ACM Research (NASDAQ: ACMR) delivered a second quarter that was stronger than the headline numbers suggest. Revenue of $292.9M beat consensus by $23.6M, a 9% upside on a 36% year-over-year gain. Non-GAAP diluted EPS of $0.61 came in $0.19 above the estimate. But the composition of that beat matters more than the magnitude.
The growth was not evenly distributed. The ECP (front-end and packaging), furnace and other technologies category surged 168% to $128.5M. Advanced packaging (excluding ECP), services & spares rose 153% to $31.4M. Together, those two categories accounted for 55% of revenue, up from 28% a year ago. Meanwhile, the legacy single-wafer cleaning, Tahoe and semi-critical cleaning equipment segment fell 14% to $133.0M. ACM is not just growing; it is rotating its revenue base toward newer, higher-growth product lines at an accelerating pace.
The 2,000th ECP chamber shipped during the quarter. A tangible milestone. It follows 500 chambers in 2022 and 1,500 in 2025, meaning the ramp from 1,500 to 2,000 took roughly half the time of the prior 1,000. That volume trajectory suggests the technology has moved beyond early adoption into high-volume manufacturing across logic, memory and 3D packaging. The company is selling more chambers, and it is selling them faster.
Gross margin of 46.0% slipped 250bp from 48.5% a year ago, landing above the midpoint of ACM's long-term 42% to 48% target range. The compression is not alarming. It reflects the mix shift toward ECP and advanced packaging, which carry different margin profiles than the mature single-wafer cleaning line. Non-GAAP operating margin held essentially flat at 19.2% versus 19.3%, as operating leverage from the revenue scale offset the gross margin drag. Operating expenses grew 17% but fell to 29.0% of revenue from 33.8%, a 480bp improvement that shows the operating model is scaling.
The GAAP net income line of $89.0M ($1.23 diluted EPS) includes a $69.6M unrealized gain on short-term investments held by ACM's Shanghai subsidiary. Strip that out, and the non-GAAP net income of $44.5M ($0.61 diluted EPS) still represents a 19% year-over-year increase. The unrealized gain is a quarterly mark-to-market that has no bearing on the operating business. Focus on the non-GAAP figure.
Management raised full-year 2026 revenue guidance to $1.125B to $1.175B, up from $1.08B to $1.175B. The new midpoint of $1.15B implies 27% growth from 2025, at the upper end of the 25% to 30% range management cited. The raise is modest in absolute terms, but it comes after a quarter that could have justified a more aggressive move. Management is signalling caution, likely reflecting the ongoing impact of international trade policy and the timing of first-tool acceptances at customer sites. The guidance range is wide, with the $50M spread representing about 4% of the midpoint, suggesting genuine uncertainty rather than precision.
Net cash of $1.0B provides substantial financial flexibility. The balance sheet is not a constraint on growth. The question is whether ACM can deploy that capital effectively as it pursues its long-term $4B revenue target, which would require roughly 3.5x current run-rate revenue. New product platforms including SPM cleaning, Track, PECVD and horizontal panel-level plating are in customer evaluations. The first production order for the Ultra ECP ap-p panel-level tool, with delivery in the first half of 2027, gives some visibility into that pipeline.
What to watch next: the pace of new product evaluations converting to production orders, particularly for the panel-level plating platform, and whether gross margin stabilises or continues to drift lower as the mix shifts further toward ECP and advanced packaging. The revenue beat is real, but the margin trajectory will determine whether the earnings power keeps pace.