ACM Research, Inc.

Good day, and thank you for standing by. Welcome to the ACM Research fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll 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 first speaker today, Stephen Correo, Managing Director of the Blue Shirt Group. Please go ahead. Great.

Thank you. Good day, everyone. Thank you for joining us to discuss fourth quarter and fiscal year 2023 results, which we released before the U.S. market opened today. The release is available on our website as well as from Newswire Services. There is also a supplemental slide deck posted to the Investor section of our website that we will reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wong, our CFO, Mark McKechnie, and Lisa Fang, 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 guidance. 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 the call will be on a non-GAAP basis, which excludes stock-based compensation and an unrealized gain and loss on short-term investments. 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 also on slide 13 and 14. With that, let me now turn the call over to David Wong, who will begin with slide three. David?

Thanks, Stephen. Hello, everyone, and welcome to ACM Research, first quarter and the fiscal year 2023 earning conference call. Please turn to slide three. I'm pleased with our fourth quarter results, which conclude a strong year. For the fourth quarter 2023, we delivered $170 million in revenue, upper 57%. For the year, we delivered $558 million in revenue, upper 43%. Profitability was good for both the fourth quarter and the full year with operating margin of 21% and 22% respectively. We ended the year with just over $300 million of cash and time deposit. For Siemens, the Siemens for the fourth quarter were $140 million down 29% year to year. Shipments for the full year were $59.7 million, upper 11%. On our third quarter call, we know the delay of shipment to several customers due in part to adjustment in their fab build-outs. While we don't normally share our expectation for shipment, I will provide more color in this case. We view the low shipments for the first quarter to be a one-quarter event. We expect to deliver nearly all of the delayed tool during the year 2024. We expect the first quarter shipment to be much higher than the first quarter levels, even with a normal Chinese New Year shutdown. And we expect the total shipment to grow faster than revenue for the full year 2024. Now I will discuss the key growth drivers, both for their market and specific to the ACM. According to a third party estimate, the overall mainland China WFE market grow around 15%. If we exclude isography tool, which more than double in China in 2023, we believe the rest of the market grow for China WFE was close to 5%. In any case, we attribute ASEAN higher growth rate of 43%. Two, one, a leading product portfolio for the China market, including AutoBench Clean and our ECB tool for the front end and packaging. Two, continual spending and market share gain at our current customer. Three, broader participation with new customer in China. And four, good execution by our production and service team. I will now provide details on product. Please turn to slide 4. Revenue from single wafer cleaning, Tahoe, and semi-critical cleaning products grew 48% in 2023 and represented 72% of total revenue. HCM offers what we believe in the industry's most comprehensive Canadian portfolio. We support nearly 90% of our all Canadian process staff for memory and logic devices. This coverage positions us as a key partner for both China mature nodes development and international markets. At the high end, we believe our flagship SAPs, Tahoe and Tebow single wafer Canadian products deliver technical feature not available from any of our competition. We entered into the 30 millimeter auto bench cleaning market several years ago is proving to be a significant winner for the mature node spending. We have delivered more than 70 auto bench tools today and noted very strong contribution in 2023 with good profitability. By our estimate, ACM became the largest China-based supplier for AutoBench in 2023. For Tahoe, we made a good progress during the year. Our engineering team modified technical features to meet production requirements for the key customers. I am pleased to report ACM has been qualified for mass production as several customers, and we expect a strong ramp with a good orders for delivery in the first half of 2024. This is good for our customers and good for their environment as our proprietary Tahoe design significantly reduces the consumption of sulfuric acid. We continue to innovate in our cleaning and look forward to additional market share gains in 2024 when we ramp up several key new products. including a bevel etcher cleaning tool, high temperature SPM single wafer cleaning tool, and the supercritical CO2 dry cleaning tool. Revenue from ECP furnace and other technology grow 33% in 2023 and representing 19% of total revenue. We hit an important milestone for this category in 2023 with more than $100 million in revenue. ECP demonstrated strong performance. I want to note that our first two shears grew even higher than 33%. We are taking a good share for overall plating with a particularly strong growth in front-end process in 2023. For Furnace, 2023 was a customer development year with many evaluations underway. We expect an even broader customer footprint and good revenue contribution in 2024. We also made great progress with our further ARD product development. In summary, we expect another year of strong growth in this product category in 2024. Revenue for advanced packaging which excludes ECP but includes service and spell grew 31.5% in 2023. and represent 9% of total revenue. This category includes a range of packaging tools, including coater, developer, scrubber, PR sweeper, and wet etchers, and service and spare parts. Last year, we also introduced ultra-CV vacuum cleaning tools, and we continue to explore new products and technology to participate in the next generation of advanced packaging. We believe ACM is the only company in the world that offers a full set of web tools, polishing, and plating for advanced packaging. We expect advanced packaging to become more important as the industry looks for packaging innovations such as 2.5D and 3D in the puzzle and fan-out. These are critical for high-performance computing applications such as AI, which is seeing increasing demand globally. Finishing up on product, we made a good progress with our new track and PECVD platform. We are engaged in active dialogue with our key customer and intend to release additional evaluation tools this year. As with our cleaning, plating, and furnace product line, our track and PECVD platform both the proprietary technology that position them as a successful choice for major customer globally, including both in and outside China. We are making a good progress in the evaluation of our track tool. We are confident that the proprietary architecture of our track tool is well suited for the high throughput required in the next generation of the software tools. We are engaged with multiple customers for our PCVD tool. We're expecting significant progress for PCVD product development and evaluation in 2024. Turn to slide five for our product SAM. We estimate our product portfolio address a $16 billion market opportunity. Our business is now primarily driven by three major product groups. cleaning, plating, and advanced packaging. We anticipate continued growth in this category and look to incremental revenue contribution from our newer products, starting with the furnace in 2024, followed by track and DCVD in 2025. Preceding to slide six, we remain committed to our median term $1 billion revenue target. We believe we can achieve this with range of the market share by product in the mainland China alone. We have achieved scale with the differential product that have been proven in China market, and we have put the resource in place to address international markets. To be clear, long term, we see an additional $1 billion plus opportunity from international markets. Moving on to the customer, please turn to slide seven. In China, we are market leader in cleaning and cleaning tool with sales to nearly every semiconductor manufacturers. Our sales and service team are now achieving deeper adoption of our products across this customer base. Beyond establishing the payer, market growth is being driven by an influx of well-founded new entrants. For 2023, we had three 10% customer. SMIC was our top customer at 18% of the sale. Cyan was our second largest at 15%. And 6MT was our third at 13%. We had a stronger contribution from second and third tier semiconductor manufacturers, including power, analog, CMOS, image sensor, and current power semiconductors and other devices. and some new customers. Total second and third tier players represent about 30% of our 2023 sales. On the international front, I'm pleased to report that a large U.S. manufacturer qualifies its first SAPs cleaning tool for revenue in the first quarter. We also plan to deliver an Ultra-CD backside cleaning and a bevel edge tool to this customer. in the second quarter of 2024. This demonstrates a deepening relationship, which we believe can lead to production orders. Furthermore, this enhances ACM brand and position us to attract new opportunities with other major global customers. Beyond the US, we installed our first evaluation tool, Ultra-C Saps 5 cleaning tool and a major Europe-based global semiconductor manufacturers in the fourth quarter. To support growth, we made progress on our facility expansion in China and other regions. Please turn to slide eight. In China, construction of our Lingam production and R&D center is nearly complete. We expect initial production in middle 2024. In Korea, We are making progress with the key customer as noted in the prior call. We have increased our commitment to support our objectives to address global market. We now have more than 150 employees in Korea with their facility including sales and administration, small scale production, and the development lab with a clean room to support internal R&D and wait for demos for the customer evaluation. and we are making initial plans to building a new factory on the land we purchased early last year. We believe a strong commitment to Korea. We're improving our relationship with our key Korean customer. Our resources in Korea are providing another basis to support international customers in the US, Europe, and other part of Asia. In the US, we leased a facility Oregon last year to add to our service support and demonstration capability for R&D and custom activity in the U.S. and Europe. I will now provide our outlook for the full year 2024. Please turn to slide nine. In early January, we introduced our 2024 revenue outlook in a range of 650 to $725 million. This implying 23% year-over-year growth at a better point. We are reiterating this outlook today. We believe the China equipment market will grow in 2024. We expect our full-year revenue growth for 2024 to outpace both China growth and global growth rates. Now let me turn the call Over to our CFO, Mark, who will review details of our first quarter and full-year results. Mark, please.