ACM Research Inc (ACMR) 2023 Q2 法說會逐字稿

Good morning, and thank you for standing by. Welcome to the ACM Research Second Quarter 2023 Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Yujia Zhai, Managing Director of The Blueshirt Group. Please go ahead.

Thank you, operator. Good morning, everyone. Thank you for joining us on today's call to discuss second quarter 2023 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 is also a supplemental slide deck posted to the Investor portion 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, the CFO of our operating subsidiary, ACM Shanghai.

Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates 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 the Risk Factors and elsewhere in ACM's filings with the SEC. 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.

Some of the financial results that we provide on this call will be on a non-GAAP basis, which includes stock-based compensation and unrealized gain loss in trading securities. For our GAAP results and reconciliations between GAAP and non-GAAP amounts, please refer to our earnings release, which is posted on the IR section of our website in Slide 12.

With that, let me now turn the call over to David Wang, who will begin to Slide 3. David?

Thanks, Yujia. Hello, everyone, and welcome to ACM Second Quarter 2023 Earnings Conference Call. Please turn to Slide 3. For the second quarter, revenue was $144.6 million, up 39% from the same quarter last year. Shipments were $153 million, up 37% from the same quarter last year. Gross margin was 47.6% and operating margin was 22.4%. We achieved record revenue and EPS as our operating and industrial supply chain largely returned to a new normal, following several years of COVID-related disruption.

This result were driven by strong mature node expansion by our China customer, market share gain and the penetration of new products, a new customer. Let me touch on each of these, beginning with a mature node investment in China.

Last year, following U.S.-China trade restrictions, some investor analysts predict that China's WFE market will be declined dramatically. At that time, we predict a fairly quicker shift to spending on mature node in China after expected pause as investor adjusted to the new export regulations. Our predictions appear to be playing out as we announce a broader sign that China has indeed sped up its capacity expansion in mature nodes. This is driven by the substantial gap between China's mature nodes capacity and their market consumption. We see continued investment in 28-nano and 45-nano and above front end fab capacity. We also see the ramp of EV production in China as a driver of China-based investment in both power devices and other 28 and 45 nano devices. This creates a good tailwind for us that we believe is still in early stage as China intensify effort to boost its domestic semiconductor capacity capabilities. We believe we are well positioned to benefit and further increase our market share due to our strong market position, leading differentiated technology and a broad multiproduct portfolio.

Moving to product. Please turn to Slide 4. Single wafer clean, Tahoe and semi-physical cleaning grew 55%. In the last few years, we introduced and began ramping our semi-critical product line, including auto bench. And then last year, we introduced Bevel etcher and high-temperature SPM tools. Over the past quarter, we built supercritical CO2 dry. Now ACM has one of the broadest cleaning product portfolio in the industry, covering nearly 90% of all cleaning process step. We believe this product portfolio will play a key role among mature nodes development in China and advanced nodes in our international effort going forward.

ECP, furnace and other technologies declined 7% due to quarterly fluctuations. However, for the first 6 months of 2023, ECP, furnace and other technology grew 40% year-over-year. Growth in this category was driven primarily by ECP product cycle with some contribution from furnace. Our higher temperature anneal and LPCVD furnace, including silicon nitride and poly and ARD have expanded to multiple customers and are under evaluation.

Advanced packaging exclude ECP service and (inaudible) grow 14% in Q2 and 58% year-over-date. This category includes a range of packaging tools, including coater, developer, scrubber, pr-sweeper and wet etch and service and spare parts. ACM is the only company that offers growth of full set of wet tools and advanced plating tool. We believe advanced packaging will become more important as industrial looks for packaging innovations such as 2.5D/3D and further, and find out to drive the higher performance for new applications such as AI and GPT.

Finish up on products, we continue to make good progress on sales efforts with a new Track and PECVD platform. We're in active discussion with our key customers, and we are planning to deliver more evaluation tool this year. Similar to our cleaning, plating and furnace product line, our Track and PECVD platform have a proprietary technology that we believe were making them winner with major customers, both in China and outside China.

Moving on to the customer, please turn to Slide 5. We continue to make progress on customers, both inside China and internationally. In China, we believe ASM tools are now used by nearly all of the semiconductor manufacturers. Our sales and service teams are working to expand the deployment of each of our major product lines across our growing customer base. In addition to our current customers, we are also seeing a good number of well-funded new entrants. Our team has done a good job of getting good traction for our product with these customers.

As this, our new customer will be reflected in our shipment this year until customer acceptance at a later date. Also, as some of you may have heard on July 21, 2023, Tahoe Semiconductor, a greater strategic customer announced the pricing of its Shanghai STAR Market IPO and expected to start trading soon. The total proceeds were RMB 21.2 billion or approximately USD 3 billion. In the U.S., evaluation at our key customers is progressing well, and we remain optimistic for qualification later this year.

In Europe, we announced an order for our first evaluation tool from a major semiconductor manufacturer in the first quarter of this year. The tool is planned for delivery in early Q4, and we are beginning to build a local service team to support effort. To support our growing initiatives, we continue making progress on our facility expansion in China and other regions.

Please turn to Slide 6. In China, construction of Lingang production and R&D center is nearly completed and expected to begin initial production later this year. In Korea, as noted in prior call, we have increased our commitment in this region. We believe a strong commitment to Korea will improve our relationship with our key customer, SK Hynix and others. In Q1 of this year, we completed the purchasing of land in the high-tech area outside Incheon as a site for new R&D and production center.

In the U.S., as noted last quarter, we leased a facility in Oregon to add to our service support and the demonstration capability for R&D and customer activities in the region. As a reminder, for 2023, we expect to spend about $100 million CapEx. This includes continued investment in our Lingang facility, remodeling for new headquarters for ACM Shanghai and our other investment in Korea and the U.S.

I will now provide our outlook for the full year 2023. Please turn to Slide 9. We reaffirmed our 2023 revenue outlook to be in the range of $550 million to $585 million. The range of outlook reflects, among other things management's current assessment of the continuing impact from the international trade policy, together with various expect spending scenario of key customers, supply chain constraints and the timing of acceptance for the first 2 on evaluation in the field.

Now let me turn the call over to our CFO, Mark, who will review details of our second quarter results. Mark, please?

Thank you, David. Good day, everyone. Please turn to Slide 10. Unless I note otherwise, I will refer to non-GAAP financial measures, which exclude stock-based compensation and unrealized loss on trading securities. Reconciliation of these non-GAAP measures to comparable GAAP measures is included in our earnings release. Also, unless otherwise noted, the following figures refer to the second quarter of 2023, comparisons are with the second quarter of 2022.

I'll now provide financial highlights for the second quarter. Revenue was $144.6 million, up 38.5%. Total shipments were $153.4 million, up 37%. Revenue for single-wafer cleaning tools and semi-critical cleaning was $112.5 million, up 55%. Revenue for ECP furnish and other technologies was $19.1 million, down 6.7%. For the first 6 months of 2023, this category grew by 39.6% versus the prior year period.

Revenue for advanced packaging, excluding ECP services and spares was $12.9 million, up 14.3%. Gross margin was 47.6%, up from 42.4%. This exceeded our normal expected range of 40% to 45%. The increase in gross margin was primarily due to a favorable product mix, improved gross margins for specific product lines and a favorable impact from fluctuations in the renminbi to U.S. dollar 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 $36.3 million, up from $22.3 million. The increase was due to higher R&D, sales and marketing and G&A costs in support of our new customer and new product activities and a boost in the post-COVID travel. Operating income was $32.4 million, up from $22.0 million. Operating margin was 22.4%, up from 21.1%. We recorded a realized gain of $3.9 million from the sale of trading securities for the quarter. Recall that realized gains are included in the non-GAAP earnings.

Income tax expense was $7.6 million, down from $7.7 million. Recall that as a result of the change in Section 174 of the U.S. Internal Revenue Code. Our effective tax does remain elevated, primarily due to the requirement to capitalize and amortize previously deductible research and experimental expenses. Net income attributable to ACM Research was $31.3 million, up from $14.6 million. Net income per diluted share was $0.48, up from $0.22.

Now I'll review some selected balance sheet items. Cash and cash equivalents, restricted cash and time deposits were $376.1 million at the end of the second quarter versus $381.7 million at the end of the first quarter. Total inventory was $471.1 million at the end of the second quarter, generally flat versus the end of the first quarter. Capital expenses for the second quarter were about $6.7 million.

I'll now provide an update on our auditor. On July 21, 2023, Armanino informed us that it will resign as our independent auditor effective as the earlier of: A, when we engage a new auditor or B, the filing of this year's third quarter 10-Q report. They advised us this was due to their decision to exit from the practice of providing financial statement audit services to all public companies. As a result, our Audit Committee has begun the process to select and appoint a new auditor. We filed an 8-K with the full details on July 27, 2023. And I would note that we've also seen a number of similar filings from other Armanino clients. Regarding the search for a new auditor that we are considering several options, including U.S. and China-based auditors.

That concludes our prepared remarks. Now let's open the call for any questions that you may have. Operator, Please go ahead.

(Operator Instructions) The first question comes from Quinn Bolton with Needham & Company.

Congratulations on the very strong second quarter results. I guess kind of big picture question for the second half of the year. I know you're not increasing your 2023 guidance. But since you're not increasing the guidance, it looks like revenues may flatten out or at least grow at a much, much slower rate in the second half. How are you thinking about the second half was the second quarter really that sort of COVID supply chain catch up and you see more normalization now? Or just any thoughts you could share on the second half or the shape of revenue in the second half would be helpful.

Yes. Okay, Quinn. In general, actually, looking at the last couple of years, our second half year is stronger than the first year and the first half of the year, right? I think that trend probably continue. And regarding to the supply chain, I should say, it's much better than last year, but still feel some components get constrained. I'm thinking maybe second half of this year are going to improve further and for supply chain. Mark, anything you want to add on?

Yes, you bet. So Quinn, our overall outlook, obviously, we factor in, we're looking at a flattish overall CapEx for overall China. I think there's a lot of debate about that, but we see better growth from our new products, share gains and new customers. First half, second half, I mean, you can look at the numbers, but it's about 40%, 60%. And so we'd expect Q3 to be up and depending on where the year plays out, that Q4 could be down, which is -- that's a normal type seasonality for us. Yes.

Got it. So sort of perhaps a return to more of a down fourth quarter post a couple of years of COVID where I think seasonality was largely at the window. Got it. Second question, just Mark for you on the auditor. I know that this has been a thorn in your side for probably a couple of years now. To the extent that you select a China-based auditor, can you just sort of walk us through? I believe there's now a process in place where PCAOB has oversight of Chinese-based auditors. And so if you select China, that shouldn't have any impact on your listing status in the U.S. But I know it's been a subject that's raised lots of questions. So can you just walk us through the latest implications to the extent you do select a China-based auditor?

Yes, you bet. No, thanks for that question, Quinn. So I think as you know, yes, last year, we did cut over to Armanino as a U.S.-based auditor, and they completed a good audit for our 2022 signed by officially a U.S. auditor. But yes, the rules, there was a positive development late last year the PCAOB was able to inspect the China auditors. And so the so-called HIFCA Act, which would result in a delisting if you were on a certain list, 3 consecutive years in a row, that became mood at least for the foreseeable now that we believe the PCAOB has been granted the inspections in China. So that's why we pointed out in terms of our possibilities range U.S. auditor that we could certainly go with a China-based auditor as well and maintain our listing at this point.

Great. And then a final quick one for me. David, you mentioned sort of expanding placements of track in PECVD this year. Can you give us sort of any sense how broad you may be able to go with those evaluations to an expanding customer base or to an expanding base within your existing customers with track in PECVD?

Yes. Actually, as I mentioned, we do have also differentiated technology with the PECVD, right? So now we actually have 2 models, one for memory application, another one for the real logic, right, foundry application. So this year, we're working with probably both set of customer, and we try to get the evaluation going on. And obviously, revenue will come next year, right? So PECVD is a huge market and also has really our second dry product other than our furnace. We have a really high expectation and also we put a lot of effort and put both on this product and also expecting a very good outcome, good future and the driver of ACM continue to grow in the next few years at a high growth rate. So it's an exciting product.

The next question comes from Suji Desilva with ROTH Capital.

Congrats on the progress here. So just digging a little bit on the ACP furnace category. I just want to make sure with the decline here. What was the furnace products uptake, the New York product uptake still ramping? And -- or within is there just supply chain catch up across that category?

Great. Great. Actually, for by end of last year, and we only have -- we got a free customer. However, this year, we're really -- we expect to increase more customer, right? Probably by end of this year, we're hoping our customer base becomes double digit. So revenue-wise, yes, not as quickly as contribution as a copper plating. However, our customer base increased quite dramatically, right? And now we also have other high-temperate neo and also LPCVD and nitride and [poly]. And also we -- 2 of our, what we call the ALD process, tool also on the customer qualification process and still they have very promised data. So we'll see that will be playing in probably next year, right, more of a contribution to revenue. As I said, this is also a quickly growing market for us.

Okay. Great. That's good progress there. And then for the Korea operations, David, could you give us what the next milestones are as you start to get the land there and try to build that out? Just give us some kind of things to look for in the next several quarters to track up?

Great. Actually, Korea and SK Hynix become a customer 2011, right? It's really long-term relationship. We sell a lot of the tools onto the Wuxi Fab. And obviously, now they're building more of their property building factory more advanced nodes, most likely they could probably focus on the cleaning side. That's really because to our effort, more focused on the current market, and that's why we're continue increase investment, and we're still continuing higher more R&D people. And like our furnace and PECVD and also their Track in real joint development between PMB Shanghai and Korea.

So we're now really fully engaged with Hynix regarding not just only cleaning, right? Cleaning actually we have about 90% of the process that we can cover and also engage with copper plating, and further revenue also obviously furnace in the PECVD and also Track we also try to -- we probably become the major supplier in the future for Hynix. Meanwhile, we'll be seeing a strong R&D and also their manufacturer base in Korea were really helping us expanding our technology further to U.S. and Taiwan region and also Europe market. So we really do R&D manufacturing center is really what makes ACM to be in build, flexible with a dynamic fab situation.

Okay. Great. And it sounds like -- sounds like a good opportunity. And then lastly, just want to sneak one last question in. Just on your advanced packaging. With the talk in the market of AI and high bandwidth memory, TMSC and Intel you may have all these areas. I'm just curious, you see an exposure there to the growth in AI, Gen AI or is that advanced node versus trailing nodes? Or just give me a sense of the advanced packaging opportunity, you may be able to lever -- you may deleverage you there?

Yes, actually good. And ACM has really good product line up, right, for their real advanced packaging. And we have really, I call -- flagship of the tool for copper plating. And also we have wider copper wet process tool, including coater, developer, wet etcher, stripper and cleaning, right? So it's real well preparation. Also we do have SFPs just astonishing and also for this advanced package application. So we are well positioned. And like, yes, we are fully engaged with the other top-tier customers. And also, we are most engaged with the customer in China, too. So it's really -- I see a very growing market and like I said, AI GPT definitely driving high end of the advanced packaging and application. So our product really prefer for this application.

The next question comes from Christian Schwab with Craig-Hallum Capital.

Great. In the prepared comments, we talked about market share gains inside of China, do you think that -- can you give us an elaboration on that? Are we gaining market share across all product lines? Or is it more targeted at cleaning and ECP and furnace? Any color there would be great.

Yes. Actually, you look at the cleaning, right? And the cleaning product were increased 55%. I mean, 3 years ago, we only have a single wafer or semi-critical tool, most single wafer side. However, the last 2, 3 years, introduced auto bench, which is really major, I call the market for their 45 nano technology and above also including power device. So this is really driving our cleaning tool continue to increase. And obviously, copper plating, and it also increased quite a lot, right? Now we're definitely #1 in like a local supplier, in cleaning #1, and also the copper plate #1.

And also, I say the furnace wise, as I mentioned, will continue to increase the customer base. And that will be also the -- look in the next few years will also become bigger driving for the revenue, too. More than that is also we now spread our cleaning and copper plating and in outside China, right? That's really exciting. We see that gain their intention or gain their interest and from their top-tier customers outside China.

Great. A question for Mark. Given the supply chain issues and COVID costs are kind of behind this or at least greatly diminished. Is it time to potentially raise the gross margin target range for the company on a consistent basis? Or is there just still too much volatility in mix to raise it at this point?

Yes, I'll take that. So on the gross margin, you're correct. I mean, we've come in at the upper end of our range or maybe a little better past few quarters or so. Christian, I think we -- our gross margins are quite dependent upon product mix, new products and old products and that we have a range across them. I think for now, we're going to keep our 40% to 45% range. Of course, we always like to do as well as we can, but we're not ready to move that range higher.

The next question comes from Chaolien Tseng with Credit Suisse.

The first question is about the customer new order momentum. Can you talk about the recent customer new order momentum? Do you see that improving or compared with the first half of this year? And can you talk about the order momentum by -- again because we are thinking that back-end equipment order had earlier correct. We are thinking that is of now the back-end order may have some improvement, especially from the Chinese customers.

Okay. Actually, as you see, our front-end customer, existing customer, obviously, their continued spending, right, and that's driving our growing. Also, we see significant second tier, third tier customer order coming, right? That's really also become the -- actually driving our shipments and also driving our revenue too. So that's onsite. And also the banking really depends. Some customers still like our policy, and some customers still is kind of investment too, right? You say -- I should say, this year, obviously not good as last year, right? So looking forward, I should say still keep going, but maybe some customers still slow down, but there's some cost invest for back end. Well, we'll see.

Okay. So from -- we understand that there are many, many Tier 2, Tier 3 merger fabs in China. I mean, ASML talked about the same a few weeks ago. But we are just thinking if we look at front-end revenue exposure, do you -- would you say that right now the revenue contributions or from the order momentum, would you say it's about maybe 1/3 from these Tier 2 to 3 customers already or even maybe health of the new orders from the Tier 2, 3 customers?

Yes. I really cannot give the real breakdown, right? I mean this is real dynamic moving. For the end of this year, we can give you really what's the top 10, whatever, 10% above customer, right? I can say some second tier and third-tier customer will become, obviously, adding to our 10% customer end of this year, right? That you can see the people -- I mean, all the second-tier growth. But at this moment, I really cannot break it down percentage-wise. But a significant or, I can say, shipment revenue come from the second tier, third tier customer because they are all driving for the mature nodes.

Okay. Significant revenue and shipments from, okay.

Yes, increase rate and bulk rate.

Okay. Do you mean significant revenue shipments from the Tier 2, 3 customers? Or do you mean the significant increase…

Increase, increase, increase.

Increase. Okay. And next question is when you look across your product across clearly copper plating furnace, do you still have any tools that with over 6 month (inaudible). We still hear from a small number of international equipment suppliers that there remains some tools still with over 6 months lead time. So I'm just wondering if it's the same for ACM?

Yes. Actually, last year, right, we do have a real experience a long leading time, right, some product, 10 months, sometimes even more than 10 months. This year, actually, that time has been shrinking, right? Actually, every still between 5 to 7 months, depends on product. It also depends on your specific components we have get in the hand. So as we improve -- and we're expecting continue to improve.

And next question is that when I look at the revenue by region, it's very great to see that the revenue from China actually grew quite recently in second quarter, although that's still just 7% revenue. So I'm just wondering, is this increased mainly from the front-end or back-end business.

You mean outside China?

Yes. In the second quarter -- yes, that's about second quarter revenue.

Yes, our majority is still come from in China right now, right? But we see that -- as I said, there are outside China sales activity keep grow and more attention from the customer, as I mentioned, in Korea. And Korea, so far, we have a Hynix as a major customer. Also, we see the traction for other packaging and customer in Korea, interest in our plating tool. And the same thing, we also have a customer from U.S. continue interest in other application tool and also we have also European customer, right? So we'll say, in the next few years, we're expecting a lot of happen for our international efforts. And for cleaning, plating and also expecting furnace you also play another revenue driving our international efforts.

Okay. Understand. And David if possible may I just ask about furnace because I was -- I have been expecting some decent revenue growth from the furnace. So, I see in the second quarter, it seems that still not yet a lot of new revenues from furnace. So I'm just thinking, can you share a bit more about the furnace? I mean -- I know you talked about this earlier already, but I'm just thinking from the revenue perspective will be the major revenues, new revenues from furnace coming from 4Q this year or maybe from 2024.

I will say, we'll have more customer base increase, right, as mentioned earlier. And by end of last year, we have 3 customers for furnace. And this year, probably we're hoping by end of this year, we can increase the total customer number to double digits, right? So again, revenue-wise, it's hard to tell, right, new customer will take time. So I will say more of the revenue we expect to happen next year, or contribution.

(Operator Instructions) The next question comes from Mark Miller with The Benchmark Company.

Congratulations on a very strong quarter. Questions about the eval tools in Europe and also U.S. When would you expect them to be revenues? Would that be next year probably?

Good question. Actually, we have this tool to evaluation, and we are expecting while I mean the tool get a qualification end of this year, right? So either end of this year or beginning next year, that's our expecting become record revenue.

Are there any other tools outside of Europe and U.S. and especially in China that are eval tools?

Outside China, or inside China?

Inside China.

We also have eval tool, right, inside China and I mentioned about the foreign company they have their manufacture in China, and we have a copper plating. We also have our cleaning tool, also have advanced packaging tool, right, in those 4 ring company, which has a factory in China. We'll continue expanding other Phase II. Obviously, we also have a evaluation tool into the Chinese customer, too, right, which is quite a bit in the furnace and some plating tool and also our variety of cleaning tool, right? For instance, we have a Bevel etcher and also [silicon CO2] and those tools customer for evaluation.

Just a couple of housekeeping questions. What was stock-based comp and cash from operations?

Mark, stock-based comp was about -- it's in the press release, but about $2 million for Q2. And then cash flow from operations in Q2 was positive, about $6 million.

The next question comes from Robert McKay with Blue Lotus.

I wanted to ask about inventory levels. They've been a little bit high for a couple of quarters. And I was just kind of wondering what the reason for that is? And if we can expect to see that come down in later quarters?

Mark, do you want to take that question?

Yes, I didn't hear the question.

Can you speak louder? I think his questions are regarding our inventory and a little higher, he said, the next few quarters is going to be reduction or not? That was his question.

Okay. Yes, we did not. Can you hear us on our end? We didn't hear that question.

Yes, I can hear you. I can hear you.

Okay. Yes. Okay. So David repeated the question. So it's about the inventory. Is that correct?

Yes, exactly. Just wondering why it's a little bit high. Yes.

Okay. So again, I didn't hear the question well, but I think I can address it if it has to do with the inventory. So our inventory at the end of the June quarter, there were 3 factors to it. So it was $471 million. It was split between raw materials, about $192 million. Work in process was $109.8 million, and then finished goods inventory was $168.9 million. So we did -- the finished goods inventory, a lot of that is tools that are under evaluation being evaluated by our customers. And so that is an important metric for us.

In terms of our overall inventory levels, we are working on bringing them down a bit. We built some inventory, one based on our forecasts. But also given the supply chain tightness. But as David noted, some of the supply chain is loosening up. So we're looking to bring those inventories down to more normalized levels.

Got it. Super clear. I don't know if you can hear me now.

Your sound is still light, can you close to speaker?

I'm on my headset. Yes, I'll speak as loud as I can. I was wondering if there's kind of any information you can share on the orders from Huahong on its new expansion this year? Are we already factoring that into our revenue guidance?

Yes. Actually, Huahong has been, as I said, (technical difficulty) So they have also multi fab building different locations, right? So it's really our strategic customer, (inaudible) quite a bit of contribution for our revenue in the future, right? And this year, something happened, so a lot of starting in next year, next 2 years. It's a great customer. And also, we have a strategic relationship, our cleaning tool, fab cleaning tool, our furnace, right, is wider, acceptor evaluates and then codify it in the Huahong Group. So it's great. We're looking for customer continue to grow and also we'll continue give a better service supporting with our portfolio product to the Huahong Group.

Got it. Got it. Very clear. Once again, sorry for my microphone quality. I just wanted to follow up a question on the revenue guidance. I think our revenue guidance is still quite wide. And I just wondering if there's anything you can share about why it remains so wide?

Yes. Well, I mean, probably, you're right, a little wider. I mean that's still they're uncertain, right? So we're probably in the Q3 time line, will be more lateral of their guidance. And at this moment, I think we'll be keeping, not changing.

Got it. So is there just some uncertainty about some orders from some customers. Is that the reason for the wide range?

Can you repeat the question? You sound too small. Can you repeat again?

Yes. I just wanted to know if the wide range is maybe due to some uncertainty about some customer orders or -- what kind of information did you need the most thinking about our guidance for the year?

Yes. I think probably you are right, some still orders, some still components of each, right, both together, that probably give us kind of wider projection right now.

Got it. Got it. Great. And then the last question I'll ask, and maybe I'll go back in the queue after is about the dividend. I think we -- a Shanghai subsidiary issued quite a large dividend. And I was wondering what we -- what our plans are for that dividend if we're just going to invest it and what we'll finally do with that, yes?

Great. Actually, as we announced, we have a dividend, right, and go to the shareholder in Shanghai company, which is 82.5% comes to the ACM USA. We've been doing usual and investing in marketing, also continue invest in even our other R&D activity development center in the U.S. and also we're playing in other game too, right? So we're going to put the money into the -- we'll enhance our sales and marketing and build capability, healthy product and go to their first year customer and look.

Our next question comes from Mark Miller with The Benchmark Company.

How should I think about modeling R&D for the remainder of this year?

Mark, I'm sorry, can you repeat the question?

How should I think about modeling R&D expense for the rest of the year?

R&D expense, yes, let me give us some thoughts on that. R&D overall was about 12.7% non-GAAP in 2021, 15.3% in 2022. So we're looking at for the year, about 14% to 15% would be the right range for R&D.

I show no further questions at this time. I would now like to hand the call back over to David Wang for closing remarks.

Thank you, operator. Thank you all for participating on today's call and for your supporting. Before we close, Yujia is going to mention our upcoming Investor Relations events. Yujia, please.

Thanks, David. From August 22 to 23, we will be attending our Annual Needham Semiconductor and Semicap Conference. From August 29 to 30, we will be attending at the 20th Annual Jefferies Semiconductor Conference in Chicago. On September 13, we will present at the 10th Annual Benchmark TMT Conference in New York City.

As a reminder attendance at the conference is by invite only. For interested investors, keep contacting our respected sales attendant to register and schedule one-on-one meetings with he management team. All right. So this concludes the call. You may now disconnect. Thanks.