ACM Research Inc
NASDAQ:ACMR
Earnings Call Analysis
Q4-2023 Analysis
ACM Research Inc
Looking forward, the company has set an ambitious revenue goal for 2024, expecting to achieve between $650 million and $725 million, which signifies a year-over-year growth of 23% at the midpoint. This outlook rides on the tailwinds of a projected growth in the China equipment market. In the past year, the company's fourth-quarter revenue soared by 56.9% to $170.3 million, and full-year revenue jumped to $557.7 million, marking a 43.4% increase. This growth was driven by a surge in sales across various segments, with single-wafer cleaning Tahoe and semi-critical cleaning equipment leading the charge with a 48% growth for the full year.
Examining the revenue streams closer, we notice that single-wafer cleaning Tahoe and semi-critical cleaning units generated $122.3 million in the fourth quarter alone, a significant uptick of 63.9%. Meanwhile, ECP, furnace, and other technologies contributed $32.1 million, showing a notable 59.0% increase compared to the same period last year. Advanced packaging (excluding ECP services and spares), while being a smaller part of the portfolio, also exhibited positive momentum with a 15.8% rise in the quarter, culminating in a 31.5% growth for the year. Notably, fourth-quarter shipments declined by 29% to $140 million. However, nearly all finished goods inventory is anticipated to be shipped in the upcoming year, pointing towards a robust pipeline.
Fiscal prudence remained evident in the company's ability to manage its margins. Gross margin for the fourth quarter dipped slightly to 46.8% from 49.7%, while the full-year figure rose to 49.8% from the previous year's 47.4%. Operating income mirrored this healthy margin trend, climbing to $36.0 million with an operating margin increase to 21.2% in the fourth quarter. For the full year, operating margin improved to 22.1% from 17.2% in 2022. Operational efficiency and prudent cost management seem to be cornerstones of the company's financial strategy.
Operating expenses witnessed an uptick, quarter-over-quarter, from $34.8 million to $43.6 million. This increase was largely due to substantial investments in new product initiatives, which are expected to reap benefits in the longer term. Despite these rising costs, net income for the fourth quarter more than doubled to $28.7 million, and for the full year, it nearly doubled too, reaching $107.4 million. Earnings per share followed suit, increasing to $0.43 in the fourth quarter and $1.63 for the full year, reflecting gains in efficiency and overall profitability.
The company's balance sheet remained solid with cash and cash equivalents totaling $304.5 million at the end of the year. Inventories ended at $545.4 million, an increase from the third quarter, indicating a well-stocked pipeline ready to meet future demands. This stockpile is well-positioned for expected shipments in 2024. Capital expenditures totaled $61.9 million for the year and are anticipated to rise to around $80 million for the following year, signaling ongoing investments in growth and innovation.
To maintain its competitive edge, the company plans to allot roughly 16% of its 2024 expenses to R&D, with sales and marketing and G&A expected to account for about 7-8% and 5.5%, respectively. Foreign markets, especially Korea, are given special emphasis as relationships improve with key customers. Another promising sign is the progression towards mass production of the specialized SAPS Megasonic tool that caters to specific customer needs and a secondary tool which has already shipped in the second quarter—a testament to the company's continued investment in innovation and customer satisfaction .
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Good day, and thank you for standing by. Welcome to the ACM Research Fourth Quarter and Full Year 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 first speaker today, [ Stephen Boyle ] Managing Director of the [ Blue Shirt Group ]. Please go ahead.
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 filing 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 has 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 Slide 13 and 14.With that, let me now turn the call over to David Wang, who will begin with Slide 3. David?
Thanks, Steven. Hello, everyone, and welcome to ACM Research Fourth Quarter and the Fiscal Year 2023 Earning Conference Call. Please turn to Slide 3.I am pleased with our fourth quarter results, which conclude a strong year. For the fourth quarter 2023, we delivered USD 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 deposit.For shipments. The shipment for the full -- for fourth quarter were $140 million, down 29% year-to-year. Shipment for the full year were $597 million, up 11%. Our third quarter call we noted delay of shipment to several customer due in part to adjustment in their fab build outs. While we don't normally share our expectation for shipment, I will provide more color in this case. We view the low shipments for the first quarter to be a 1 quarter event. We expect to deliver nearly all of the delayed tool during year 2024. We expect our first quarter shipment to be much higher than the first quarter levels, even with a normal Chinese New Year shutdown. And we expect our total shipment to grow faster than revenue for the full year 2024.Now I will discuss the key growth drivers both for their market and specific for 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 grow 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 batch clean and our ECP tool for the front end and packaging. Two, continue spending at 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, a semi-critical cleaning product grew 48% in 2023 and represent 72% of total revenue. ACM offers what we believe in the industry the most comprehensive cleaning portfolio. We support nearly 90% of our all cleaning process step 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 [indiscernible] Tahoe and Tebo single wafer cleaning products deliver technical feature not available from any of our competition. We enter into the [ 30 ] millimeter auto bench cleaning market several years ago, is proving to be a significantly winner for the mature node [indiscernible]. We have delivered more than 70 auto bench tools today and note their very strong contribution in 2023 with good profitability. By our estimate, ACM become the largest China-based supplier for auto bench in 2023.For Tahoe we made a 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 qualifying for mass production and 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 their 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 our [indiscernible] cleaning tool, high temperature SPM single wafer cleaning tool and the super-critical CO2 dry cleaning tool. Revenue from ECP, furnace and other technology grow 33% in 2023 and representing 19% of total revenue. We hit 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 on the way. We expect an even broader customer footprint and good revenue contribution in 2024.We also made great progress with our furthest a R&D 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 spares grew 31.5% in 2023 and represent 9% of total revenue. This category includes a range of packaging tools including coder, developer, scrubber, [indiscernible] sweeper and [indiscernible] and service and the spare parts. Last year, we also introduced Ultra C v vacuum cleaning tools and we continue to explore new products and technology to participate in the next generation of advanced packaging.We believe ACM is 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 industrial looks to -- looks for packaging innovation such as 2.5D and 3D interposers and fan-out. These are critical for high performance computing application such as AI, which is seeing increasing demand globally.Finishing up on product. We made a good progress with our new Track and PECVD platform. We are engaged in active dialogue with our key customer and intend to release additional evaluation tools this year. As with our cleaning, plating and furnace product line or Track and PECVD platform, both the proprietary technology that position them as a successful choice for major customer globally, including both in and outside China. We are making a 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 the [indiscernible] tools. We are engaged with multiple customer for our PECVD tool. We are expecting significant progress for PECVD product development and evaluation in 2024.Turn to Slide 5 for our product SAM. We estimate our product portfolio address a $16 billion market opportunity. Our business is now primary driven by 3 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 this year by product in the Mainland China alone. We have achieved scale with a differentiated product that has been improving in the China market, and we have put resources to -- 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 a market leader in cleaning and cleaning tool with sales to nearly every semiconductor manufacturers. Our sales and service teams are now achieving deeper adoption of our products across this customer base. Beyond establishing the player, market growth is being driven by an influx of well-founded new entrants. For 2023, we had 3 10% customers. SMIC was our top customer at 18% of the sales. SIEn was our second largest at 15%. And CXMT was our third at 13%. We had a stronger contribution from second and third tier semiconductor manufacturers, including power, analog, CMOS, image sensors and compound semiconductors and other devices and some new customers. Total second and third tier player represent about 30% of our 2023 cells. On the international front, I'm pleased to report that a large U.S. manufacturer qualify it first SAP convenient tool for revenue in the first quarter. We also plan to deliver Ultra C v backside cleaning and bevel edge tool to this customer in the second quarter of 2024. This demonstrates deep relationships which we believe can lead to production orders. Furthermore, this enhanced ACM brand position us to attract new opportunities with other major global customers. Beyond the U.S., we saw our first evaluation tool Ultra C SAPS-V cleaning tool at a major Europe-based global semiconductor manufacturers in the fourth quarter. To support growth, we made progress on our facility expansion in China and other region.Please turn to Slide 8. In China, construction of our Lingang Production and R&D Center is nearly complete. We expect initial production in middle 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 [ 250 ] employees in Korea with the facility including sales, administration, small-scale production and the development lab with the clean room to support our internal R&D and wafer demos for the customer evaluation. And we are making initial plans to build in 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 the 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 the range of USD 650 million to USD 725 million this implying 23% year-over-year growth at the midpoint. We are reiterating this outlook today. We believe that 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.
Thank you, David. Good day, everyone. Please turn to Slide 11. Unless I note otherwise, I will refer to non-GAAP financial measures, which excludes stock-based compensation, unrealized gain loss on short-term investments. A 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 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 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% to 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 off for 2023. For 2024, we are planning for R&D in the 16% range, sales and marketing in the 7% to 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 Instructions] Our first question comes from the line of Suji Desilva with Roth MKM.
Congratulations on the progress. Great job there. Can you talk about the international customers? It sounds like you're making progress there. Just trying to gauge the pace of that. As you guided '24 full year, do you have some contribution from 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?
Okay. Thanks, Suji. Okay. I think this tool we ship a year ago, right? Then there are [indiscernible] service pros engineer hardworking and then we have a first tool gather acceptance. So this what we get in to the production, their mass production. And also, I want to see that this specific SAPS Megasonic tool, we will address the customer needs and we can see -- get a good continuing performance and also much less particle consumption. So that's really customer like the tool. And we believe this is definitely [indiscernible] qualification will lead to their additional order for the same customer, right? So meanwhile, and as I mentioned, we also have a secondary different tool, which is backside and [indiscernible] was ordered by the same customer, and we shipped them in the second quarter of this year. So oversee that is this is a key customer in the U.S., and we want this to be another example and also encouraging other big player and adapt our differential technology, right? So we'll see that will be the good outcome. And also, there is, of course, international, I call it revenue contribution to our year 2024 forecast. We can see that too.
Yes. Suji, I'd just add for 2024, I mean a lot of things go into our forecast. We don't have a -- 2024 will be a building year for us for the international, and we'd expect some additional contribution. Whether we get an order that ships for -- one or several tools that ships this year or next year, that will depend on how big it could be for us.
Okay. And my second question is, can you just explain again the shipments and what the delays, what the dynamic was there? maybe didn't catch it in the prepared remarks.
Yes. And I think in the Q3, we also in the call mentioned about that, the delay. And it's because of our customers, they're building the plan and there is certain, I call -- I call the plan delay or the installation, not enough resource or floor plan not fast enough. Anyway, there is continued investment going on. So those portions of the delay, as I said, it will be definitely delivered in 2024. And that's also added to our shipments. Those 2 have been built already. It's going to also save the cash. We spent the last year already. So we'll see that happen. And I would say that also the total shipment that we expect in 2024, and there will be quite an increase. We believe even will increase rates higher than the call revenue increase, right, in compared to 2023. So that's another, I can say, a great year for us in 2024.
Okay. That sounds like [indiscernible]. My last question is around the overall demand environment. I'm trying to understand in China whether the memory market has stabilized and capacity is increasing again across NAND and DRAM. And maybe is someone like CXMT actually progressing to DRAM production versus development effort?
Yes. I mean you can see that our 6MT [indiscernible] customer in year 2023, right? So we're expecting this memory business to continue to grow, and again it's other memory in China is still a multiyear expansion. And so we see that as a good market for us. And also we see that continue to grow.
Our next question comes from the line of Charlie Chan with Morgan Stanley.
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 primary 2024 outlook revenue growth more than 30%. I remember you were like 37% Y-o-Y growth. So I calculate your midpoint suggesting the ACMR, it's growing like 23% Y-o-Y. So what's the discrepancy between your ACM Shanghai entity versus the parent company?
Yes. Well, there's a slight difference like a revenue recognition rule, and we're using the Chinese GAAP versus U.S. GAAP. So that's the primary reason show the difference of both forecast. Yes, in general, see that is U.S. GAAP will be first tool, take a long time evaluation. And after that, we can recognize repeat order just on the shipment, right? But in China, GAAP is you have to -- that is new or it's a repeat order. You have really installed and basically accept kind of initial acceptance by the customer, then you can recon revenue. So that's different show the core revenue difference. In other words, probably you can see China as a forecast [indiscernible] we have a lot of probably new tool and the new customer, right? That's what the quickly can be recognized revenue versus the U.S. recognition rule. So that's the difference that we see there.
I see. So my next question is about the China CapEx sustainability, right? I mean, right now, as you said, right, it's for local efficiency, but you also see that some of your major customers, their gross margin already dropped to like 10% gross margin. So I'm worried about the sustainability. So any kind of science or lead indicator we should pay attention to, right, to check the China CapEx seasonability.
Yes. Well, I should say that, as we said a couple of times before is that China's fab is still in the multi-expansion no matter the logic or memory right? Also, a lot of our, I call it, mature nodes is related to the [ EVIGBT ] is still in the, I call it product in the building process. Also, I want to 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, I'd still say the next few years in China and this market will continue to grow.
Okay. Got you. So yes, one last question, and I will be 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?
Charlie, thanks for asking. So, yes, I said in my prepared remarks, I gave some detail there, but I'll go ahead and repeat it. We're anticipating our target model for gross margin is unchanged at the 40% to 45%. Obviously, we've done better than that for the last several years, but that's kind of the margin level that we're -- that's our target level. And then for the OpEx levels, and these are non-GAAP numbers. We expect R&D -- continue to invest pretty strong in R&D. And you should always expect as we're a growing company to spend at about a 16% level is our outlook for non-GAAP in 2024. Sales and marketing, we expect in the 7% to 8% range and then G&A about 5.5%.
[Operator Instructions] Our next question comes from the line of Mark Miller with The Benchmark Company.
Well, first of all, congratulations on another great quarter. But just wanted to get a little more into the OpEx in the December quarter. You did mention the sales and marketing was down. You said it was because of a demo system. I'm confused why that fell so much?
Yes. It was a significant decline in the sales and marketing promotion tools. So we took that out of the sales and marketing expense. And going forward, you won't see that expense level in the sales and marketing. And so we looked 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% to 8% non-GAAP next year.
Can you give us a little -- you say 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 in terms of when you expect revenue generation?
In terms of -- yes, David, he's asking about our evals at our customers. Maybe I'll let you address that, and then I can add to it --
In general, right?
Yes. Yes. And so that's -- I think, Mark, our finished goods inventory is largely comprised of evaluation tools at our customers. And so I think, yes, David.
Yes. Let me see. That is obviously there's finished goods in the customer side for evaluation, mostly in the first tool. And those first tool can be the first of a new customer, right, especially their first-time buyers. They want to make sure those tool are and not just qualify for to itself, sometimes qualify the whole production line. You look at the yields come out. That takes some time, right? Also, there's also the first tool is pretty brand-new tool, and we need a customer to -- well, we call the beta tool, right? You need a real evaluate that, and that sometimes takes a process 1 year, even 1.5 years. It depends on how the other 2 first building team mature, how mature it is. So those kind of tools where we consider as our first pool.
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?
Okay. Great. So Hynix actually is a real long-term customer, right? And we are fully engaged with the customer, I mean, Hynix right now because we're a real emphasized our investment also expansion in our R&D force also manufacturing in Korea. We do have about 150 employees in Korea right now. As I mentioned, we bought the land and also to building factory there at a future proper time. So key point I'm trying to see that is that we have a multiple tool like cleaning, copper-plating and including furnace and they're also divided PECVD and also Track. So all these 5 tool were trying to engage with the customer in Hynix and because of a relationship and also because of our local R&D force and also we offer customers with differential product and differentiate technology, which is quite an interest or getting interest from the customer in Korea.
[Operator Instructions] Our next question comes from the line of Christian Schwab with Craig-Hallum Capital.
Fantastic year and great quarter. So I'm trying to better understand the 2 or 3 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?
Okay. Great. I think the ACM there were started beginning even from the Bay Area, right? In ACM our R&D philosophy is we call differentiation, right? And each product, we're building like cleaning, you already know that SAPS, Tebo and Tahoe is pretty differentiated product. And same thing for the copper plating. So our goal is building differential product in this moment, widely has been accepted by the local customer in China. And with those differentiated products and the technology, I think we can penetrate or get into international, right? The example is we already get into the Hynix. And also, we have one bigger manufacturer in U.S. adapted SAPS already. Also have a European company also adapt the SAPS Megasonic cleaning tool. Beyond that, the next one is Tahoe, Tebo, plus we have supercritical CO2 dry with Tahoe. With Tebo tool what will be exciting for their patent wafer [indiscernible] tool, right? And beyond that is also, as I said, we have also furnace. And for furnace ALD and including copper plating. And it was another very [indiscernible] product and to be able to penetrate international market. So as I say that, of course, we developed PECVD and the Track also has our proprietary differentiated design point. So ACM really developed the, I call this differential product, which will offer differentiation, offer the different benefit than our other competitors doing. And that's our confidence and also our proven record. We can put the tool and sell in the international market.
Great. So congrats again on a very differentiated and better product than your competitors. Just a quick last follow-up then is on the international front, 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 why you thought you would outgrow the market. So I'm just wondering if you're willing to provide more clarity there.
Yes. 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 going to be kind of development. So really substantially, most of that growth that we're planning for in 2024 is from the China market, the Mainland China market. New product cycles, customer -- additional customer traction.
Okay. And then I guess my very last question then is the TAM for your products outside of China globally is substantially larger. 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 starting in '24. Is that a '26-'27 or '25 event? Or is it too early to know?
Yes, 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 products we qualify here now. So those are -- I think our goal will say, reaching $1 billion even by China market only, right? Within the next few years, we should be -- we should go. And simultaneously, in a couple of years, 3 years ago, we started also global market expectation -- I mean, penetration. So the key is really how we're executing our international sales plan. Now we have hiring good people and the sales guy in Korea. Actually also in the U.S., in Europe. And we'll see that quite a bit of progress. And let's put this way, for the international market and as we talk to the customer, everybody looking for back again, differentiation, right? So with that in mind and as I mentioned, cover product we have right now, we do have a confidence as the first, I call the U.S. customer adapt our tool. We see more of our customers may that additional other tool too. So we see that happen. But then you ask in which year is how to well 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, definitely will penetrate into the international market. Even asking the next few years is a very exciting -- we have to quickly executing our plan and to quickly reaching our goal. And eventually, as I mentioned a couple of times before, we want half from Mainland China, half from outside Mainland China, right? So like you said, the real revenue contribution actually more bigger outside Mainland China.
Our next question comes from Charlie Chan with Morgan Stanley.
So I think the new customer contribution cost are right [indiscernible]. So it was in our radar screen. So I'm not sure why [indiscernible] becomes such a big customer. And if you can provide some more detail, is that purely 12-inch equipment or also including some [ A&G ] equipment.
Yes. I think the primary we sell to the [indiscernible] is a 12-inch tool, right? And also there, most expansion now is mature now. So we actually sell a lot of our auto bench. They are probably the largest auto bench customer right now for us in China. So of course, they also buy the wafer, right? So that's the why primary driving that to become the second largest customer in 2023. And looking forward, I think also we have a very good relation and engage with them in copper plating, our furnace and also [indiscernible]. And so that's another contribution, we can say from [indiscernible]. And it's a great customer, and we're happy with our, I said, our auto bench tool be largely deployed and in -- seen in the production line. Okay. So yes, so it's a great business, right?
So I'm assuming comes out your lawyer about the U.S. export control before you're shipping to other customers in [indiscernible] is that the right assumption?
Well, I mean, we're straight to follow all the export control rule, right, as said here. And for those whatever restrict the customer, we have to be very carefully U.S. parts, right? And [indiscernible] and also non-U.S.A technology, yes. So we are pretty very carefully managing and control and follow strictly with the standard export control role of the U.S.
Okay. Okay. And next question is about the advanced memory, HPM. So can you talk about your opportunity in Korea for the HPM production line? I think we asked that question last quarter as well. And also, there's some recent news about China may also have the own HPM production. So can you comment about your potential opportunity at Korea and also China customers?
Yes. Well, let's say this way. Obviously, Hynix is the #1 provider, right? They're also a technology leader, HPM. And I think our current product definitely involve their process. And also, we see the HPM either this is a copper plating tool, right, TSV, order the packaging, whatever they need it. So that's the next tool we are working as closely with Hynix. And I should [indiscernible] other tool further, and we're working with them too. So there's a lot of -- including cleaning, by the way, actually other cleaning other than we sold them SAPS Megasonic, also working with the Hynix too. So it's a very good opportunity. HPM is a greater, I call it demand and greater [indiscernible] they need a lot of differentiated technology, further supporting HPM development in the future. In China, really not much we can hear right now, really, right? It's just -- I mean not much we have right now. So in other words, we are really focused on the outside China for HPM expansion for the business opportunity.
Yes. So based on your comments and also other global equipment vendors, right? They're talking about HPM this year, the global FTE revenue comes from the memory. So why Hynix? Is that your kind of the top customer? Or do you think this year Hynix can contribute more than 10% of revenue given HPM opportunity and also the memory spending recovery?
Well, I mean, obviously, more than -- I mean other than Hynix also looking for other players, right, is here. Then the memory market, HPM is really moving, right? That's key here. So we see that the demand there, as I mentioned, right? This is -- for us, cleaning copper plating is really demand there. I don't know what time come back to 10% of our customer is not to predict it right now. So really I will see, right, especially second half year or next year, it's really -- we want to see something recover from DRAM market.
Our next question comes from the line of Edison Lee with Jefferies.
So, David and Mark, congratulations on a great quarter. I have just one question, which is the contribution of your 3 customers for 2023 which has amounted to almost 50% of the revenue. So can you give us some color as to whether you think that those top 3 customers will continue to be top 3 customers in 2024? And what is your expectation on the contribution to the top 3 customers in 2024?
Yes. Actually, I look at this year's order [indiscernible], right? And the top 3 customer continue, I think, will grow, right? And they probably still are major customers. Also, we see the additional body of our home. They have also the expansion plan. And they are probably simultaneously building 2 fab this year and also they are building property next year, 3 fab simultaneously, right? So that's another bigger I say the top customer will come back in our 2024 revenue contribution.
Yes. Maybe a related question is that based on your revenue guidance, at the midpoint, that implies 20% plus growth. And so that's significantly below the growth rate in 2023. So do you think the key driver there is just some digestion period? Or 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?
Yes. I think the key driving force is I want to see that China WFE market is continued, people say maybe I mean, slightly increased, at least a flat or we see that as #1 important. But second and most important, we have our game for our, I call it, a higher growth rate is because we have continued a new customer coming in and also we have gained our market share from existing customers and also do have like a furnace will do the more contribution this year and for revenue, right? So that's all the added together, that's our -- give us a basis to forecast our growth rate higher than the growth rate of the WFE market in China.
Okay. And the last one is that for 2024, what do you think is the percentage of overseas revenue in your guidance?
Yes, Edison, we didn't -- we're not -- we didn't break it out, but we did a couple other questions about that. We mentioned it wouldn't be a very significant contribution to 2024. We expect that to build in the coming years, but it's not a very -- a significant piece. It's -- we think it will be bigger than it was this year. And so you got the numbers and you will get the international numbers shortly, but it's not going to become a huge -- I wouldn't expect it to be more than 10%, right? Yes.
Yes. But I should say growth rate is higher, right? I mean, of course, obviously, there's a number. So then the real absolute number, like you said, we're still increasing number of the total revenue.
I'm showing no further questions at this time. I'd like to hand the conference back over to Stephen Boyle for closing remarks.
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 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.
Thank you.
Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.