ACM Research, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the ACM Research Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad, and to redraw your question, press the hash key. If you require technical support at any time, please press star 0. I would now like to hand the conference over to your first speaker today, Gary Diverchak. Please go ahead.

Good day, everyone. Thank you for joining us on today's call to discuss third quarter 2021 results. We released results after the U.S. market closed yesterday. The release is available on our website as well as from Newswire Services. There's also a supplemental slide deck posted to the investor portion of our website that we will reference during our prepared remarks. On the call with me today, are our CEO, Dr. David Wong, our CFO, Mark McKechnie, and Lisa Fung, the 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 of the financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation, a loss relating to a change in fair value of a financial liability, and unrealized gain in trading securities. For our GAAP results and reconciliations between GAAP and non-GAAP amounts, you should refer to our earnings release, which is. With that, let me now turn the call over to Dr. Wang, who will begin with slide three. David.

Thanks, Gary. Good day, and welcome to today's call. We had an excellent third quarter with strong financial results. We delivered record revenue and assurance with solid profitability. Third quarter results demonstrate the strength of our expanding customer base, our differential-aged multi-product solution, strong product cycle for both front-end and back-end, and our growing production scale. Revenue grew to $67 million, up 41% year-over-year. Sharements were $99 million, up 68% from $59 million in the same period last year. We maintain a good balance of growth and profitability with a 44.5% growth margin and 19.5% operating margin. We are focused on profitable growth as we invest in R&D to drive innovation, broaden our product portfolio, and introduce new products. On the bottom line, we report 56 cents of net income per dilute share compared to $0.42 in the same quarter last year. We ended the quarter with $65 million of cash. In addition, we had a $30.25 million end from our holding of SMIC stock market shares. I will now discuss recent operational highlights on slide three. First, our Q3 revenue growth was broad-based. driving bulk carrying and new products. All wet cleaning and other front-end process tools grow 29% and represent 70% of total sales in Q3. The growth was driven by our flagship cleaning steps tool, good contribution from people cleaning tool and all semi-critical cleaning tools. Advanced packaging, other process tools, services and spare parts grow by 88% to 26% of the sale. The strong growth of this group was driven by AP tools, including ECP-AP, white etcher, stripper, and scrubbers, together with the increase in our service and spare parts business. Second, we received good orders from three new major customers. Several weeks ago, we announced evaluation orders from two potential new customers, The first order is for SAP's Canadian tool from major global semiconductor manufacturer and is scheduled to be installed in their China-based development lab in the first quarter of next year. The second order is for Ultra-USAP MAP carbon plating tool from major Asia-based semiconductor manufacturer. Also for delivery early next year, yesterday, we announced order from leading global semiconductor integrated device manufacturer, or IDN. The orders are for two Ultra-C PR web shipping systems to be used in the China-based advanced packaging facility. We already delivered the first order in October and plan a second delivery in Q1 of 2022. ACM offers a full product line of WALP web process tools. ranging from coder, developer, wet etcher, cleaning, and PR strippers to advanced copper plating tools. Wire, our WLP wet process tool, have gained wider acceptance with a number of China-based manufacturers. This order, our ACM's first WLP tool, wins their major global player. ACM's progress with three new major players is a testament to our technology leadership, regional support teams, and the production skill. We are confident that successful qualification of this tool can result in larger business opportunities. We continue to build our scale, our sales pipeline with a top tier player. I want to thank our sales and technical support teams for their outstanding execution. China is among the largest and the fastest growing market for semiconductors. Over the year, ACM has become a significant supplier of semiconductor equipment in China with our major domestic front-end customer. We believe ACM's efficient technology and multi-product offering provide us an opportunity to capture significant market share on a global basis. Longer term, we are targeting half of our sales from countries and regions outside of mainland China. Third, our ECP product, REMS, is getting momentum. We delivered multiple ECP tools in the first half of 2021, and even more in Q3. As noted in last quarter's call, we expect the ECP momentum to continue with the delivery of 20 ECP tools for the full year 2021. We expect the ECP product line to drive meaningful growth in 2022. We see good opportunity for ECP in both front-end and back-end or packaging applications. In the front-end, smaller geometry require advanced plating solutions. Our front-end ECP portfolio includes the ECP map for dimethyl copper interconnection and the ECP-TSD for through silicon wear. Meanwhile, back-end and advanced packaging has become more important as industrial moves via Moore's Law. Manufacturers are looking for packaging innovation to drive higher performance. ECM-ECP-AP for advanced packaging addresses this back-end opportunity. We estimate that the total global market for ECP front-end and back-end applications were tripled from $500 million last year to up to $1.5 billion in the coming years. Fourth, we are seeing strong interest for our ultra-FN furnace dry process tool portfolio. So far in 2021, we delivered several first tools and evaluation tools, including doped and non-doped poly-LPCVD. We expect to deliver to deliver additional units by year-end. More recently, in October, shipped furnace product with higher temperature oxidation and annealing capability. Building on this strong execution, the next major development in our furnace roadmap is a batch atomic layer deposition, or ALD process. Reveal this. as the most challenging and promising product for advanced manufacturer nodes for both memory and logic. We expect the furnace product cycle to ramp in 2022. Based on 2022 market data, we estimate our current products address 5 billion total global market opportunity. We are committed to our goal to double our addressable market to 10 billion in the next several years. On that note, we are making steady progress with our R&D investment in two additional major new product categories. These are long-term commitment to major adjacent market in which our customers are pushing us to invest in product roadmap that support their advanced nodes. We have accelerated our hiring to support in this program. We are confident that we can deliver the first tool in each category in the first half and second half of 2022, respectively. We have a deep R&D program intended to address the next two product generations by entering this category as a leading-edge node. We are in a strong strategic position to leverage our local relationships with some of the most advanced semiconductor fabs in the world. where we can test driver and develop our most advanced technology. This will help driving most of our product line to the leading edge and competing on a global basis. Next, I would like to recap ACM customer base on slide five. Our first group includes our five major front-end customers that represent the Foundry, 3DNet, and DRAM manufacturers. For 2021, we expect a good growth from Huahong Group and YMTC, which we expect to remain as our top two customers. However, each may represent a lower percentage of total revenue as we anticipate, meaningful growth from other customers. For 2021, we also expect a good contribution from our other three major front-end customers, but are now unlikely to be over 10 percent contributors, this including SMIC, which contributed to our third quarter results as anticipated, SK Hynix and 6MP. Our second group, including a number of new China-based semiconductor customers who manufacture power, analog CMOS, image sensor, compound semiconductors, and other devices. This customer, including four of five Tier 2 players, a handful of new Tier 3 and others, which each is relatively small, this group of new customers combined could contribute 10% or more to our 2021 revenue. As the newer customers are investing in new capacity to support the growth of 5G, IoT, EV, and AI, and other emerging technologies. ACM has good presence of these customers, supplying a broader range of tools, including SAPs, semi-critical cleaning, ECT, and their furnace products. Our third group is advanced packaging and wafer manufacturing customers. Top customers here have included J-CAP, Tungfu, Nappers, and WaferWorks. Wafer had good offer Good order momentum in this group this year, including orders from two new advanced packaging houses in Q1, and yesterday's announcement from the China-based packaging facility, a major global IDM. We expect additional orders from more potential customers in this group by year-end. Collectively, we expect tremendous growth from this group. This should be driving buyers Increased industrial focus on advanced packaging and waveform manufacturing. Penetration of new customer and a strong product cycle for ACM ECP AP tools. Looking ahead, we believe our current customer base represents a significant opportunity for ACM. Most of these customers are still in early or middle stage of multi-year capacity expansion. We are committed to further broaden our customer base as we believe every major semiconductor manufacturer can benefit from our technologies. Move on. I would now like to discuss Q3 shipments and provide an update on our manufacturing facility. Please turn to slide six. We deliver record total shipments of 99 million in the third quarter shipments. Achievements were $32 million higher than revenue, the difference being first tools and evaluation tools. Map of customer acceptance for previous delivered first tools. This is a positive indicator as it reflects demand for new product and from new customer. To achieve this level of achievements, we must thank the production team in our TransSat facility We are ramping production capacity to meet a strong customer demand in a constrained supply chain environment. We started production in the second building of our transfer factory in Q3 as planned. We are on track with our capacity roadmap, which targets a full rate of $50 million of annualized production capacity by the end of this year, upper from 350 million at the beginning of this year. We expect to further increase production capacity to 625 million by the end of 2022. We are committed to our long-term strategic plan to build a production and R&D center in the Ninggang region of Shanghai. The one million square feet of floor space will enable us to increase our annual production capacity to $1.5 billion. The facility will also be used to support advanced R&D with state-of-the-art cleaning room and testing equipment. We recently began initial construction, laying the groundwork towards our plan for initial production in the beginning of 2023. Before I provide our 2021 outlook, I want to provide an update on ACM Shanghai's stock market IPO. Yesterday, the Shanghai Stock Exchange announced the pricing of the stock market IPO for share of ACM operating subsidiary, ACM Shanghai. In IPO, ACM Shanghai proposed to issue 43.4 million shares, which is 10% of the total share outstanding following the IPO, and they announced pricing of 85 RMB per share. This would represent growth proceeds of 3.685 billion RMB or approximately 575 million U.S. dollars at the current exchanging rate. If all grows according to plan, we tentatively expect ACM Shanghai stock to begin trading on November 18, 2021. Please keep in mind that the term timing and successful completion are subject to factors beyond ACM Shanghai's control. We are confident that the stock market listing of ACM Shanghai shares combined with the NASDAQ listing of ACM Class A common share can provide a strong foundation to supporting our mission to become a major player in the global semiconductor equipment industry. Now let's move to our 2021 outlook on slide eight. Our guidance reflects optimism about our growth opportunity for 2021. We have tightened our revenue guidance to the range of $230 million to $240 million, representing 50 percent of our annual growth at the middle point. Our outlook for 2021 is based on several key assumptions. First, stability regarding the global COVID-19 pandemic. Second, the stability in the U.S.-China trade situation. Third, a range of spreading, a range of expanding scenario for their production ramps of key customers. Fourth, management of ACM supply chain. And finally, a range of timing of customer acceptance of our first tools. Our results and outlook demonstrate successful execution of our strategic with strong strategy. Our strong growth is supporting additional R&D spending on new products. We are building our global sales and marketing resource to penetrate the new customer in the region. and we are scaling production capacity to support our long-term growth plan. We believe we can on track to achieve our mission to become a major equipment supplier to the global semiconductor industry. To conclude, I would like to thank our employees for their hard work and dedication. I also want to thank our customers, partners, and shareholders for their support and competence in ACM research. I will now turn the call over to Mark to discuss financial results in more detail. Mark, please.