ACM Research, Inc.

Good morning and thank you for standing by. Welcome to the ACM Research Second 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ujia Zai, Managing Director of the Blue Shirt Group. Please go ahead.

Thank you, operator. Good morning, everyone. Thank you for joining us on today's call to discuss second quarter 2023 results. We released results before the US market opened today. The release is available on our website, as well as from Newswire Services. There is also a supplemental slide deck posted to the investor portion of our website that we will reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wang, our CFO, Mark McKechnie, and Lisa Tsang, 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, and 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 the risk factors and elsewhere in ACM's filings with the SEC. 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 includes stock-based compensation and unrealized gain, loss, and trading securities. Our GAAP results in reconciliations between GAAP and non-GAAP amounts. You should refer to our earnings release, which is posted on the IR section of our website in slide 12. With that, let me now turn the call over to David Wang, who will begin with slide three. David?

Thanks, Yujia. Hello, everyone, and welcome to ACM's second quarter 2023 earnings conference call. Please turn to slide three. For the second quarter, revenue was $144.6 million. upper 39 percent from the same quarter last year. Sheemans were 153 million upper 37 percent from the same quarter last year. Gross margin was 47.6 percent and operating margin was 22.4 percent. We achieved record revenue and EPS as our operating and industrial supply chain largely returned to a new normal following several years of COVID-related disruption. This result was driven by strong, mature notes sent in by our China customer. Market share gained under penetration of a new product, a new customer. Let me touch on each of this, beginning with mature note investment in China. Last year, following US-China trade restrictions, some industrial analysts predict China's WFE market will be declined dramatically. At that time, we predict a fairly quicker shift to spending on mature notes in China. After I expected the pulse as industrial adjusted to the new export regulations, our prediction appear to be playing out as we are now seeing broader sign that China is indeed speed up its capacity expansion in mature nodes. This is driven by the substantial gap between China's mature nodes capacity and their market consumption. We see continuing investment in 28nano and 45nano and above from under fab capacity. We also see the ramp-up of EV production in China as a driver of China-based investment in both power devices and other 28 and 45 nanodevices. This creates a good timing for us that we believe is still in early stage as China intensify effort to boost its domestic semiconductor capacities capabilities. We believe we are well positioned to benefit and further increase our market share. due to our strong market position, leading differentiated technology, and a broad multi-product portfolio. Moving to product, please turn to slide four. Single-weaver cleaning, Tahoe, and semi-critical cleaning grow 55%. In the last few years, we introduced and began ramping our semi-critical product line, including AutoBench Then last year, we introduced bevel etcher on high temperature STM tools. Over the past quarter, we introduced super critical CO2 dry. Now, ACM has one of the broadest cleaning product portfolio in the industry, covering nearly 90% of all cleaning process staff. We believe this product portfolio will play a key role among mature nodes, development in China, and advance notes in our international effort going forward. ECP, Furnace, and other technologies declined 7% due to quarterly fluctuation. However, for the first six months of 2023, ECP, Furnace, and other technology grow 40% year-over-year. Growth in this category was driven primarily by ECP product cycle with some contribution from Furnace. Our higher temperature anneal and LPCVD furnace, including sitting nitride and poly and ARD, have expanded to multiple customer and are under evaluation. Advanced packaging includes DCP. Service and spell grow 14% in Q2 and 58% year-over-date. This category includes a range of packaging tools including coder, developer, scrubber, PR sweeper, and wet etcher, and service and spare parts. ACM is the only company that offers both a full set of wet tools and advanced plating tools. We believe advanced packaging will become more important as the industry looks for packaging innovations, such as 2.5D and 3D in the puzzle, and find out to drive the higher performance for new applications such as AI and GPT. Finish up on products. We continue to make good progress on self-efforts with our new track and PCVD platform. We're in active discussion with our key customer, and we are planning to deliver more evaluation tools this year. Similar to our leaning, plating, and furnace product line, our track and PCVD platform have a proprietary technology that we believe we're making them winner with major customer both in China and outside China. Moving on to customer, please turn to slide five. We continue to make progress on customer both inside China and internationally. In China, we believe ACM tools are now used by nearly all of the semiconductor manufacturers. Our sales and service team are working to expand their deployment of each of our major product line across our growing customer base. In addition to our current customer, we are also seeing a good number of well-founded new entrants. Our team has done a good job of getting good traction for our product with these customers. As this, our new customer, This will be reflected in our shipment this year until customer acceptance at a later date. Also, as some of you may have heard, on July 21, 2023, Huahong Semiconductor, a greater strategic customer, announced the pricing of its Shanghai stock market IPO and expected to start trading soon. The total proceeds were 21.2 billion RMB, or approximately 3 billion US dollars. In the US, evaluation at our key customer is progressing well, and we remain optimistic for qualification later this year. In Europe, we announced an order for our first evaluation tool from a major semiconductor manufacturer in the first quarter of this year. The tool is planned for delivery in early Q4, and we are beginning to build a local service team to support effort. To support our growing initiatives, we continue making progress on facility expansion in China and other regions. Please turn to slide six. In China, construction of a lingang production and R&D center is nearly completed and expected to begin initial production later this year. In Korea, as noted in prior call, we have increased our commitment in this region. We believe a strong commitment to Korea will improve our relationship with our key customer SK Hynix and others. In Q1 of this year, we completed the purchasing of a land in a high-tech area outside Incheon as a site for new R&D and production centers. In the U.S., as noted last 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 a reminder, for 2023, we expect to spend about $100 million capex. This includes continual investment in our lingang facility, remodeling for new headquarters for ACM Shanghai, and our other investment in Korea and the US. I will now provide our outlook for the full year 2023. Please turn to slide nine. We are reaffirming our 2023 revenue outlook to be in the range of 515 to 585 million US dollars. The range of outlook reflects among other things, management's current assessment of the continuing impact from the international trade policy together with the various expected spending scenario of a key customer, supply chain constraint, and the timing of acceptance for the first tool on evaluation in the field. Now let me turn the call over to our CFO, Mark, who will review in detail our second quarter results. Mark, please.