Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research Second Quarter 2025 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we're 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 the Blueshirt Group. Please, Steven, please go ahead.
Thank you. Good day, everyone. Thank you for joining us to discuss second quarter 2025 results, which we released before the U.S. market opened today. The release is available on our website as well as from our newswire services. There is also a supplemental slide deck posted in the investor section of our website that we will reference during our prepared remarks today. 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 two. Let me remind you that the 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 other financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation and the unrealized gain loss 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 13. Also, unless otherwise noted, the following figures refer to the second quarter of 2025, and comparisons are with the second quarter of 2024. I will now turn the call over to David Wang. David?
Thanks, Steven. Hello, everyone, and welcome to ACM Research second quarter earnings conference call. We deliver another quarter of good result, with strong sequential growth in both revenue and shipment, reflecting continued progress across our expanding product portfolio. We saw momentum from our SPM, Tahoe, plating, and the furnace tool, which are helping expand our addressable market and gain market share. We also continue to make progress with new platform, including track, PECVD, and the panel-level packaging tools, which represent important long-term growth drivers. We recently announced major upgrade to our Ultra C wb wet Bench cleaning tool. The technology integrate ACM's patent-pending nitrogen bubbling technology to generate a large size bubble with good bubble density, uniformity, and enhance the etching rate uniformity in a 3D structure across the wafer.
I'm happy to announce that we have received repeat orders for the new Ultra C wb wet Bench tool with our proprietary nitrogen bubbling technology. We expect good shipments for this tool this year and the next. The technology is also adaptable to our Ultra C Tahoe platform, with a significant application potential for manufacturing advanced 3D NAND, 3D DRAM, 3D logic devices. We believe this new technology is another example of ACM's leadership in cleaning tools that will be good for our customers and support our growth initiatives. Our nitrogen bubbling technology tool adds to early breakthrough for Tahoe and other recent product launching, such as our high temperature SPM tool and the panel-level packaging tool for flux clean and the bubble etcher.
Taken together, these developments reinforce ACM's differentiated leadership in wafer cleaning and give us confidence that we will continue to gain share in a critical segment. We remain committed to deliver innovative new products, such as this, to enable our customer to meet next generation of semiconductor manufacturing challenges as demanded by the artificial intelligence transformation. Now, on to our business results. Please turn to slide three. For the second quarter of 2025, we deliver revenue of $215 million, up 25% sequential, and 6% year-over-year. Shipments were $206 million, up 32% sequential, up 2% year-over-year. Gross margin was at 48.7%, exceeding our targeted range of 42%-48%. We ended the quarter with a net cash of $206 million. Now, I will provide a detail on product.
Please turn to slide four. Revenue from single wafer cleaning, Tahoe, and semi-critical cleaning tools grew 1% and represent 74.2% of total revenue. We believe our top to bottom cleaning portfolio puts us in a strong position. We continue to make a technical improvement and the customer progress with our SPM tool. Our high temperature SPM system features ACM proprietary nozzle design, which prevent both liquid SPM and acid mist spat out of the chamber during SPM process. This improving particle performance reduced chamber pre-preventative maintenance cleaning frequency and enhance the system uptime. We have achieved a better particle control over average particle count, less than 10 at this 26 nm particle size. We also believe it will show better performance than competitors offering at a particle size more than 17 and 50 nm.
In Q2, we delivered SPM and Tahoe tools to several more customers as we continue to gain market share in SPM space. Revenue from ECP, furnace, and other technologies grew 23% and represent 22% of total revenue. ACM recently delivered a ECP tool to a customer, which included company's 1,500 electroplating chamber shipped. We are seeing a strong momentum for ECP tool in advanced packaging, driving by demand for both front and back-end plating system. We are also see growth interest in our newest , Ultra ECP ap , panel level, horizontal plating system. As the industry shifts from wafer to panel level packaging, to support the next generation AI chips, our unique horizontal plating approach, which delivers superior uniformity than vertical panel plating solution, has attracted attention for, from the major players.
Our furnace product are building momentum, supported by strong customer interest and expanded pipeline of evaluation and their engagement. We see good demand across multiple applications, including high temperature anneal, especially our 1,250 degrees C version, high temperature anneal furnace, and also LPCVD, oxidation, and ALD. We believe ACM differentiated the design, position us to capture meaningful market share. Revenue from advanced packaging, which excludes ECP, but including service and spare, was up 20% and represent 6% of revenue. We are making good progress with our new track and PECVD platform. Our proprietary PECVD platform with three tracks per chamber, give us flexibility to support a wide range of process with the same hardware.
We feel good about our positioning, with a plan to deliver more better tool to a handful of customers this year and look for revenue contribution in 2026 and beyond. For Track, we're in the final development phase of our 300 wafer per hour in-line KrF tool, and we expect to deliver the beta tool to a key customer in the current quarter. To close on product, our roadmap, including incremental contribution from Tahoe SPM and furnace tool in 2025, with the panel-level packaging Track and PECVD tool, expected to drive growth in 2026 and beyond. Please turn to slide six. Our first half result reflects solid execution across our product portfolio. We remain confident in the year and our long-term opportunity in China.
As a result, we have increased our long-term revenue target for mainland China to $2.5 billion, versus our previous target of $1.5 billion. The increase is based on two main factors. First, we're now assuming a long-term China WFE market size of $40 billion, versus our prior assumption of $30 billion. This is based on updated by third-party global market forecast and also on our view of the China semiconductor industry. Second, we have adjusted our market share targets for product group as follows: We have raised our market share target for both cleaning and plating to 60% versus the 55% prior. This is a result of our current assessment of a customer traction and increased confidence for share gain for new product.
For furnace, PECVD and track, however, we're keeping our track target at a 15%, 15%, and 10% level. Of course, we aspire to achieve better results, but need more time in the market before we will formally adjust the target. Moving to the bottom of the chart, we maintain our revenue target for the rest of the world at $1.5 billion. We believe ACM focus on differentiated world-class product, combine our global sales and service team, will deliver results with our global customer. As an example, we have a plan to deliver a server tool to U.S. in the third quarter. We remain engaged with our major U.S. customer with active evaluation across a range of the cleaning process steps as we continue to work towards our global- our goal for production orders.
Bottom line: We have raised our long-term revenue target to $4 billion, versus our prior target of $3 billion. Now, I will provide update on ACM Shanghai's proposed capital raise in China. ACM Shanghai recently received approval from the CSRC to proceed with its proposed follow-on offering on the stock market, to raise up to $620 million by selling less than 10% of the total share. The capital raising is leadership, is intended to help accelerate our updated revenue targets and add to the long-term foundation to support our effort to scale up product to major global customer. As the majority-... shareholder, we view the proposed transaction as an important step in strengthening our position in the China market, and it demonstrates the long-term value of our ownership stakes. Next, let me provide the update on our production facility. First is Ningbo.
Please turn to slide eight. As I discussed last quarter, our state-of-the-art Ningbo production and R&D center is nearly completed. The site, including two production buildings, with the first now in production and the second available for future expansion. Each of the two production buildings can supporting up to $1.5 billion of annual production capacity. Combined, we believe we can eventually support $3 billion of production at Ningbo from the two manufacturing buildings. Next, our Oregon facility. Please turn to slide nine. Recall, we purchased a 40,000 sq ft facility last year. We made good progress during the second quarter, and we have began upgrade on our customer demo R&D lab. We believe this will help our effort with the customer in the region as it will allow them test wafer locally on ACM tool.
We also are moving forward with a plan to add production capacity to the Oregon facility. We target the mid-2026 for the demo lab and production to commence operations. Our investment in Ningbo and Oregon are key enabler of our growth strategy, expanding our capacity, strengthening customer support, and prepare us to scale globally. Now I will provide our outlook for the full year 2025. Please turn to slide 10. We're maintaining our 2025 revenue outlook in the range of $850 million-$950 million. This is implying 15% year-over-year growth at the middle point. In closing, our focusing remains on delivering differentiated, enabling technology that solve our global customer most critical process challenges. Now, let me turn the call over to our CFO, Mark, who will review details our second quarter results. Mark, please.
Yeah, thanks, David. Good day, everybody. Please turn to slide 11. Unless I note otherwise, I'll refer to non-GAAP financial measures, which exclude 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 2025. Comparisons are with the second quarter of 2024. I'll now provide the financial highlights. Revenue was CNY 215.4 million, up 6.4%. Total shipments were CNY 206 million versus CNY 202 million in Q2 2024, and CNY 157 million in Q1 of 2025. Strong sequential rebound in Q2 shipments led to a return of positive year-over-year shipment growth for the quarter.
Gross margin was 48.7% versus 48.2%. This exceeded our long-term business model target range of 42%-48%. We expect gross margin to vary from period to period due to a variety of factors, including sales volume, product mix, and currency impacts. Operating expenses were $63.4 million, up 38.8%. R&D was 14.5% of sales. Sales and marketing was 9.3% of sales, and G&A was 5.6% of sales. For 2025, we now plan for R&D in the 14%-16% range. This is an increase versus last quarter's plan, due to ACM's continued focus on proprietary, R&D programs. We plan for sales and marketing in the 8% range and G&A in the 5%-6% range.
Operating income was $41.5 million, down 20.2%. Operating margin was 19.3% versus 25.6%. Income tax expense was $1.9 million versus $9.3 million. For 2025, we expect our effective tax rate in the 10% range. Net income attributable to ACM Research was $36.8 million versus $37.5 million. Net income per diluted share was $0.54 versus $0.55. Our non-GAAP net income excluded $9.8 million in stock-based compensation expense for the second quarter. I will now review selected balance sheet and cash flow items. Cash, cash equivalents, restricted cash, and time deposits were $483.9 million at quarter end, versus $498.4 million at the end of the first quarter.
Net cash, which excludes short-term and long-term debt, was $205.8 million versus $271.0 million at the end of the first quarter. Total inventory net was $648.3 million versus $609.6 million at the end of the first quarter. Raw materials was $285.6 million, up $45.7 million quarter-on-quarter. We made strategic purchases to support production plans and to mitigate any potential supply chain risk. Work in progress was $60.7 million, down $10.2 million quarter-on-quarter. Finished goods inventory was $302 million, up $2.2 million quarter-on-quarter. Finished goods inventory primarily consists of first tools under evaluation at our customer sites, along with finished goods located at ACM facilities.
Cash flow used by operations for the first half of 2025 was $39.6 million versus $51.9 million cash flow provided by operations in the year-ago period. Capital expenditures were $32.2 million for the first half of 2025 versus $39.7 million in the year-ago period. For the full year 2025, we expect to spend about $70 million in capital expenditures. That concludes our prepared remarks. Now, let's open the call for any questions that you may have. Operator, please go ahead.
Thank you. To ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Your first question comes from the line of Charles Shi with Needham & Company. Your line is now open.
Good evening, David and Mark. First question on shipment. I noticed that the shipment was up, but only up slightly on a year-over-year basis. I recall you guys previously said that the full year 2025 shipment should be, I mean, should grow. Maybe not necessarily growing faster than revenue this year, but that should grow. But it looks to me that in second half of the year, you have a good amount of catch up to do for shipment to be flattish versus last year's level. Is that still the right target for to think about shipment? Or maybe the full year number may actually come down a little bit on year-over-year basis? Thank you.
Hey, Charles, and our 2024 shipment was very strong, right? You'll recall about the, you know, over 2023 is 63% of the increased rate. So then we also have a lot of new product, and this year, we're contributing to the shipment this year. So I want to say the first, second half year, obviously much stronger than the first half of the year. We're expecting still growing for 2025, I mean, 2025, and growth is still achievable.
Got it. So, relative to, let's say, 90 days ago, the expectation for shipment for this year, do you see actually its shipment growth may be stronger than you thought 90 days ago, or flattish or weaker, any direction or color you can provide? But the reason why I ask this, maybe it's good to get your thoughts as well. Your U.S. peers, who have reported that so far ahead of you, have been seeing China WFE upside, especially for the second half of the year. Wonder if you are seeing the same thing or not? Thank you.
Yeah, I should say, our Q3 is very strong, right? We see the Q4, and there, there's still some slot we're going to fill in. And so I still say they're very good and, outlook for Q4. So I want to compare, like you said, you know, 90 days ago, we see that, market situation going to improve.
Got it. Lastly, I think, Mark, you mentioned some strategic purchase you made over the last quarter. I think that the news flow did suggest that the U.S. may be working on something at the in terms of actual control at the subsystem level. Wonder what the what's the ACM assessment on let's say, supply chain risks, maybe for the reasons of potential new export controls and how the company has prepared to mitigate that risk? And any thoughts on that front would be great. Thank you.
Yeah. David, do you want to take that first and I can add, or do you want me to go ahead? Yeah, go ahead.
Obviously, you know, now we're doing the multi-source of the components, right? And we're definitely looking for the new components and supplier in the other country and then, than the U.S. And also, we have also looking for the local supplier in mainland China. And, I want to say, there is a certain, you know, challenging, however, and I think we can overcome that with the multi source, alternative source supplier for our key components in the tool. So, Mark, you want to add on that?
Yeah. Charlie, the only thing I'd add, I think it's a good question. It's something that we look at a lot. I mean, it's, you know, we have a pretty good solid balance sheet. We have a good forecast for our shipments, so we thought it was the right thing to do to kind of increase some of our strategic supplies of some key components. So, we might even do a little bit more here in the second quarter. Yeah. Or I'm sorry, in the third quarter.
Yeah. Yeah, maybe just a quick follow-up, because the strategic purchase, it could be for preparing for a higher demand in coming quarters, or it can be more for mitigating supply chain risks, especially the, let's say, maybe some of the components you are sourcing currently from the U.S. Which one is it, more for you-
Well, Charlie-
to motivate you to do that? Yeah.
Yeah. I mean, as of December, or sorry, January first, you can't get parts from the U.S., right? So, yeah, these are strategic purchase, probably from other regions. And, I won't really break out, you know, how much of it is to mitigate the risk or just kind of based on our forecast, but it's a combination of those, Charlie. Yes.
Yeah, that's. Thank you, Mark. I really appreciate the insights. Thanks.
Yep, you bet. You bet.
Thank you, Charlie. Charles
Thank you. Your next question comes to the line of Mark Miller with the Benchmark Company. Your line is now open.
I had a question about long-term borrowings. They're, they're up significantly over the last six months. I'm just wondering what's going on there?
Yeah, I can, I can hit on that a bit, and then, we got Lisa here in the background. But, long-term borrowing, we did, step things up a bit. You know, there's, there's controls over, you know, how we can use some of our capital from, from, from the China, capital raise and what have you. Of course, we have that coming along, so, we, we did step up our, long-term borrowing, a bit here in the, in the first half of the year. Lisa, did you want to add something?
Yeah, in addition to that, the interest rate for deposit is much higher than borrowing in China. So we're trying to, you know, using that kind of leverage to maximize the return.
Good opportunity to kind of take the lower interest rate down. Yep. Thanks, Mark. Yep.
Okay, thank you.
The next question comes from Suji De Silva with Roth Capital. Your line is now open.
Hi. Hi, hi, David, Mark, Lisa, congrats on the progress here. So milestone wise, can you talk about the customer traction outside China and what some of the milestones we would look for here, update on those, on the customer base across different parts of the world?
Yes. Hi, Suji, and I think we're continually work with a key customer in Korea and also in, you know, in the U.S. And, this moment I want to say the, it take a little more time. However, we're really working closely with the key customer, you know, evaluate our, differentiate the cleaning technology and our mechatronic cleaning. And, we are reaching, you know, a very encouraging result. Also, we're working with a Korean customer for the, copper plating, you know, product, and that also made the progress, right? And continually, we're also exploring new customer in both the U.S. and Taiwan. And, I think especially our, I want to say our, panel level and packaging tool, you know, made a very strong attraction, right, from Taiwan customer, too.
So I want to say, with our continued innovation and technology we're providing the market, and we're going to have our, you know, expand our sales revenue outside China. Especially we're now building our R&D center in Oregon and also the, you know, manufacturing. And this R&D center will really make it easier for our cleaning, copper plating demo and for the customer outside China. And also manufacturing, we're doing right now, preparing all for the Oregon, and that's really gives us a strong position and to really minimize impact of any, you know, tariffs in those situations. So we believe our strategy, you know, building our R&D manufacturing center in China, in Korea, and the U.S., will further strengthen our position in the global market.
And, you know, we're fully confident, you know, with our new defensive product. And, also, I want to say, a lot of new future AI chip request, a lot of new technology, which is, you know, even today, nobody offer in the market. And those new demand for the technology driving will really put ACM's product in a differential or the position. So we believe, you know, with our innovation continuous going on, and we're continue again attraction, you know, from the key customer in cleaning, in copper plating, and panel, and also other new product, you know, we're planning too. So we still have very strong confidence, right? We're getting to the global market. I still want to say, every customer in the world, they demand for the best technology, right?
As we announce in this meeting, we have introduced bubbling technology, which generates large-sized bubbles with, you know, uniformity across the entire wafer in the past. So we believe that's what really driving their innovation requirement and for both, you know, 3D NAND and 3D DRAM in the future, probably also the 3D logic down the road. So that's another word I look at, you know, our innovation technology will bring to the market. Okay, Mark, you want anything add on that?
Yeah, no, David, I think that was a good answer. I mean, we're working really hard with our big U.S. customers. We got, you know, some additional tools that are going to different organizations here in Q3 to the U.S. So, you know, our team is pretty active in Oregon. We're pretty focused on, you know, getting our demo room up and running and, you know, being ready to produce tools in the U.S.
Thanks Suji.
Yes, thank you. The next question comes from Edison Lee with Jefferies. Your line is now open.
Hey, David and Mark, how are you? Can I maybe ask you 2 questions? Number 1 is for the 2Q growth.
at the revenue level is 6%, which is actually below the growth rate that you are guiding for the full year. So what was actually driving that, slower growth in the second quarter? And then for 3Q, you said that the outlook is very strong. Can you share the growth drivers coming from logic, memory, power, and advanced packaging? So which areas actually you are seeing the strongest growth, and which area you are seeing the slowest growth? Thank you.
Yeah, you know, I mean, revenue can be lumpy, right? And, we're still expecting, you know, 15% midpoint growth for the year. And, also, you know, we're - you're asking the Q3 driving force, I want to say, still our cleaning and copper plating is still the major, driving there. And also certain product, you know, customer requests, where, you know, shipping turns to Q2 or Q3, right? I want to say, over the year, we still have our, you know, whole year is expecting growth. Better than the Q2.
Right. So in China, can you talk about the growth that you're seeing from memory versus logic?
I would say there we both are true ourselves with the memory and the logic customer, right? But you would say, which is growing faster? I don't have a real number right now on top of my head. I want to say both, you know, even looking the long run, I want to say memory is still very strong, both the 3D NAND and also, you know, this DRAM business. And of course, there's, you know, logics and people are still building, you know, fast and, both for mature nodes and other advanced nodes. And so I want to say that there, looking the next really a few year, those those market is very solid, still there.
Okay, great. Thanks, David.
Thank you.
Thanks, Edison. Yeah.
Thank you. As a reminder, to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. Your next question comes from the line of Matt Cook with Potentia Capital. Your line is now open.
Hey, David. Hey, Mark. How's it going? Can you hear me okay?
Hey, Matt.
Yes.
Good. Great. So I just wanted to ask, ACM Shanghai reported its results about 60 minutes ago. Now I know that there are different accounting standards, but their numbers look a lot better than yours. Like, the difference is bigger than we're kind of used to. So revenue was $270 million compared to $215 million for ACMR, and adjusted net income was $62 million compared to about 37 that you just reported. So Mark, could you just help understand, like, what's caused the difference? I know there are different recognitions on revenue and timing. That's the first question, like, why the results are so much better there, and if there could be some kind of like, you know, if that can swing the other way in Q3.
And then the second question is, are shipment numbers different for ACM Shanghai? And if so, what are they in dollars? That'd be great. Thank you.
Yeah. David, I can go ahead and hit that and you can add if you want. So, in reverse order, yeah, I mean, simply the shipments are the same for both. They're measured the same. The difference is rev rec. And so, under China GAAP, the China organization recognizes revenue upon installation, and, of course, US GAAP is 606, right? Where we take revenue on repeat shipments or upon acceptance when it's a first tool shipments. So just a timing difference in the rev rec standards. And this quarter was a little bigger than it had been in the past.
I think it could be kind of a result of some of the bigger shipments that we had last year, that it took a little long, you know, the timing of the installations here in Shanghai. And we won't literally guide how that's going to change for the back half of the year. You know, Q3 and Q4, I don't think we're going to give any specific details on that. Yeah.
Yeah. I want to add on that.
Okay. Thank you.
You're looking at long run, this two numbers should be matching, right? But looking at quarter-to-quarter basis, you will get sometimes U.S. is higher, sometimes, you know, Shanghai is higher. So that's as I you know, Mark mentioned, different recognition of the revenue. So, so I want to say overall, like you said, Shanghai numbers looks good, but that's only quarter-to-quarter basis, right? And I want to say, a whole year, I mean, or long run, this number is, is very matching.
Hey, Matt, one other thing I could bring out that I think will be important is that the U.S. GAAP and the R&D side, we don't capitalize anything, right? So it's all expensed. And so there is some capitalization of R&D. I don't know if they give out the exact mix, but that's the big difference is on the operating expenses. That's one. And then, of course, ACMR, the global operation, you know, we've got our costs of being a public company, and then we also have our sales and marketing efforts that are incremental expenses. Yeah.
Helpful. Thanks very much.
You bet, thanks, Matt. Yep.
Thank you.
Thank you.
Your next question comes from the line of Charles Shi with Needham & Company. Your line is now open.
Yeah, so yeah, I feel. Hey, can you hear me?
Yes, Charles, I can hear you.
Yeah, I feel obligated that to ask a question about the long-term target. I think it's important update, but I have a really question on the mainland China portion of the long-term projection there. I think one key change versus your prior target was the mainland China WFE market size. You kind of raised it from $30 billion to $40 billion. It does match with where China WFE numbers were trending over the last couple of years. Last year, I believe it's slightly above $40 billion, this year, maybe around $40 billion.
But I think that my question is, would there be any concern, I mean, by the team, maybe you are a little bit extrapolating the peak China WFE number there from the last year's peak run rate level into the future? Or, where's the confidence on China WFE maintaining at this $40 billion level over the long term? Thank you.
Okay, Charles, obviously, you know, year-over-year can be, can be kind of changing, right? Maybe 5-10% up and down. And I want to say, our long-term revenue is not for next year, right? It's like a 5-year or, you know, timeline, we're talking about or beyond. So we believe that moment, that year, China WFE market will be $40 billion. That's what we talk about our long run of the, you know, goal. And you look in the expanding China of the either memory or the logic, or including IGBT, it's a lot of demand here. So that's our confidence. We believe that the market, $40 billion, you know, you look in the 5-year, down the road, should be that number. Of course, there are global market growth, too.
So the $40 billion we think is a reasonable target we put there. And second, I want to see that is, we do have also a new product coming in, and we are through the last, last three, four year, R&D, our furnace, PECVD, and the track, including our latest, you know, panel level packaging tool, getting into the, you know, the market and or start to, you know, generate revenue either this year and also next year. Second, I want to mention that is, we just get approved, right? From CSRC, and we have, you know, second fund raising more than $600 million. Those fundraisings, that will help ACM to accelerating our, the target R&D, and, so that will be another big factor.
Third one, I want to mention that is ACM has been really in China market, in six other differentiation, innovative technology into the market. So I believe, you know, Chinese, invest, the customer still like the best technology with IP protection. So that will put ACM in very unique position, and this moment, we have not found any local Chinese company, copy our IP, infringe our, you know, IP. So we have a very confidence ACM can maintain our differential product margin, and also, as said, you know, customer locally, we design the best technology, which is that we are providing a differential in the solution. So we're much better than those people provide their similar product, and since I said, we're providing for differentiation. That's what's solving the future needs and, you know, for the customer.
With all three automation, we're very, you know, confident. That's why we're raising this, you know, China market from $1.5 billion to $2.5 billion. Thanks.
Yeah, thank you. I appreciate the wonderful color. Glad I asked.
Next question comes to the line of Jimmy Hang with J.P. Morgan. Your line is now open.
Yeah. Hi, Danny and Mark. Can you hear me?
Yes, please.
Yeah. Thank you. So I want to ask about whether you have any thoughts on the WFE into 2026, and actually, can you also share about your estimate on the China WFE for 2025 and 2026, either estimate numbers or YOY comparison? Thank you.
Yeah, well, I mean, looking at 2025 and, obviously, you know, different report, right? Show different results. Looking at Gartner, they're pretty like in lower, but you have another SEMI , you know, show their very, I want to say, you know, different results. In other words, it's better than the, you know, the Gartner. I mean, you're looking at 2025, 2026, yeah, I'm still hard to predict. Maybe, you know, I mean, 10% up or down, right? But therefore, our feeling is it doesn't matter. As I said, China market still exists, you know, they already reached about either 30% or 35% of the global number, really.
So with our differential technology, with the new product come out, and even the flat of the revenue or the WFE spend in China, we're still expecting our growth, and also high growth. As I said, you know, our new product, PECVD, and we have a few customers, you know, hundred customer coming to their evaluation this year. We'll also put their 300 wph wafer per hour KRF line, and which is in line with the, you know, scanner, will ship out very soon, in probably in Q3. And also add the new technology, as I mentioned, our panel level packaging, you know, as attraction. And plus, you know, we have this high temperature anneal 1,250 degrees C, and that's really can really shorten the anneal time for the IGBT, also other critical application.
So as I said, all this new product we put in the market will give us a strong confidence where we're having growing fast, even with the flat or, you know, Chinese WBH market. As I mentioned, just, you know, I asked Charlie if we offer China market with real differentiated product, and we feel confident we can protect our IP, and therefore we can, you know, have our, I want to say, you know, margin maintained and keep the customer best of choice. And so we're not getting into, you know, that kind of similar product and price competition. As I said, the Chinese customers still demand for the best performance. If they're choosing performance versus price, of course, they're choosing performance.
So that's why we're our differential product can offer such a superior, better result than those people provide a similar product, right? So we think that will be our strong point.
I see. Thank you, Dr. Wang.
Yeah, if you don't mind, I might just add a few things on that. Just, you know, obviously we're not gonna, we don't give our guidance for 2026 until early in the year, but you probably noticed our OpEx was pretty strong this year relative to our revenue. Even if we do, you know, we do the midpoint, still kind of, we're growing our OpEx this year. And a big reason is we're spending into the market opportunity, right? I mean, David mentioned a lot of the new R&D projects. We're also spending more on sales and marketing. But clearly, that spending is, you know, kind of anticipating good growth ahead.
Yeah, and add on that, you know, compare the first-tier guy, their R&D probably 10%-12%, right? And then we're spending 14%-16%. And that's really show our, you know, heavy invest R&D. Also, with our new product come out in a speed, and we have more, you know, I call the product, you know, a new product come ratio compared to, you know, first-year global guy. And that's why, it show that our spending is higher. So that's why we're spending, investing in R&D and also market, sales and marketing, and that's really supporting our next five-year growth. And we believe we spend this, always, I mean, we spend this operation spending is very important and also supporting our long, long, long growth.
Yeah. Thank you, Dr. Wang and Mark. Also want to ask about the cleaning equipment market share target, you raised to 50% in the long run in China. Do you think, in that case, what will be the split of the remaining 40% share between other Chinese peers and international suppliers? Yeah.
Wow!
When you get 60% market share in China. Yeah.
It, it'll have to be divided who is the second, who is third, right? I mean, again, we're currently number one in China, of course, right? Why I say that is, our new product portfolio really almost can match 95% of the, our cleaning process steps. So we are probably the widest product in the world, compare even the three big guy in global international, right? And also, as I said, our product has a lot of differentiation and, you know, the Tahoe tool and SAPS, you know, megasonic, TEBO, and the non, non-violation or non-damaging, you know, megasonic technology, and also continue adding this recent announcement, the nitro bubbling, right? With a special, proprietary design, generate a large bubble size with uniformity.
So we're continuing really, not just the our product widespread, also have another innovative approach in the better than those, you know, top tier in the world. Especially when I mention SPM. Our, our SPM, as I mentioned, we have new proprietary nozzle design, can really limit all the liquid splash or, you know, acid mist out of chamber. And that really can improving in the small particle performance. And today, as I said, 26 nano, we're, we're reaching average almost a 5, you know, in the particle, and we believe with improving the chamber environment, and we should get a better result in the 15 nano, 17 nano, which is really advanced in the next step. So particle.
Anyway, I want to say, you know, we're doing our, you know, again, differentiated approach and with IP protection, and that's the strong point, and we are saying we're expanding China market, and also we're not facing any, as I said again, you know, we got a very strong IP portfolio in China and even globally. Also, we do not expect any local Chinese people can copy our tool. So that's a real strong confidence, and we see there we're expanding in the China market. Of course, with those differentiated product has in the China market, will push to the global, right? As you know, the cleaning has been more and more important for the future AI chip manufacturing because of the yield suffer.
So this cleaning become more and more challenging for 3D NAND, 3D, you know, I mean, DRAM is down the road, and also 3D Logic, eventually people will see that. So all the 3D cleaning, we do have a, a product, you know, technology, really for that. So we're, we're very, you know, we're very, you know, and kind of, see our, our technology, you know, going to, spread out in our other global market.
Yeah. I see. Thank you, Dr. Wang. Maybe I have my next question. Can you, like, talk more about your progress in Taiwan and Southeast Asia region? And also for the PLP testing, because I think the industry now thinks that mass production of Taiwan Foundries FOPLP, or we call CoW, will wait until 2029 or even 2030. I think the development time for test and manufacturing will be longer than expected.... So how do you think about the mass production time of the, FOPLP or CoWogS with the fine, fine line space? Yeah. Not the, the, the large, yeah, line space for the, done by the panel makers. I mean, the, for the advanced, yeah, process.
Sure. Actually, PLP, this is, you know, panel level packaging, we believe is ready to go for the, you know, large size of the AI chip packaging, right? As the people lay down in the panels, 310 by 310 square versus the, you know, circle, their effective area increased more than 60%, right? It's a bigger gain for the customer, especially for large chip. Obviously, other people, you know, get it now to 310 by 310, will probably very soon move into large size panel. So we believe that's really a strategic step, and the Taiwan customer taking that direction. And as to the ACM, I feel we have very good product, really for that product. And we're already putting the market for the, you know, low-pressure CVD, bevel CVD.
Also, I want to mention that is our horizontal and the, you know, rotational electroplating, it's really a solution for this panel level, right? And why is a, you look in the 200 millimeter packaging, you know, used to be vertical, and you go 300 millimeter wafer, it will turn to horizontal. And now-
Yeah.
You can see our, you know, panel-level, we are probably the only guy providing this horizontal solution because of proprietary IP design. And this year, you know, March, we got a reward, got a technical award from the IEEE 3D IC inside the USA. So we believe, you know, our strong position in this horizontal plating will position ACM very a strong position for this, future, AI, you know, PLP market. So we're, you know, we see that as recent, we reach our, horizontal plating uniformity less than 5%. And I want to say we're trying next quarter, less than 3%. So we'll maintain equal, performance, panel square plating versus a circle, same, same level. That's really driving, to the panel.
As you mentioned about 2029 or timing, I think that's really depends on technology driving, right? And if, well, you know, customer can solve the whole issue, they can speed up. If they cannot solve, maybe delay. So really, this is a, you know, market is driven by two manufacturer technology combined together. So I mean, with our copper plating, we definitely believe that will be speed up, right, in the copper plating process, which is one of the major block for the people moving from 300 millimeter wafer to the panel level. And we're glad, you know, this technology offers the copper for the customer, enabling their the production line and hopefully speed up their production. That's our confidence, and also we're engaging with the customer in the Taiwan.
Yeah. I know that you guys have technology leadership, you have real products and IP, but I feel like the issues now, the ecosystems are ready, so the customer might need to delay their CoWoS mass production timeline. Meanwhile, do you think that the plating tool supplier from CoWoS to CoWoS will they still stick to the original Japanese and American supplier, or they could adopt new supplier for CoWoS?
Well-
From COWoS.
I want to see-
For the plating market. Yeah.
I want to say, I mean, wafer level, we're engaging, right? I mean, then you're looking at this panel level, I think we're a much better, superior, you know, product, right? Wafer level, probably will offer, you know, equal in the, this, this moment. I won't- I want to say that. But then for the real panel level, as I mentioned, you know, I mean, those last ten years, nobody can do horizontal plating, right? We're the first guy announce the product. We can do horizontal. As I said, even today, we're about 5% uniformity. Our next goal, go 3%. I believe with a strong IP position, we should offer the best, panel plating tool in the world.
Again, right, that's really exciting, you know, for our ECP penetration in the global market, and is one of the key product we offer to enabling the technology for the customer. So we're very, you know, involved to put effort on those product development. Plus, we also prepare additional other differential product and also enabling the panel level. And we're going to announce probably, you know, in the end of this year. We're working on a new product too, and to further get into this market. So we're very exciting about this panel level, right? It, it's the way to go because all AI chip get a size bigger and bigger. I mean, we have a very, we invest a lot in this product.
I see. Thank you so much. So I may have occupied too much time, but thank you so much for the details.
Thank you.
Thank you. Your next question comes to the line of Yang Lei with UBS. Your line is now open.
Hi, David. Can you hear us? Okay, can.
Yes, please.
Thanks for taking my question. Just one quick one. Seems like your Q2 year-over-year growth in for Asia is still underperforming other like China peers. Any reason the high-end probably like due to different customer exposure? Thanks.
Good question. Yeah.
David, I think the question was the growth maybe of ACM Shanghai's revenue or even ours versus some of the China peers. Maybe it was, you know, what's why what's the reason for the difference?
Between China, between U.S., or between our, with our whole, with other peer?
... Maybe between ACMR, both U.S. and China, and Shanghai, versus other like China, WFE peers? Thanks.
Ask quickly versus China peers.
Oh, okay. I didn't see the other result come out, you know, China peer. Obviously, looking at Shanghai, our revenue growth is still looks good, right? And I want to say we're confident. And also this year, as I said, you know, we're coming to the moment of the multi-product, and the revenue will not much contribute this year, but with the next year, we see our furnace PECVD track, that contribution, right? And also we have a new product with cleaning, and they're, you know, continue expanding CAPA 80. So I want to say we still have a very good, you know, confidence and also outlook for 2026.
This year, well, Q3 very, very busy, and Q4, we have a couple slot open, but we think we'll be also, you know, fill that soon. So in general, we still have a good confidence. You know, we have a, you know, good, good growth still this year.
Oh, thanks. Pretty clear. Thanks.
Thank you.
Thank you. Seeing no more questions in the queue, let me turn the call back to David Wang for closing remarks.
Okay, thanks, operator. Thank you for all the participating on today's call and for your support. Before we close, Steven is going to mention our upcoming investor relations event. Steven, please.
Thanks. Thanks, David. Before we conclude, I just want to give everyone a quick reminder, our upcoming investor conferences. On October 21st, we're gonna present at the 6th Annual Needham Virtual Semiconductor and Semicap one-on-one conference. On August 25th, we will present at the Jefferies Semiconductor, IT Hardware and Communications Technology Summit at the Four Seasons Hotel in Chicago. On September 3rd, we'll present at the Benchmark 2024 TMT Conference in New York City. On October 7th, we'll present at the 17th Annual CEO Summit in Phoenix, Arizona. Attendance at the 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. This concludes the call, and you may disconnect.