What Management Said
Read the full Q3 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 on slide 13. Revenue grew 32% year-over-year to a new quarterly record, reflecting broader demand across our innovation product portfolio. In September, our ACM Shanghai subsidiary completed its second capital raising on stock market raising net proceed approximately $623 million. ACM has the technology, the customers, the capacity and global reach and now additional capital to pursue our mission to become a key supplier to major global semiconductor producers.
We believe this is the right combination to grow our business and maintain our gross margin targets. For the third quarter of 2025 we delivered revenue of $269 million, up 32% year-over-year. Revenue from single wafer cleaning, Tahoe, and semi-critical cleaning tool grew 13% and represent 68% of total revenue. We expect this new platform, especially SPM, to contribute more revenue in 2026 and beyond.
We remain confident in our target for 60% market share in China market and we expect higher growth rates for cleaning next year and beyond. Revenue for ECP, furnace, and other technology grew 73% and represent 22% of total revenue. We had a record revenue quarter for ECP Front End tool, which represent about 60% of the mix for this group. This group, including our MAPP ECP3D and ECP G3 production, all of which grew from last year.
What went well
- Revenue grew 32% year over year to a new quarterly record of $269.2 million, reflecting broader demand across ACM's product portfolio as AI and data-center investment accelerate wafer-fab equipment spending.
- ACM Shanghai completed its second capital raise on the STAR Market, raising net proceeds of approximately $623 million and materially strengthening the balance sheet.
- Net cash surged to $811 million (about $12 per share) from $205.8 million a quarter earlier, and cash/time-deposit balances rose to about $1.1 billion.
- ECP, furnace and other technologies revenue grew 73% (22% of revenue) on a record ECP front-end quarter, and advanced-packaging revenue (ex-ECP) was up 231% (10% of revenue).
- Product milestones advanced the roadmap: first high-throughput KrF Track tool shipped, high-temperature SPM reached single-digit particle counts at 19 nm, the first panel-level plating tool was slated to ship in Q4, and the Lingang production and R&D center reached full operation with capacity for up to $3 billion of annual output.
- Traditional single-wafer cleaning grew 13% (68% of revenue), and management sees an incremental China opportunity of more than $1 billion for newer cleaning products (SPM, Tahoe, supercritical CO2).
What went wrong
- Gross margin fell to 42.1% (low end of the 42%-48% target) from 51.6% a year earlier, hurt by roughly 200 bps from an unfavorable mix of smaller, lower-margin front-end tools and roughly 300 bps from higher inventory provisions and other adjustments.
- Operating income declined 35% to $36.5 million and operating margin compressed to 13.6% from 27.5% as operating expenses rose 56.3% (R&D 14%, S&M 7.7%, G&A 6.9% of sales).
- Net income attributable to ACM Research fell to $24.8 million from $42.4 million, with diluted EPS of $0.36 versus $0.63.
- Shipments were only slightly positive year over year (+0.7% to $263.1 million); management expected Q4 shipments to be down from Q3 and full-year shipments to decline year over year for the first time in many years, on a tough 2024 comparison, customer push-outs into Q1 2026 and parts shortages.
- ACM Research's ownership of ACM Shanghai declined to 74.6% from 81.1% following the subsidiary's capital raise, increasing minority interest.
- New-product lines (SPM, furnace, panel-level packaging, PECVD, Track) still contributed little revenue in 2025, with the meaningful ramp deferred to 2026.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Full-year 2025 revenue | FY2025 | Narrowed to $875M-$925M (implies ~15% year-over-year growth at the midpoint) |
| Gross margin | Ongoing | 42%-48% target model reaffirmed despite the Q3 dip to 42.1% |
| Operating expenses | FY2025 | R&D 14%-16% of sales; S&M ~8%; G&A ~6% |
| Effective tax rate | FY2025 | Lowered to 7%-8% |
| Capital expenditures | FY2025 | About $60M-$70M |
| New-product revenue | 2026 | SPM, furnace, panel-level packaging and PECVD expected to begin contributing more meaningfully in 2026 |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Revenue | +32% to $269.2M | Record quarter on broad demand; led by ECP/front-end and advanced packaging, with traditional cleaning up 13%. |
| Gross margin | -950 bps to 42.1% | ~200 bps from a mix of smaller low-margin front-end tools and ~300 bps from higher inventory provisions/adjustments; low end of the target model. |
| Operating income | -35% to $36.5M | Operating expenses up 56.3%; operating margin fell to 13.6% from 27.5%. |
| Net income attributable to ACM Research | -42% to $24.8M | Diluted EPS $0.36 versus $0.63; lower gross margin and higher opex, partly offset by a lower tax rate. |
| Shipments | +0.7% to $263.1M | Up 28% sequentially but flat year over year against a strong 2024; some deliveries pushed to Q1 2026 and parts shortages. |
| Cleaning (single-wafer, Tahoe, semi-critical) | +13% | 68% of revenue; growth mainly from traditional cleaning, with newer lines still small. |
| ECP, furnace and other | +73% | 22% of revenue; record ECP front-end quarter (~60% of the group mix), furnace still small. |
| Advanced packaging (ex-ECP) | +231% | 10% of revenue; small advanced-packaging tools (~$0.5-1.0M each) shipped to several customers, including two new U.S. customers. |
| Net cash | - | $811M (~$12/share) versus $205.8M in Q2, boosted by the ~$623M net ACM Shanghai capital raise. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ACM Shanghai second capital raise | CSRC approval in Q2 | Completed, raising ~$623 million net; proceeds to fund the Lingang mini-line, global capacity and accelerated R&D across cleaning, plating, furnace, PECVD, Track and panel-level packaging. | — |
| Gross-margin pressure | Above target range in Q2 | Fell to 42.1% on low-margin front-end tool mix and higher inventory provisions (mostly raw-material aging plus some finished-goods write-downs); management calls it temporary and holds the 42%-48% target. | — |
| Shipment inflection | Growth expected | Q4 shipments to be down sequentially and full-year shipments down year over year for the first time in years, on a tough 2024 compare, Q1-2026 customer push-outs and parts shortages; new products expected to drive a 2026 rebound. | — |
| Panel-level packaging | Award-winning horizontal plating | First panel-level plating tool to ship in Q4; strong global engagement (Taiwan, U.S., China) as horizontal plating enables large-area AI-chip packaging (310x310 and 515x510). | — |
| Innovation vs. price in China | Differentiated strategy | Management argued Chinese customers still demand best performance (e.g., 19 nm SPM particle control) and that ACM's strong China/global IP prevents copying, supporting share gains and margins despite many new local entrants. | — |
| SK Hynix and global customers | - | Hynix is a long-run customer engaged across multiple cleaning, plating and new products; ACM's Korea and Shanghai teams co-develop tools, and two new U.S. advanced-packaging customers received tools in Q3. | — |
Q&A Summary
Suji De Silva (Roth) asked about shipment visibility over the next four quarters.
David Wang cited customer requests to delay some shipments into Q1 2026 and parts shortages that prevented completing some final testing, but said those products should ship in Q1 and 2026 shipments should continue to grow; Mark McKechnie added some newer products slipped from 2025 into 2026.
Charles Shi (Needham) asked whether the shipment softness reflects the end market and to quantify Q4 and full-year shipments.
McKechnie said it is more customer push-outs and parts shortages than an end-market call; Q4 shipments will likely be down from Q3 and full-year shipments down year over year against a strong 2024, with a rebound expected in the first half of 2026 as SPM, furnace and panel-level packaging kick in.
Charles Shi (Needham) asked about the ~300 bps inventory write-down and whether it was internal or at customer sites.
McKechnie said a big piece was a formula-driven provision on aging raw materials, plus some finished-goods write-downs that were mostly internal tools; ACM is not disclosing the internal-versus-customer split.
Charles Shi (Needham) asked whether ACM's innovation focus risks missing near-term China demand for tools that merely match the global baseline.
David Wang said even Chinese customers demand best performance as geometries shrink (e.g., single-digit particles at 19 nm SPM), ACM's patented technology cannot be copied, and AI-driven demand favors new technology over low price, supporting share gains in and outside China.
Mark Miller (Benchmark) asked about PECVD prospects for next year and an update on SK Hynix.
David Wang clarified ACM makes PECVD (not MOCVD), differentiated by a three-chuck-per-chamber design; a couple of tools ship this quarter with revenue expected in 2026 including in Korea and globally. Hynix is a long-run customer engaged across cleaning (SAPS, bevel), plating and new products, with co-development in Korea.
Suji De Silva (Roth) asked about the panel-tool opportunity and ramp into AI/HBM memory packaging.
David Wang said panel packaging is very hot (especially with a major Taiwan customer), plating is the key enabling step, and ACM is first to offer horizontal (not vertical) copper plating; the first panel plating tool ships in Q4 and ACM is engaging multiple customers in Taiwan, the U.S. and mainland China.
More on ACM Research, Inc.
Reported 2025-11-05 · figures from the ACM Research, Inc. Q3 2025 earnings call.
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