ACM Research Q3 2026 Earnings Call Transcript

ACM Research (NASDAQ:ACMR) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

ACM Research reported a 37% increase in revenue and a 31% rise in shipments for Q3 2026, driven by market share gains and successful execution in production and supply chains.

The company highlighted significant progress in its proprietary panel-level horizontal electroplating technology, marking a milestone with shipments to customers in Asia.

Backlog increased by 88% year-over-year to $2.5 billion, with orders up 147% through September 2026, indicating strong demand across all product categories.

Revenue from single-wafer cleaning was $211 million, representing 57% of total revenue, with innovations in sulfuric acid recycling expected to enhance environmental and operational efficiencies.

The company raised its full-year 2026 revenue guidance to $1.24 billion to $1.28 billion, up 38% to 42% year-over-year, citing strong backlog and product cycles.

ACM Research is expanding its global footprint with facilities in Oregon and increased operations in Asia, aiming for long-term growth outside of mainland China.

Gross margin for Q3 2026 was 41.6%, with operational expenses rising 12.7%; the company expects modest gross margin improvements in the next quarter.

Management remains confident in maintaining long-term gross margins between 42% to 48%, supported by its differentiated and patent-protected technologies.

Full Transcript

OPERATOR

Later we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today’s call. If you have any objections, you may disconnect at this time. I would now like to hand the conference over to your speaker today, Steven Poleo. Please go ahead.

Steven Poleo (Investor Relations)

Good day, everyone. Thank you for joining us to discuss third 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 is 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 are our CEO, 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 the remarks made during this call may include predictions, estimates, and other information that might be considered forward-looking. These forward-looking statements represent ACM Research’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 Research’s filings with the Securities and Exchange Commission.

Please do not place undue reliance on these forward-looking statements, which reflect ACM Research’s opinions only as of the date of this call. ACM Research 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 gains and losses on short-term investments, and, beginning in the second quarter of 2026, its impact to net income attributable to non-controlling interest. 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 slide 13.

Also, unless otherwise noted, the following figures refer to third quarter 2026, and comparisons are to the third quarter 2025. I will now turn the call over to David Wang. David

David Wang (Chief Executive Officer)

Thanks, Steven. Hello, everyone, and welcome to ACM Research’s third quarter 2026 earnings conference call. We delivered strong results for the September quarter, with revenue up 37% and shipments up 31%. We attribute the growth to 1) market share gain and product cycles, and 2) good execution by our production and supply chain team. Growth was led by our ECP and Advanced Packaging categories. I’m especially pleased with the return to growth for our cleaning categories. One, we are gaining market share with more cleaning steps and technology improvements; two, our Linga Mini line has helped our engineers to duplicate our customer production environment and deliver technology improvements to the market much faster; and three, broad adoption of our single-wafer SPM solution across multiple customers.

We are making good progress with our proprietary panel-level horizontal electroplating technology. In October, we announced the shipment to a customer in Asia of a 310 x 310 millimeter panel-level horizontal plating tool. We believe this is the world’s first shipment of its kind, and it truly marks a significant milestone in our commercialization efforts. This follows earlier shipment of a larger 515 x 510 millimeter system to a mainland China customer.

I will provide more detail on this later. I will now provide an update on our backlog. As reported by ACM Shanghai about a month ago, total backlog as of 9-29-2026 was US$2.5 billion, an 88% year-over-year increase. The backlog includes orders across all product categories, with a heavier emphasis on our new products. Year-to-date orders through September 30th were up 147%, thanks to good execution by our sales, production, and operations teams. We continue to expect shipments to grow faster than revenue for 2026.

We remain confident in our growth profile 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 several product cycles, including SPM and the furnace. Market share gains together with strong execution enable us to outgrow the China WFE market. We are optimistic that our newer platform will provide another source for growth as we expect Track, PECVD, and panel-level horizontal plating to proceed from evaluation phase into commercialization phase beginning next year.

Now on to our third quarter results. Please turn to slide 3. Revenue was $368 million, up 37%. Shipments were $343 million, up 31%. Gross margin was 41.6%, and operating margin was 18%. We ended the quarter with gross cash of $1.3 billion and net cash of $0.9 billion. Now I’ll provide detail on product. Please turn to slide 4. Revenue from single-wafer cleaning, Tahoe, and the semi-critical cleaning tools was $211 million, up 16%, and represented 57% of revenue. ACM has developed one of the industry’s broader cleaning product portfolios, spanning a full range of critical cleaning and wet process steps. Our products include SAPS, Megasonic, Tahoe, backside cleaning, solvent cleaning, bevel cleaning, scrubber, wet etcher, and our proprietary sulfuric peroxide mixture, or SPM, technology.

Semiconductor devices are becoming more complex, with additional process steps and more demanding cleaning requirements. We believe our broader portfolio of differentiated technology positions ACM to capture these growing opportunities. We are fully committed to our long-term target for 60% market share in China’s cleaning equipment market. Our SPM product line is a key part of the target. As a reminder, we estimate that SPM tools represent about one-third of the total cleaning equipment market, and our product cycle is just now beginning to contribute. We recently introduced our enhanced version of our 170°C single-wafer hot SPM system incorporating sulfuric acid recycling. The system achieved a 70% sulfuric acid recycle rate with reasonable particle performance. This innovation is expected to reduce sulfuric acid consumption by approximately 400 tons per tool annually, delivering meaningful environmental and operating cost benefits.

In October, at China International Industrial Fair, ACM Shanghai was presented with China International Industrial Fair Innovation Achievements Awards for its single-wafer high-temperature SPM cleaning system. This is yet another award from a prestigious organization, which further highlights the innovation and technology capability of our SPM platform. I’m pleased to repeat today that we are on track to ship more than 20 single-wafer SPM tools across multiple customers for the full year of 2026.

Beyond SPM, we continue to expand the capability and application of other differentiated cleaning technologies. Our Ultra C Tahoe now supports additional wet etcher and monitor wafer reclaim applications, providing customers with greater process flexibility and expanding the range of addressable applications, especially in the reduction of fine particles less than 19 nanometers. We are also getting more traction with our supercritical CO2 cleaning technology.

Our differentiated technology, with a much smaller CO2 chamber, reduces CO2 usage by 30% as compared with other market solutions. At the same time, we deliver better drying performance. This is a strong combination, and we are confident we can take share with this product line and expand applications from DRAM to 3D NAND and logic applications. Revenue from ECP, furnace, and other technology grew 83% and represented 30% of total revenue. Growth was driven primarily by strong momentum in both front-end wafer-level and back-end advanced packaging electroplating applications, with the furnace contributing a relatively small portion. We see increased demand for electroplating for both logic and memory applications as semiconductor manufacturing and packaging become more complex.

Our proprietary panel-level horizontal plating technology is a game changer for the industry. We began developing for panel-level plating more than five years ago, and the market is now coming to us. Our patented horizontal design enables highly uniform plating across the panel, including increasingly larger-dimension substrate formats. Our 310 x 310 millimeter system supports copper, nickel, tin, silver, and gold plating processes, incorporates high-speed plating paddle technology, and supports tall copper pillars exceeding 300 microns with good within-die uniformity.

We have engaged with multiple customers across different regions and panel size configurations. We also offer a comprehensive set of wet processing tools for panel-level packaging, including outgassing, vacuum flux cleaning, and outer bevel etcher and cleaning tools. We are confident that ACM’s differentiated technology positions us to enable next-generation solutions as driven by the increasingly complex 2.5D and 3D packaging roadmap for the global AI.

Turning to our furnace business, we continue to make progress expanding customer adoption. We are advancing our capability across key applications, including silicon nitride LPCVD, polysilicon LPCVD, oxidation, thermal ALD, and plasma-enhanced ALD, addressing opportunities across both memory and logic applications. We also supply high-temperature 1150°C and ultra-high-temperature 1250°C annealing furnaces, especially addressing IGBT applications.

As these systems complete customer acceptance and transition into production, we expect the furnace to make a more meaningful contribution to our revenue. In 2027, revenue from advanced packaging, which excludes ECP but includes service and spare parts, was up 71% and represented 13% of the revenue mix. This includes coater, developer, etcher, stripper, scrubber, and vacuum cleaning tools supporting a broader 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 those tools. We believe our broader product portfolio and expanding global customer relationships position us well to capture additional opportunities as we continue to grow this business.

Turning to our Track and PECVD platforms, we have made progress with customer evaluation and initial deployment of our next-generation systems. For Track, our focus remains on delivering industry-leading throughput and competitive process performance, addressing opportunities in KrF lithography across standalone systems and configurations integrated with lithography scanners. For PECVD, we believe our differentiated chamber architecture, electrostatic chuck design, and RF power source technology provide important advantages in throughput and process performance.

We are working closely with a key customer to demonstrate the performance and capability of both platforms. Looking ahead, we expect additional shipments in 2027, with a revenue contribution expected as customer qualification and production adoption progress through 2027 and into 2028. Next I will provide an update on global manufacturing and operations infrastructure. First, Lingdong. Please turn to slide 8. Our first Lingdong building continues to operate in volume production, and we are currently ramping up our second building. Together, the two buildings can support up to $3 billion in annual output, providing significant capacity to scale our business over time. I’m pleased to report that we expect shipments in the fourth quarter of 2026 to increase from third-quarter levels, and we also plan for good growth in shipments for 2027 and beyond.

Next, our Oregon facility. Please turn to slide 9. We are preparing for the official opening of our Oregon operation very soon. This is an important milestone to support customers outside mainland China. The facility includes a Class 100 cleanroom, product demonstration and customer evaluation, along with cleanroom space for storage, pre-assembly, manufacturing, and technical support capability. We believe U.S.-based demo lab and production facilities will support our effort to scale our global business.

In addition, we continue to strengthen our operations across Asia. In Korea, we are expanding the capability of ACM Hangoku, including manufacturing, engineering, and technical support resources to serve our growing international customer base. And in Singapore, we are adding local resources to support customer installation, service, and ongoing technical engagement. Our global business continues to gain momentum. As we discussed last quarter, we expect to have more than 20 tools installed at customer sites outside mainland China by year-end 2026, representing approximately 10 customers across five countries.

We are particularly encouraged by our progress in North America, Singapore, and other parts of Asia, where our global sales and service teams are expanding customer relationships and supporting deployment across a growing range of products and applications. This engagement is helping us establish a stronger foundation for future business as customers gain experience with our technology and evaluate the opportunity for broader adoption. The progress we are making demonstrates the competitiveness of our technology and positions ACM for meaningful long-term growth outside mainland China.

Now I’ll provide our outlook for the full year 2026. Please turn to slide 10. As a result of good execution by our sales and operations team, significant backlog, and several major product cycles, we are raising our outlook as follows. We now expect 2026 revenue to be $1.24 billion to $1.28 billion, up 38% to 42% year over year. This compares to our previous range of $1.125 billion to $1.175 billion. We continue to expect full-year shipment growth to outpace revenue growth.

We believe our expanding differentiated product portfolio, global infrastructure, and global customer relationships position ACM to capture new market opportunities and advance toward our long-term revenue target of $4 billion. With that, let me turn the call over to Mark to review our financial results in more detail.

Mark McKechnie (Chief Financial Officer)

Thank you, David. Good day, everyone. Please turn to slide 11. Unless I note otherwise, I will refer to non-GAAP financial measures, which exclude stock-based compensation and unrealized gain/loss on short-term investments. A 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 third quarter of 2026, and comparisons are with the third quarter of 2025.

We’ll now provide the financial highlights. Revenue was $367.7 million, up 36.6%. Revenue for single-wafer cleaning, Tahoe, and semi-critical cleaning was $210.7 million, up 16.1%, and represented 57.3% of sales. Revenue for ECP, front-end packaging, furnace, and other technologies was $109.5 million, up 82.9%, and represented 29.8% of sales. Revenue for advanced packaging, excluding ECP services and spares, was $47.5 million, up 71.2%, and represented 12.9% of sales.

Total shipments were $343.5 million, up 30.6%. In 2026 we continue to expect shipment growth to outpace revenue growth. Gross margin was 41.6% versus 42.1%. Gross margin was slightly below our long-term target model. This was due in part to product mix, foreign exchange, and the inventory provision for the quarter. We maintain our 42% to 48% long-term target range, and product mix can cause fluctuations on a quarterly basis. For the fourth quarter, we expect gross margin to improve modestly from the third-quarter level.

Operating expenses were $86.7 million, up 12.7%. R&D was 12.8% of sales. Sales and marketing was 6.7%, and G&A was 4%. For 2026, we plan for R&D in the 15% to 17% range, sales and marketing in the 7% to 8% range, and G&A in the 5% range. Operating income was $66.2 million versus $36.5 million. Operating margin was 18.0% as compared to 13.6%. Income tax expense was $1.9 million versus $2.7 million. In 2026 we expect our effective tax rate in the 10% range.

Net income attributable to ACM Research was $40.5 million versus $28.4 million. Non-GAAP net income excluded $10.7 million in stock-based compensation expense and the unrealized loss on short-term investments, together with its effect on non-controlling interest. Net income per diluted share was $0.55 versus $0.41. Now onto the balance sheet and cash flow items. Cash, cash equivalents, restricted cash, and time deposits were $1.28 billion at the end of the third quarter. Net cash, which excludes short-term and long-term debt, was $0.9 billion. Total inventory, net, was $851.2 million. This consisted of raw materials, net, at $465.5 million; work in progress, net, at $122.7 million; finished goods inventory, net, at $263.1 million. This 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 $70.4 million. Capital expenditures were $25.2 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 up for any questions that you may have. Operator, please go ahead.

OPERATOR

As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by as we compile a Q&A roster. Our first question comes from the line of Suji Da Silva of Roth Capital. Please go ahead. Your line is open.

Suji Da Silva (Analyst)

Hi, David. Hi, Mark. Lisa, congratulations on the progress here. Very strong. Great job.

David Wang (Chief Executive Officer)

Thanks, Suji.

Suji Da Silva (Analyst)

Sure. So the new products seem to be growing nicely here. What do you think the mix of those will be a year or two out versus where they are now? Because I think that’ll help drive some of the growth and the margin opportunity for you guys.

Mark McKechnie (Chief Financial Officer)

Oh, David, you’re muted. Hey David, I think you’re muted. Yeah.

David Wang (Chief Executive Officer)

One second. Let me, let me get it.

Mark McKechnie (Chief Financial Officer)

There we go. We can hear you now, David.

David Wang (Chief Executive Officer)

Sure. Well, I could actually—you mean the new product, right? Our track, PECVD, right, and electroplating. Yes, I think this new product will also reemphasize differential technology, and when it comes out, we think it will be a good margin for our product. Especially this horizontal electroplating got good recognition from customers. And also our track system started getting into their pre-production together with scanner, and the PECVD made progress too.

So as these new products join—including furnace too—join our revenue stream, we think they will still give us, maintain, and even some products increase our gross margin.

Mark McKechnie (Chief Financial Officer)

Yeah, hey Suji, maybe I’ll answer to that. I mean, the mix of the new products next year—one thing is in the backlog, I think David mentioned that the mix was skewed a bit towards some of our newer products. I mean, we’ve got a lot teed up for new products next year that, you know, they’ll contribute in different—some shipments first, then to revenue. But our SPM product cycle is just starting to kick in pretty nicely. I think furnace, we’ve got a lot of tools that are under evaluation, and so that’s really small, and we expect that to kick in pretty nice next year.

And then of course track, PECVD, and these panel-level plating tools are really early stage. So a lot of growth potential from all those starting next year.

Suji Da Silva (Analyst)

Yeah, that sounds great. And then on the same question in terms of mix and how that trends next year or two for the global customers versus the China customers, because it seems both are growing but it seems like you’re landing in more regions and geographies globally. So curious how the global customer mix increases over the next year or two.

David Wang (Chief Executive Officer)

Yeah. Actually, we see more of our international customer interest in our technology. And this year we have more of an advanced packaging tool installed in the Singapore region. And also we do have other customer interest in our technology in the U.S., in Korea, and also in the Taiwan region. So we see that there are also customers even in Europe. So this year, by end of this year, we have 20 tools being installed in regions outside mainland China.

So I should say next year we will have a much better outcome for the global customer.

Mark McKechnie (Chief Financial Officer)

Yeah. Hey Suji, the one thing I’d add—we’ll of course give our guidance like we always do in January of next year. But for the global customers to hit 10% of our revenue at these levels, it’s $120 million plus. So we’re not really ready to talk about the mix that will hit. I guess the challenges are our business in China with our product cycles is growing at a pretty good clip. But we expect the global customers to really grow in terms of revenue this year, of course next year, and for many years to come as we scale that up.

Suji Da Silva (Analyst)

Yeah. And I understand China is growing strong as well. Last quick question, supply chain—are you guys seeing any constraints? And then what’s the timing to Lingang second building being up and running? How long do you think that will take?

David Wang (Chief Executive Officer)

I think the second building already finished decoration, and we started moving the people and started using that right now. So with that, the second building being put into manufacturing, our space almost doubled. Of course, we’re going to hire more people, train the technicians and workers, and really get a doubling of the capacity. Next one is really I want to say the supply chain constraint, and probably everybody has the same problem since this is increasing too fast. But we’re still doing very well and working with our vendors and suppliers. So basically, we give them six months and even longer—one-year forecast. Then we give those primary supplier forecasts; we want them to increase the capacity. But some can do, maybe some others cannot meet our requirement. Therefore we are looking for a second source, third source, to meet those requirements.

So our team is working very well and, again, it’s a lot of challenging, and our team made a lot of progress for this supply chain management and control.

Mark McKechnie (Chief Financial Officer)

Yeah, Dave, if you don’t mind, I’ll say a few things. I mean, our supply chain team is really critical, right. I mean, they’ve helped us drive the growth over the past years. We’ve been through some interesting market conditions. In this case, we think we’re doing—ACM is not going to be the one to hold up our customers. David was pretty clear, Q3 shipments were pretty strong. We expect Q4 shipments to be even higher. You go back and look at some of our past years, a lot of times you have a flat to down Q4.

I think the execution from the team—the Lingang facilities—comes on at exactly the right time. And, you know, we used our cash, our balance sheet, to grow our raw materials this quarter. So we used a little bit of cash, but I think that was the right thing to do to scale up for our production.

Suji Da Silva (Analyst)

Understood. Thanks. I’ll pass it along, guys. Congrats again.

Mark McKechnie (Chief Financial Officer)

Yep, thanks, Suji.

David Wang (Chief Executive Officer)

Thank you, Suji.

OPERATOR

We will now take our next question. Please stand by. Our next question comes from the line of Bintou O Ni of Daiwa Securities. Please go ahead. Your line is open.

Bintou O Ni (Analyst)

Great, thank you, David. Mark, thanks for letting me on. So first question is that we had a pretty volatile gross margin. Now it’s back to 41 in the quarter. You mentioned product mix and also the inventory provisions. Can I hear more about the inventory provisions? And also is it also happening in fourth quarter as well?

Mark McKechnie (Chief Financial Officer)

Yeah, let me hit on that and then I’ll kind of hit that one and let David talk a little bit about our strategies here. But, you know, the inventory provision, it wasn’t particularly high here in the third quarter. Second half of last year we had some challenges there. But this time it was kind of within a normal range. So, you know, we feel like we’ve got that managed, and so it’ll be in kind of similar levels next quarter and even, you know, quarterly for next year.

The provision—the bigger impact was really, I think, on the product mix and even the foreign exchange on the quarter. David, you might want to say something about, you know, kind of how we focus on world-class products, right—kind of the longer-term strategy for our gross margins.

David Wang (Chief Executive Officer)

Yeah, I would say that real gross margin long run—we rely on our differential product. With our cleaning, copper plating, even also furnace; we’re developing PECVD and also track. We all rely on our differential technology. So our product in the market—even China sells a lot of it—we cannot see anybody can copy our differential technology with our well-patented and also trade secret protection. So if our product succeeds and becomes the number-one performance, I mean succeeding the top tier of the global player, then that product would really have a good margin in the China market.

If anybody, I said, cannot copy ACM tool—even somehow similar to come out—with top-tier guys’ tool, their performance is still below us. That’s our confidence we can maintain long-term gross margin in the market in China. Of course those differentiated, patent-protected technologies also can sell outside mainland China. And also, you know, outside mainland China pricing is also good too. So for that long-run consideration, we have confidence we can maintain our gross margin in a 42% to 48%.

Bintou O Ni (Analyst)

That’s great. Thank you. My second question is about orders. If I hear correctly, you had 147% order growth in nine months ’26. I think your first-half order growth was 100%. So third quarter was very strong. So how much is driven by volume and how much is driven by share gains? Thank you.

Mark McKechnie (Chief Financial Officer)

I’ll touch on that. Yeah, let me hit on that. And I think, David, I’ll help you with that. The market in China has been pretty solid, and we think it’s still pretty early in the investment days. In China, we’re growing our shipments 30%, and the orders at the level we’re growing. We think we’re growing a lot faster than the market, both in terms of orders, revenue, and shipments. And so I don’t know how to break it out between the market, you know, the China WFE market.

But, you know, it’s always our goal to grow faster than the China WFE market.

David Wang (Chief Executive Officer)

Yeah, I want to say that, you know, China market still in their, I want to say their, you know, growing stage. A lot of logic fabs and also the memory fabs continue and increase their capacity. Also I want to say the, you know, demand and also the orders, you know, the data center and, you know, automobile and also robotics will continue driving China market growth. So also I want to say that probably you want to say the building space is probably about two year, a few years compared with the outside world, right, in terms of technology.

So we see that even peak, you know, reach so far. People talk about global 2028, maybe the peak, or 2029 peak, and we think China peak will be behind that year or two year. So that’s the way we have a real strong confidence to the revenue long run in the next five year for China WFE market.

OPERATOR

As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. Please stand by as we compile a Q&A roster. There are no further questions. Speakers, please continue.

Steven Poleo (Investor Relations)

Okay, thanks, everyone. Before we conclude, I do want to give everyone a quick reminder of our upcoming investor conferences. On November 18, we will participate in the 15th annual ROTH Technology Conference at the Hard Rock Hotel in New York City. November 19th, we’ll participate with the Daiwa Miami Corporate Day at the Mondrian South Beach in Miami. December 2nd and 3rd, we will present at the UBS Global Technology and AI Conference in Scottsdale, Arizona.

And on December 15th, we’ll present at the 15th annual New York City Summit at Maestro’s in New York City. Attendance at the conference is by invitation only. For interested investors, please contact your respective sales representatives to register and schedule one-on-one meetings with the management team. This concludes our call, and you may now disconnect. Take care.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.