ACM Research, Inc. (NASDAQ:ACMR) Q3 2023 Earnings Call Transcript

David Wang: Yes, I mean, well I think we’re close to, there’s a two right, one is real R&D or evaluation tool, another one is just like, repeat order tool, so for the R&D two year right, two-year finish and by the second tool I think we’re very close to final qualification and we call their sign off for our revenue, we are very close.

Charles Shi: Thanks, David. I will hop back to the line.

David Wang: Great, thanks.

Operator: [Operator Instructions]. We will take our next question. And the question comes from the line of Suji Desilva from Roth Capital Partners. Please go ahead. Your line is open.

Suji Desilva: Hi, David, hi Mark. Congrats on the progress here. Mark, on the gross margin you said about improving gross margin for specific product lines. Any color there, it seems like you’re trending above the target. Consistently, just want to get any update there.

Mark McKechnie: Yes, Suji, we won’t really break it out by product line, but we had a good mix of differentiated products and some cost downs. We also got a little bit of tailwind from foreign exchange. Obviously, we’re pleased with that level, but we’re not changing our 40% to 45% target at this point.

Suji Desilva: Okay, thanks. And then I noticed you mentioned AI, GPT chips in the prepared remarks, David. Clearly, there’s import export controls on some of those products for U.S. semis vendors. Is there a burgeoning China AI chip market that the foundries are servicing there? Can you give us a sense of how big that might be versus the global AI chip market because that could be a very exciting opportunity for you guys.

David Wang: Yes, well I didn’t really mean that advanced packaging, most of that operating, right. I mean, this is the real product we’re talking and we’re talking about not only China market, we also talk about the global market too. So in general, it’s that right and in China, I still say most of our tool is for mature product and this moment for the packaging. So, as I said, we’re really looking for our tool to be spread out not only in China market, which is the moment you’ll know, also looking for our cover on the long side of operating, we’ll be selling in the global market, which is more of the bank, AI and also GPT.

Suji Desilva: Okay, appreciate that color, David. And last question I have is on the vacuum cleaning tool. You mentioned chiplets. That’s the first time I’ve heard you guys talk about chiplets. Is that a new growth driver area or is that really just an element of the advanced packaging functionality that you have? I was curious there if that’s an incremental opportunity.

David Wang: Yes, we see there’s a new product, new requirement come out, right? You look at this, all the advanced packaging, all the chiplets, when they have a package finishing, there’s also flags inside the gap. So those kind of gaps are hard to clean and those are that. So with our vacuum type of cleaning, you can really either chemical or the water getting into the small gap because of vacuum status. That’s really made clean very well. So we see that market growth. And again, there’s a lot of this chiplet going on in the whole industry. And for both our setting, the mature nodes or the advanced nodes. So we’re looking for this product, to be add another, I call it revenue booster for our product portfolio.

Suji Desilva: Okay, great. Appreciate the color. Thanks guys.

David Wang: Thanks, Suji.