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session, instructional before at that time. 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. Stephen Pillay, Managing Director of the Blue Shirt Group. Stephen, please go ahead.

Good day, everyone. thank you for joining us to discuss second quarter 2026 results which we released before the u.s market opened today the release is available on our website as well as from newswire services there's also a supplemental slide deck posted to the investor section of our website that we will reference during our prepared remarks on the call with me today our ceo dr david wong our cfo mark mckechnie and lisa fang our cfo of our operating subsidiary acm shanghai before we continue please turn to slide two let me remind you that remarks made during this call may include predictions estimates or other information that might be considered forward looking these forward looking statements represent acm's current judgment for the future however they are subject to risks and uncertainties that could cause actual results to differ materially those risks are described under risk factors and elsewhere in acm's filings with the securities and exchange commission please do not place undue reliance on these forward looking statements which reflect ACM's opinions only as of the date of this call. ACM is not obliged to update you on any revisions to these forward-looking statements. Certain financial results that we provide in this call will be on a non-GAAP basis, which excludes stock-based compensation and unrealized gains and losses on short-term investments. For our GAAP results and reconciliation between GAAP and non-GAAP amounts, you should refer to our earnings release, which is posted on the IR section of our website, and to slide those two. Also, unless otherwise noted, the following figures refer to second quarter 2026, and comparisons are with the second quarter 2020 tide. So with that, I will now turn the call over to David Wang.

Thanks, Stephen. Hello, everyone, and welcome to ACM's second quarter 2026 early conference call. The June quarter marked another period of strong execution for ACM research. revenue and sharement increased 36% year-over-year revenue growth was led by our ECP and advanced packaging product category both of which increased more than 150% year-over-year this strong performance reflect progress we are making in transforming ACM into a broader multi-product semiconductor equipment company. In June of this year, third-party research, Frost and Sullivan, published a report called the Global and China Semiconductor Equipment Market Research. They now estimate the global semiconductor equipment market exceeded $140 billion in 2025 and will grow to more than $200 billion by 2029 they also estimate the mainland china market exceeding 50 billion in 2025 and then will grow to more than 80 billion in 2029 to fund our global operation we have recently strengthening our balance sheet as it now has more than 1 billion dollar of net cash globally this includes approximately 300 million in the us following our 150 million which is the director offering completed completed this past May. This financial strength provides a solid foundation to support our mission to become a key supplier of world-class capital equipment to the top major product of semiconductors. We believe AI is driving one of the most significant technology transition the semiconductor industry has experienced in many years. As chip complexity and chip size continue to increase, traditional wafer-level packaging approaching a reaching practical limit, creating demand for entire new manufacturing technology across advanced packaging. ACM predicted a shift from wafer-level to panel-level packaging more than five years ago and began investing early in horizontal panel-level plating and other panel-level wide process technology. We believe the market is now coming to us and has begun to validate those investments. Today, I'm pleased to announce that we have received orders from two advanced packaging customers for our panel-level horizontal plating tool, adjusting both 510 by 515 millimeter and 310 by 310 millimeter panel size. One is the production order from existing customers in mainland China, and the second one is the evaluation system for new customers in Asia. We believe ACM will be among the first companies to deliver horizontal panel level plating system to multiple customers across multiple regions. Our proprietary horizontal plating architecture is a key differentiator, delivering strong a superior plating uniformity while addressing the demand process the requirement of a next-generation AI packaging this order are important the milestone or what we believe could become a significant long-term growth opportunity I'm pleased to report today that our order book has been quite strong For the first half of 2026, orders increased 100% or 5% year-over-year. This is a mix across all product category with a heavier emphasis on some of our new products. As with the prior years, ACM Shanghai plans to release backlog figure as of September 30 in early October. Thanks to good execution by our operation team, we continue to expect achievement across each of our categories to grow faster than revenue. We remain confident in our growth target for 2026 and beyond. For 2026, we see a healthy backdrop for China WFE as our customers continue to scale their production capacity. We expect an extra boost for our business from a few product cycles, including our SPM and the Furnace, to enable us to outgrowing the China WFE. Beyond this year, we estimate that our newer platform, including TRAC, PCVD, and horizontal panel-level plating, will proceed for evaluating phase into a commercialization phase, resulting in production orders and drive our growth for years to come. In summary, we see 2026 as a big year for new product and another year of solid growth for ACM. Now onto our business result. Please turn to slide three. Revenue for the second quarter was $293 million, upward 36%. Sherman for the second quarter was $282 million, upward 36%. Gross margin was a 46% and operating profit margin was about 19%. And we ended the quarter with a gross cash of $1.4 billion and net cash of 1.0 billion now i will provide detail on product please send to slide four revenue from single wafer cleaning tahoe and semi-critical cleaning tool was 133 million down 14 and represent 45 of revenue we believe acm has built industrial brothers cleaning product portfolio. Our product in this category, including SAF, Tebow, Tahoe, backside clean, solvent clean, bevel clean, scrubber, and wet etcher, and our proprietary single wafer hot STM technology. In May, we present our proprietary hot STM clean technology in 2026 surface preparation and cleaning conference. This system demonstrates fewer than 15 particles performance at a 15 nanoparticle size. Our proprietary nozzle design prevents acid mist and the chemical splashing outside chamber during the hot SPM process. This therefore does not require periodical TI water chamber outside clean. For customers, this means less maintenance, better uptime, and a more stable particle performance. We believe this represents the best performance in the industry. Our SPM platform is well suited for their advanced logic and memory, where cleaning requirements are becoming more demanding. Today, we also announced new capability for Ultra-C Tahoe. Expanding it into a broader wet process platform, Tahoe is built on a patented hybrid architecture that combines batch SPM process and a single wafer cleaning. We have added wet etching and modeling the wafer reclaim application to the Tahoe platform. This integrates multiple processes that had previously required a separate standalone tool into one toggle platform. The expanded platform has been adopted by multiple leading semiconductor manufacturers. ACM will continue to drive world-class process performance with a focus on ESG benefit to helping make advanced semiconductor manufacturer more efficient and more stable sustainable we have shipped a handful of a single wafer spm tool in the first half of this year and we are on track to ship more than in the second half of this year for more than 20 by end of this year as a reminder we estimate that SPM represent about one-third of the total cleaning market. We have had a very little revenue today for the SPM tool and with this major product cycle we expect our overall cleaning revenue to rebound as our customer qualifies the first tool and we grow our repeat achievement. Revenue for ECP, furnace, and other technology grow 168% and represent 44% of the revenue mix. Growth was driven by momentum on both front and back-end plating tool. In logical device, we have benefited from larger die size and the steady increase from higher interconnector layer counts. In memory device, we have benefited as HBM packaging demands higher level of DUM stacking and there and thus more than more copper process steps. During the quarter we shipped our 2,000th electroplating chamber. This follows our 500th chamber shipment in 2022 and our 1,500th chamber shipment in 2025. It shows how quickly our installed base has grow and how broadly customers are adopting our technology in volume production. We had a larger contribution from further in the quarter, but it's still just a small part of our overall revenue mix. We continue to improve the technology breakthrough across key applications, including LPCVD, oxidation, thermal ALD, P-ALD, and ultra-high temperature anneal. Revenue from advanced packaging, which excludes ECAP, but including service and parts, was up 153 percent. This including coveters, developer, etcher, stripper, scrubber, and the vacuum cleaning tool, supporting a broad range of advanced packaging applications. We are particularly pleased with our global progress here, with active deployment in Singapore and North America across a range of these tools. We are making good progress with our new track and PCVD platform. We remain confident that we have the right approach for our PCVD and track platform and we have made significant progress in 2026. Our proprietary one-chamber-three-trucks architecture for PECVD performed well in our Lingang mini-lab early this year. We shipped the secondary tool to our new customer in Q1, and we anticipate this qualification by year-end. the story is similar to our track platform indeed our high throughput kif track tool is progressing through customer evaluation and we anticipate production qualification by year end we see strong interest in both standalone tools and configure to integrate with the scanners for both gcbd and track we are hard at work with the development effort with several key customers we are optimistic that our tool performance can meet or exceed our customer requirements and result in production order in the near future please send to slide five the quarter we have a update our market assumption with the latest wfg data from the report one report i mentioned earlier this result in a 1 billion increase to acm the global sam about the 22 billion please turn to slide six there are no changing to a long-term revenue target of 4 billion This is still based on market share assumption for each of our product categories, which gets us to about $2.5 billion from mainland China and $1.5 billion from the global market. We adjusted some of our assumptions based on China WFE now and about $50 billion. We continue to assume a robust WFE environment over the next several years for the global market. The magnitude and the timing of our growth will be impacted by the overall spending trajectory of our customer and our market share gains. Next, let me provide an update on our production facility. First, on Lingang, we turn to slide 8. The first building is in volume production, and we plan to open the second building later this year. Together, the two facilities can support up to $3 billion in annual output. With our strong order book, we are fortunate to be ready to secure the second facility. Next, our Oregon facility return to slide 9. In Oregon, we remain on track for a U.S.-based demo center with multiple tools in world-class cleaning room environment starting later this year. This is important for our global customers, and we believe they will help us to secure production orders. Our global business is beginning to scare. As we said last quarter, we expect to have more than 20 tools installed at a customer site outside mainland China by the end of this year, 2026. This includes about 10 customers in five countries. It is clear that leading global chip makers can benefit from our innovative product. Although it is still early day for our global deployment, our engagement is growing, and we are confident that our global sales and service team will deliver good results. Now I will be providing an outlook for full year 2026. Please turn to slide 10. based on our first half performance and the improved visibility we have raised the middle point of our full year revenue guidance we now expect a full year 2026 revenue of 1.125 billion to 1.175 billion versus the prior range of 1.08 billion to 1.175 billion this new range implies 25% to 30% year-over-year growth. We also expect the shipment growing growth to outpace revenue growth in 2026. Now let me turn the call over to our CFO, Mark, who will review details of our second quarter results.

Thank you, David, and good day, everyone. Please turn to slide 11. Unless I note otherwise, I'll refer to non-GAAP financial measures, which include stock-based compensation, 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 second quarter of 2026 and comparisons are with the second quarter of 2025. I'll now provide financial highlights. Revenue was $292.9 million, up 36%. Revenue for single-way for cleaning, Tahoe, and semi-critical cleaning was $133.0 million, down 14.2%, and represented 45.4% of sales. David noted this included very little contribution for some of our newer products. As normal, SPM will be reflected first in our shipments, followed by revenue contribution in later quarters. Revenue for For ECP front-end and packaging, Furnace and other technologies was $128.5 million, up 167.7% and represented 43.9% of sales. Revenue for advanced packaging, excluding ECP, services and spares was $31.4 million, up 153.3% and represented 10.7% of sales. We saw a good improvement in our customer concentration. During the first half of 2026, our 10% customer mix has improved to just one customer at 12.7% of our revenue mix. This compares to three 10% customers representing 49.9% of our mix for the first half of 2025. While this can vary by period, we consider the reduced concentration as positive as it represents the broadening of our customer base. Total shipments were $281.5 million of 36.4%. In 2026, we expect shipment growth to outpace revenue growth. Gross margin was 46.0% versus 48.7%. Gross margin was above the midpoint of our long-term target model. We maintain our 42% to 48% long-term target range, and product mix can cause fluctuations on a quarterly basis. Operating expenses were $78.5 million, up 23.9%. R&D was 13.9% of sales. sales and marketing was 7.7 percent, and G&A was 5.2 percent. For 2026, we planned for R&D in the 16 to 18 percent range, sales and marketing in the 8 percent range, and G&A in the 5 to 6 percent range. Operating income was 56.3 million versus 41.5 million. Operating margin was 19.2 percent as compared to 19.3 percent. Income tax expense was $13.5 million versus $1.9 million. For 2026, we expect our effective tax range in the 10 to 12 percent range. Net income attributable to ACM research was $44.5 million versus $37.3 million. Non-GAAP net income excluded $6.6 million in stock-based compensation expense and the $69.6 million of unrealized gain on short-term investments and its effect on non-controlling interests. Net income for diluted share was $0.61 versus $0.55. Now onto the balance sheet and cash flow items. Cash equivalents, restricted cash, and time deposits were $1.36 billion at the end of the second quarter. Net cash, which excludes short-term and long-term debt, was $1.0 billion. This includes about $300 million of net cash on our U.S. balance sheet. Total inventory net was $783.1 million. This consisted of raw materials net at $406.1 million, work in progress net at $89.0 million, finished goods inventory net at $287.9 million, which primarily consists of first tools under evaluation at our customer sites, along with finished goods located at ACM's facilities. Cash used by operations was $6.4 million and capital expenditures for 65.4 million for the full year 2026 we continue to expect capital expenditures of about 175 million that concludes our prepared remarks now let's open the call for any questions that you may have operator please go ahead thank you ladies and gentlemen to ask a question at this time you will need to press star one one on your telephone and wait for your name to be announced.

Please stand by while we compile the Q&A roster. Now, first question coming from the lineup, Suji Da Silva with Rod Capital. Your line is now open.

Hi, David. Hi, Mark. Hi, Lisa. Congratulations on the progress here. Great diversification going on, so it's really good to see. You got it. Yep. So, David, I mean, the global tools shipped to 200. It's a great number.

What geographies are you seeing the larger shipments today in and maybe what geographies do you expect the best growth opportunity in your tournament as you scale out beyond China yeah actually we see there especially I want to say a first hop this year wherever almost like her you know close a dozen to go to Singapore right while with their packaging house there also ever to and they're you know Ronnie you know while their foundry in the Singapore too so we do see Singapore as the opportunity for our front end tool and also you know packaging tool there of course we do have a customer you know continue the US as I mentioned you know we're going to you know finish the building of our demo demo lab in Oregon with that demo lab start using, we're going to attract more of our interest and also attention into our differential technology. So this way we can provide more of our demo capability for customers in a global.

And then my second question is given that you now have a significant amount of cash in the U.S., $300 million, maybe David or perhaps Mark, what are some of the planned use of those proceeds? Is it expanding capacity, which regions and perhaps even inorganic activity. Any color would be helpful there?

Yeah, obviously, you know, with this cash preparation, it'll show our determination and also our confidence by expanding the sales activity outside mainland China. As I mentioned, our long-term goal is still $1.5 billion for the revenue outside China. That's exactly for that goal we prepare our funding and also our activity. So this funding basically was supporting our activity, definitely U.S. and also Taiwan and Singapore, Asia, also the Europe. It's a bigger opportunity. We see a lot of demand come out for those, especially for our differential technology, cleaning, plating, and also R&D for the even new PCVD and the foreigners. So it's really exciting. As I mentioned, AI is really driving a lot of new demand for the innovation technology. So we believe whatever developer in Shanghai can be really spread out to benefit for all the customers globally. It's our goal here.

Okay, that's very helpful. And then my last question, I know you guys are diversifying your customer base, and you have a 110% customer focusing on global. But I'm curious, in China, how levered are you to what's going on with CXMT and the DRAM market? Understanding AI is, you know, a plating play for you in other areas where you're very strong, but the DRAM effort there is growing very strongly. I'm curious how much leverage you have to that opportunity.

Well, I really cannot comment too much detail, you know, with any customer, right? By looking at overall, you're looking for Frost and Sullivan, their report, right, It shows a very strong demand in WFE market world in China, right? First of all, I want to say China is a bigger market, right, for the oldest application, AI including. So it's a huge market there, and therefore they can support a lot of, you know, cheap manufacturers in here. In the same way, they demand a lot of WFE equipment, right? So that's where we see opportunity here. And with ACM, I said we have a real, you know, multiple product in the timeline, especially this year. We call our, you know, 2026 as a big year for product, you know, new product come out of the market. And all our PCVD furnace and track system, we started a development from 2000 or 2001 or, you know, 2019. In those timelines, we're really focused on their technology, focused on differentiation. So through the four or five years, our R&D team is hardworking. We've got some real exciting results. And some of them, obviously, very approaching to the top tier performance. And something we see even better than top tier performance, right? So that's really our confidence. we can with this new product come out we can further sustaining or increase our high growth rate and for our you know revenue in the market China of course those new product you know after qualify in a China market will be also eventually will sell to the global market so it's a lot of exciting for next few years so our revenue will be not only come from cleaning and they're you know cover plenty anymore new product will join our revenue growth so it's going to be a very exciting year for next a few years that's very helpful color David thank you and congratulations you and the team

on the strong execution here thank you thank you thank you our next question in Coming from the line of Charleston with Needham & Company, your line is now open.

Hi, thanks for taking my question. Maybe the first one, I know you don't really guide the quarter, but can you kind of walk us through how the Q3, Q4 is shaking up? you have probably a very big beat in Q1 and now in Q2, and I think if I look at the consensus estimates for Q3, Q4, those numbers probably need to come down a little bit. So, wondering if the revenue timing or shipment timing has some change over the course of the last 90 days, and And maybe I'll have a follow-up on PMNOW-related items.

Yeah, as I mentioned in Scrib, right, we do have the first half year, our PEO receiving and there has been increased 100%, more than 100%, right? It's a real indication of real demand and also, you know, a large backlog. So, and some of those tools, obviously, we're going to try to deliver a Q3, Q4. and some of the tools probably were, you know, were waiting for probably a little bit later. So now we really try to increase our capacity and, you know, obviously now the components, you know, has been, I want to say, everybody's demand for components, right? So there's a little bit of constraint for supply there. So we're kind of looking to Q3, Q4 revenue. I think it really is how we execution our order, manufacturing, and also how we qualify, ship the, you know, defer the revenue of the tool. So, I want to say we're still very, you know, positive about our projection for whole year, right? That's why we increased our low site, and now we're expecting our whole year revenue, you know, 25 to 30% range. I think we're pretty confident for this forecast.

Yeah, thanks. Maybe another question for Mark. Mark, I noticed that the range for SG&A as a percent of revenue kind of revised it down a little bit compared with the last quarter. So I guess, I mean, based on your midpoint of your guidance, your overall OPEX may actually come in a little bit lighter than you previously expected. I'm wondering what is the reason for the slide, the OPEX cut for this year, because if I recall correctly, one of the reasons you raised the OPEX range, I think at the beginning of the year, was related to the build-out of the R&D lab, R&D center in Lingon, and wondering the OPEX savings relative to what you previously thought. Is it related to some of the timing of that R&D center? And any color would be gray.

Yeah, Charles, there's not a lot to read into that. I mean, R&D, we're looking 16% to 18%. G&A, I said 5% to 6%, and sales and marketing around 8%. So it's really just tightening up by the estimates now that we're halfway through the year, but not a meaningful change from where we were at the beginning of the year.

All right. Thank you.

Thank you. Our next question coming from the line of Jimmy Huan with J.P. Morgan. Yolanda Smelton.

Yeah. Hi, it's Debbie. Mark, congrats for the results. Can you hear me?

Yes, you can.

Yeah, sure. So all this, yeah, so all this China manufacturing capacity build is very robust and structural. You also have a very solid product portfolio for WLP and PLP. Do we have any guidance or expectations for manufacturing equipment treatment for this year and next year?

Okay, well, we do not put a number, right, for the shipment of this year, but definitely we also, because of a strong, I want to say the, you know, backlog, and our shipment and definitely will grow, outgrow our revenue, right? So it's very, will be very strong shipment this year. Again, as I mentioned, you know, also we're kind of a short, you know, we see the shortage all industry for there's some components and used to be you can buy four months sometime you have to get it you know probably longer deliver anyway uh we try to managing those uh you know supply chain and make sure those components you know coming on time uh that's maybe the one thing i want to say uh you know might be impact and a whole year shipment but i still feel this year machine is still pretty good yeah i see so do you have any nice uh all the in test guidance all the impact expectations for your advanced packaging equipment for this year and

another question is there for all sets every 10k with capacity built for 2.5 d weather level packaging what's apmr content value based on your product offerings at this moment i think some like equipment companies they could have this kind of sharing for investors to to understand your progress yeah yeah I don't did I don't quite understand the yeah yeah maybe ask that again can you see a question again I'm not gonna loss their cover sentence can't repeat again yeah sure I mean my fault I mean also as for the wafer capacity I mean for the elements of packaging capacity

bill such as 2.5 B I mean I'm there every 10k capacity bills what's the potential contribution to ACM based on your product offering we have any sharing on that yeah yeah he's just looking at kind of our the intensity of you know when our customers spend on 10,000 wafers per month how much will that drive our equipment sales I don't I don't think we're really good I couldn't say they're you know depend on which line you build right maybe let's put this way the cleaning market right you can see that there I want to say there are cover the same, Canadian market today, probably in the whole FAB spending occupies 5% to 7%, depends on advanced lab or mature lab, right, at FAB. But you're looking really for the future, I want to say, advanced lab, FAB going on, Canadian become more and more important. And some people, you know, even projecting continuing to continue marketing to grow. It might even come to 10% eventually because cleaning becomes more and more difficult and more of a material loss control, particle size gets more and smaller. So also the drying method becomes maybe from the IPA to the supercritical CO2 dry. So anyway, I see that market grow as number one. Second one is copper plating. It's clearly, you know, actually four or five years ago, we set a copper plating to be the 1.5 billion. That time, nobody, you know, really believed it, right? Now it's almost 1.5 billion already. You know, with all the future, you know, backside of their, you know, power and HPM, a layer of their DRAM stacking going on. So there's a lot of plating tool demand come out, right? And more important, this panel market also demands a lot of plating tool, too. So ACM is really pioneered in their panel-level electroplating. So it's probably, I want to say, this is the first time ACM really stands in the top for their horizontal plating technology and marketer, I want to say, offering. So that really gives us a bigger growth potential for this existing market. And further than that is the furnace and PCVD track. We see that also big potential there too. So that's why I want to say ACM, you know, is a real good, exciting period. And we're expecting, you know, continual growth for cleaning and cover plating. And also with our new product, you know, furnace, PCVD track come out. We'll further reinforce our revenue growth, right? So that's why I said the next few years, a really exciting year for our growth.

Yeah, thank you, Dr. Wang. So I think for China, I think they are building a lot of cohorts like 2.5D and the mass packaging capacity. As far as I know, they are probably still using a lot of TSMC baseline tool vendors, including web processing tools and other stuff. Are we trying to get more market shares, more qualifications here, and how's our progress in China's cohorts like 2.5D capacity build?

Yeah, I mean, you're looking at our actually plating growth, right? You know, 156% and also our packaging tool growth also, right? It really shows indication a lot of new demand for 3D packaging, right? And the 3D packaging become more and more important for all the devices, right? So we see that growth potential here. ACN is well positioned for that, you know, with our cleaning and with our coder developer, with all this PR shaper, and also a couple of ladies. So it's really good, I want to say, growth for the 2.5D or 3D packaging. Also, I want to say panel also grow, too. Panel level packaging is another big one. So it's very exciting for I see the 3D packaging going up, which is good for our product.

Yeah, I think it's quite exciting that we just announced that we have the first a plp ecp tool evaluation system shipped to a customer in asia and regarding the progress when could the image evaluation results come out any probability that we could receive the first purchase order from these customers in the next maybe few quarters of the next six to 12 months yeah yeah obviously you know you mentioned that the panel now is very hot right You know, in all Asia, looking at, you know, mainland China, Taiwan, Korea, and even Singapore, right?

It's very, very hot. And everybody believes that would be their, you know, ultimate solution for their large, you know, AI chip or this, you know, Cobas, HBM, whatever packaging, you know, in large chip size. So we do see that trend. Obviously, we're positioned for 515 by 510, which is a more large size, as Intel probably pioneer now. and also we're also positioned for 310 and 310 which is leading by tsmc approach right so there's a lot of exciting you know i want to say we're prepared for both markets yeah i think thank you so much that's all my questions thank you thank you thank you and as a reminder to ask a question please press star one one our next question coming from the line of christian schwab with Craig Hallam, Capital, Yolanus Malzman.

It's Ben Taxol on for Christian here. Great quarter. Exciting stuff going on at ACMR. My first question is, what is any commentary, any initial commentary? I know it's kind of early on 2027 visibility. I get, you know, new products and, you know, strong orders. But, you know, anything else? Or what exactly should we be thinking about for 27?

I still see that there are a lot of fab we see right in the local China as in real still in the multi-year expansion right and clearly this year you know we see many fab open and also we see that there are some fab will definitely beyond 2027 and grow as I said probably markets here strong bigger right so so we're very excited about the you know even I said this for us there's Sullivan they give a report right by year 2029 they're turning the market beyond 80 billion well maybe I mean that's really I'm liking that number but it's a big exciting, right? Anyway, I want to say it's growing in the next few years in the local market here.

And we have, obviously, some of our new platforms that could kick in. I would also say some of the orders we get this year, we're not going to be able to support all those this year, so that'll kind of flow into next year as well. So, yeah, 27 is starting to shape up pretty, you know, for the good growth year.

Great. Also, I wanted to mention We made the progress, right, with all the track system, PECVD, and we see that both products take off, and obviously, you know, we'll probably become a leading supplier, local supplier, you know, and for the track system. I know the PCVD is quite a bit competitive there, but our one-chamber-three-chalk is a real unique platform, and we see there's certain special big market requirements for this PCVD, too. So anyway, we're both excited about this new product.

Great. Just one other question. Any update on the Shanghai listing?

Or the Hong Kong, right?

Or sorry, yes. Yep, sorry.

No update. Really, we cannot comment too much on Hong Kong Listing, right? I can only tell that the April timeline we announced, we're going to do that. And that's only information I can tell you right now. You know, eventually, maybe sometime later in the future, we may see, we may discuss more.

Perfect. Thanks, guys. That's all I got.

No, thanks for asking.

Thank you. And we have a follow-up question from Jimmy Flynn with J.P. Morgan. Your line is open.

Yeah, thank you. Thank you, Debbie. We talked about component shortage. There are also a lot of component price types. Will rising component cost impact ACM's cost margin? If so, on which potential quarters or finies?

And what kind of options does your company have to pass this cost to your customers? well I mean probably this is a global you know point right you know looking at our supply you know probably either honestly major supply our components you know from Japan right or something Korea definitely is a lot of growing so there's a shortage there we see that can happen so something we still you know switching to the local supplier and here you know it looks better but anyway I want to say this is still I'm looking at this year global component suppliers still tight even some mechanical parts you know some sliders even robot for example the components they're hard to get you know on time we see that they're really you know booming right that's why where we have the real managing well in the second half year make sure our supply you know catch our demand yeah there's really you kind of take a look at it I mean no change to our gross margin target 42 to 48 so we're comfortable where we are we have a good amount of raw materials right that we had been purchasing look you know we stocked up on some raw materials so you know what we have in stock and kind of our outlook, we don't see any significant impact on growth We prepare a certain path at the end of last year, right? Because we are predicting this year is a very heavy year. So we are certain our vendor did something special for us. That really helps us right now.

Yeah, but the demand is very robust, and the supply is quite tight.

So is it possible that we could pass through these incremental codes or writing component codes to our customers or it's not a key priority of your business wow it's hard to tell right now right probably you know i mean we're not at risk pricing right now this moment right also our i want to say our vendor uh supply not many people raising price some are racing but not much the only say that is they're probably delayed achievement right they cannot tell you i can you know maybe i used to be sent to in four months maybe they did six months and that's happened but they didn't there increase our price our key supplier no i see and my second follow-up question is regarding our manufacturing capacity bills outside of mainland china are we going to build more capacity in in the stars or in other asia regions if we receive more international owners yeah you know that we do have our manufacturer I want to say a facility and a capability in Korea right so that's really started play and some tool we ship the u.s. will be made there actually made now is made in Korea right now and also some future tool probably shipping to Taiwan and or Singapore will be also made probably you know in Korea too right as also i said as really more of a you know revenue growing in the us or in other region we can also probably propel a secondary manufacturer side too so we're really in another uh i want to say consideration and a direction all right i see and regarding your further funding for this kind of capacity manufacturing capacity expansion would you need to dispose some steps in asian shanghai or you don't consider that option?

Yeah, so we're pretty comfortable with our balance sheet, right? David mentioned we have $300 million on our US balance sheet. So part of that was kind of a war chest to show our customers that when we get the production orders, we can support that. And so we don't have any near-term plans to scale out of any more of our Shanghai shares.

Yeah, thank you so much, Damien, Mark, it's very clear, thank you.

Thank you, our next question coming from the line of Bintuanib with Daiwa Capital Markets, Ceylon is now open.

Hey, thank you for letting me on, I have a first question, congratulations on your new orders, 100%, it's very impressive, but can I ask, you know, in terms of by segment, can rank, which one is the strongest for D1, HDM, none than the logic.

In terms of our order strength, David, he's asking, yeah, we didn't break it out, but David, in the prepared remarks, mentioned that they were across all of our customer base and across our products a little bit stronger in some of our newer products, but we didn't break it out by end markets.

Yeah. Well, obviously, we see they're strong in memory and also strong in logic, right, both.

Thank you, David. Mark, the next question is about our cash flows. It looks like we have a very strong tailwind from the industry-wise, and also our new product launch is going ahead.

So in terms of operating cash flows and cashbacks, how should we think about that? yeah i think this year on the cash flow side um you know we're still obviously heavily in growth mode we're spending on our capex um and what have you but uh you know the the whole uh the the plan is you know in growth mode you you make these investments um and and then you get we harvest those uh over the next several years so uh this year we'll probably burn some cash obviously putting capital to work on our new production facilities, on our facilities outside in Oregon, and what have you. But longer term, we see it. Obviously, it's a positive cash flow operation.

Okay.

Thank you.

Thank you. Seeing there are no more questions in the queue, I will now turn the call back over to Stephen Pelea for closing remarks.

Okay, great. Before we conclude, I just want to give everyone a quick reminder of our upcoming investor conferences. On August 20th, we will participate in Needham's 7th Annual Virtual Semiconductor and Semicap One-on-One Conference. On August 25th, we'll present at the 2026 Jefferies Semiconductor IT Hardware and Communications Technology Conference at the Four Seasons Hotel in Chicago. On October 13th, we will present at the 18th Annual CEO Summit Conference in conjunction with Semicon West in San Francisco. Attendance at these conferences are by invitation only. For interested investors, please contact your respective sales representatives to register and schedule one-on-one meetings with the management team with that this concludes the call and you may now disconnect ladies and gentlemen that doesn't call conference for today.

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