ACM Research - Q4 2023
February 28, 2024
Transcript
Operator (participant)
Good day, and thank you for standing by. Welcome to the ACM Research fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press * one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press * one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Steven Pelayo, Managing Director of The Blueshirt Group. Please go ahead.
Steven Pelayo (Managing Director)
Great. Thank you. Good day, everyone. Thank you for joining us to discuss fourth quarter and fiscal year 2023 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 investor section of our website that we will reference during our prepared remarks. On the call with me today are our CEO, Dr. David Wang, 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 the 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 of the financial results that we provide on the call will be on a non-GAAP basis, which excludes stock-based compensation and an unrealized gain and loss on short-term investments. 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 also on slides 13 and 14. With that, let me now turn the call over to David Wang, who will begin with slide 3. David?
David Wang (CEO)
Thanks, Steven. Hello, everyone, and welcome to ACM Research fourth quarter and the fiscal year 2023 earnings conference call. Please turn to slide 3. I'm pleased with our fourth quarter results, which conclude a strong year. For the fourth quarter 2023, we delivered $170 million in revenue, up 57%. For the year, we delivered $558 million in revenue, up 43%. Profitability was good for both the fourth quarter and the full year, with operating margin of 21% and 22%, respectively. We ended the year with just over $300 million of cash and time deposits. For shipments. The shipments for fourth quarter were $140 million, down 29% year-over-year. Shipments for the full year were $597 million, up 11%.
On our third quarter call, we noted the delay of shipment to several customers, due in part to adjustment in their fab buildouts. We don't normally share our expectation for shipments, I will provide more color in this case. We view the low shipments for the fourth quarter to be a one-quarter event. We'd expect to deliver nearly all of the delayed tool during year 2024. We expect their first quarter shipment to be much higher than the fourth quarter levels, even with the normal Chinese New Year shutdown. And we expect their total shipment to grow faster than revenue for the full year 2024. Now, I will discuss the key growth drivers, both for the market and specific to the ACM. According to a third-party estimate, the overall Mainland China WFE market grow around 15%.
If we exclude lithography tool, which more than double in China in 2023, we believe the rest of the market growth for China, WFE, was close to 5%. In any case, we attribute ACM higher growth rate of 43% to, one, a leading product portfolio for the China market, including Auto Bench Clean and our ECP tool for the front-end and packaging. Two, continued spending and market share gain at our current customer. Three, broader participation with new customer in China. And four, good execution by our production and the service team. I will now provide detail on product. Please turn to slide 4. Revenue from single wafer cleaning, Tahoe and semi-critical cleaning product grew 48% in 2023 and represent the 72% of total revenue. ACM offers what we believe in the industry, the most comprehensive cleaning portfolio.
We support nearly 90% of all our cleaning process steps for memory and logic devices. This coverage positions us as a key partner for both China mature nodes development and international markets. At the high end, we believe our flagship SAPS, Tahoe, and TEBO single wafer cleaning products deliver technical features not available from any of our competition. We entered into the 300 millimeter auto bench cleaning market several years ago, is proving to be a significant winner for the mature node spending. We have delivered more than 70 auto bench tools to date, and another very strong contribution in 2023, with good profitability. By our estimate, ACM became the largest China-based supplier for auto bench in 2023. For Tahoe, we made good progress during the year.
Our engineering team modified technical feature to meet production requirements for the key customer. I'm pleased to report ACM has been qualified for mass production at several customers, and we expect a strong ramp with good orders for delivery in the first half of 2024. This is good for our customer and good for the environment, as our proprietary Tahoe design significantly reduce the consumption of the sulfuric acid. We continue to innovate in our cleaning, and look forward to additional market share gain in 2024. We ramp up several key new product, including a Bevel Etcher cleaning tool, high temperature SPM single wafer cleaning tool, and the supercritical CO2 dry cleaning tool. Revenue from ECP, furnace, and other technology grow 33% in 2023, and representing 19% of total revenue.
We hit an important milestone for this category in 2023, with more than $100 million in revenue. ECP demonstrated strong performance. I want to note that our first tool shipment grow even higher than 33%. We are taking a good share for overall plating, with a particular strong growth in front-end process in 2023. For furnace, 2023 was a customer development year, with many evaluations underway. We expect an even broader customer footprint and good revenue contribution in 2024. We also made a great progress with our furnace ALD product development. In summary, we expect another year of strong growth in this product category in 2024.
Revenue for advanced packaging, which exclude ECP, but includes service and spare, grew 31.5% in 2023, and represent 9% of total revenue. This category includes a range of packaging tools, including coater, developer, scrubber, PR stripper, and wet etchers, and service and spare parts. Last year, we also introduced Ultra C vacuum cleaning tools, and we continue to explore new product and technology to participate in the next generation of advanced packaging. We believe ACM is the only company in the world that offer a full set of wet tool, polishing, and plating for advanced packaging. We expect advanced packaging to become more important as the industry looks for packaging innovation, such as 2.5D and 3D in the package and fan-out.
These are the critical for high-performance computing applications, such as AI, which is seeing increasing demand globally. Finishing up on products, we made good progress with our new Track and PECVD platform. We are engaged in active dialogue with our key customers and intend to release additional evaluation tools this year. As with our cleaning, plating, and furnace product line, our Track and PECVD platform, both the proprietary technology that position them as a successful choice for major customers globally, including both in and outside China. We are making good progress in the evaluation of our Track tool. We are confident that the proprietary architecture of our Track tool is well-suited for the high throughput required in next generation of advanced fab tools. We are engaged with multiple customers for PECVD tool.
We're expecting significant progress for PECVD product development and evaluation in 2024. Turn to slide 5 for our product SAM. We estimate our product portfolio addresses a $16 billion market opportunity. Our business is now primarily driven by three major product groups: cleaning, plating, and advanced packaging. We anticipate continued growth in this category and look to incremental revenue contribution from our newer products, starting with the furnace in 2024, followed by track and PECVD in 2025. Please turn to slide 6. We remain committed to our medium-term $1 billion revenue target. We believe we can achieve this with a range of market share by product in the Mainland China alone. We have achieved scale with a differentiated product that have been proven in China market, and we have put resources in place to address international markets...
To be clear, long term, we see an additional $1 billion plus opportunity from international markets. Moving on to the customer, please turn to Slide 7. In China, we are market leader in cleaning and cleaning tool, with the sales to nearly every semiconductor manufacturers. Our sales and service team are now driving deeper adoption of our products across this, customer base. Beyond established player, market growth is being driven by an influx of well-funded new entrants. For 2023, we had three 10% customers. SMIC was our top customer at 18% of the sales. Hua Hong was our second largest at 15%, and SK Hynix was our third at 13%. We had a stronger contribution from second and third-tier semiconductor manufacturers, including power, analog, CMOS, image sensor, and compound semiconductors, and other devices, and some new customers.
the second and this third-tier player represent about 30% of our 2023 sales. On the international front, I'm pleased to report that a large U.S. manufacturer qualified our first-step cleaning tool for revenue in the first quarter. We also plan to deliver the Ultra C ECP backside cleaning and a bevel edge tool to this customer in the second quarter of 2024. This demonstrates a deepening relationships which we believe can lead to production orders. Furthermore, this enhances ACM brand and positioning us to attract the new opportunities with other major global customers. Beyond the U.S., we installed our first evaluation tool, Ultra C SAPS V cleaning tool, at a major Europe-based global semiconductor manufacturer in the fourth quarter. To support growth, we made progress on our facility expansion in China and other regions. Please turn to Slide 8.
In China, construction of our Lingang production and R&D center is nearly complete. We expect initial production in mid-2024. In Korea, we are making progress with a key customer. As noted in the prior call, we have increased our commitment to support our objectives to address global market. We now have more than 150 employees in Korea, with the facility, including sales and administration, small-scale production, and the development lab with a clean room to support the internal R&D and with demos for the customer evaluation. We are making initial plans to build a new factory on the land we purchased early last year. We believe a strong commitment to Korea, we're improving our relationship with our key Korean customer. Our resources in Korea are providing another basis to support international customers in the U.S., Europe, and other parts of Asia.
In the U.S., we leased a facility in Oregon last year to add to our service support and demonstration capability for R&D and customer activity in the U.S. and Europe. I will now provide our outlook for the full year 2024. Please turn to Slide 9. In early January, we introduced our 2024 revenue outlook in a range of $650 million-$725 million. This implying 23% year-over-year growth at a better point. We are reiterating this outlook today. We believe the China equipment market will grow in 2024. We expect our full year revenue growth for 2024 to outpace both China growth and global growth rates. Now let me turn the call over to our CFO, Mark, who will review details of our fourth quarter and full year results. Mark, please.
Mark McKechnie (CFO)
Thank you, David. Good day, everyone. Please turn to Slide 11. Unless I note otherwise, I will refer to non-GAAP financial measures, which exclude 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 fourth quarter of 2023. Comparisons are with the fourth quarter of 2022. I'll now provide financial highlights for the fourth quarter and full year of 2023. Revenue was $170.3 million for the fourth quarter, up 56.9%. Revenue for single wafer cleaning, Tahoe and semi-critical cleaning, was $122.3 million, up 63.9%. For the full year 2023, this category, category grew by 48.0%.
Revenue for ECP, furnace, and other technologies was $32.1 million, up 59.0%. For the full year 2023, this category grew by 33.4%. Revenue for advanced packaging, excluding ECP, services and spares, was $15.9 million, up 15.8%. For the full year 2023, this category grew by 31.5%. Full year 2023, revenue was $557.7 million, up 43.4%. Total shipments were $140 million for the fourth quarter, down 29%. For the full year 2023, shipments were $597 million, up 11%. Gross margin was 46.8% for the fourth quarter versus 49.7%. For the full year 2023, gross margin was 49.8% versus 47.4% in 2022.
This exceeded our normal expected range of 40%-45%. We do expect gross margin to vary from period to period due to a variety of factors such as sales volume, product mix, currency impacts. Operating expenses were $43.6 million for the fourth quarter, up from $34.8 million. R&D was $28.8 million versus $17.0 million as we invest in our new product initiatives. Sales and marketing was $7.2 million versus $11.8 million. The decline in sales and marketing was primarily due to a significant reduction of costs related to promotional tools. G&A was $7.6 million versus $6 million. For the full year 2023, operating expenses were $154.4 million, up from $117.4 million.
R&D was 15.1% of sales, sales and marketing was 7.4% of sales, and G&A was 5.2% of sales, all for 2023. For 2024, we are planning for R&D in the 16% range, sales and marketing in the 7%-8% range, and G&A in the 5.5% range. Operating income was $36.0 million for the fourth quarter, up from $19.2 million. Operating margin was 21.2%, up from 17.7%. For the full year 2023, operating margin was 22.1% versus 17.2% in 2022. For the fourth quarter, we recorded a realized gain of $0.5 million from the sale of short-term investments. Recall that realized gains are included in the non-GAAP earnings.
Income tax expense for the fourth quarter was $8.1 million versus $2.7 million. For the full year 2023, income tax was $19.4 million versus $16.8 million in 2022. Net income attributable to ACM Research was $28.7 million for the fourth quarter, up from $12.6 million. For the full year 2023, net income attributable to ACM Research was $107.4 million versus $54.8 million in 2022. Net income per diluted share was $0.43 in the fourth quarter, up from $0.19. For the full year 2023, net income per diluted share was $1.63 versus $0.83. I will now review selected balance sheet items.
Cash, cash equivalents, restricted cash and time deposits were $304.5 million at year-end versus $326.5 million at the end of the third quarter. Total inventory at year-end was $545.4 million versus $507.4 million at the end of the third quarter. The mix was split between raw materials, $235.1 million, work in process, $81.4 million, and finished goods inventory, $228.9 million. Inventory also included finished goods at our own facilities. As David said, nearly all of the finished goods at our own facilities is expected to ship during the year 2024. Capital expenditures were $15 million in Q4 and $61.9 million for the full year.
For 2024, we expect to spend about $80 million in capital expenditures. This will be primarily to complete our investment in Lingang, and will also include remodeling the new headquarters for ACM Shanghai and investments in Korea and the U.S. That concludes our prepared remarks. Now, let's open the call for any questions that you may have. Operator, please go ahead.
Operator (participant)
Thank you. As a reminder, to ask your question, you'll need to press * one one on your telephone. To withdraw your question, please press * one one again. Please wait for your name to be announced. Please stand by while we compile a Q&A roster. One moment for our first question, please. Our first question comes from the line of Sujit Siva with Roth MKM. Your line is now open.
Suji Desilva (Managing Director and Senior Research Analyst)
Yeah. Hi, David. Hi, Mark. Congratulations on the progress, great job there. Can you talk about the, the international customer? Sounds like you're making progress there. Just trying to gauge the pace of that. As you guided 2024 full year, do you have some contribution from an international customer in that assumption, or would that be upside and is it potential first half timing, or is it most likely back-end loaded second half this then?
Mark McKechnie (CFO)
Okay, thanks, Sujit. Okay, at this tool, we shipped a year ago, right? Then, through our service parts engineer, hard working, and then we have our first tool get their acceptance. So this will be getting into the production, you know, their mass production. And also, I want to say that this specific SPM megasonic tool, we address the customer needs, and we can see, you know, get a good cleaning performance and also much less particle consumption. So that's really the customer like the tool, and we believe this definitely, you know, first full qualification will lead to their additional order, you know, for the same customer, right? So meanwhile, and as mentioned, we also have a second, different tool, which is the backside and also barrel clean.
It was ordered by the same customer, and we ship them and in the second quarter of this year. So obviously that is, this is a key customer, you know, in the U.S., and we want this to be another example and also encouraging other big player in adapt to our differential technology, right? So we'll say that will be the-
David Wang (CEO)
... good outcome. And also, there's a, of course, international, I call the revenue contribution to our year, 2024 forecast. You know, we can, we can see that too.
Mark McKechnie (CFO)
Yeah, Sujit, I just add for 2024, I mean, a lot of things go into our forecast. You know, we don't have a 2024 will be a building year for us for the international, and we'd expect some additional contribution. You know, whether we get an order that ships or for one or several tools that ships this year or next year will depend on how big it can be for us.
Suji Desilva (Managing Director and Senior Research Analyst)
Okay. And then the second question is, can you just explain again the shipments and what the delays, what the dynamic was there? I maybe didn't catch that in the prepared remarks.
David Wang (CEO)
Yeah, I think in the Q3, we also, you know, call or mention about that, the delay. And there, it's because of the our customer, they're building a plan, and there are certain, you know, I call the plan delay or the installation, not fast enough. But anyway, this continuing investment going on. So those portion of the delay, as I said, will be definitely delivered in 2024. And there, you know, that's also added to our shipment. You know, those two have been built already. It's going to also, you know, save the cash. We spent it last year already. So we'll see that happen.
There, I would say that also, the total shipment we expecting 2024, and there will be, you know, quite an increase. We believe even our increase rate higher than the quarter revenue increase, right? In compared to 2023. So this is another. I consider a great year for us in 2024.
Suji Desilva (Managing Director and Senior Research Analyst)
Okay, that sounds like a good momentum. My last question is around the overall demand environment. I'm trying to understand in China whether the memory market is stabilizing, capacity is increasing again across NAND and DRAM, and maybe is someone like CXMT actually progressing to DRAM production versus development effort?
David Wang (CEO)
Yeah, I mean, you can see that our CXMT is still our third customer, you know, year 2023, right? So we're expecting, you know, this memory business to continue to grow. And again, you know, it's all the memory in China is still multi-year expansion. And so we see that as good market, you know, for us, and also we see that continue to grow.
Suji Desilva (Managing Director and Senior Research Analyst)
All right. Thanks, guys. Congrats again.
David Wang (CEO)
Yeah, thanks, Suji.
Mark McKechnie (CFO)
Thank you.
David Wang (CEO)
Thank you.
Operator (participant)
One moment for our next question, please. Our next question comes from the line of Charlie Chan with Morgan Stanley. Your line is now open.
Charlie Chan (Executive Director, Equity Research)
Thanks for taking my questions. David, Mark, happy Chinese New Year, and Gong Xi Fa Cai, and congrats for a very solid 2023 results. So my first question is actually on the full year guidance, because I had the impression that your ACM Shanghai entity they have a preliminary 2024 outlook, revenue to grow more than 30%. I remember you was like 37% year-on-year growth. So I calculate your midpoint suggesting the ACMR is growing, like, 23% year-on-year. So what's the discrepancy between your ACM Shanghai entity versus the parent company?
David Wang (CEO)
Yeah, well, you know, there's a slight difference, like a revenue recognition rule, and we're using, you know, using Chinese GAAP versus U.S. GAAP. So that's the primary reason show the, you know, difference of both, I call it, forecast. Yeah, in general, say that is U.S., you know, GAAP will be your first tool, take a long time evaluation, and after that-
Charlie Chan (Executive Director, Equity Research)
Mm-hmm.
David Wang (CEO)
- you can recognize, you know, repeat order just on the shipment, right? But in China-
Charlie Chan (Executive Director, Equity Research)
Mm-hmm.
David Wang (CEO)
GAAP is you have to, no matter it's new or it's a repeat order, you have to really install and basically accept, you know, kind of initial acceptance by the customer, then you can recognize revenue. So that slight difference show the, I call the revenue difference. In other words, probably you can say, China, the forecast mean that is we have a lot of, you know, probably new tool and the new customer, right? That's what be the quickly can be recognized revenue versus the U.S. recognition rule. So that's the, that's the difference we see there.
Charlie Chan (Executive Director, Equity Research)
I see. Thanks, David. So my next question is about the China CapEx sustainability, right? I mean, right now, as you said, right, it's for local sufficiency, but you also see that some of your major customer their gross margin already dropped to, like, 10% gross margin, right? So I'm a little bit worried about the sustainability. So any kind of signs or lead indicator we should you know, pay attention to, right? To check the China CapEx sustainability.
David Wang (CEO)
Yeah. Well, I should say that, as we said, you know, a couple times before, is that China's fab is still in the multi expansion, no matter the logic or memory. Right? Also, you know, a lot of our, I call them mature nodes, is very related to the EV IGBT is still, you know, is still in the production, I call it, in the fab building process. Also, I wanna say another thing is the consumption of the chip, especially mature nodes in China, is way higher than capability can be produced in China, right? So you look at that gap and still say next few year in China and obviously this market will continue to grow.
Charlie Chan (Executive Director, Equity Research)
Okay, gotcha. So, yeah, one last question, I will bring you back to the queue. So, a question to Mark. Since you are ramping up the Lingang new campus, can you give us some updated gross margin and also OPEX assumption for 2024?
Mark McKechnie (CFO)
Yeah. Hey, Charlie, thanks for asking. So, yeah, and I said in my prepared remarks, I gave some detail there, but I'll go ahead and repeat it. You know, we're anticipating our target model for gross margin is unchanged at 40%-45%. Obviously, we've done better than that for the last several years, but that's kind of the margin level that you know, that's our target level. And then, you know, for the OpEx levels, and these are non-GAAP numbers, we expect R&D continue to invest pretty strong in R&D.
You know, you should always expect, you know, as we're a growing company, to spend at about a 16% level is our outlook for non-GAAP in 2024. Sales and marketing, yeah, we expect in the 7%-8% range, and then, G&A, about 5.5%.
Charlie Chan (Executive Director, Equity Research)
Hmm, okay. Okay.
Mark McKechnie (CFO)
Yeah.
Charlie Chan (Executive Director, Equity Research)
Thanks for the recap. Yeah, so thanks for the recap. Those are guidance.
Mark McKechnie (CFO)
You bet. You bet.
Operator (participant)
Thank you. As a reminder, to ask a question, you'll need to press * one one on your telephone. One moment for our next question. Our next question comes from the line of Mark Miller with the Benchmark Company. Your line is now open.
Mark Miller (Analyst)
I believe you. Well, first of all, congratulations, another great quarter. But just wanted to get a little more into the OpEx in the December quarter. You did mention the SM, sales and marketing was down. You said it was because of demo systems? I'm confused why that fell so much.
Mark McKechnie (CFO)
Yeah, we-- It was a significant decline in the sales and marketing promotion tools. So, we took that out of the sales and marketing expense. And, you know, going forward, you won't see that expense level in the sales and marketing. Yeah. And so we look at it kind of for the full year, sales and marketing was about 7.4% on a Non-GAAP basis. And so, we expect that sales and marketing level to be kind of in the 7%-8% in Non-GAAP next year.
Mark Miller (Analyst)
Can you give us a little, you said you had a lot of quals underway? Can you give us a little more color on what's going with your quals and timing of quals and in terms of when you expect revenue generation?
Mark McKechnie (CFO)
Oh, in terms of, yeah, David, he's asking about our evals at our customers. Maybe I'll let you address that for, and then I can add to it. But,
David Wang (CEO)
In general, right?
Mark McKechnie (CFO)
Yeah.
David Wang (CEO)
Okay.
Mark McKechnie (CFO)
Yeah, and so that's, I think, Mark, you know, our finished goods inventory, you know, is largely comprised of evaluation tools at our customers.
David Wang (CEO)
Yeah.
Mark McKechnie (CFO)
And so, I think... Yeah, David.
David Wang (CEO)
Yeah. Let me say that is obviously there's this finished goods in the customer side for evaluation, mostly in the first tool. And those first tool can be either, first of all, new customer, right? Especially if they're first time buyers, they want to make sure those tool and not just qualify for tool itself, some kind of qualify the whole production line to look at the yield to come out. That takes some time, right? Also, there's also the first tool is a pretty new, brand new tool, and then we need a customer to really, we call it a beta tool, right? You need to really evaluate that, and that is sometimes take a process, you know, one year, even a year and a half.
You know, it depends on how the other tool, you know, first building be mature, how mature it is. So those kind of tool will be considered as our, you know, first tool.
Mark Miller (Analyst)
Okay, and just final question. You previously said you were doing more investment in Korea to, I guess, get more business from SK Hynix. Can you give us an update on what's going on there?
David Wang (CEO)
Okay, great. So Hynix actually is a real, long-term customer, right? And they're—we're fully engaged with the customer, I mean, Hynix right now, because we're a real, emphasize our investment, also expansion, our R&D force in, also manufacturing in the Korea. We do have a, you know, about 150 employee in Korea right now. As I mentioned, we bought the land, and it will give to also to building factory there, you know, future proper time. So key, key point I'm trying to say that is, we have a multiple tool, like cleaning, copper plating, and including furnace, and then there also a development PECVD and also Track.
So all these five tools we're, you know, trying to engage with the customer in SK Hynix, and they're because of our relationship and also because of our local R&D force, and also we offer customer with differential product and differential technology, and which is quite a, you know, interest or get interest from the customer in Korea.
Mark Miller (Analyst)
Thank you.
Christian Schwab (Analyst)
... Thanks, Mark.
Operator (participant)
Thank you.
David Wang (CEO)
Thanks.
Operator (participant)
Thank you. As a reminder, to ask a question, you'll need to press * one one. Please wait for your name to be announced. One moment for our next question, please. Our next question comes from the line of Christian Schwab with Craig-Hallum Capital. Your line is now open.
Christian Schwab (Analyst)
Hey, guys. Fantastic year and great quarter. So I'm trying to better understand, you know, the two or three reasons better, either from a product category standpoint or a customer standpoint, your conviction and your ability to outgrow WFE, not only in China but also globally, year-over-year.
David Wang (CEO)
Okay, great. I think you know the ACM there, where I started beginning, you know, even from Bay Area, right? In ACM, the philosophy is there, we call differentiation, right? And each product we're building, like cleaning, you already know that SAPS, you know, TEBO and Tahoe is pretty our differential product. And same thing for the copper plating. So our goals are building differential product, and at this moment, widely has been accepted by the local customer in China. And with those differential product and the technology, I think we can penetrate or get into international, right? Example is we already get into the Panasonic, you know, and also we have a major manufacturer, U.S. adopter SAPS already. Also have a European company and also adopter SAPS, making a single cleaning too.
Beyond that, I think the next one is our Tahoe. Our TEBO, plus we have a supercritical CO2 dry. With Tahoe, with TEBO tool, will be really, you know, exciting for their patterned wafer cleaning tool, right? Beyond that, I said we have also, you know, furnace. And for furnace, ALD, and including copper plating, and there was another very candidate product, and to be able to penetrate international market. So as I say that is, of course, we're developing PECVD and the Track also has our proprietary differential design point. So ACM really developed their, you know, I call this a differential product, which really offers differentiation, offers the different benefit than our other competitor doing. That's our confidence and also our proven record.
We can put a tool and sell in international market.
Christian Schwab (Analyst)
Great. So, congrats again on a very differentiated and better product than your competitors. Just in a quick last follow-up then, is on the international front, you know, how much of the year-over-year growth are you looking for from that? I guess I know it was kind of asked earlier, but you mentioned it numerous times as what you thought you would outgrow the market. So I'm just wondering if you're willing to provide any clarity, more clarity there.
Operator (participant)
Yeah. Hey, Christian, I'll hit that. So, in terms of our outlook, I mean, the range, we have a pretty small contribution from international this year. It's still gonna be, you know, kind of development. So really substantially, you know, most of that growth that we're planning for in 2024 is from the China market, the Mainland China market. Yeah, new product cycles, customer additional customer traction.
Christian Schwab (Analyst)
Okay. And then I guess my very last question is, you know, the TAM for your products outside of China, you know, globally, is substantially larger. You know, how many years do you think is reasonable for us to assume it takes for broad-based success internationally? It sounds like this year was a great building year. Initial shipments, you know, starting in 2024. Is that a, you know, 2026, 2027 or 2025 event, or is it too early to know?
David Wang (CEO)
Yeah, Christian, this is a very good question. I think the way we're doing right now, obviously, it's quite a quicker, fast growth in the mainland China market, right? A lot of product we qualify here now. So those are, I think, are our goal, where, say, you know, reaching $1 billion even by China market only, right? We think the next few years, we should be reaching our goal, and simultaneously, you know, a couple of years ago, we started also global market expectation, I mean, penetration. So the key is really how we executing our international sales plan. Now we have a, you know, hiring gooder people and a sales guy in the Korea, actually, also in the U.S., in Europe.
We'll see that quite a bit of progress. Let's put it this way, you know, for the international market, and as we talk to the customer, everybody looking for back again, you know, differentiation, right? So with that in mind, and as I mentioned, core product we have right now, we do have confidence as their first, you know, I call it their U.S. customer adopter or tool. We see more of our customer may adopt additional or other tool too. So we see that happen. But then you ask me which year is, how do we give you precisely?
But I think, as I said, we have a bigger revenue with our strong financial supporting from sales here, with also differential product, you know, definitely will penetrate, you know, into the international market. If asking, you know, next few year is a very exciting, you know, we have to, you know, quickly execution our plan and to quickly reach that goal. And eventually, as I mentioned a couple times before, we under half from mainland China, half from outside mainland China, right? So like you said, the real revenue contribution actually more bigger outside mainland China.
Christian Schwab (Analyst)
Thank you. That's great. No other questions. Thanks, guys.
David Wang (CEO)
Thank you.
Christian Schwab (Analyst)
Thanks, Christian. Yeah.
Operator (participant)
Our next question comes from Charlie Chan with Morgan Stanley. Your line is now open.
Charlie Chan (Executive Director, Equity Research)
Thanks for taking my question again. So, I think the new customer contribution caught our eye, SiEn. So it wasn't in our radar screen. So I'm not sure why SiEn becomes such a big customer. And if you can provide some more details, is that purely 12-inch equipment or also including some 8-inch equipment? Thank you.
David Wang (CEO)
Yeah, I think the primary we sell to the Xinhong is a, a 12-inch tool, right? And also, their most expansion now is a Mature Node. So we are actually sell a lot of our, our, Auto Bench. They're probably the largest Auto Bench customer right now for us in China. So of course, they also buy from wafer, right? So that's why primary driving that become the second largest customer, customer in 2023. And looking forward, and then also we are, you know, a very good relation and engage with them in a copper plating furnace and also online.
Charlie Chan (Executive Director, Equity Research)
Mm-hmm.
David Wang (CEO)
So that's another indication, as they say, from the Xinhong, right? And they're a great, great customer, and we're happy with, as I said, you know, our Auto Bench tool being largely deployed and in the Xinhong's production line.
Charlie Chan (Executive Director, Equity Research)
Okay. So yeah, so it's a great business, right? So I'm assuming consulting your counsel, your lawyer about the U.S. export control before you ship into all the customers, including Xinhong, right? Is that the right assumption?
David Wang (CEO)
Well, I mean, we're straight to follow all the export control rule, right? As said here. And for those-
Charlie Chan (Executive Director, Equity Research)
Mm-hmm.
David Wang (CEO)
... whatever, you know, restrict the customer, we have to be very carefully, you know, U.S., parts, right?
Charlie Chan (Executive Director, Equity Research)
Mm-hmm. Mm-hmm.
David Wang (CEO)
And, personally involved, and also, you know, non-USA technology. Yeah, so we are pretty very carefully managing and control, and then follow their strictly with the standard, the export control law of the U.S.
Charlie Chan (Executive Director, Equity Research)
Okay. Okay, thanks, David. Next question is about the advanced memory, HBM. So, can you comment on your opportunity in Korea for the HBM production line? I think we asked that question last quarter as well. And also there's some recent news about China may also have their own HBM production. So, can you comment on your potential opportunity, you know, in Korea and also China customers.
David Wang (CEO)
Yeah, well, let's this way. Obviously, you know, Hynix, the number one in provider, right? They're also technology leader, HBM. And I think our, our current product definitely involve their process. And also we see the HBM-
Charlie Chan (Executive Director, Equity Research)
Mm-hmm.
David Wang (CEO)
... either, you know, this is a copper plating tool, right? You know, TSV or the packaging, whatever they needed. So that's the next tool-
Charlie Chan (Executive Director, Equity Research)
Mm-hmm.
David Wang (CEO)
... we are working with, you know, closely with the Hynix and their, you know, I should say rest of our other tool, you know, furnace, and we're working with them too. So there's a lot of, including cleaning, by the way, actual other cleaning other than we sold them, you know, SAPS megasonic, also working with the Hynix too. So it's a very good opportunity. HBM, you know, is a greater, I call it, demand and, greater-
Charlie Chan (Executive Director, Equity Research)
Mm-hmm
David Wang (CEO)
... driving. Also, they're - they need a lot of differential technology, you know, further supporting and HBM development in the future. In China, really not much we can hear right now, really, right? It's just, you know, I mean, not much we have right now. So in other words, we're really focused on the outside China for HBM expansion for the business opportunity.
Charlie Chan (Executive Director, Equity Research)
Yeah. So based on your comments and also other global current vendors, right? They talk about actually this year the global FT revenue comes from the memory. So why Hynix is on your kind of the top customer? Or do you think this year Hynix you know can contribute more than 10% of revenue given HBM opportunity and also the memory spending recovery?
David Wang (CEO)
Well, I mean, obviously, more than, I mean, other than Hynix, also looking for other player, right? Is key here.
Charlie Chan (Executive Director, Equity Research)
Mm-hmm.
David Wang (CEO)
Then the memory market, HBM, is really booming, right? That's key here. So we see that there-
Charlie Chan (Executive Director, Equity Research)
Mm-hmm
David Wang (CEO)
demand there, as I mentioned, right? This is, for us, you know, cleaning copper plating, it's really demand there. I don't know what's time it comes back to 10%, our customer is how particular right now. So really-
Charlie Chan (Executive Director, Equity Research)
Mm-hmm
David Wang (CEO)
... and we'll see, right? Especially second half year or next year, it's really where-
Mark McKechnie (CFO)
Mm-hmm.
David Wang (CEO)
We want to see something recover from DRAM market.
Mark McKechnie (CFO)
Okay, gotcha. Thanks, David.
David Wang (CEO)
Thank you.
Operator (participant)
Thank you. One moment for our next question, please. Our next question comes from the line of Edison Lee with Jefferies. Your line is now open.
Edison Lee (Analyst)
Thank you. Thank you for taking my question. So, David and Mark, congratulations on a great quarter.
David Wang (CEO)
Thanks, guys.
Edison Lee (Analyst)
I have just one question, which is, the contribution of your three customers for 2023, which had amounted to almost 50% of the revenue. So can you give us some color as to whether you think that those top three customers will continue to be top three customers in 2024? And, and what is your expectation on the contribution of the top three customers in 2024?
David Wang (CEO)
Yeah, actually, I looked at this year's our order, you know, list, right? The top three customer continue, I think, will grow, right? They're probably still our, you know, major customer. Also, we see their, you know, an additional body of our home, they have also their expansion plan. They are probably simultaneously building 2 fabs this year, and also they're building probably next year, you know, 3 fabs simultaneously, right? So that's another bigger, I see their top, you know, customer will come back, you know, in our 2024 revenue contribution.
Edison Lee (Analyst)
Yeah. Maybe a related question is that, based on your revenue guidance at a midpoint, that implies 20, 20% plus growth. And, so that's, that's significantly below the growth rate in 2023. So do you think the key driver there is, just some digestion period or is, is a matter of taking time for your evaluation tools to be recognized as revenue? So what are the key factors for the slowdown in terms of the growth rate?
David Wang (CEO)
Yeah, I think the key driving force is I want to see that the China WFE market is continue, you know, people say maybe, I mean, slightly increase, at least a flat. I see that as number one important. But second, most importantly, we have our gain for our, you know, I call it a higher growth rate, is because we continue to have a new customer coming, and also we have a gain on market share from existing customer, and also do have a like a furnace what do the more contribution this year and for our revenue, right?
So that's all the added together, that's our, you know, give us a basis to forecast our growth rate higher than the, you know, the growth rate of the WFE market in China.
Edison Lee (Analyst)
Okay. And maybe the last one is that for 2024, what do you think is the percentage of overseas revenue in your guidance?
Mark McKechnie (CFO)
Yeah. Hey, Edison, we didn't... we're not ... we didn't break it out, but we did-
Edison Lee (Analyst)
Mm-hmm.
Mark McKechnie (CFO)
A couple other questions about that. We mentioned it wouldn't be a very significant contribution in 2024. You know, we expect that to build in the coming years, but it's not a very significant piece. It's we think it'll be bigger than it was this year, and so you got the numbers in... You'll get the international numbers shortly, but it's not gonna become a huge, you know, I wouldn't expect it to be more than 10%, right? Yeah.
David Wang (CEO)
Yeah. But I should say, growth is higher, right? I mean-
Mark McKechnie (CFO)
Of course.
David Wang (CEO)
Obviously, it's one number. So then the real absolute number, like you said, you know, we're still a fixed number of the total revenue.
Mark McKechnie (CFO)
Yep.
Edison Lee (Analyst)
Right. Okay, got it. Thank you very much.
David Wang (CEO)
Thanks.
Operator (participant)
Thank you. I'm showing no further questions at this time. I'd like to hand the conference back over to Steven Pelayo for closing remarks.
Steven Pelayo (Managing Director)
Okay, great. Thanks, Mark and David, and thank you all for participating on today's call. Before we conclude, I just want to give everyone a quick reminder on our upcoming investor conferences. On March 18, we will present at the 36th Annual Roth Conference in Dana Point, California. Attendance at the conference is by invitation only. For our interested investors, please contact your respective sales representatives to register and schedule one-on-one meetings with the management team. This concludes the call, and you may now disconnect.
David Wang (CEO)
Thank you.
Operator (participant)
Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.