ACM Research, Inc.

ACM Research, Inc. (ACMR) is a Delaware corporation, founded in 1998, that supplies advanced capital equipment to the global semiconductor industry. The company operates primarily through its subsidiary, ACM Research (Shanghai), Inc. (ACM Shanghai), which is a limited liability corporation in mainland China, with ACM Research holding a 74.6% direct ownership interest ¹. ACM Shanghai's shares trade on the Shanghai SciTech innovAtion boaRd (STAR Market) under the symbol SSEC: 688082.SS ². The company's principal corporate office is in Fremont, California, while a substantial majority of product development, manufacturing, support, and services are conducted in mainland China through ACM Shanghai ³. Additional product development and subsystem production are performed in Korea through a subsidiary of ACM Shanghai, and sales and marketing activities for ACM Shanghai products in North America, Europe, and certain regions in Asia outside mainland China are conducted through ACM Research ⁴. The global wafer fab equipment (WFE) market is estimated by Gartner to have grown by 11.0% from $111.6 billion in 2024 to $123.9 billion in 2025, and is projected to increase by 11.8% to $138.5 billion in 2026 ⁵.

ACM Research's core business model revolves around developing and selling differentiated process solutions for yield-critical and performance-sensitive steps in semiconductor manufacturing. The company generates revenue from the sale of wet-cleaning, plating, furnace, PECVD, track, and other front-end processing equipment, as well as advanced packaging equipment ⁶. The business model involves a "demo-to-sales" process where evaluation equipment, or "first tools," are placed with selected customers ⁷. Revenue recognition for "first tools" occurs upon customer acceptance, which can take 24 months or longer, while "repeat shipments" are recognized upon delivery ⁸. The company's primary customer segments include foundry, logic, and memory chip makers, as well as wafer assembly and packaging customers ⁹. A substantial majority of sales have historically been to customers in Asia, particularly mainland China, and this trend is anticipated to continue ¹⁰.

For the fiscal year ended December 31, 2025, ACM Research reported total revenue of $901.309 million ¹¹. Cost of revenue was $501.242 million ¹², resulting in a gross profit of $400.067 million ¹³ and a gross margin of 44.4% ¹⁴. Operating expenses totaled $290.638 million ¹⁵, leading to income from operations of $109.429 million ¹⁶. Net income for the period was $121.893 million ¹⁷. Net income attributable to ACM Research, Inc. was $94.078 million ¹⁸, with diluted EPS of $1.37 ¹⁹. Cash and cash equivalents, restricted cash, short-term time deposits, and long-term time deposits combined were $1,132.553 million at December 31, 2025 ²⁰. Total short-term borrowings were $74.041 million ²¹, and total long-term borrowings (net of current portion) were $178.930 million ²². Net cash used in operating activities was $(10.325) million ²³.

Comparing 2025 to 2024, total revenue increased by 15.2% from $782.118 million ²⁴ to $901.309 million ²⁵. Gross margin decreased from 50.1% in 2024 ²⁶ to 44.4% in 2025 ²⁷, a decline of 570 basis points ²⁸. Income from operations decreased from $150.998 million in 2024 ²⁹ to $109.429 million in 2025 ³⁰. Net income attributable to ACM Research, Inc. decreased from $103.627 million in 2024 ³¹ to $94.078 million in 2025 ³². Diluted EPS also decreased from $1.53 in 2024 ³³ to $1.37 in 2025 ³⁴. The increase in revenue for 2025 was attributed to higher sales across all product categories, reflecting a longer-term commitment by mainland China-based customers to increase production capacity and market share changes and product cycles ³⁵. The decrease in gross margin was primarily due to revenue mix between product categories and a higher provision for inventory ³⁶.

During 2025, ACM Shanghai completed a private offering, selling 38,601,326 ordinary shares at RMB 116.11 per share, raising net proceeds of approximately $623.0 million ³⁷. This offering resulted in ACM Research's ownership interest in ACM Shanghai declining to 74.6% ³⁸. In January 2025, ACM Shanghai received the share certification for an investment of $16.737 million in Ninebell, increasing the company's equity interest in Ninebell to 36.2% ³⁹. Subsequent to the Private Offering in September 2025, the company's equity interest in Ninebell decreased to 34.9% ⁴⁰. The company also acquired a commercial facility in Hillsboro, Oregon, for $7.75 million on October 1, 2024, to expand its R&D, production, and demonstration capabilities in the U.S. market ⁴¹.

The company's product and service lines are categorized into three main areas. Revenue from single wafer cleaning, Tahoe, and semi-critical cleaning equipment totaled $625.964 million ⁴², representing 69.5% of total revenue in 2025 ⁴³. This category includes proprietary SAPS, TEBO, and Tahoe technologies designed for effective particle removal on various wafer surfaces and for cost and environmental savings ⁴⁴. Revenue from ECP (front-end and packaging), furnace, and other technologies totaled $199.551 million ⁴⁵, or 22.1% of total revenue in 2025 ⁴⁶. This segment includes Ultra ECP ap for advanced packaging, Ultra ECP map for front-end copper plating, Ultra fn Furnace for dry processing at high temperatures, and Ultra Pmax PECVD tools for film uniformity and reduced stress ⁴⁷. Revenue from advanced packaging (excluding ECP), services, and spares totaled $75.794 million ⁴⁸, or 8.4% of total revenue in 2025 ⁴⁹. This category encompasses a range of single-wafer products for back-end wafer assembly and packaging, such as coaters, developers, photoresist strippers, scrubbers, wet etchers, and copper-plating equipment, with a focus on custom-made, differentiated equipment ⁵⁰. The company estimates its current product portfolio addresses approximately $21 billion of the 2025 global WFE market, with wafer cleaning equipment addressing $7.3 billion, PECVD equipment $5.3 billion, Track equipment $3.0 billion, furnace equipment $2.6 billion, ECP equipment $1.5 billion, and stress-free polishing, advanced packaging, wafer processing, and other processing equipment addressing more than $1.2 billion ⁵¹.

Management expects gross margin to range between 42% and 48% for the foreseeable future, with direct manufacturing costs approximating 50% to 55% of revenue and overhead costs totaling approximately 5% of revenue ⁵². The company aims to maintain its gross margin by continuing to develop proprietary technologies that avoid pricing pressure for its wet cleaning equipment and by actively managing operations through principles of operational excellence ⁵³.

The company is investing in the development of new products for several adjacent front-end process steps, including furnace, PECVD, and track, leveraging common design principles, modular platforms, and deep process integration ⁵⁴. This multi-product approach is intended to support customers across a larger portion of the manufacturing flow, deepen technical engagement, and create additional growth opportunities over time ⁵⁵. The company estimates an approximately $5.3 billion market opportunity for its Plasma-Enhanced Chemical Vapor Deposition (PECVD) equipment, $3.0 billion for its Track equipment, and $2.6 billion for its furnace equipment ⁵⁶. These platforms are currently at earlier stages of customer evaluation and adoption, but hold meaningful long-term growth potential ⁵⁷.

Operationally, the company expects sales and marketing expense to increase in absolute dollars for the foreseeable future, driven by continued investment in hiring additional employees and expanding marketing programs in existing or new markets ⁵⁸. Research and development expense is also expected to increase in absolute dollars as the company continues to invest in R&D to advance its technologies and support and enhance its cleaning, plating, advanced packaging, furnace, and future product offerings to maintain technology leadership ⁵⁹. The company's headcount grew by 24% in 2025, 27% in 2024, and 32% in 2023, and it plans to continue expanding operations by adding new offices, locations, and employees ⁶⁰.

Planned capital allocation includes using proceeds from ACM Shanghai's Private Offering, which raised approximately $623.0 million ⁶¹, for research and development, capital expenditures, and working capital ⁶². The company also intends to retain all available funds and any future earnings to finance the operation and expansion of its business, and does not anticipate paying any cash dividends in the foreseeable future ⁶³. Purchases of property and equipment (net of proceeds from disposals) were $57.7 million in 2025 ⁶⁴.

Management has explicitly flagged several structural headwinds and execution risks. The addition of ACM Shanghai and ACM Korea to the BIS Entity List prohibits any party worldwide from furnishing hardware, software, or technologies subject to U.S. export controls jurisdiction to these entities without authorization ⁶⁵. This has impacted the procurement of items, technology, and software from the United States and certain commodities subject to U.S. export controls from outside the U.S. for manufacturing products ⁶⁶. The company believes the impact on its supply chain and ability to produce tools can be managed through the transition of certain components, but it will require customer qualification to maintain consistent quality standards ⁶⁷. The new regulations may also limit the ability of ACM Shanghai and ACM Korea personnel to provide services to U.S. customers ⁶⁸. Furthermore, the U.S. government has implemented an outbound investment review mechanism, the Outbound Investment Security Program (OISP), which could restrict certain types of private investment in ACM Research in the United States, although the COINS Act, signed in December 2025, is expected to reverse the OISP's application to certain U.S. companies, including ACM Research, once implementing regulations are issued by March 2027 ⁶⁹.

Geographic, regulatory, and macro factors also present constraints. Gartner estimates China WFE decreased by 1.7% from $40.0 billion in 2024 to $39.3 billion in 2025, and is expected to decrease by 9.9% to $35.4 billion in 2026 ⁷⁰. The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has significantly expanded U.S. export controls on advanced IC products, related manufacturing equipment and technology, and supercomputers where the destination or ultimate end user is in mainland China, Hong Kong, and Macau ⁷¹. These rules require an export license for additional types of semiconductor manufacturing equipment, with license applications reviewed under a presumption of denial ⁷². Japan and the Netherlands have also implemented similar semiconductor-focused export controls, which could further negatively impact ACM Shanghai's supply arrangements and its customers' ability to scale production ⁷³. U.S. officials have suggested potentially targeting Chinese origin legacy semiconductors with additional tariffs, and a Section 232 investigation into semiconductors is underway, which could result in specific tariffs or other import curtailment actions ⁷⁴.

The company faces material risks including potential intervention by mainland China central government authorities in ACM Shanghai's operations, which could change quickly and without notice, potentially requiring permissions or approvals for ACM Research's U.S. listing or imposing new restrictions on ACM Shanghai's operations ⁷⁵. The company is also exposed to the U.S. Holding Foreign Companies Accountable Act (HFCA Act), which could lead to delisting from Nasdaq if its auditor, Ernst & Young Hua Ming LLP, cannot be inspected by the PCAOB for two consecutive years ⁷⁶. Regulatory actions, such as the addition of ACM Shanghai and ACM Korea to the BIS Entity List, prohibit furnishing U.S. export-controlled hardware, software, or technologies to these subsidiaries without authorization, impacting procurement and potentially future production plans ⁷⁷. Furthermore, the U.S. government's Outbound Investment Security Program (OISP) and the Comprehensive Outbound Investment National Security Act (COINS Act) may limit investment opportunities and capital raising from U.S. investors ⁷⁸. The semiconductor industry's cyclicality can lead to substantial variations in demand for products, and the company's dependence on a small number of customers (four customers accounted for 52.2% of revenue in 2025 ⁷⁹) makes it vulnerable to order reductions or cancellations ⁸⁰. Supply chain disruptions due to global events, reliance on a limited number of suppliers (including single-source suppliers like Ninebell Co., Ltd. for robotic delivery systems ⁸¹), and potential defects in complex tools could harm operations, increase costs, and damage customer relationships ⁸². Intellectual property protection, particularly in mainland China where the majority of IP is developed and owned by ACM Shanghai, is a significant concern due to historical ambiguities in enforcement ⁸³. Cybersecurity breaches could degrade business operations, lead to data loss, intellectual property theft, and reputational damage ⁸⁴.

Management's message to shareholders emphasizes the company's focus on supplying advanced, innovative capital equipment to the global semiconductor industry, with a strategic portfolio of intellectual property to support and protect key innovations. They highlight the importance of their local presence in mainland China to address the growing market by working closely with regional chip manufacturers to understand specific requirements, encourage adoption of their SAPS, TEBO, Tahoe, ECP, furnace, PECVD, Track, and other technologies, and design innovative products and solutions ⁸⁵. Management intends to continue investing in sales and marketing by hiring additional employees and expanding marketing programs in existing or new markets, and to increase research and development spending to advance technologies and enhance product offerings ⁸⁶. The company aims to maintain its gross margin between 42% and 48% for the foreseeable future ⁸⁷. They also note the use of proceeds from the ACM Shanghai Private Offering, approximately $623.0 million ⁸⁸, for research and development, capital expenditures, and working capital ⁸⁹. A key strategic priority is to leverage their "demo-to-sales" process to establish a referenceable base of leading foundry, logic, and memory chip makers to influence broader market adoption ⁹⁰.