Good day, ladies and gentlemen. Thank you for standing by, and welcome to the ACM Research third quarter 2022 earnings conference call. Currently, all participants are in a listen only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, we're recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to Mr. Gary Dvorchak, Managing Director of The Blueshirt Group. Mr. Dvorchak, please go ahead. Thanks, Lisa, and good morning, everyone. Thank you for joining us on today's call to discuss third quarter 2022 results. We released results before the U.S. market opened today. The release is available on our website as well as from newswire services. There's also a supplemental slide deck posted to the investor portion of our website that we'll reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wang, our CFO, Mark McKechnie, and Lisa Feng, the CFO of our operating subsidiary, ACM Shanghai. Before we continue, please turn to slide two. Let me remind you that the remarks made during this call may include predictions, estimates, and 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 of the financial results that we provide on this call will be on a non-GAAP basis, which excludes stock-based compensation and an unrealized gain or loss in trading securities. For our GAAP results and reconciliations between GAAP and non-GAAP amounts, you should refer to our earnings release, which is posted on the IR section of our website and slide 12 in the supplemental deck. With that, let me now turn the call over to David Wang, who will begin with slide three. David? Thanks, Gary. Good afternoon, everyone, and welcome to ACM's third quarter 2022 earnings conference call. I will start with the new China trade restriction issued by the U.S. Department of Commerce, Bureau of Industry and Security in October. The updated export controls cover equipment and parts subject to U.S. export controls, including items from U.S. and the activities of U.S. persons. Based on our preliminary assessment, the new policy restricts export U.S. parts for tools delivered to advanced node facility or for tools that meet certain ECCN parameters. Some of our shipments will be impacted as our tools currently have 5%-10% of the components sourced from U.S., and we produce some tools in certain ECCN categories. Let me provide more detail. First, some of our customers have advanced node facilities. Shipment to this facility may be impacted due to U.S. export restrictions. Advanced node facility is defined as building where production at their restricted technology level occurs. The policy does not apply to other customer buildings with mature nodes. However, even when they are on the same campus. Second, some ACM Shanghai products meet the parameter of a certain export control classification number or ECCN number on the Commerce Control List. Shipment of this tool may also be impacted if those tools need parts from U.S. This may include our ECP tools that specifically support cobalt metal plating, several furnace products, and one of the new platform products that we plan to introduce. It does not include our cleaning tools, most of our ECP tools, our WLP tools or other new platform products we plan to introduce. Third, the policy restricts U.S. persons from facilitating shipment and servicing products involved with advanced nodes or listed as new ECCN number. We have no U.S. employee in our Shanghai and Korea R&D teams. Therefore, the impact from the new U.S. person policy is minimal. We have, however, implemented compliance protocols concerning U.S. person involvement in facilitation, shipment, and services supporting activities. We believe the new policy will not impact shipment of ACM Shanghai tools that do not have U.S. parts or do not include restricted activity of U.S. persons. We believe that ACM Shanghai tools that are not in the restricted ECCN category can be shipped to the mature nodes, even with U.S. parts and U.S. person involvement. I will now move on third quarter highlights. Please turn to slide three. Our third quarter results were record for the company. Revenue was $134 million, up nearly 100%, driven by our flagship cleaning tools and strong growth from our new ECP and furnace products, which tripled. Shipments were $163 million compared to the $99 million last year. Gross margin was 49.3%. GAAP operating margin was 23.7%, and non-GAAP operating margin was 25.1%. We ended the quarter with $473.2 million of cash equivalents, restricted cash, and time deposit. For the first nine months of 2022, revenue grew 70%, cleaning tool grew 56%, ECP and furnace tool grew 316%, and contributed to 20% of sales. We had three 10% customers, which together accounted for over 50% of sales versus 66% mix for the same period last year. We made good progress with our initiative and a major semiconductor manufacturer outside mainland China. The evaluation of two cleaning tools in a U.S. factory of a large U.S.-based manufacturer is going well, and we are gaining traction with the potential new customers in Europe and other regions. In Q3, we launched our first ALD furnace product. ALD is one of the fastest-growing applications for manufacturing advanced nodes in memory and logic, making it a critical new capability for our furnace portfolio. We delivered our evaluation tool to a top-tier China-based foundry manufacturer and target qualification in 2023. This is the first in a series of furnace ALD tools with a product line expansion ahead. We expect our furnace ALD product to make good contribution starting next year, with ALD technology expected to represent about half of the total furnace market. Furnace ALD offers significantly higher throughput than traditional single wafer ALD tools and presents a compelling value proposition. We believe that ACM's ALD furnace with a proprietary technology can narrow the performance gap between furnace ALD and their single-wafer ALD. Next, we plan to grow our operation with investment in new facilities. Construction of our Lingang production and R&D center is in full gear, and remains on track for initial production in the middle of 2023. I also want to announce we are close to purchasing a new headquarters in Zhangjiang, Shanghai, the Silicon Valley of China. We are committed to the China market, and this new headquarters will provide stability for our employees and help us attract new talent. We are also in final stage of selecting a site to expand our R&D and production facility in South Korea. Lastly, we are on track to double our addressable market opportunity with upcoming introduction of two new product categories planned for later this year. I want to provide more thought on the impact to our future business from new U.S. restrictions. We expect a temporary pause as some customers and industry adjust to the new policy. ACM Shanghai is committed to complying with new regulation and meeting the demands of its customer base. We are actively managing our supply chain to source compliant components to ensure maximum shipment of our tools. For mature nodes, we expect a fairly quicker recovery. Most of our business has been for 28 nm and above logic devices, 96-layer or less 3D NAND, and 19 nm and above DRAM. Looking forward, we expect our China customers to continue to add or even speed up capacity as in mature nodes. This is because mature nodes made in China is much lower than China's market and consumption, and we are strongly positioned to participate in this opportunity. For advanced nodes, we remain committed to participating in that market in full compliance with the new U.S. export control. ACM is focusing more effort to bring its advanced technology to leading-edge fabs of global customers. We are making good progress with U.S. and European customers and expanding our global sales and support teams. We are also accelerating our R&D and production facility in South Korea to be close to several major semiconductor players and provide a second site to support worldwide customers. I will now provide our outlook. Please turn to slide six. As a result of new U.S. trade policy and supply chain constraints, we have lowered the upper end of our full year revenue outlook. We now expect 2022 revenue in a range of $365 million-$385 million, versus the previous range of $365 million-$405 million. The range of our company's 2022 outlook reflects, among other things, the impacts from the new U.S. trade policy, supply chain constraints, various spending scenario for the pre-production ramping of key customer, and the timing of acceptance of first tool on the evaluation in the field, and assuming stability with respect to the COVID-19 pandemic in China. Now let me turn the call over to our CFO, Mark, who will reveal details of our third quarter results. Mark, please. Thank you, David. Good day, everyone. Please turn to slide five. Unless I note otherwise, I'll refer to non-GAAP financial measures, which exclude stock-based compensation and unrealized loss on trading securities. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. I'll now provide financial highlights for the third quarter. Revenue was $133.7 million, up 99.5%. Total shipments were $163 million versus $99 million in the year ago period. Revenue for single wafer cleaning tools, which includes SAPS, TEBO, Tahoe, and semi-critical cleaning, was $99.7 million versus $49.5 million. Revenue for ECP, furnace, and other technologies was $24.5 million versus $8.2 million. Revenue for advanced packaging, excluding ECP, services and spares was $9.5 million versus $9.4 million. Gross margin was 49.4%, up from 44.5% in the prior year. This exceeded our normal expected range of 40%-45%. The increased gross margin versus the prior year period was primarily due to a higher mix of ECP, front-end and packaging, furnace and other technologies, and a positive impact due to a change in the renminbi to U.S. dollar currency exchange rate. We expect gross margin to continue to vary from period to period due to a variety of factors such as sales volume, product mix, and currency impacts. Operating expenses were $32.6 million versus $16.7 million. Higher R&D due to tools built for product development, additional engineers and other factors, together with higher sales and marketing due to promotional tools and personnel costs, contributed to the growth versus the prior year period. Operating income was $33.5 million versus operating income of $13.1 million. The large increase was due to higher gross margin and leverage in our top line. Operating margin was 25.1% compared to 19.5%. Unrealized loss on trading securities was $5.3 million. The loss reflects the change in market value in the shares of SMIC, which are owned by ACM Shanghai. The value is marked to market quarterly and is excluded from the non-GAAP results. Realized gain from sale of trading securities was $1.1 million due to the sale of a portion of SMIC shares, which generated net proceeds of $4.5 million. Other income expense net was $7.2 million. This reflects $6.4 million due to gains recognized from the impact of exchange rates on foreign currency denominated working capital transactions, versus $0.3 million i n the year ago period. Income tax expense was $10.5 million, compared to a benefit of $0.3 million in the year ago period. The effective tax rate for 2022 has increased primarily to a new requirement to capitalize and amortize previously deductible research and experimental expenses under IRS Code Section 174, which became effective on January 1st, 2022. The company's tax provision for the nine months ended September 30th, 2022 assumes the rule will not be overturned and is based on capitalization of all R&D expenses for tax purposes. Net income attributable to ACM Research was $28.2 million versus net income of $12.4 million in the year ago period. Net income per diluted share was $0.42 compared to net income per diluted share of $0.19 in Q3 of 2021. I will now review selected balance sheet items. Cash, cash equivalents, restricted cash and time deposits was $473.2 million at the end of the third quarter versus $468.9 million at the end of the second quarter. Total inventory was $327.8 million at quarter end, up from $288.1 million at the end of the last quarter. This included finished goods inventory, $109.2 million, work in process, $73.5 million, and raw material of $145.1 million. Net cash used in operations was $2.2 million. CapEx was $13.2 million due to construction in Lingang and other facilities. For the full year, we plan to spend $30 million-$35 million in total CapEx for Lingang and other facilities. There may be additional CapEx in the fourth quarter should we close on our new headquarters in Zhangjiang. That concludes our prepared remarks. Now, let's open the call for any questions that you may have. Operator, please go ahead. Thank you. If you would like to ask a question, please press star one one on your telephone. One moment while we compile the Q&A roster. At this time, the first question will be coming from Quinn Bolton of Needham & Company. Your line is open. Hey, David and Mark. Congratulations on the strong near-term shipments. Obviously, big questions I think for a lot of us on the line are, you know, the impact of the export controls, and it looks like it's certainly having an impact on the fourth quarter as you take the midpoint or the range for 2022 down. I guess a couple of questions. One, as you look at 2023, I know you haven't given 2023 guidance, but could you give us some sense what the impact of the new export controls might be on 2023? You know, is that $50 million? Is it $100 million of potential business that could be affected? Second question is just, can you give us some sense of the split between what% of revenue is affected from shipments to advanced facilities in China, you know, DRAM, the 128-layer NAND, versus how much of the impact is due to parts that contain or, sorry, tools that contain U.S. parts and/or the new tools that are affected by the ECCN classifications? Sorry for the long questions, but hopefully you get sort of what I'm driving at. Okay. Well, let me cover first one and maybe Mark add on, right? I mean, our revenue projection for the next year forecast normally give a general timeline. This moment I think it's still too early, you know, probably can't give too much detail this moment. I wanna mention there, you know, looking at this restriction, you know, actually I can say that definitely some advanced nodes production plan will probably get slowed down. However, as I mentioned in the script, China has a lot of mature nodes and chips, the consumption in the market. China import almost 60% of the global of their chips. For this mature nodes, I think would be, you know, a potential and also a lot of, you know, this electric car and also a lot of commercial product using the 20nm and 45nm, right? We see that it will be still continue to grow, even, possibly speed up, and this, potential of the fab build up. Also our technology mostly, you know, this moment will service for those nodes be proving, and we're positioned this, this kind of, market. Therefore, I would say that the mature nodes will continue to grow and, even speed up. That definitely some, you know, advanced node get to slow down. Combination put together, I still say ACM is still in a growing pace and, in the China market, right? That's how I view the market we're talking here. Then at the same time, you know, we have to also increase, you know, our two new products online, and that's probably introduced very soon and, you know, by end of this year. With the new product add on to our product portfolio, we have also multiple in the market. That will give us more of a, I call it revenue stream, probably in 2024 and for the two new product. Recent announcement is ALD of the first product. That's also keep give us revenue in 2023, 2024. We're still keep confidence in the work we have in the market in China. We have very, you know, I call the good R&D engineer and also together with the Korean engineer and also very preparation for the real, this mature nodes participation in material growth. But meanwhile, also we are trying to expanding our advanced nodes, right? In the international market, right? Especially with we have building our Korean fab and Korean R&D facility. So for that reason, I would say, we're, you know, we still can continue R&D and for the service global customer, and we want to still differentiate product and the servicing for the entire, you know, industry. Hope I give you the first question. Hey, Mark, you want to cover a second question or you want anything to add on that? Yeah, I can. No, thanks, David. Yeah, I think Quinn's second question was about what percent of our tools were going to advanced nodes. It's hard to measure, but it's a pretty small percentage, right? You know, the majority of our business has been to, you know, the more mature nodes. I think as everyone knows, you know, and ACM's in a good position, you know, where we've got some flexibilities, you know, we can ship a lot of products where others can't. We're gonna be impacted by the overall spending at our customers, right? For instance, if they can't get certain tools from other players, you know, their spending, we would expect it to pause for a bit, as David mentioned in the prepared remarks. I guess kind of bringing it all together, you know, looking out to 2023 as David noted, we'll give the guidance like we always do it at the beginning of the year. We're planning for some growth, and, you know, we'd expect there to be a bit of a pause in the first half as the industry adjusts and works to get their licenses, and, you know, as the customers work on, for instance, fabs, buildings that don't have the mature nodes, right? They can have almost what you would call a compliant fab. So we're watching that closely, but, you know, we'd anticipate kind of a pause from some of the bigger customers, you know, some of it hitting this quarter, and some of it carrying through into the first half of the year. As David noted, we'd expect the spending and the industry to start being able to support the mature nodes that those customers as you move through the year next year. Great. Just a small one. Yeah, let me... Oh, go ahead. Let me add on to our U.S. parts ratio. Our product normally have a 5%-10% U.S. components, right? Clearly, if we're not in an ECCN category, we have actually our Canadian product is not an ECCN category. For our major, you know, revenue and we still can using U.S. parts and also use the personnel involved to sell those parts to either mature nodes customer, right? As a matter for those, probably, you know, our Chinese engineer or our Chinese staff, is their activity to building tool for the advanced nodes. Then they will have to, you know, this moment cannot get any parts from U.S., so they probably have to choosing to other compliance with supplier, you know, can be, you know, any other area. We do have found some parts in China locally. You know, something will take time, but as I said, this can be taking, you know, probably a year, maybe a year or two. However, it really depends on how their vendor and also this commercial supplier, how fast or quickly react to this, you know, changing. I should say I still consider U.S. parts impact is minimized compared to other guys. We're pretty much minimized. But, you know, we're working on that. One final quick clarification, Mark and David. For the parts that are under the ECCN classifications, those are the tools where you cannot source U.S. components, is that right? So it would only be, for instance, the cobalt ECP tool, not the rest of the ECP line. Then I think you mentioned one of the two new platforms may also fall under ECCN. I'm just trying to get a sense of what shipments for ACM are affected and, you know, where you are free of restrictions. Yeah. Actually, like you said, you know, this is a copper plating cobalt, right? It's, you know, really targeting probably 7nm, right? At this moment I do not expecting, you know, higher revenue in China, obviously. A lot of like, you know, 80nm, 20nm to nodes above those nodes is all copper plating, right? Even the 60nm, 40nm, FinFET is still copper plating, in other words. I should say, you know, our copper plating is still okay, another ECCN and our cleaning not in there, right? Our new product we can introduce that's in the ECCN, right? In this case we have to really sort the other U.S. part out. As I said again, even in our new product, we talk about ECCN, our U.S. part probably, I would say 10% range, right? Almost like that. It still can be, possibly, you know, found other alternative choice. Obviously neither, you know, qualify neither to be, and working with the vendor, you know, and gather those things to be qualified, right? That take time. However, we think can be solved. Understood. Thank you, David. Thank you, Mark. Yep. Thanks, Quinn. Thanks, Quinn. Thank you. As a reminder, if you have a question, please press star one one on your telephone. One moment while we prepare for the next question. Our next question will be coming from Suji Desilva of Roth Capital. Your line is open. Hi, David. Hi, Mark. Congrats on executing in an obviously very tough environment here. Can you guys talk about the Korea footprint for R&D and tools? What are the remaining steps in the timetable there for readiness, or is it already ready? Will the mix of tools shipping out of Korea be planned to be similar to Shanghai, or is it leaning more towards the leading edge nodes? Okay, good. Actually, you know, we started Korean our subsidiary 2017, right? Since that we can hire people and today we have about almost 110 employees in Korea, and in which 60% is R&D. Korean has over 3,000 sq m facility. Actually, we can manufacture our cleaning tool and the future product can also manufacture copper plating tool. And also we have a dryer, let's see the furnace, right, ALD tool and most portion is also made in Korea and some portion made in China. As time going on, we do have two new introduced products. All right. We've not given name yet. Those two new products also can be manufactured in Korea. I think Korean R&D manufacturing base or by the way, we're also finding the land in the final phase, you know, the government approval for license. After that, we're building also a second manufacturing center in Korea, right? With this preparation, I think we're well positioned to have a Korean tool maker tool, of course, can sell back to China, right? Also we're also prepared and the tool made in Korea to sell to the, you know, Taiwan and also sell to the U.S. or European market, right? At this moment I think we have two manufacturing centers, one in China, one in Korea. Also, we have to put out more effort and to work with the Korean top player and their customer here and also to do the R&D research and advanced nodes, right? That would be the real second center and for us expanding the global market. Hey, Mark, anything you want to add on that? No, I think you hit it, Dave. I mean, I guess maybe I'd mention that just having a second production center I think is pretty attractive to some of our international customers. That'll help us drive our international business. Okay. Thanks, David. Mark. My second question is around. I think in the prepared remarks you spoke about first tools taking longer for acceptance. Is that simply an offshoot of the kind of reassessment with export controls, or is there something else going on there right now, more generally? Suji, I don't think we've said anything specific about first tools taking longer for acceptance. I think when David commented on the outlook, he attributed it to supply chain constraints and the new U.S. policy. We didn't mention anything about delayed acceptances. Yeah. Okay. I may have misheard that. All right, thanks guys. Thank you. Thank you. One moment while we prepare for our final question. Our final question will be coming from Christian Schwab of Craig-Hallum. Please go ahead. Hey, good afternoon, or good morning. Mark, can you just tell us where all the cash is in the use of funds and whether we can bring some of that back to the United States to do a meaningful stock buyback or some program? Can you just refresh us on the use of the significant cash balance? Yeah. Hey, David. He's asked, Christian. Hi, Christian. Yeah. Yeah, go ahead. I think I'll cover something, maybe you can tell where the cash is, right? Okay. Well, basically, you know, the cash we have is mostly proceeds from the IPO last year, right? Those money belong to a subsidiary. You do have 17.5% minority investment there. We cannot directly bring cash back to the major shareholder in the U.S., right? We cannot do that. However, you know, as time going on, we have a profit generated in China, and we can bring some dividend back to U.S. Last year we didn't do anything but, you know, we're still considering this as one option and putting cash back to U.S., not necessarily, you know, real buy back share. Really important when we're trying to enhance our R&D and also sales effort and to exploring further, you know, U.S. and European market. That's probably we'll consider. Anything else, Mark, you want to add on that? Yeah, I can. Christian, we break out our cash by geography in our Q's. At the end of June, we had almost $30 million in the U.S. It was $240 million in mainland China. We also had some cash in Hong Kong and South Korea. You know, as David noted, you know, the U.S. cash, you know, we plan to use that to grow our business. You know, we're evaluating a couple tools at a pretty major potential customer. We've got a small services team in place, but that cash is good to allow us to, you know, run some pretty long-term marketing and customer development programs. We're not planning necessarily to do anything different with that cash. That's it. Thanks for that, Christian. Great. No other questions. Thanks, guys. Thank you. Thank you. If you would like to ask a question, please press star one one on your telephone. One moment while we prepare for another question. Our next question will be coming from Robert McKay of Blue Lotus. Please go ahead. Hi there. Can you hear me? Yes. Yeah. Hey, Robert. Okay, great. Thanks. Thanks for taking my question. Congratulations on the good results. I just wanted to get some clarification on the percentage of U.S. parts in your different types of equipment. Would you be able to clarify that? Like, for example, what percentage of U.S. parts are in your wafer cleaning tools and in your other tools? Thanks. Typically I said between 5%-10%. It depends on the cleaning tool type. We do have some heater and some kind of pump, right? Those parts, we're purchasing from the U.S. It's about a 5%-10% in terms of value wide. Okay, got it. Do these parts need to get licenses or is that my understanding? Is that understanding correct? Yeah, well, actually there are two category, right? As I said, if our tool is not ECCN list, which is meaning not ECCN yet, right? It's not ECCN. Also, we're shipping mature nodes customer a facility. For those portion of the tool, we do not need a BIS license. Okay. The only tool you need a license is for the mature nodes and also some tool which in the ECCN number, which is, I say, [cobalt plating], and also some, you know, ALD form of ALD tool. Those tool, if you're using U.S. parts, you need licenses. Got it. All right. You're saying for the wafer cleaning tools, the parts, there's no license is necessary even if they come from the U.S. For example, your supplier doesn't need to get a license, if they want to ship you the part. Is that correct? Yeah, above for mature nodes to make sure. Yeah. Right. Okay. You go with. Hey, Robert and David, let me just clarify. I mean, there is just a, there's a lot of regulatory and you know license requirements in general for tools you know going to China or going to other areas. The point is that this new policy hasn't added any additional restrictions for you know for cleaning tools and for you know certain tools. I just wanted to be clear. You know, the new policy added additional restrictions for exports of products that would be going to into tools that would be going to advanced nodes and for exports of products that would be going into this new platform. Yep. Is that clear? Answer your question, Robert. Hello, Robert. Oh, he's gone. I think we lost Robert. Yeah. He is gone. If you would like to ask a question, please press star one one on your telephone. We have another question coming in from Robert McKay of Blue Lotus. For that? The line was open. Yeah. Yeah. Can you guys hear me now? Yeah. Yeah, I lost connection there in the middle of the call. I'm sure someone else took notes. I didn't catch it, but I'm sure someone else took notes. I guess my next question would be what about, like, the U.S. headquarters? Does that complicate things for your business? Because I understand ACM Research is headquartered in the U.S. Of course, you have the Chinese subsidiary. I was just wondering if there's any kind of negative impact from your specific kind of business overview. Thanks. You're saying impact in U.S. or impact in China? I want to clear your question. Yeah, sure. Let me just clarify. I just meant in terms of the BIS rules. I was just wondering if there's any kind of impact from the fact that your headquarters are in the U.S. Does this make you subject to any extra kind of regulations in terms of the BIS rules due to your U.S. headquarters? Okay. Well, that's a good question. At this moment, U.S. headquarters basically is actually only conducting sales and marketing, right? For the tool... In the U.S. and Europe, right? For those activities, they're promoting, you know, our tool made in China or made in Korea and to the U.S. or to the, you know, European market. I should say no impact there, right? Because this export control law only for tool go to China, right? I don't think impact anything outside China activity. Right. Okay. Got it. The other question was about your ECP tool. I understand it's only for the cobalt plating for ECP. The other tools that you ship that are ECP, just like you were saying for wafer cleaning, there's no license requirements for those mature tools that are not for example, under 28nm, that are not for cobalt ECP. Is that correct? That's correct. Yes. Okay. Basically. Okay, great. Yeah. You are correct. Okay. For furnace, I think it also applies to furnace. Does that mean the furnace then going forward there would be no revenue stream for furnace? Because I think from your remarks. Well, actually. Go ahead. Yeah. Like you said, definitely our Furnace ALD is in another category, which is easily seen category. For those tools, probably we can either import any parts from U.S., right? The second thing is we can either also have a U.S. person, you know, directly involved, right? The servicing, installation or the, you know, shipping, whatever, all together. Well, you know, that's the case with what we devote all our, you know, responsibility and sales, marketing, everything decision to our Chinese team. They have a CEO, they have a sales VP, operation, you know, people there. They take care, right? There are different sales, but they're using non-U.S. parts. A U.S. person cannot involve. Got it. Okay. Fair enough. For that furnace tool then, is there any Chinese suppliers that could supply some- Uh- of the parts that you need for that tool to make it... Yeah. Domestically? Or would that be against the regulation? Yeah, it's a good question. Actually, the parts can be, you know, we're using maybe other country. You know, some parts we can source from Europe, right? Some parts from Korea and some are from Japan. We can find some parts also in China too, right? You need some kind of qualification to qualify those parts. Mm-hmm. That's what we, you know, take time. Okay. Yeah. Okay. Got it. In your view then, do you think that, you know, for the vast majority of your products, you can re-qualify with, like, non-U.S. supply chain parts and then theoretically maintain your product lineup? We're still evaluating that right now, and we do things. Okay. You know, some parts is possible, can be changed quickly, and some parts we have to really work with the supplier, you know, then to qualify the parts and also work with the customer to qualify the, you know, that tool, right? So with the everything time, it's not just like, you know, one day switch, right? But then. Right. Normally our qualification process, I should say, if we're changing the parts in six months or one year, a typical time you need to qualify. Right? That's the typical timing I can see to qualify new products. Okay. Got it. Okay. That's very, very helpful information. Yeah, congratulations on the good results, and thanks for asking or answering all the questions I had. I know it's difficult to sort through all these regulations. Yeah, thank you. Thanks, Robert. Thank you. Yeah. Thank you. If you have a question, please press star one one on your telephone. One moment, please. One moment, we have our next question. It's coming from [audio distortion]. One minute for your line to open. [audio distortion], do you hear me? We can hear you. Okay, great. Thank you, Mark. My first question is regarding. I understand that for mature 12-in, in logic side, the market size, market potential is very big in China. But I'm also very curious, how about for say, like, I mean, 96-layer NAND and 90nm DRAM? Do you expect the Chinese, I mean, fab customers will continue to expand over the next few years? I think one of the argument is that because for this NAND and DRAM products, maybe because of the cost structure issues or the market is very worried that these potential China fab customers may not continue to have good expansion over the next one to three years. Well, obviously, this moment we're still assessing their market, right? It's too early to give any conclusion right now. If you say 90 nm DRAM above, there's a lot of a niche market, right? In the DRAM business. You're not only getting into the smaller dimension, and some DRAM still sell 25 nm, but for all niche market there. I don't know. I just, I'm not. I cannot speak for customer, but I won't say that DRAM does have a lot of application in the larger nodes, right? For 3D NAND, I don't know really this moment. I cannot comment if the 96-layer has any other application, we don't know yet, really. I cannot comment. Okay. Thank you, David. Another question from me is that, so, over the past few months or after the, I mean, the Shanghai finished the lockdown. On the product development on the R&D side, I mean, what do you see that kind of ahead of expectation in the past two quarters versus what kind of still slow in terms of the new product development. Another thing is that, could you share a little bit more about the wafer cleaning in our supercritical dry tools progress? Thank you. Okay. Well, new product, and I think we are coming, you know, for almost like two, three years, you know, on effort, right? There's the two new product, new category product, which is a real double our addressable market. It's a real good progress, put it this way, right? We're in the final stage in the testing, and also do the, you know, I call, you know, pretty much wanna make sure our testing okay, and meet the customer, you know, requirement and we ship. I still think we're probably possibly shipping by end of this year, the two new products to the customer. Regarding the CO2 dry clean product, I think we're doing also very well, right? This is a you know, critical product and for all the high aspect ratio drying process. Our Chinese engineer is working very hard and they're trying to bring this to market, you know. Thank you. David, one more question is back to the gross margin side, because I missed the first few minutes. I'm not sure if you or Mark already discussed the gross margin on ECP and furnace versus the corporate average. Because the second quarter gross margin is pretty good, I'm just thinking about, is there any potential? Is there any possibility that looking ahead, our gross margin will be more on the higher end of our long-term range? Thank you. Well, I still want to say that our growth margin is still in the range of 40%-45%, right? Last quarter is again the combination tool, right? You are right. You know, our copper plating for front-end application does have a higher margin, right? That's one of the driving. Also, we do have some combination of the cleaning tool to have also higher margin, right? So it really depends on the ratio. There are also. We do have something also in low margin tool, like, you know, WLP tool, right? Also, you know, auto bench tool, right? So it really depend on combination. I still say our margin is still 40%-45%, you know, for the near future. Okay. Got it. Thank you. Thank you, David. Thank you. One moment while we prepare for the next question. If you would like to ask a question, please press star one one on your telephone. The next question will be coming from Charlie Chan of Morgan Stanley. Your line is open. Thank you. Hi. Hi, David. Hi, Mark. Hey, Charlie. First of all, thanks for walking us through. Yes, it is a very challenging environment, and thanks for all the clarifications. My first question is really about the cyclical impact. I know China still need to build to local sufficiency, right? If you look at out of China, essentially all the foundry fabs, memory fabs are cutting CapEx by at least 20% into next year. Now, do you think that that's going to impact your plan in mature nodes? And do you see any mature nodes customers are withdrawing some CapEx plan recently? Thank you. Yeah. Actually, Charlie, I really couldn't say in a really near future, right? Let's say next quarter, I cannot really tell. I just you know, in the I call the you know high level point of view, as I said, you know, China still consumption a lot of mature nodes and products, right? There are also recent electric car even consume more of the power device. A lot of mature nodes product, which is still not enough or made in China, right? As that, for that that point of view and China's been really increased more of a mature nodes production and that meet their own requirements. From that point of view, I can see that the next few year there's still a lot of fab is going to build, right? To meet such a requirement because, you know, most of the market right now is in China, right? That's the real reason markets are here, so they can build the fab, they can, you know, they can sell the product. From that point of view, I still have a very positive view for China market building mature nodes. As a matter of either next one quarter, two quarter, or three quarter, I couldn't tell, you know, after the year, probably after more of the market next year. From the long view, I think there's a lot of fabs being built up. Also, it's electric car driving, right? It's real high, you know, demand in China. That's a power device, can be another bigger potential market we're looking right now. I see. Yeah, I totally respect your view. Just FYI, we did some analysis before, right? Meaning, CapEx long-term still correlate with the free cash flow. From what we're seeing right now, there's some wafer pricing pressure in mature nodes. I'm a little bit worried about free cash flow could decline and that will at some point catch up to the CapEx plan. Anyway, I do agree that the long-term there is still upside for China's mature nodes. My second question is about your efforts or the entire supply chain's efforts to minimize the U.S. technology dependency. You do... You said that you want to qualify some, you know, U.S. components from Japan, Germany or even China locally. I think that that should be the way to do. My question here is that how do your customer complete the production line without the critical tools, right? No matter ASML's lithography tool or Applied Materials' Epi tool or, you know, Lam Research ICP, etc., right? Meaning because of those companies or countries still want to comply more with the U.S. rule, how do you know, still sell your tools if your customer lack those critical products? Okay. Let me clear that. Yeah. Do I miss anything? Yeah. Well, let me clarify that. As you mentioned for the advanced nodes or for mature nodes? Advanced nodes. Yeah. Because the mature nodes I think should be fine, right? No matter from the... Yeah. The export rule perspective or technology perspective. Mature advanced node is something that I'm asking. Yeah. I think what we do is anticipate the mature nodes will slow down, right? You know, a lot of, like you said, critical paths and also critical tool, right, is made in U.S. right now. Those systems are hard to really easily find another, you know, replacement tool, right, in other, even in Japan or in Europe. That can be the slowdown. Yeah, I agree with that. What I see is that really, you know, we're more focused on the mature nodes and at the same time we're also focused on the international market with advanced nodes too, right? Like ACM has differentiated product. We're not only trying to sell the 60 nm, 40nm. We want also sell to the 3nm, 2nm, right? We're gonna also focus in the market outside China for the advanced nodes, and this way we can have a differential product and get into the global market. I see. That's very reasonable. Last question maybe to Mark or David, if you want to comment. Because right now all the local equipment suppliers say they are kind of more so focused on the mature node opportunity, do you see more price competition from your local peers? Secondly, Mark, given the kind of a reduced revenue scale, but I believe you guys continue to spend R&D to launch a new product line, what would be the reasonable operating margin assumption for coming years? Thank you. Okay. Let me answer the first question and leave question second for the Mark to answer. Okay. Well, you mentioned. Sure. Mature nodes. Yeah. I think ACM real position for the mature node, they give you even cleaning, right? We are now can do mature nodes cleaning almost 90% or above, right? Also we're launching almost two years ago, auto bench product, right? For this moment, I think we're very, very well positioned for those mature nodes. Plus, we do have a LPCVD, right? Those kind of tool come out. Copper plating, obviously, you know, needed for mature nodes. Also we do have two new product, which will also have a huge market contribution or a market potential for the mature nodes. In terms of a local competitor, I will say this way, customers still choosing, you know, and not only say low price. You know, even looking at mature nodes, there's also tools difficult to make. Also for the customers who want to ramp even faster for their mature node production, they gotta have, you know, found the part or the tool they can use first, right? Now they qualify, you know, one vendor after another. I still think this, you know, semiconductor is not easy, you know. For any tool player, customers probably like one or two players maybe, maximum three. You know, maybe two is good enough for them to choose. If you got three, four different players and for the same product, it's really defocusing their efforts on the effort. They make the chip. Right? We're pretty comfortable on our position, our technology and the depths and also our customer relationship and also our commitment, right? You know, 10-20, over 10, 15- year relationship with the customer. We're pretty okay with our competitive position in China. Hey, Mark, maybe second question for you. Well, yeah, you bet. No, I think the question was about the operating margins kind of outlook. Yeah, as you know, we've talked about this before, but look, you know, we're a technology company. We believe there's a lot of growth ahead of us. We certainly, you know, are still targeting that billion-dollar revenue target over the longer medium, longer term. We're planning for growth. For next year, of course, David mentioned, you know, we're not guiding yet for next year. We'll talk about that on our Q4 call. We're planning for growth. You know, in general, the operating margin, it depends on the overall top line. What we did, we just did 25% here in Q3. You know, if you're, depending on what kind of revenue you'd be looking at for next year, we'd like to have kind of a floor of a 10% annual level. You know, with modest growth next year, that would be kind of a reasonable target. You know, with any, with good growth, we hopefully would see some leverage. Mark, you know, I'm not sure if I get it right. With some moderate growth, you're still comfortable you can get 10% operating margin or above next year. Is that right? I'd call that a target. We'd call that a target. I mean, it depends. There's a lot of factors, you know, we're gonna invest in a given year. You know, we generally have kind of a 10% annual operating margin target. Okay. Fair enough. Thanks for all the insights, David and Mark. Okay. Thank you, Charlie. One moment while we prepare for our next question. Our next question will be coming from Mark Miller of The Benchmark Company. Your line is open. Your line is open. Hey, Mark. Okay. There was a glitch on the phone. I just had a question. You adjusted your year-end total sales down somewhat. I was just wondering, and you attribute that to several factors. I was wondering what pecent of that change was attributed to the new restrictions? Okay. Well, I should say there's a pause, right? You know, probably those parts, we're buying U.S. parts, right? And so that will be now the shipment with the problem, or you have to find a different, I call it source, like compliant source. That's the portion of delay our shipment, right? That's something push off. And also we still do have some constraint even from non-U.S. parts, right? It's really tight, you know, tight control for the constraint of the supply chain. All that maybe put the two things together, that's impact our revenue in Q4. Okay. You indicated, the restrictions would impact your ECP plating tool. Did you also say furnaces? Furnace though will be, you know, specific especially for ALD, right? It's really dependent type, right? It's not all furnace. Okay. Some furnace. Just one final housekeeping question. What was stock-based compensation? What was the question, Mark? What was the stock-based compensation? Oh, stock-based comp. It's $1.9 million for the quarter. Yep. Okay. Thank you. Yep. Thank you, Mark. Thanks, Mark. If you have a question, please press star one one on your telephone. One moment please. There are no more questions in the queue. I would like to turn the call back over to David Wang for closing remarks. Okay. Thank you, operator, and thank you all for participating on today's call and for your support. Great. Thanks, guys. This concludes today's conference call. Thank you all for joining, and have a good rest of your day. You may all disconnect.