What Management Said
Read the full Q2 2025 transcript ↗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. Hello, everyone, and welcome to ACM Research Second Quarter Earnings Conference Call. We delivered another quarter of good results with strong sequential growth in both revenue and achievement, reflecting continued progress across our expanding product portfolio. We also continue to make progress with new platforms, including Track, PECVD, and panel-level packaging tools, which represent important long-term growth drivers.
I'm happy to announce that we have received repeat orders for the new Ultra C wb wet bench tool with our proprietary N2 bubbling technology. 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. 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. For the second quarter of 2025, we delivered revenue of $215 million, up 25% sequential and 6% year-over-year.
Revenue from single wafer cleaning, Tahoe, and semi-critical cleaning tools grew 1% and represents 74.2% of total revenue. Revenue from ECP, furnace, and other technologies grew 23% and represents 22% of total revenue. We are seeing a strong momentum for our ECP tool in advanced packaging, driven by demand for both front and back-end plating systems. We are also seeing growth interest in our new Ultra ECP APP panel-level horizontal plating system, as the industry shifts from wafer to panel-level packaging.
What went well
- Revenue rose to $215.4 million, up 6% year over year and up 25% sequentially, with total shipments of $206 million rebounding 31% sequentially from $157 million in Q1 and returning to positive year-over-year growth versus $202 million in the prior-year quarter.
- Gross margin of 48.7% exceeded the top end of the company's 42%-48% long-term target range and improved from 48.2% a year earlier.
- ACM raised its long-term revenue targets: total long-term revenue to $4 billion (from $3 billion), mainland-China revenue to $2.5 billion (from $1.5 billion), on a raised China WFE market assumption of $40 billion (from $30 billion) and higher cleaning and plating China share targets of 60% (from 55%).
- ACM Shanghai received CSRC approval for a follow-on offering to raise up to about $620 million, strengthening the balance sheet to accelerate R&D and capacity plans while demonstrating the value of ACM's majority ownership stake.
- New and differentiated products gained traction - repeat orders for the upgraded Ultra C wet-bench tool with proprietary N2 bubbling technology, continued high-temperature SPM particle-performance progress, ECP momentum (the 1,500th plating chamber shipped), and growing interest in the horizontal panel-level plating platform.
- Ended the quarter with net cash of $205.8 million and a strong balance sheet supporting continued strategic raw-material purchases and investment.
What went wrong
- Revenue growth of 6% year over year trailed the company's ~15% full-year midpoint target, as some customer-requested shipments shifted between quarters and revenue can be lumpy.
- Shipment growth was only slightly positive year over year (+2%), and management acknowledged a large second-half catch-up would be required for full-year shipments to grow against a very strong 2024 (which had risen 63%).
- Operating income fell 20% to $41.5 million and operating margin compressed to 19.3% from 25.6%, as operating expenses jumped 38.8% on stepped-up R&D (now planned at 14%-16% of sales) and sales-and-marketing investment.
- ACM Shanghai's China-GAAP results (revenue ~$270 million, adjusted net income ~$62 million) were well above ACM Research's U.S.-GAAP figures, reflecting a larger-than-usual revenue-recognition timing gap that can reverse in later quarters.
- New-product revenue (Track, PECVD, panel-level packaging) remained minimal in 2025, with meaningful contribution not expected until 2026 and beyond; export-control and supply-chain risk on U.S.-sourced components required strategic pre-buying of inventory.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Full-year 2025 revenue | FY2025 | Maintained $850M-$950M (implies ~15% year-over-year growth at the midpoint) |
| Gross margin | FY2025 | 42%-48% long-term target range reaffirmed (Q2 came in above range at 48.7%) |
| R&D expense | FY2025 | Raised to 14%-16% of sales on continued proprietary R&D investment |
| Sales & marketing / G&A | FY2025 | S&M ~8% of sales; G&A 5%-6% of sales |
| Effective tax rate | FY2025 | ~10% |
| Capital expenditures | FY2025 | About $70 million |
| Long-term revenue target | Long term | Raised to $4 billion ($2.5B China + $1.5B rest of world) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Revenue | +6% to $215.4M | Up 25% sequentially; growth led by single-wafer/Tahoe/semi-critical cleaning (74% of revenue) and ECP/furnace, though below the full-year growth rate on shipment timing. |
| Total shipments | +2% to $206M | Strong sequential rebound from $157M in Q1; positive year-over-year again after a very strong 2024 comparison. |
| Gross margin | +50 bps to 48.7% | Above the 42%-48% target range on product mix; management cautions margin varies with volume, mix and currency. |
| Operating income | -20% to $41.5M | Operating expenses up 38.8% on higher R&D and sales/marketing spend; operating margin fell to 19.3% from 25.6%. |
| Net income attributable to ACM Research | -2% to $36.8M | Diluted EPS $0.54 versus $0.55; income tax expense fell to $1.9M from $9.3M. |
| Cleaning (single-wafer, Tahoe, semi-critical) | +1% | 74.2% of revenue; steady traction for SPM and Tahoe as ACM gains cleaning share. |
| ECP, furnace and other | +23% | 22% of revenue; strong ECP momentum in advanced packaging and building furnace pipeline. |
| Advanced packaging (ex-ECP) | +20% | 6% of revenue; progress on Track and PECVD platforms and panel-level packaging. |
| Net cash | - | $205.8M at quarter end versus $271.0M at end of Q1, ahead of the ACM Shanghai capital raise. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Raised long-term targets and China WFE view | $3B total, $30B China WFE, 55% cleaning/plating share | $4B total ($2.5B China + $1.5B ROW), $40B China WFE assumption, 60% cleaning and plating share targets; furnace/PECVD/Track share targets held at 15%/15%/10%. | — |
| ACM Shanghai capital raise | - | CSRC approved a follow-on to raise up to ~$620 million (selling <10% of shares) to accelerate R&D and capacity as majority shareholder. | — |
| Differentiated technology and IP | - | Management stressed customers choose ACM for performance not price, citing N2 bubbling, high-temperature SPM nozzle design, Tahoe/SAPS/TEBO/Maxonic and horizontal panel plating, and strong IP protection in China with no observed local infringement. | — |
| Panel-level packaging | - | ACM positions its horizontal plating (vs vertical) as a unique enabler for large-area AI-chip panel packaging (310x310 and larger), with <5% uniformity targeting <3%, and won a 3D InCites technology award. | — |
| Global expansion (Korea, U.S., Taiwan) | - | Engaging key U.S. and Korean customers on cleaning and copper plating; building an Oregon R&D/demo lab and planning U.S. production by mid-2026 to serve global customers and mitigate tariffs. | — |
| Supply-chain and export controls | - | Made strategic component purchases and is qualifying multi-source and China-domestic suppliers to mitigate risk that U.S.-sourced parts are unavailable. | — |
Q&A Summary
Charles Shi (Needham) asked whether full-year shipments can still grow given only slight year-over-year growth in Q2 and a large second-half catch-up.
David Wang said 2024 shipments were very strong (up 63%), the second half of 2025 will be much stronger than the first half, and shipment growth for the year is still achievable; Q3 is very strong and Q4 has slots to fill.
Charles Shi (Needham) asked about the strategic inventory purchases and U.S. subsystem-level export-control risk.
Mark McKechnie and David Wang said, with U.S. parts unavailable as of January 1, ACM is multi-sourcing from other regions and qualifying China-domestic suppliers; the strategic buys reflect both a solid shipment forecast and risk mitigation, and more purchasing may occur in Q3.
Mark Miller (Benchmark) asked why long-term borrowings rose sharply.
McKechnie and Lisa Feng said ACM stepped up long-term borrowing in the first half partly due to controls on using China capital-raise proceeds, and because China deposit rates exceed borrowing rates, using leverage maximizes return.
Matt Cook (Pro Tanto) asked why ACM Shanghai's China-GAAP results (~$270M revenue, ~$62M adjusted net income) were much better than ACM Research's.
McKechnie said shipments are identical; the difference is revenue recognition timing (China GAAP recognizes on installation versus U.S. GAAP ASC 606), plus China capitalizes some R&D and ACM Research carries incremental public-company and global sales/marketing costs; the gap was larger this quarter and should even out over the long run.
Charles Shi (Needham) asked whether ACM is extrapolating a peak China WFE number in raising its $40 billion assumption.
David Wang said the target is a five-year view, not next year; China WFE is already ~30-35% of the global market with strong memory, logic and IGBT demand, and combined with new products and the ACM Shanghai raise, $40 billion is a reasonable long-term assumption.
Jimmy Hang (JPMorgan) asked about 2025/2026 China WFE and how ACM can grow if the market is flat.
David Wang said forecasts vary and 2026 is hard to predict (maybe +/-10%), but new differentiated products - PECVD, the 300 WPH KrF Track, panel-level packaging and ultra-high-temperature furnace - plus IP protection let ACM grow and hold margin even in a flat China WFE market.
Sujeeva De Silva (Roth) asked about customer traction outside China.
David Wang said ACM continues to work closely with key Korea and U.S. customers on differentiated cleaning and copper plating with encouraging results, is exploring new customers in the U.S. and Taiwan (strong panel-level packaging interest), and the Oregon R&D/manufacturing base strengthens its global position and mitigates tariffs.
More on ACM Research, Inc.
Reported 2025-08-06 · figures from the ACM Research, Inc. Q2 2025 earnings call.
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