Third-quarter 2026 earnings call, November 5, 2026

Guidance raise is large, and the order book backs it up

ACM Research raised its full-year 2026 revenue outlook to $1.24 billion to $1.28 billion, up 38% to 42% year over year, from a prior range of $1.125 billion to $1.175 billion. The midpoint moves up by roughly $120 million, or about 10%, a sizable step for a company that is already three quarters into the year. Management also reiterated that shipments will grow faster than revenue for 2026, which points to a continued build in tools sitting at customer sites awaiting acceptance.

The order data explain the confidence. Backlog at September 29 stood at $2.5 billion, up 88% from a year earlier, and year-to-date orders through September 30 were up 147%. An analyst from Daiwa noted that first-half order growth was about 100%, which implies the third quarter was considerably stronger. CEO David Wang said the backlog skews toward newer products. Management declined to split order growth between market expansion and share gains, with CFO Mark McKechnie saying only that "we think we're growing a lot faster than the market, both in terms of orders, revenue and shipments."

Third-quarter revenue was $367.7 million, up 36.6%, and shipments were $343.5 million, up 30.6%. Management guided fourth-quarter shipments above the third-quarter level. McKechnie noted that this contrasts with prior years, when the fourth quarter was often "flat to down." Non-GAAP EPS was $0.55 versus $0.41, and operating margin rose to 18.0% from 13.6%, helped by operating expenses growing just 12.7% against revenue growth of 36.6%.

Panel-level plating moves from concept toward commercialization

The most notable new product disclosure was the October shipment of a 310x310 millimeter panel-level horizontal electroplating tool to a customer in Asia. Management believes this is the first shipment of its kind in the world. It follows an earlier shipment of a larger 515x510 millimeter system to a Mainland China customer. Wang called the technology "a game changer for the industry" and said development began more than five years ago, adding that "the market is now coming to us."

The tool handles copper, nickel, tin, silver and gold plating, includes high-speed plating, and supports copper pillars exceeding 300 microns with good within-die uniformity. ACM says it is engaged with multiple customers across regions and panel sizes, and also offers companion wet-processing tools for panel-level packaging. Management expects panel-level plating, along with the Track and PECVD platforms, to move from evaluation to commercialization beginning in 2027. That is an expectation rather than a booking, and revenue from these lines is described as early stage.

Cleaning returns to growth, with SPM as the swing product

Single-wafer cleaning, Tahoe and semi-critical cleaning revenue was $210.7 million, up 16.1%, the first clear return to growth the company has highlighted in this category. The slowest-growing segment still accounts for the largest share of sales, which makes the cleaning rebound important for the overall story. ACM attributed it to additional cleaning steps, faster technology iteration through its Lingang Mini line, and broader adoption of its single-wafer SPM tool across multiple customers.

Management estimates SPM tools represent about one-third of the total cleaning equipment market and said its product cycle is "just now beginning to contribute." The company remains on track to ship more than 20 single-wafer SPM tools in 2026. A new 170-degree C hot SPM version with sulfuric acid recycling achieved a 70% recycle rate, which ACM says cuts consumption by about 400 tons per tool annually. The company reiterated a long-term target of 60% share of China's cleaning equipment market. Supercritical CO2 cleaning is also gaining traction, with a smaller chamber that management says reduces CO2 usage by 30% versus competing solutions and improves drying performance.

Plating and advanced packaging drive the fastest growth

Revenue from ECP, furnace and other technologies rose 82.9% to $109.5 million, or 29.8% of sales, driven by front-end wafer-level and back-end advanced packaging electroplating. Furnace remains a small contributor, but management expects a "more meaningful contribution" in 2027 as tools complete customer acceptance. McKechnie said many furnaces are under evaluation, and the company's range now covers LPCVD, oxidation, thermal and plasma-enhanced ALD and high-temperature annealing aimed at IGBT applications.

Advanced packaging revenue, excluding ECP but including service and spares, grew 71.2% to $47.5 million, or 12.9% of sales. Management highlighted active deployments in Singapore and North America. For Track, ACM is working with a key customer, including configurations integrated with lithography scanners, and expects additional shipments in 2027 with revenue contribution building through 2027 and into 2028.

International expansion remains small relative to China

ACM expects more than 20 tools installed at roughly 10 customers across 5 countries outside Mainland China by year-end. The Oregon facility, which includes a Class 100 demonstration cleanroom, is set to open officially soon, while Korea and Singapore are adding manufacturing, engineering and service resources. Management would not give a 2027 mix target. McKechnie did frame the scale: for global customers to reach 10% of revenue at current levels, "it's $120 million plus." The implication is that international revenue is below that threshold today and that China's growth is large enough to dilute the mix even as overseas business expands.

Gross margin slips; working capital deserves attention

Gross margin was 41.6% versus 42.1% a year earlier, below the bottom of the 42% to 48% long-term target range. Management cited product mix, foreign exchange and inventory provisions. It described provisions as within a normal range after a difficult second half of 2025, and expects them to stay at similar levels. Fourth-quarter gross margin is guided to improve "modestly." Wang argued that differentiated, patent-protected products should sustain margins, saying competitors' tools, even from top-tier vendors, are "still below us" in performance. That claim is untested by the reported margin trend, which has yet to move into the target band even as newer products ramp.

The balance sheet shows the cost of scaling. Net inventory reached $851.2 million, including $465.5 million of raw materials and $263.1 million of finished goods, the latter mostly first tools under evaluation at customer sites plus stock at ACM facilities. Operating cash flow was negative $70.4 million, and capex was $25.2 million, with full-year capex still guided to about $175 million. McKechnie said the company deliberately used cash to grow raw materials ahead of production, and net cash remains $0.9 billion on $1.28 billion of gross cash. Even so, a large inventory base tied to unaccepted evaluation tools carries execution and provisioning risk if qualification timelines slip.

Capacity and supply chain

The second Lingang building is being staffed and brought into production, roughly doubling floor space. Together the two buildings can support up to $3 billion of annual output, against 2026 revenue guidance of about $1.26 billion at the midpoint and a long-term revenue target of $4 billion. Wang acknowledged supply chain strain, saying "probably everybody has the same problem since it's increasing too fast." ACM gives suppliers 6- to 12-month forecasts and is qualifying second and third sources where primary vendors cannot expand quickly enough. McKechnie said ACM does not intend to be the party holding up customers.

China WFE outlook

Wang said China's wafer fab equipment market remains in a growth stage, supported by logic and memory capacity additions and demand tied to data centers, automobiles and robotics. He argued that China's technology build-out lags global markets by a few years, and that while global spending may peak in 2028 or 2029, China's peak will arrive one to two years later. This underpins management's confidence in the market over the next five years. It is a view from a company whose growth depends on that spending, and it leaves the business exposed to any change in domestic capital expenditure or trade policy.