ACM Research, Inc.

Thank you for standing by, and welcome to the ACM Research First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1-1 on your telephone. To remove yourself from the queue, simply press star 1-1 again. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Gary Dvorak, Managing Director of the Blue Shirt Group. Please go ahead.

Thanks, Jonathan, and good morning, everyone. Thank you for joining us on today's call to discuss first quarter 2023 results. We released results before the U.S. market opened today. The release is available on our website as well as the Newswire services. There's also a supplemental slide deck posted in 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 Phan, 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 revision to these forward-looking statements. Certain of the financial results that we provide in this call will be on a non-GAAP basis, which excludes stock-based compensation and an unrealized gain or loss in trading securities. 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 look at slide 12. With that, let me now turn the call over to David Wong, who will begin with slide three. David?

Thanks, Gary. Hello, everyone, and welcome to ACM Research, the first quarter 2023 Earnings Conference Call. Please turn to slide three. For the first quarter, revenue was $74.3 million, up 76% from the same quarter last year. Shipments were $89 million, up 33% from the same quarter last year. Growth margin was $53.8. and the non-GAAP operating margin was 14.7%. Our operation in the first quarter was impacted by several factors, including COVID policy, the Chinese New Year holiday supply chain challenges related to U.S. restrictions, and some delays that deliver to certain customers. We expect our business to improve in the second quarter with expected acceleration in the third and fourth quarters. Study with the product presented to slide four. We had a good growth from our cleaning tools and increased contribution from our ECEP furnace and other technology with a continual strong product cycle from ECEP products, which were more than one-third of the first quarter sales. Single-wafer cleaning, Tahoe, and semi-critical cleaning grow 41 percent, driven by single-wafer cleaning tools. and strong mature nodes demand in China. ACM has one of the broadest cleaning product portfolio in the industry, covering nearly 90% of all cleaning process steps. We recently introduced several important new cleaning tools, including the bevel etcher tool and high temperature SDM single wafer cleaning tool, which is important for our international efforts. In Q1, we received the customer qualification of our single wafer wet bevel edge tool. ECP and furnace and other technology grow 117%. Growth in this category was driven primarily by ECP product cycle with some contribution from furnace. Our higher temperature anneal and LPCVD furnaces including silicon nitride and poly have expanded to multiple customers and are in qualification. Advanced packaging, including ECP, service, and spare parts grow from our small base last year and represent about 15% of the sales. This category includes a range of packaging tools, including coater, developer, scrubber, PR stripper, and wet etcher, and service spare parts. ACM is the only company that offers both a full set of web tools and advanced plating tools. We believe advanced packaging will continue, will become more important as industry looks for packaging innovation such as 2.5D and 3D in the portal and fan out to drive a higher performance. Our product line is very well suited for the mature nodes and power devices investment we see in a near term for China. We see continued investment in 28, 45 nano and above nanometer in front end fab capacity as China is committed to close the gap between its consumption and production of semiconductors. We also see the ramp up of EV production in China as a driving of China-based investment in both power devices and other 28 and 45 nano devices. In this mature node expansion environment, we expect solid growth from our cleaning tools, especially our AutoBench, which is well-suited for those applications. To finish up on products, I feel great about both our PCVD and TRAC platforms. Similar to our cleaning, plating, and furnace products line, our PCVD and TRAC platform have a proprietary technology that we believe we're making them winner with a major customer both in China and outside China. We are in active discussion with our key customers. They are accepting to our new approach and technologies, cost and their way for throughput. Although we do not expect revenue in 2023, we plan to deliver a several innovation tool to key customers this year. ACM has built a scale business in cleaning, and we have strong product cycle from ECP, Furnace, and other technologies. With the track and PECVD, we are moving from proof of concept during the last year to accept to active evaluation with the key customers. At this point, we now believe our differential technology can go head-to-head with any of their major players. Moving on to customer, please turn to slide five. I'm pleased with our position with the China-based customer and the progress we are making with the potential new customers in other markets. In China, we believe ACM tool are now used by nearly all the semiconductor manufacturers. Our sales and service teams are working to expand the deployment of each of our major product line across our growing customer base. we continue to go to gain traction from second and third tier semiconductor manufacturers, including power, analog, CMOS image sensor, compound semiconductors, MEMS, and other devices. In the US, the evaluation of a key potential customer is progressing well, and we remain optimistic that this could lead to production orders. In Europe, we announced an order for our first evaluation tool from top tier customer in the first quarter. The tool is a plan for deliver in the early Q4 this year, and we are beginning to build a local service team to support the effort. To support our growth initiatives, we continue add a facility in China and other region, present to slide six. I will start with update on China. Construction of Lingang production and R&D center is on track for initial production in the second half of this year. We took ownership of our new headquarter for ACM Shanghai in Zhangjiang this quarter and plan to move in later this year. This is an important addition for us that we believe will provide the stability for employee, help us attract new talent and allow us to invest in world-class R&D center to speed up the development of our tools. Next, in Korea, we have a strong basis of more than 70 R&D engineers and more than 50,000 square feet of at least R&D administrative and production facilities. ACM Korea co-developed our furnace, track, and PECVD products together with our Shanghai R&D team. As I have noted in previous course, we have increased our commitment to Korea.

We believe a strong commitment to Korea will improve our relationship We are also adding resources in the U.S.

to support ongoing evaluation and additional sales activities. In the first quarter, we leased a facility in Oregon to add to our service support and demonstration capability for R&D and custom activities in the region. As noted on the call last quarter, for 2023, we expect to spend about 100 million CapEx This including continuing investment in our Lingdang facility, remodeling for our new headquarters of ACM Shanghai, and our investment in Korea and the U.S. Following this important investment, we believe our major spending project will be complete for the next several years. I will now provide our outlook for the full year 2023 presented to slide nine. reconfirm reaffirm our 2023 revenue outlook to be in the range of 515 to first tool on the evaluation in the field. Now, let me turn the call over to our CFO, Mark, who will reveal details for our first quarter results. Mark, please.

Thank you, David. Good day, everyone. Please turn to slide 10. Unless I note otherwise, I refer to non-GAAP financial measures which exclude stock-based compensation, unrealized loss on trading securities. Reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. Recall that our operations last year in the first quarter of 2022 were impacted by the Shanghai COVID restrictions. As David noted, our operations in the first quarter of 2023 were impacted by China's relaxed COVID policy, the Chinese New Year holiday, supply chain challenges related to the U.S. restrictions, and some delayed deliveries to certain customers. I will now provide financial highlights for the first quarter. Revenue was $74.3 million versus $42.2 million in the first quarter of last year. Total shipments were $89 million, up 33%. Revenue for single-way for cleaning tools and semi-critical cleaning was $36.6 million, up 41% from $26 million in the first quarter of last year. Revenue for ECP furnace and other technologies 2 million in the first quarter of last year. Revenue for advanced packaging, excluding ECP services and spares, was 11 million, up 183% from 3.9 million. Gross margins, 54% up from 46.9% in the prior year period. This exceeded our normal expected range of 40 to 45%. The high gross margin was primarily due to a favorable product mix, with a particularly strong mix of our higher margin products and a lighter mix of our lower margin products for the quarter. We expect gross margin to continue to vary from period to period due to a variety of factors, such as sales volume, product mix, and currency impacts. Operating expenses were $29.2 million versus $27.7 million in the year-ago period. The increase was due primarily to higher sales and marketing and G&A costs, partly offset by lower R&D costs. Operating income was $10.9 million, representing 14.7% operating margin, versus an operating loss of $7.9 million in the year-ago period. We recorded a realized gain of $4 million from the sale of a portion of ACM Shanghai shares of SMIC for the quarter. Recall that the realized gains are included in non-GAAP earnings. That income tax expense was $2.9 million compared to income tax benefit of $4 million in the year-ago period. As a result of the change in Section 174 of the U.S. Internal Revenue Code of 1986, as amended, that became effective on January 1, 2022, our effective tax rate has increased primarily due to the new requirement to capitalize on amortized previously deductible R&D expenses. Net income attributable to AACM research is $9.9 million versus a net loss of $0.6 million in the year-ago period. Net income per diluted share was $0.15 compared to net loss per diluted share of a penny in Q1 of 2022. I will now review selected balance sheet items. Cash, cash equivalents, restricted cash, and time deposit. at the end of the first quarter versus $420.9 million at the end of the last quarter. Total inventory was $473.3 million at the end of the first quarter, up from $393.2 million at the end of last quarter. This includes finished goods inventory of $195.7 million, work in process of $74.4 million, and raw material $203.2 million. Capital expenditures for the first quarter were about $15 million, which includes spending on our Lingong facilities, normal maintenance spending, and as David mentioned, the purchase of land in South Korea. That concludes our prepared remarks. Let's open the call for any questions that you may have. Operator, please go ahead.

Certainly. As a reminder, if you have a question at this time, please press star 11 on your telephone. One moment for our first question. And our first question comes from the line of Quinn Bolton from Needham & Company. Your question, please.

Hey guys, congratulations on the nice results and continued strong outlook. I guess first maybe David and Mark, can you just give us your sense of spending in the China market both on sort of the mature nodes but also including power semiconductors, silicon carbide. Are you seeing continued strength in those nodes and how sustainable do you think that spending is?

Okay. Well, actually looking at real electric vehicle growth market in China is pretty, very promising, right? And a lot of Chinese people like driving electrical car because much less gas spending. So we see that market continue to grow. And also they're using much more silicon base of their power devices versus sitting carpet, right? So we see that probably 12 inch wafer uh fab and also they're demanding for the igbt or power devices is extra accelerating so we see that market will be you know static growth also see the multiple fab multiple customer also aiming for this you know a very high potential market you also see that as also our future growth and for both cleaning tool and copper plating tool and the furnace including pcvd and the future even you know attract So we see that they're one major driving for the mature nodes. Obviously, 28 and 45 nano, also other MEMS devices, also we see the growth potential by the future few years.

Thanks for that color, David. And Mark, I know you have been putting a lot of working capital into inventory over the past couple of years. Balance is now up to almost $500 million. you know, is there a point where you start to throttle back on inventory? I guess I was, you know, particularly surprised by the increase in finished goods. You know, your shipments weren't up, you know, that meaningfully. But wondering if you could just give us, you know, your kind of latest thoughts on, you know, as you approach $500 million of inventory on the balance sheet, you know, does that balance start to level out for a period of time?

Yeah. Hey, thanks, Quinn, on that. So... You know, for the quarter Q1, shipments were down, right? And there were a number of reasons for that that we talked about, right? The relaxation of the COVID restrictions, you know, where a lot of employees and our customers, you know, caught the illness in December and January. You had Chinese New Year, you know, the adjustments to the U.S. restrictions as well and some delays. So, you know, that led to a lower shipment number. And so our overall inventory uptick, as you know, it's raw materials, work in process, and finished goods inventory. We expect our shipments to rebound pretty nicely in Q2 and beyond. So that's one driver for the inventory. And then I think you also know that the finished goods inventory Most of that includes the evaluation tools that are at our customers. So we had an increased quarter-on-quarter from that. We also did have an increased quarter-on-quarter of finished goods inventory that was not shipped to the customer for those reasons. So to answer your question, we do anticipate the inventory is at an elevated level this quarter. you know, we'd anticipate, you know, that being kind of a high watermark and should be coming down as we move forward. Great. Thank you, Mark.

Thank you. One moment for our next question. And our next question comes from the line of Suji Da Silva from Roth Capital. Your question, please.

Hi, David. Hi, Mark. So the gross margin in the quarter was above trend. I'm curious, can you remind us which of the segments are above trend that are driving that? And I know non-single wafer clean is doubling year over year. Is that a pace that can continue and where the gross margin implication is there?

Yeah, I think, Suzy, this is a gross margin. It really depends on product combination, right? It really depends on how much a portion of the high margin product versus no margin product. So I still think our margin still will be 40, 45%. And the reason for that is we're still driving our product. And for all other, like a cleaning staff, advance the single wafer versus also the other bench. And for the ECP, we have also front-end and back-end also too. So let's put it this way. I think we're still probably, we think our range is still 40, 45. And maybe until later, our PCVD and the track become mature, especially when we're spending to the international market, right? That might be changing. But for the near future, I think 40, 45 is pretty much good range for our product portfolio now.

Okay.

All right. Thanks, David. And then you related the full year expectation. Did the customer delays that you saw in 1Q, are those normalizing, recovering as expected right now? Do you expect any lingering impact in the 23 numbers around COVID or U.S. geopolitical challenges in China?

Yeah, there's a certain delay, right? And I think that both have some delay from their advanced nodes and also some delay for their mature nodes too. However, I think those are... delay their shipment we think it still will be probably happen you know either you know something happens to end of this year maybe something we have maybe next year also I want to see that is we see also other new customer coming right so looking to hold this year we see our shipment is still record high you know it's a real promising and however those their revenue will come from most new customer right so they're So that's the reason we still maintain our revenue as we projected, and we'll probably by second quarter later, we'll have a more clear picture, and then we'll start to possibly changing based on the new readout for next six months or beyond.

Okay. That's very helpful, David.

Thank you, guys.

Thanks, Suji.

Thank you. One moment for our next question. And our next question comes from the line of Charlie Chan from Morgan Stanley. Your question, please.

Hi, David. Hi, Mark. Good evening or good morning. So my first question is still about your first quarter revenue. I'm wondering what is kind of an unexpected factor, right, because we all know there's a Chinese New Year, there's COVID policy, but I'm just wondering, you know, what kind of the unexpected events? Because I feel like, you know, in terms of the full year target, your quarterly run rate should be like 90 to 100 million US dollars. But it seems like, you know, it is kind of like a minor shortfall. Can you give us more explanation on that?

Yeah, let me say something, Mark, and more. Actually, China, first quarter always lower, right? And obviously, it's China's new year. And this year, most especially, there's COVID relaxing, which impacts our operation and also our supply chain, too. So I look at the first quarter, it's still a pretty good quarter compared with a year ago, right? A year ago, even worse. I know that. But I look at the second quarter, obviously, it will be strong. And we see the third and fourth quarter even strong and strong, right? So that's why we still say, hey, first quarter result, it's natural and normal. And we see more of a growth in the next three quarters.

Yeah, Charlie, the only thing, what I'd add is if you looked at last year, maybe the first half of the year was about, and typically first half of the year is at 35 to 40%, and then the second half of the year, the remainder. So this year, the first half would be in the 35%, that sort of similar range with the back half, the rest. We talked a few quarters ago when the restrictions on the advanced nodes first hit. We are continuing to see a pause as the overall supply chain and our customers adapt to comply with the rules. That's impacting the first half as well.

Okay. That pause of the shipping to That is something that, you know, we didn't fully capture. Is that a fair interpretation?

No, I think we captured that. Yeah, I mean, that was, you know, we had talked about that, you know, towards the end of last year. And so, you know, that was anticipated. Yeah.

Yeah, well, I'll just say there's some delay or there's shimmy, right? And for a certain customer, which that probably also, and, you know, give us minor impact for also their revenue in Q1 too. But those are achievements maybe we think, you know, maybe resume, right, in the Q4 or Q3 timeline, but we don't know yet. It depends on the market going, right? So that's some, I call it not fully clear at this moment.

Okay. Okay. Yeah. I mean, you know, sorry, sorry for, for, you know, asking, uh, all those details because I feel like companies are running well, uh, but share price didn't, uh, perform. Uh, so I thought, uh, you should, uh, because of the, the first quarter revenue show fall. Um, but that's, uh, that's, uh, that's all clear now. And, uh, the second question actually relates to the first, first one. Um, so if you put a little bit, uh, a middle long-term perspective, right? I mean, the opportunity for China now more depends on, you know, power-saving analog EVM market, as you just shared. So I'm wondering, just in terms of the claiming tool in terms of percentage of CapEx, can you give us some comparison between the mature nodes versus the leading edge? For example, if I assume cleaning is 10% of the mature nodes and 5% of leading energy, is that the right way to think about the opportunity?

Yeah, I will say that still we see the 28, 9, and 45, someone is still major mature nodes driving, right? And we definitely see that people are spending for their power devices, which are almost like 60, 80 nanos, right, devices for those power devices. So I want to say in the future, like the next year, one year, two year, we see a lot of fab building to production, you know, these power devices. And, you know, so we see that as two major driving, 2008 and 45, and also, you know, power devices. But looking at the real tool, I should say, 28nano is 80% of the Canadian tool. But 45 above, and also including the power devices, probably 80% is the other bench. It's the reverse. And our product portfolio is both cover both applications. So I should say, obviously, I see a lot of demand for all the bench and the people moving 45 and also their power devices. analog devices. So we see that the market continue to grow, which is the older bench, by the way, we're just bringing the market two, three years ago. So we see that as another driving force for our revenue growth.

Okay, thanks. And my last one is about your supply chain and also link down facility. So you just mentioned that the long-term growth margin may have upside given you know, the PECVD and TRAC contribution. But how about Lingang? I remember in your previous earning call you said Lingang can help you to improve the gross margin. Is that still the case?

Yeah, I think they're obviously, you know, even in PECVD, they have a high margin product, also, you know, kind of a low margin product, right, including TRAC2. So we're probably balanced, you know, our customer and also our product portfolio. And this moment, I still say maintain 40, 45% is our range. And I said, unless, until we are really have a high margin and a high quality product be proving in the market, which can be, you know, beyond 45. So this is the moment I want to stay and maintain our gross margin 40, 45, right? That's the, right there, you know, near future our gross margin.

But how about Lingang? Lingang, bigger scale.

Lingang, I think we'll definitely, we'll probably start production at the end of this year. And also, they will add more automation for our assembly, for our production. As long run, we see Lingang will definitely add more value, right? Improve our gross margins. But in this year, one year, two year, I don't know, really. It's really have the real because it's a fab running smoothly and around the full scale. So, you know, as a long run, definitely improve, right? Short run, you know, you add some more of a cost maybe. But I don't think much, not much, you know, point difference, right?

I see. I see. Okay. Thanks, David and Mark. That's all I have for now. Thank you.

Thank you.

Thank you. One moment for our next question. And our next question comes from the line of Christian Swab from Craig Hallam. Your question, please.

Great. Thanks for taking my questions, and congratulations on a continued extremely strong revenue growth outlook versus WFE. I'm wondering, number one, your thoughts. There's rumors in the marketplace that, You know, CXMT is going to do a large IPO who's historically been, you know, a customer of yours that could bring in many billions of dollars. If that does occur, you know, should we think of that as something very positive for you over time?

Yeah, I think so. So we see they're continuing to grow.

And obviously they're also one of our major customer and we have a product cleaning and all kinds of, I call it a cleaning tool and being evaluated also in production for CXMP plus also copper plating, including future or bring even in our furnace, even PECVD down the road. So we see that CXMP one of the major driving force for future revenue.

Okay, fantastic. And then, you know, as far as the total available market, you know, that you guys have talked about, you know, getting to a billion dollars worth of business just in mainland China and then the rest of the world with upside. I mean, we've got our first evaluation tool in Europe that you've talked about. and a local service team that's going in, you know, you just announced, you know, that you have a local service team, you know, in Oregon, you know, obviously next to Intel, very large U.S. manufacturer. At what point, you know, what would you have to see, you know, to start including the rest of the world, which is, you know, 10X the size of China for, you know, long-term, you know, revenue objective.

Yeah, I think this moment, I still say we're still major sales also from China, right? It's clear right now. However, we do see our differential product, you know, obviously cleaning, even plus our plating, and even in the future, we believe our furnace and also PECVD we're getting to the outside China, right? Actually working with the customer in Korea, actively for the multi-product and for the rest of the world, including Taiwan, US, and also Europe. And this moment primarily is Canadian, and we see also some people interest, customer interest are cover plating too. As time moving on, and as I said, our partnership more in the global market, and we'll see more of opportunity for people buying not only our, you know, Maxonic cleaning, but by also rest of the cleaning tool and plus the copper feeding tool, right? So I know the market grow outside mainland China still in a process in a way, but we think eventually with our differential product, we should break through other major customer in the outside China. At long run, I still ACM targeting our half revenue come from mainland China, of revenue comes from outside mainland China. And that's our strategic goal to grow ACN to be their major player in this, you know, world market.

Fabulous. Thank you for that clarity. And then I think it was last conference call, you know, there seems to be, you know, Applied Materials is talking about, you know, everybody's seeing strength in China, right? Applied Materials, you guys, LAM, anybody who's got a presence there. is seeing tremendous strength. But I think, you know, the consumption and production closing of the gap, I think, you know, you mentioned, I think it was last quarter that, you know, in the mature node slash power, et cetera, you know, that it would probably take, you know, at least three years to potentially close the gap. Did I remember that correctly?

Yeah, obviously we see that mature node

hi operator i think we lost david's audio sorry i guess i was halfway sorry maybe i can hear me now yeah yeah we can hear you now maybe start over david for uh christian's question was about uh the gap of Chinese semiconductor production versus consumption. Yeah.

Yeah. Okay. I see that they're always demand for their, you know, mature nodes, you know, 28 to 45. It's a, you know, there's still gap between their consumption rate versus, you know, major or minor fabricated in China, right? That gap will gradually, you know, echo reduce as the more fast build up and more important. I see that also this electric vehicle driving more demand, new demand come out and for their, for the China market. We see that another new driving force for the 28, 45, and also the power devices. So that's probably two driving forces. One is the new demand. Another one will reduce the gap between the production made in China versus the consumption rate.

Great. No other questions. Thanks, guys.

Thank you. Thank you. One moment for our next question. And our next question comes from the line of Mark Miller from Benchmark. Your question, please.

Thank you for the question. Just was wondering if you could give us an impression or what you're estimating. You had the sale, the purchase order for the SAPS tools from Europe. You're setting up support for US customer in Oregon. In terms of your sales projections for this year, what percent do you think will come from outside of China?

Well, Mark, it's very hard to give you precisely, right? And we're working, you know, very closely with the major customer. We also continue to increase our investment, right, in our sales marketing team and service team in China. I think we're still in a market exploration and I call it a stage. I think we'll have to be, you know, get an initial product, qualify, then get a repeat order. get a multiple order right then you get maybe other new pro i mean other product getting into so i still see that it'll take time and uh so you're looking up i think it still will be next few years majority still come from mainland china market but we see their uh market growth work including korea you know u.s taiwan and europe at this moment it's very hard to give you you know percentage versus a year right really depends on how we progress the are successfully making the sales and service effort outside of mainland China.

A number of semi-firms have done very well supplying EV manufacturers in China. I'm just wondering, you mentioned that it's an opportunity for you. I'm just wondering, could you also kind of give me an impression of what percent of sales this year are related to EV sales?

I'll give you a precise number. But I can say we see a fuel production line is planning in the building process or in the expanding process for this real EV market, right? Which is including power devices, analog, and also they're aiming for their automobile market, too. So it's a clear trend in the China FAB, and they're very and just be also they try to get in or prepare for growth or even a market in China.

Thank you.

Thank you. As a reminder, if you have a question at this time, please press star 11 on your telephone. One moment for our next question. Our next question comes from the line of Donnie from Numera. Your question, please.

Hi, David and Mark, can you hear me?

Yes.

Hey, David, congrats on the strong first quarter result. First question is regarding to your product mix in the first quarter. So cleaning tool, the percentage of cleaning tool declined quite significant year on year, which means the cleaning tool progress is pretty strong. But previously, I think your target is like the wafer cleaning still accounted for a very big portion of this year's sales. But the first quarter looks like it has been shrinking a lot. So are you changing your target this year? And should we expect more non-wafer cleaning tools sales contribution significantly improved this year? And how this will have the impact to the gross margin? Thank you.

yeah well actually the first quarter i look in the you know detail product mixing right and like you said you know our cleaning tool is is lower than 70 right 65 but i look in real forecast this year we think that 65 probably is not a whole year number i still say probably our you know cleaning will stay probably 70 range and this year is still major our cleaning and the reason i say that is we see other uh you know our uh the bench you know growing you know pretty uh quickly and also there's also demand for single wave of communion too so i should still say probably 70 percent is a whole year our range obviously i can say you know furnace and stack wall and they you know i call their uh electroplating or tool uh but that ratio i think probably 70 is the right right right portion not a 65 percent okay

Got it. And just to follow up, so for the ECP and furnace, et cetera, tools, are the major customers similar to the wafer cleaning tools, or they are maybe different categories?

Pretty much, I should say, obviously, copper plating is more like we're in both, right, front end and back end. And actually, copper plating we sell so far, you know, $28 a month is major. People still buy $45. Even some power devices also buy copper plating, too. So, plus, also you can see our, you know, our advanced packaging, right? The only thing is the carbon plating. So we still say carbon plating is still continuing to grow. And for the, you know, for the coming year and, you know, for the coming next year, right? It's a growing market. And also, plus, we see that our furnace has been expanding customer and multiple customer right now. And so we see that it can be another driving force for our non-convenient product category.

Understood. And my second question is regarding to the customers, right? So for the leading NAND makers in China, are you still seeing they are expanding the capacity or they are now more like to do some more qualification on the, you know, domestic equipment production line and the incremental capacity expansion maybe need to wait until all the domestic equipment, maybe like small production line qualification being passed and to continue the expansion. And for the Hynix, recently there is an industry report mentioned about that Hynix is considering to extend Wuxi Fab to increase some legacy nodes capacity. So are you seeing any signs of Hynix going to expand the capacity in China again?

We have not seen that sign, right? Obviously, you can see that, you know, DRAM market continue really suffer, right? Pricing, whatever. We have not heard anything about, like you said, you know, Hynix expanding, you know, Wushifap at this moment.

Okay. How about the NAND maker?

uh the leading name maker in china well because we're obviously we have something delayed shaman right you know whatever reason they couldn't their expansion and in terms of when they can restarting and expanding we really don't know right it's really i mean we we don't know what they explain this moment and uh and this one obviously they have the real field order missing puzzle and we don't know yet you know when they can they can finish that

Understood. So just a follow-up. So for the strong first quarter sales and as well as Schumann, who are the major drivers behind the strong sales? Thank you. That's my last question.

Oh, wow. Okay. It's very hard to give you the precisely, right? Normally we give the customer percentage and I think yearly base, right, Mark? We give them half a year or yearly base.

Just once a year, at the end of the year.

Once a year. Yeah, I try to give you the quarter at this moment. And obviously, as I said, I can see this is still existing customer. And also, last year, we saw some new customers become mature and repeat the order, right? And some new customers were also facing a strong demand but cannot count on the revenue in Q1, right? That's one of the issues. I want to see that. That's major. There is still, you know, existing customer is a major contribution.

Understood. Okay. Thank you, Toby and Mark.

Thank you. Thank you. One moment for our next question. And our next question is a follow-up question from Mark Miller from Benchmark.

Thank you for the follow-up. I'm just wondering, what was stock-based compensation? Was it around $2 million during the quarter?

Yeah, Mark, it's $2.1 million for the quarter.

Thank you.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to David Wong for any further remarks.

Okay, thank you, operator, and thank you all for participation on today's call and for your support. Before we close, Gary is going to mention our upcoming investor resistance events. Gary, please.

Hey, thanks, David. So on May 31st, we'll present at the 20th Annual Craig Hallam Institutional Investor Conference in Minneapolis. Attendance of the conference is invitation only for clients of Craig Hallam. please contact them to register and request one-on-one meetings with us. So this concludes the call. You may all now disconnect.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.