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

Charlie Chan: Thank you. Hi, David, and Mark. Good evening and good morning. So first of all, my question is about your potential exposure to the high end memory, meaning the high with memory. We do — you have some memory customers. So can you explain to us, first of all, what kind of a tool you potentially can supply to the memory customers for the HPM? And secondly, what is the progress for this adoption for your tool for HPM module? Thanks.

David Wang: Yes, okay, Charlie, I really cannot tell too detail, right? But we have a multiple product and working for this customer for the HPM, right? And this is a real new growing market. And as I said, we have more than two products working with them. Also, we’re trying to spreading also other products in our portfolio. And they’re working more closely with their R&D group and to qualify our advanced technology for that. So I’d say we put all the effort in Korea and we have now 150 engineers R&D in the Korea and we really become local supporting for the customers and get a closer and faster response to the customer. So we’re building continuously and building our production capacity and to meet the requirements and not only for the Korean customer probably also for the all the customer internationally. So that’s the three effort we’re putting right now.

Charlie Chan: Okay, I understand. Thanks David. The next question is for Mark. I know you explained the OpEx trend, but it’s still a very, very big jump even those are new R&D expense a lot of the customer activity, but still pretty big jump versus a previous quarter. So how much of those increases like one of post-COVID travel? And should we use that $45 million a quarter as the new norm for the future OpEx?

Mark McKechnie: Yes, thanks for that on the OpEx question. So we’re obviously investing in the R&D side and our sales and marketing. We’ve got public companies, two public stocks. So I think the quick answer to the new level, yes, I mean I would actually expect the OpEx to be — maybe even up a little bit next quarter. There is, as you know, a lot of our expenses are in renminbi. Third quarter, remnant B actually strengthened on the quarter, so that moved things a little bit. But in general, we would anticipate the OpEx to be at — that’s about the right new run rate, Charlie.

Charlie Chan: Okay. And so can we justify that increased OpEx was a very strong shipment because we calculate the OpEx ratio, OpEx by revenue, right? It seems like pretty high OpEx ratio. So is that more like correlates with the shipment, because it seems like shipment into, third quarter and fourth quarter are pretty strong?

Mark McKechnie: There’s a correlation there, Charlie. I don’t — we don’t break it out specifically, but of course there’s a correlation to our shipping level in our OpEx.

Charlie Chan: Okay. Yes, and also such as to the R&D, do you think that the peak spending of your R&D, I know you’re already introduced to your new thing. So how much more aid for us, R&D you need to invest in for the future product line or current product lines?

David Wang: Let me cover that. I mean maybe Mark can add more. The R&D is major, if you look two years ago or three years ago, general R&D spending above 12% right. As we especially after IPO in China aftermarket and so we start boosting on assets, starting good investment into new product right, you want to see number one and plus PECVD and also Track. And we look at their next two, three years at the very big opportunity for us to grabbing the market in China and plus with our new innovation or proprietary technology building to the owners, PECVD and also Track. And we were also getting to the market in international. Especially, I want to mention the Track. The Track system is going very well in the customer qualification.