Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the ACM Research Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to Mr. Steven Pelayo, Managing Director of the Blueshirt Group. Steven, please go ahead.
Steven C. Pelayo: Good day, everyone. Thank you for joining us to discuss second quarter 2026 results, which we released before the U.S. market opened today. The release is available on our website as well as from Newswire services. There is also a supplemental slide deck posted to the Investors section of our website that we will reference during our prepared remarks. On the call with me today are CEO, Dr. David Wong; our CFO, Mark McKechnie; and Lisa Feng, our CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates or other information that might be considered forward-looking. These forward-looking statements represent ACM's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under Risk Factors and elsewhere in ACM's filings with the Securities and Exchange Commission. Please do not place undue reliance on these forward-looking statements, which reflect ACM's opinions only as of the date of this call. ACM is not obliged to update you on any revisions to these forward-looking statements. Certain financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation and unrealized gains and losses on short-term investments. 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. Also, unless otherwise noted, the following figures refer to second quarter 2026 and comparisons are with the second quarter 2025. So with that, I will now turn the call over to David Wang. David?
David Wang: Thanks, Steven. Hello, everyone, and welcome to ACM's Second Quarter 2026 Earnings Conference Call. The June quarter marked another period of strong execution for ACM Research. Revenue and shipments increased 36% year-over-year. Revenue growth was led by our ECP and advanced packaging product category, both of which increased more than 150% year-over-year. This strong performance reflects the progress we are making in transforming ACM into a broader multiproduct semiconductor equipment company. In June of this year, third-party research, Frost and Sullivan published a report called the Global and China Semiconductor Equipment Market Research. They now estimate the global semiconductor equipment market exceeded $140 billion in 2025 and will grow to more than $200 billion by 2029. They also estimate the Mainland China market exceeding $50 billion in 2025 and will grow to more than $80 billion in 2029. To fund our global operations, we have recently strengthened our balance sheet. ACM now has more than $1 billion of net cash globally. This includes approximately $300 million in the U.S. following our $150 million registered direct offering completed this past May. This financial strength provides a solid foundation to support our mission to become a key supplier of world-class capital equipment for the top major product of semiconductors. We believe AI is driving one of the most significant technology transition the semiconductor industry has experienced in many years. As chip complexity and chip size continue to increase, traditional wafer-level packaging approaching and reaching practical limit, creating demand for entire new manufacture technology across advanced packaging. ACM predicted a shift from wafer level to panel-level packaging more than 5 years ago and began investing early in horizontal panel level plating and other panel level wet process technology. We believe the market is now coming to us and has begun to validate those investments. Today, I'm pleased to announce that we have received order from 2 advanced packaging customers for our panel-level horizontal plating tool addressing both 510 x 515-millimeter and 310 x 310-millimeter panel size. One is the production order from existing customer in Mainland China and the second one is the evaluation system for a new customer in Asia. We believe ACM will be among the first company to deliver horizontal panel level plating system to multiple customers across multiple regions. Our proprietary horizontal plating architecture is a key differentiator, delivering strong superior plating uniformity while addressing the demand process requirement of next-generation AI packaging. This order are important milestone for what we believe could become a significant long-term growth opportunity. I'm pleased to report today that our order book has been quite strong. For the first half of 2026, orders increased 105% year-over-year. This is a mix across all product categories with a heavier emphasis on some of our new products. As with the prior years, ACM Shanghai plans to release backlog figure as of the September 30 in early October. Thanks to good execution by our operations team, we continue to expect shipment across each of our category to grow faster than revenue. We remain confident in our growth target for 2026 and beyond. For 2026, we see a healthy backdrop for China WFE as our customers continue to scale their production capacity. We expect an extra boost for our business from a few product cycle, including our SPM and furnace to enable us to outgrow the China WFE. Beyond this year, we estimate that our newer platform, including Track, PECVD and horizontal panel level plating will proceed for evaluating phase into a commercialization phase, resulting in production orders and drive our growth for years to come. In summary, we see 2026 as a big year for new product and another year of solid growth for ACM. Now on to our business results. Please turn to Slide 3. Revenue for the second quarter was $293 million, up 36%. Shipment for the second quarter was $282 million, up 36%. Gross margin was 46% and operating profit margin was about 19%. And we ended the quarter with a gross cash of $1.4 billion and a net cash of $1.0 billion. Now I will provide detail on product. Please turn to Slide 4. Revenue from single-wafer cleaning, [indiscernible] and semi-critical cleaning tool was $133 million, down 14% and represent 45% of revenue. We believe ACM has built industrial broadest cleaning product portfolio. Our products in this category, including SAPS, TEBO, Tahoe, backside clean, solvent clean, [indiscernible], scrubber and wet etcher and our proprietary single-wafer hard STM technology. In May, we present our proprietary hard STM cleaning technology in 2026 Surface Preparation and Cleaning Conference. This system demonstrates fewer than 15 particles performance at 15 nanoparticle sites. Our proprietary nozzle design prevents acid mist and chemical splashing outside chamber during the hot SCM process. And therefore, does not require periodical [indiscernible] water chamber outside clean. For customers, this means less maintenance, better uptime and more stable particle performance. We believe this represents the best performance in the industry. Our SPM platform is well suited for the advanced logic and memory, where cleaning requirements are becoming more demanding. Today, we also announced new capability for Ultra-C Tahoe, expanding it into a broader wet process platform. Tahoe is built on our patented hybrid architecture that combine batch SPM process and single wafer cleaning. We have added wet etching and monitor wafer reclaim application to the Tahoe platform. This integrates multiple process that had previously required a separate stand-alone tool into one Tahoe platform. The expanded platform has been adopted by multiple leading semiconductor manufacturers. ACM will continue to drive world-class process performance with a focus on ESG benefit to helping make advanced semiconductor manufacturer more efficient and more stable, sustainable. We have shipped a handful of single-wafer SPM tool in the first half of this year, and we are on track to ship more than in the second half of this year for more than 20 by end of this year. As a reminder, we estimate that SPM represents about 1/3 of the total cleaning market. We have had very little revenue today for the SPM tool. And with this major product cycle, we expect our overall cleaning revenue to rebound as our customers qualify the first tool and we grow our repeat shipment. Revenue from ECP, furnace and other technology grew 168% and represent 44% of the revenue mix. Growth was driven by momentum on both front and back-end plating tool. In logic device, we have benefited from larger die size and a steady increase from higher interconnector layer counts. In memory device, we have benefit as HBM packaging demands higher level of DRAM stacking and there -- and thus more than more copper process steps. During the quarter, we shipped our 2,000th electroplating chamber. This follows our 500th chamber shipment in 2022 and our 1,500th chamber shipment in 2025. This shows how quickly our installed base has grown and how broadly customers are adopting our technology in volume production. We had a larger contribution from furnace in the quarter, but it's still just a small part of our overall revenue mix. We continue to improve the technology breakthrough across key applications, including LPCVD, [indiscernible] oxation, thermal ALD, PLD and ultra-high temperature anneal. Revenue from advanced packaging, which excludes [ SAP ], but including service and parts was up 153%, this including coaters, developer, etcher, sweeper, scrubber and vacuum cleaning tool, supporting a broad range of advanced packaging applications. We are particularly pleased with our global progress here with active deployment in Singapore and North America across a range of these tools. We are making good progress with our new Track and PECVD platform. We remain confident that we have the right approach for our PECVD and Track platform, and we have made significant progress in 2026. Our proprietary 1-chamber 3 trucks architecture for PECVD performed well in our Lingang Mini Lab early this year. We shipped second tool to our new customer in Q1, and we anticipate this qualification by year-end. The story is similar to our track platform. Indeed, our high-throughput KIF track tool is progressing through customer evaluation, and we anticipate production qualification by year-end. We see strong interest in both stand-alone tools and configure to integrate with scanners. For both PECVD and Track, we are hard at work with the development effort with several key customers. We are optimistic that our tool performance can meet or exceed our customer requirements and result in production order in the near future. Please turn to Slide 5. The quarter, we have updated our market assumption with the latest WFE data from the report one report I mentioned earlier. This result in a $1 billion increase to ACM for global SAM of about $22 billion. Please turn to Slide 6. There are no changing to our long-term revenue target of $4 billion. It's still based on market share assumption for each of our product category, which gets us to about $2.5 billion from Mainland China and $1.5 billion from the global market. We adjusted some of our assumption based on China WFE now and about 50 billion. We continue to assuming a robust WFE environment over the next several years for the global market. The magnitude and the timing of our growth will be impacted by the overall spending trajectory of our customer and our market share gains. Next, let me provide an update on our production facility. First, on Lingang, we turn to Slide 8. The first building is in volume production, and we plan to open the second building later this year. Together, the 2 facility can support up to $3 billion in annual output. With our strong order book, we are fortunately to be ready to scale the second facility. Next, our Oregon facility, please turn to Slide 9. In Oregon, we remain on track for a U.S.-based demo center with multiple tool in world-class cleaning room environment starting later this year. This is important for our global customer, and we believe it will help us to secure production orders. Our global business is beginning to scale. As we said last quarter, we expect to have more than 20 tools installed at customer site outside Mainland China by the end of 2026. This included about 10 customers in 5 countries. It's clear that leading global chip makers can benefit from our innovative product. Although it is still early days for our global deployment, our engagements are growing, and we are confident that our global sales and service team will deliver good results. Now I will providing our outlook for full year 2026. Please turn to Slide 10. Based on our first half performance and improved visibility, we have reached the midpoint of our full year revenue guidance. We now expect full year 2026 revenue of $1.125 billion to $1.175 billion versus the prior range of $1.08 billion to $1.175 billion. This new range implies 25% to 30% year-over-year growth. We also expect shipment growing growth to outpace revenue growth in 2026. Now let me turn the call over to our CFO, Mark, who will review details of our second quarter results.
Mark McKechnie: Thank you, David, and good day, everyone. Please turn to Slide 11. Unless I note otherwise, I'll refer to non-GAAP financial measures, which excludes stock-based compensation, unrealized gain loss on short-term investments. Reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. Also, unless otherwise noted, the following figures refer to the second quarter of 2026 and comparisons are with the second quarter of 2025. I'll now provide financial highlights. Revenue was $292.9 million, up 36%. Revenue for single-wafer cleaning, Tahoe and semi-critical cleaning was $133.0 million, down 14.2% and represented 45.4% of sales. As David noted, this included very little contribution from some of our newer products. As normal, SPM will be reflected first in our shipments, followed by revenue contribution in later quarters. Revenue for ECP front-end and packaging, furnace and other technologies was $128.5 million, up 167.7% and represented 43.9% of sales. Revenue for advanced packaging, excluding ECP, services and spares was $31.4 million, up 153.3% and represented 10.7% of sales. We saw a good improvement in our customer concentration. During the first half of 2026, our 10% customer mix has improved to just 1 customer at 12.7% of our revenue mix. This compares to three 10% customers representing 49.9% of our mix for the first half of 2025. While this can vary by period, we consider the reduced concentration as positive as it represents a broadening of our customer base. Total shipments were $281.5 million, up 36.4%. 2026, we expect shipment growth to outpace revenue growth. Gross margin was 46.0% versus 48.7%. Gross margin was above the midpoint of our long-term target model. We maintain our 42% to 48% long-term target range and product mix can cause fluctuations on a quarterly basis. Operating expenses were $78.5 million, up 23.9%. R&D was 13.9% of sales, sales and marketing was 7.7% and G&A was 5.2%. For 2026, we plan for R&D in the 16% to 18% range, sales and marketing in the 8% range and G&A in the 5% to 6% range. Operating income was $56.3 million versus $41.5 million. Operating margin was 19.2% as compared to 19.3%. Income tax expense was $13.5 million versus $1.9 million. For 2026, we expect our effective tax range in the 10% to 12% range. Net income attributable to ACM Research was $44.5 million versus $37.3 million. Non-GAAP net income excluded $6.6 million in stock-based compensation expense and the $69.6 million of unrealized gain on short-term investments and its effect on noncontrolling interest. Net income per diluted share was $0.61 versus $0.55. Now on to the balance sheet and cash flow items. Cash, cash equivalents, restricted cash and time deposits were $1.36 billion at the end of the second quarter. Net cash, which excludes short-term and long-term debt was $1.0 billion. This includes about $300 million of net cash on our U.S. balance sheet. Total inventory net was $783.1 million. This consisted of raw materials net at $406.1 million, work in progress net at $89.0 million, finished goods inventory net at $287.9 million, which primarily consists of first tools under evaluation at our customer sites, along with finished goods located at ACM's facilities. Cash used by operations was $6.4 million and capital expenditures were $65.4 million. For the full year 2026, we continue to expect capital expenditures of about $175 million. That concludes our prepared remarks. Now let's open the call for any questions that you may have. Operator, please go ahead.
Operator: [Operator Instructions] Our first question coming from the line of Suji Desilva with ROTH Capital.
Sujeeva De Silva: Lisa, congratulations on the progress here, great diversification going on. So it's really good to see. You got it. Yes. So David, I mean the global tools shipped to 200 is a great number. What geographies are you seeing the largest shipments today in? And maybe what geographies do you expect the best growth opportunity near term in as you scale out beyond China?
David Wang: Yes. Actually, we see there, especially I want to say first half of this year, we have almost like close to a dozen tools go to Singapore, right? One of their packaging house there. Also have a tool and running one of their foundry in Singapore, too. So we do see Singapore as an opportunity for our front-end tool and also packaging tool there. Of course, we do have a customer continue in the U.S. And as I mentioned, we're going to finish the building of our demo lab in Oregon. With that demo lab starting using, we can attract more of interest and also attention into our differentiated technology. So this way, we can provide more of our demo capability for customer in the global.
Sujeeva De Silva: Great. And then my second question is, given that you now have a significant amount of cash in the U.S., $300 million, maybe for David or perhaps Mark, what are the some of the planned use of those proceeds? Is it expanding capacity, which regions and perhaps even inorganic activity? Any color would be helpful there.
David Wang: Yes. Obviously, with this cash preparation, it show our determination, also our confidence, right, expanding the sales activity outside Mainland China. As I mentioned, our long-term goal is still $1.5 billion for the revenue outside China. That's exactly for that goal, we prepare our funding and also our activity. Those funding basically supporting our activity definitely U.S. and also Taiwan and Singapore, Asia, also the Europe, right? That's bigger opportunity. We see a lot of demand come out for those -- especially for our differential technology, cleaning, plating and also where R&D for the even new PCB and the furnace. So it's really exciting. As I mentioned, AI we are driving a lot of new demand for the innovation technology. So we believe whatever developer in Shanghai can be really spread out to benefit for all the customers globally, right? It's our goal here.
Sujeeva De Silva: Okay. That's very helpful. And then my last question. I know you guys are diversifying your customer base and you have one 10% customer focusing on global. But I'm curious in China, how levered are you to what's going on with CXMT in the DRAM market? Understanding AI is a plating play for you in other areas where you're very strong, but the DRAM effort there is growing very strongly. I'm curious how much leverage you have to that opportunity.
David Wang: Well, I really cannot comment too much detail with each customer, right? But looking at overall, you look at the Frost and Sullivan, their report, right, showed a very strong demand and WFE market growth in China, right? First of all, I want to say China is a bigger market, right, for all this application, AI including. So it's a huge market there. And therefore, they can support a lot of chip manufacturer here. In the same way, they demand a lot of WFE equipment, right? So that we see opportunity here. And with the ACM, I say we have a real multiple products in the time line, especially this year, we call our 2026 as a big year for product -- new product come out to the market. and all our PECVD furnace and track system, we started development from 2000 or 2001 or 2019. In those time line, we are really focused on their technology, focused on differentiation. So through the 4, 5 years, our R&D team are working. We've got some real exciting results. And some of them, obviously, very approaching to the top-tier performance and something we see even better than top-tier performance, right? So that's really our confidence we can -- with this new product come out, we can further sustain or increase our high growth rate and for our revenue in the market in China. Of course, those new products after qualify in the China market will be also eventually will sell to the global market. So it's a lot of exciting for next few years. So our revenue will not only come from cleaning under top of plating anymore, new product will join our revenue growth. So it's going to be a very exciting year for next few years.
Sujeeva De Silva: Congratulations to you and the team on the strong execution here.
Operator: Our next question in queue coming from the line of Charles Shi with Needham & Company.
Yu Shi: Maybe the first one, I know you don't really guide the quarter, but can you kind of walk us through how the Q3, Q4 is shaping up? You have probably a very big beat in Q1 and now in Q2. And I think if I look at the consensus estimates for Q3, Q4, those numbers probably need to come down a little bit. So wondering if the revenue timing or shipment timing has some change over the course of the last 90 days? And maybe I have a follow-up on the P&L-related items.
David Wang: Yes. As I mentioned in our script, right, we do have in the first half year, our PO receiving and there has been increased 100%, more than 100%, right? It's really indication of real demand and also a large backlog. So -- and some of those tools, obviously, we try to deliver Q3, Q4 and some of the tool probably we're waiting for probably deliver later. So now we are really trying to increase our capacity. And obviously, now the components has been -- I want to say everybody demand for components, right? So there's a little bit constraint for supply there. So we are kind of looking at Q3, Q4 revenue, I think really how we execution our order manufacturing and also how we qualify ship the deferred revenue or the tool. So I want to say we're still very positive about our projection for whole year, right? This is why we increased our low side. And now we're expecting our whole year revenue 25% to 30% range. I think we're pretty confident for this forecast.
Yu Shi: Yes. Maybe another question for Mark. Mark, I noticed that the range for SG&A as a percent of revenue kind of revised down a little bit compared with the last quarter. So I guess, I mean, based on your midpoint of your guidance, your overall OpEx may actually come in a little bit lighter than you previously expected. I wonder what is the reason for a slight OpEx cut for this year? Because I -- if I recall correctly, one of the reasons you raised the OpEx range, I think, at the beginning of the year was related to the build-out of the R&D lab, R&D center in Lingang. And wondering the OpEx savings relative to what you previously thought, is it related to some of the timing of that R&D center? And any color would be great.
Mark McKechnie: Yes. Charles, there's not a lot to read into that. I mean, R&D, we're looking at 16% to 18%. G&A I said 5% to 6% and sales and marketing around 8%. So it's really just tightening up of the estimates now that we're halfway through the year, but not a meaningful change from where we were at the beginning of the year.
Operator: Our next question coming from the line of Jimmy Huang with JPMorgan.
Jimmy Huang: Mark, congrats for the results. Can you hear me? -- so obviously, China's manufacturing capacity build is very robust and structural. You also have a very solid product portfolio for WLP and POP. Do we have any guidance or expectations for manufacturing equipment shipment growth rate for this year and next year?
David Wang: Okay. Well, we do not put a number, right, for the shipment of this year. But definitely, we also -- because of the strong, I want to say the backlog and our shipment and definitely will grow -- outgrow our revenue, right? So it will be a very strong shipment this year. Again, as I mentioned also, we're kind of short -- we see the shortage in our industry for some components. It used to be you can buy 4 months, sometimes you have to get probably longer delivery. Anyway, we're trying to managing those supply chain and make sure those components coming on time. That's maybe the one thing I want to say might impact our whole year shipment. But we still feel this year shipment is still pretty good.
Jimmy Huang: Yes, I see. So do you have any like order intake -- order intake expectation for your advanced packaging equipment for this year? And another question is that for OSAT 10K wafer capacity built for 2.5D wafer level packaging, what's ACMR content value based on your product offerings at this moment? I think some like equipment companies, they could have this kind of sharing for investors to understand your progress.
Mark McKechnie: Yes. I don't quite understand the -- maybe ask that again.
David Wang: Repeat your question again? I'm not going to lost. Can you repeat again?
Jimmy Huang: Yes, sure. I mean in OSAT wafer -- I mean for the advanced packaging capacity build such as 2.5D I mean, on the every 100 capacity build, what's the potential contribution to ACM product offering. Do we have any share on that?
Mark McKechnie: Yes. He's just looking at kind of our -- the intensity of when our customers spend on 10,000 wafers per month, how much will that drive our equipment sales? I don't think we're really get.
David Wang: I couldn't say there -- it depends on which line build, right? Maybe let's put this way, the cleaning market, right, you can see that -- I want to say the cover SAM. Cleaning market today, probably in the whole fab spending occupy 5% to 7%, depends on advanced lab or mature lab, right, fab. But you're looking really for the future, I want to say, advanced lab fab going on, cleaning become more and more important and some people even projecting continued market growth. It might be even come to 10% eventually because cleaning become more and more difficult and more of our material loss control, particle size gets more smaller. So also the drying method become maybe from the IPA to the super critical CO2 dry. So anyway, I see that market grow, number one. Second one is copper plating. It clearly, actually 4, 5 years ago, we said copper plating to be the $1.5 billion. That time, nobody really believe it, right? Now it's almost $1.5 billion already. With all the future backside of their power and HBM layer of their DRAM stacking going on. So there's a lot of [indiscernible] demand come out, right? And more important, this panel market also demand a lot of plating tool, too. So ACM is really pioneer in the panel level electroplating, right? That's a lot -- probably I want to say this is the first time ACM really stand in the top for the horizontal plating technology and market, I want to say, offering. So that really give us a bigger growth potential for this existing market. And further than that is the furnace and PECVD track, we see also a big potential there, too. So that's why I want to say ACM is a real good, exciting period and we're expecting continued growth for cleaning and copper plating and also with our new product, furnace, PECVD track them out, will further reinforce our revenue growth, right? So that's why I said the next few years, very exciting year for our growth.
Jimmy Huang: Yes. Thank you, Dr. Wang. So I think for China, I think they are building a lot of CoWoS-like 2.5D advanced packaging capacity. As far as I know, they are probably still use a lot of [ TSMC ] baseline tool vendors, including processing tools and other stuff. Are we trying to get more market shares, more qualifications here? And how is our progress in China like CoWoS-like 2.5D capacity build?
David Wang: Yes. I mean if you look at our actually plating growth rate, 156% and also our packaging tool growth also, right? It really should indication a lot of our new demand for 3D packaging, right? And the 3D packaging become more and more important for all the devices, right? So we see that growth potential here. ACM is well positioned for that with our cleaning and with our coater developer with all this PR driver, right, and also a couple of lading, right? So it's really good, I want to say, growth for the 2.5D or 3D packaging, right? Also, I want to say panel also too, right? Panel level packaging is another big one. So it's very exciting for -- I see the 3D packaging going up, which is good for our...
Jimmy Huang: Yes. I think it's quite exciting that we just announced that we have the first PLP ECP tool evaluation system shipped to a customer in Asia. And regarding the progress, when could the evaluation results come out, any probability that we could receive the first purchase order from the customers in the next maybe few quarters or the next 6 to 12 months?
David Wang: Yes. Obviously, you mentioned that the panel now is very hard, right? In all Asia, looking at Mainland China, Taiwan, Korea and even Singapore, right? It's very, very hard. And everybody believes that will be the ultimate solution for the large AI chip or the cobot, HBM, whatever packaging in large chip size. So we do see that trend. Obviously, we're well positioned for 515 x 510 with more large size as Intel probably pioneer now. Also, we're also positioned for [ 310 x 310 ] with leading by TSMC approach, right? So there's a lot of exciting. I want to say we're prepared for both markets.
Operator: [Operator Instructions] Our next question coming from the line of Christian Schwab with Craig-Hallum Capital.
Unknown Analyst: It's [ Ben Taxel ] on for Christian here. Great quarter, exciting stuff going on at ACMR. My first question is, what is -- any commentary, any initial commentary? I know it's kind of early on 2027 visibility. I get new products and strong orders. But anything else? Or what exactly should we think about for '27?
David Wang: Well, that's right...
Mark McKechnie: '26 right...
David Wang: Well, I still see that a lot of fab we see, right, in the local China is in real in a multiyear expansion, right? And clearly, this year, we see many fab open. And also, we see that there are some fab will definitely beyond 2027 and grow. As I said, probably market is here, strong, bigger, right? So we're very excited about it. Even I said this, [indiscernible] they give a report, right? By year 2029, they are in China market beyond $80 billion. Well, I mean that's really -- I'm like that number, but it's exciting, right? Anyway, I want to say it's growing in the next few years in the local market here.
Mark McKechnie: And we have, obviously, some of our new platforms that could kick in. I would also say some of the orders we get this year, we're not going to be able to support all those this year. So that will kind of flow into next year as well. So '27 is starting to shape up pretty good growth year.
David Wang: Also mentioned, we made the progress, right, with all the track system, PECVD. And we see that both products take off. And obviously, we're probably -- we will become a leading supplier -- local supplier and for the track system. I know the PECVD quite a bit competitive there. But our [indiscernible] is a unique platform, and we see the certain special big market requirement for this PECVD too. So anyway, we are both excited about this new product.
Unknown Analyst: Great. Just one other question. Any update on the Shanghai listing?
Mark McKechnie: Hong Kong, right?
Unknown Analyst: Sorry, yes. Yes, sorry.
David Wang: I say we really cannot comment too much on Hong Kong listing, right? I can only tell that the April time line we announced, we're going to do that. And that's only information I can tell you right now. Eventually, maybe sometime later in the future, we may see -- we may disclose more.
Operator: And we have a follow-up question from Jim Huang with JPMorgan.
Jimmy Huang: We talked about component shortage. There are also a lot of component price hikes. Will rising component costs impact [indiscernible] gross margin? If so, which potential quarters for? And what kind of options does your company have to pass the cost to your customers?
David Wang: Well, I mean, this is a global point, right? Looking at our supply, probably either major supply are components from Japan, right, or some in Korea. Definitely, it's a lot of growing. So there's a shortage there. We see that happen. So something we still switching to local supplier. And here, it looks better. But anyway, I want to say this is still -- looking at this year, global component supply is still tight, right? Even some mechanical parts, some sliders, even robot, for example, the components, they are to get on time. We see that really booming, right? That's why we have managed well in the second half of the year, make sure our supply catch our demand.
Mark McKechnie: Yes. There's -- really, you kind of take a look at it. I mean no change to our gross margin target, 42% to 48%. So we're comfortable where we are. We have a good amount of raw materials, right, that we have been purchasing. We stocked up on some raw materials. So what we have in stock and kind of our outlook, we don't see any significant impact on gross margin.
David Wang: We prepare certain parts at the end of last year, right, because we are predicting this year is a very heavy year. So we are certain -- our vendor did something special for us. That will help us right now.
Jimmy Huang: Yes. But the demand is very robust and the supply is quite tight. So is there any -- is it possible that we could pass through this incremental cost of rising component costs to our customers? -- it's not a key priority of your business?
David Wang: Well, it's hard to tell right now, right? Probably -- I mean, we're not raised pricing right now at this moment, right? Also, our -- I won't say our vendor supply -- not many people raising price. Some are rising, but not much. The only say that is they probably delayed shipment, right? They cannot tell you -- maybe I used to be sent in 4 months, maybe they did 6 months, that's happened, but they didn't increase our price, our key supplier, no.
Jimmy Huang: I see. And my second follow-up question is regarding our manufacturing capacity build outside of Mainland China. Are we going to build more capacity in the South or in other Asia regions if we see more international orders?
David Wang: Yes. You know that we do have our manufacture, I want to say, facility and capability in Korea, right? So that's really start to pay. And some tool we ship to the U.S. will be made actually now is made in Korea right now. And also some future tool will we ship into Taiwan and Singapore will be also made probably in Korea, too, right? As also I said, it's really more of a revenue growing in the U.S. or in other region, we can also probably propel secondary manufacturing site too. So we're really in other, I want to say, consideration and the direction.
Jimmy Huang: I see. And regarding your further funding for this kind of capacity -- manufacturing capacity expansion, would you need to dispose some stake in Shanghai or you don't consider that option?
Mark McKechnie: Yes. So I mean we're pretty comfortable with our balance sheet, right? David mentioned we have $300 million on our U.S. balance sheet. So part of that was kind of a war chest to show our customers that when we get the production orders, we can support that. And so we don't have any near-term plans to scale out of our -- any more of our Shanghai shares.
Operator: Our next question coming from the line of [indiscernible] Capital Markets.
Unknown Analyst: Congratulations on your new orders, 100% -- it's very impressive. Can I ask in terms of by segment, can you rank which one is the strongest for DRAM, HBM and logic?
Mark McKechnie: In terms of our order strength, David, you're asking. Yes, I don't -- we didn't break it out, but David, in the prepared remarks mentioned that they were across all of our customer base and across our products, a little bit stronger in some of our newer products, but we didn't break it out by end markets.
David Wang: Yes. Well, obviously, we see the strong in memory and also strong in logic, right, both.
Unknown Analyst: Okay. David. And next question is about our cash flows. It looks like we have a very strong tailwind from the industry-wise and also our new product launches going ahead. So in terms of operating cash flows and CapEx, how should we think about that?
Mark McKechnie: Yes. I think this year, on the cash flow side, we're still obviously heavily in growth mode. We're spending on our CapEx and what have you. But the whole -- the plan is in growth mode, you make these investments and then you -- we harvest those over the next several years. So this year, we'll probably burn some cash, obviously, putting capital to work on our new production facilities on our facilities outside in Oregon and what have you. But longer term, we see it, obviously, it's a positive cash flow operation.
Operator: Seeing there are no more questions in the queue. I will now turn the call back over to Steven Pelayo for closing remarks.
Steven C. Pelayo: Okay. Great. Before we conclude, I just want to give everyone a quick reminder of our upcoming investor conferences. On August 20, we will participate in the Needham Seventh Annual Virtual Semiconductor and SemiCap One-on-One Conference. On August 25, we'll present at the 2026 Jefferies Semiconductor IT Hardware and Communications Technology Conference at the Four Seasons Hotel in Chicago. On October 13, we will present at the 18th Annual CEO Summit Conference in conjunction with SEMICON West in San Francisco. Attendance at these conferences are by invitation only. For interested investors, please contact your respective sales representatives to register and schedule one-on-one meetings with the management team. With that, this concludes the call, and you may now disconnect.
Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.