10q10k10q10k.net

What changed in ACM Research, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of ACM Research, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+366 added−412 removedSource: 10-K (2025-03-03) vs 10-K (2023-12-31)

Top changes in ACM Research, Inc.'s 2024 10-K

366 paragraphs added · 412 removed · 307 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

51 edited+2 added−17 removed101 unchanged
Biggest changeOur Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, are also available free of charge on our website at www.acmrcsh.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.
Biggest changeOur Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those documents filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, are also available free of charge on our website at www.acmr.com a s soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. 17 Table of Contents Investors should note that we announce material information to our investors and others using filings with the SEC, press releases, public conference calls, webcasts or our website (www.acmr.com), including news and announcements regarding our financial performance, key personnel, our brands and our business strategy.
We intend to continue to invest in research and development to support and enhance our existing cleaning products and to develop future product offerings to build and maintain our technology leadership position. Intellectual Property Our success and future revenue growth depend, in part, on our ability to protect our intellectual property.
We intend to continue to invest in research and development to support and enhance our existing products and to develop future product offerings to build and maintain our technology leadership position. Intellectual Property Our success and future revenue growth depend, in part, on our ability to protect our intellectual property.
Highlights of our SAPS II equipment include: 10 Table of Contents • compact design, with footprint of 2.65m x 4.10m x 2.85m (WxDxH), requiring limited clean room floor space; • up to 8 chambers, providing throughput of up to 225 wafers per hour; • double-sided cleaning capability, with up to 5 cleaning chemicals for process flexibility; • 2-chemical recycling capability for reduced chemical consumption; • image wafer detection method for lowering wafer breakage rates; and • chemical delivery module for delivery of dilute hydrofluoric acid, RCA SC-1 solution, functional de-ionized water and carbon dioxide to each of the chambers.
Highlights of our SAPS II equipment include: • compact design, with footprint of 2.65m x 4.10m x 2.85m (WxDxH), requiring limited clean room floor space; • up to 8 chambers, providing throughput of up to 225 wafers per hour; • double-sided cleaning capability, with up to 5 cleaning chemicals for process flexibility; • 2-chemical recycling capability for reduced chemical consumption; • image wafer detection method for lowering wafer breakage rates; and • chemical delivery module for delivery of dilute hydrofluoric acid, RCA SC-1 solution, functional de-ionized water and carbon dioxide to each of the chambers.
We select these independent representatives based on their ability to provide effective field sales, marketing forecast and technical requirement updates for our products. In the case of representatives, our customers place purchase orders with us directly rather than with the representatives. 14 Table of Contents Our sales have historically been made using purchase orders with agreed technical specifications.
We select these independent representatives based on their ability to provide effective field sales, 13 Table of Contents marketing forecast and technical requirement updates for our products. In the case of representatives, our customers place purchase orders with us directly rather than with the representatives. Our sales have historically been made using purchase orders with agreed technical specifications.
TEBO equipment solves the problem of pattern damage caused by transient cavitation in conventional jet spray and megasonic cleaning processes, providing better particle 12 Table of Contents removal efficiency with limited material loss or roughing. TEBO equipment is being evaluated by a select group of leading memory and logic chip customers.
TEBO equipment solves the problem of pattern damage caused by transient cavitation in conventional jet spray and megasonic cleaning processes, providing better particle 11 Table of Contents removal efficiency with limited material loss or roughing. TEBO equipment is being evaluated by a select group of leading memory and logic chip customers.
We have focused our selling efforts on establishing a referenceable base of leading foundry, logic and memory chip makers, whose use of our products can influence decisions by other manufacturers. We believe this customer base has helped us penetrate the mature chip manufacturing markets and build credibility with additional industry leaders.
We have focused our selling efforts o n establishing a referenceable base of leading foundry, logic and memory chip makers, whose use of our products can influence decisions by other manufacturers. We believe this customer base has helped us penetrate the mature chip manufacturing markets and build credibility with additional industry leaders.
In addition to using silicon wafers for chip production, chip manufacturers routinely process wafers through a limited portion of the front-end fabrication steps in order to evaluate the health, performance and reliability of those steps. Manufacturers also use wafers for non-product purposes such as inline monitoring.
In addition to using silicon wafers for chip production, chip manufacturers routinely process wafers through a limited portion of the front-end fabrication steps in order to evaluate the health, performance and reliability of 9 Table of Contents those steps. Manufacturers also use wafers for non-product purposes such as inline monitoring.
Conventional processes have proven ineffective, however, for process nodes of 20nm or less, and we believe the increased yield that can be achieved by 11 Table of Contents using TEBO technology for nodes up to 70nm can more than offset the cost of the additional time in utilizing TEBO technology.
Conventional processes have proven ineffective, however, for process nodes of 20nm or less, and we believe the increased yield that can be achieved by using TEBO technology for nodes up to 70nm can more than offset the cost of the additional time in utilizing TEBO technology.
For this reason, we devote significant financial and personnel resources to research and development. Our research and development team is comprised of highly skilled engineers and technologists with extensive experience in megasonic technology, cleaning processes and chemistry, mechanical design, and control system design.
For this reason, we devote significant financial and personnel resources to research and development. Our research and development team is comprised of highly skilled engineers and technologists with extensive experience in megasonic and other technologies, cleaning processes and chemistry, mechanical design, and control system design.
Our front-end customers have included: Shanghai Huali Microelectronics Corporation, together with Huahong Semiconductor Ltd., collectively known as The Shanghai Huahong (Group) Company, Ltd., or The Huali Huahong Group, a leading mainland China-based foundry; Semiconductor Manufacturing International Corporation, or SMIC, a leading mainland China-based foundry; SK Hynix Inc., a leading Korean memory chip company; Yangtze Memory Technologies Co., Ltd., or YMTC, a leading mainland China-based memory chip company, together with one of its subsidiaries; ChangXin Memory Technologies, or CXMT, a leading mainland China-based memory chip company; and SiEn, a leading mainland China-based power-semiconductor chip company.
Our front-end customers have included: Shanghai Huali Microelectronics Corporation, together with Huahong Semiconductor Ltd., collectively known as The Shanghai Huahong (Group) Company, Ltd., or The Huali Huahong Group, a leading mainland China-based foundry; Semiconductor Manufacturing International Corporation, or SMIC, a leading mainland China-based foundry; SK Hynix Inc., a leading Korean memory chip company; Yangtze Memory Technologies Co., Ltd., or YMTC, a leading mainland China-based memory chip company, together with one of its subsidiaries; ChangXin Memory Technologies, or CXMT, a leading mainland China-based memory chip company; Shenzhen Pengxinwei Integrated Circuit Manufacturing Co., Ltd., or PXW, a leading mainland China-based semiconductor foundry company; and SiEn, a leading mainland China-based power-semiconductor chip company.
We focus on providing custom-made, differentiated equipment that incorporates customer-requested features at a competitive price. 13 Table of Contents For example, our Ultra C Coater is used in applying photoresist, a light-sensitive material used in photolithography to transfer a pattern from a mask onto a wafer.
We focus on providing custom-made, differentiated equipment that incorporates customer-requested features at a competitive price. For example, our Ultra C Coater is used in applying photoresist, a light-sensitive material used in photolithography to transfer a pattern from a mask onto a wafer.
For additional information, see “—Our Technology and Product Offerings—Wet Cleaning Equipment for Front End Production Processes.” 18 Table of Contents Available Information We are required to file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission, or the SEC.
For additional information, see “—Our Technology and Product Offerings—Wet Cleaning Equipment for Front End Production Processes.” Available Information We are required to file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission, or the SEC.
Our modular approach supports a wide range of 8 Table of Contents customer needs and facilitates the adaptation of our model tools for use with the optimal chemicals selected to meet a customer’s requirements.
Our modular approach supports a wide range of customer needs and facilitates the adaptation of our model tools for use with the optimal chemicals selected to meet a customer’s requirements.
We have 57 patents granted internationally protecting our SAPS technologies, and we have filed 11 international patent applications for key TEBO technologies, and 5 for Tahoe, in accordance with the Patent Cooperation Treaty. In addition we have patented technologies for SFP and ECP that are embedded in certain tools.
We have 63 patents granted internationally protecting our SAPS technologies, and we have filed 13 international patent applications for key TEBO technologies, and 5 for Tahoe, in accordance with the Patent Cooperation Treaty. In addition, we have patented technologies for SFP and ECP that are embedded in certain tools.
We do not have any insurance coverage for intellectual property infringement claims for which we may be obligated to provide indemnification. Additional information about the risks relating to our intellectual property is provided under “Item 1A.
We do not have any insurance coverage for intellectual property infringement claims for which we may be obligated to provide indemnification. 15 Table of Contents Additional information about the risks relating to our intellectual property is provided under “Item 1A.
We estimate, based on third-party reports and on customer and other information, that our current product portfolio addresses approximately $16 billion of the 2023 global wafer fab equipment, or WFE, market.
We estimate, based on third-party reports and on customer and other information, that our current product portfolio addresses approximately $18 billion of the 2024 global wafer fab equipment, or WFE, market.
We consider our employee relations to be good. We compete in the highly competitive semiconductor equipment industry, with operations principally in mainland China. Attracting, developing, and retaining skilled and experienced employees in research and development, manufacturing, sales and marketing, and other positions is crucial to our ability to compete effectively.
We compete in the highly competitive semiconductor equipment industry, with operations principally in mainland China. Attracting, developing, and retaining skilled and experienced employees in research and development, manufacturing, sales and marketing, and other positions is crucial to our ability to compete effectively.
Coaters typically provide input and output elevators, shuttle systems and other devices to handle and transport wafers during the coating process. Unlike most coaters, the Ultra C Coater is fully automated.
Coaters typically provide input and output elevators, shuttle systems and other 12 Table of Contents devices to handle and transport wafers during the coating process. Unlike most coaters, the Ultra C Coater is fully automated.
We encourage investors to review the information we post on these channels. We may from time to time update the list of channels we will use to communicate information that could be deemed material and will post information about any such change on www.acmrcsh.com.
Information that we post on our corporate website could be deemed material to investors. We encourage investors to review the information we post on these channels. We may from time to time update the list of channels we will use to communicate information that could be deemed material and will post information about any such change on www.acmr.com.
Our particular areas of focus include development of the following: • new cleaning steps for Ultra C SAPS cleaners for application in logic chips and for DRAM, and 3D NAND technologies. • new cleaning steps for Ultra C TEBO cleaners for FinFET in logic chips, gates in DRAM, and deep vias in 3D NAND technologies. • new cleaning steps for Ultra Tahoe cleaners for application in logic chips and for DRAM and 3D NAND technologies. • new dry technologies such as supercritical CO2 dry and advanced IPA dry for DRAM, and logic technologies. 15 Table of Contents • new hardware, including new system platforms, new and additional chamber structures and new chemical blending systems; • new software to integrate new functionalities to improve tool performance; and • support for the ongoing evaluations and commercialization efforts and product extensions for the newly introduced PECVD and Track product categories.
Our particular areas of focus include development of the following: • new cleaning steps for Ultra C SAPS cleaners for application in logic chips and for DRAM, and 3D NAND technologies. • new cleaning steps for Ultra C TEBO cleaners for FinFET in logic chips, gates in DRAM, and deep vias in 3D NAND technologies. • new cleaning steps for Ultra Tahoe cleaners for application in logic chips and for DRAM and 3D NAND technologies. • new dry technologies such as supercritical CO2 dry and advanced IPA dry for DRAM, and logic technologies. • new hardware, including new system platforms, new and additional chamber structures and new chemical blending systems; • new software to integrate new functionalities to improve tool performance; and • support for the ongoing evaluations and commercialization efforts and product extensions for the newly introduced PECVD and Track product categories. 14 Table of Contents Longer term, we are working on new proprietary process capabilities based on our existing tool hardware platforms.
By product line, we estimate an approximately $5.2 billion market opportunity is addressed by our wafer cleaning equipment, $4.3 billion by our Plasma-Enhanced Chemical Vapor Deposition, or PECVD, equipment, $2.2 billion by our furnace equipment, $2.5 billion by our Track equipment, $800 million by our electro-chemical plating, or ECP, equipment, and more than $900 million by our stress-free polishing, advanced packaging, wafer processing, and other processing equipment.
By product line, we estimate an approximately $5.9 billion market opportunity is addressed by our wafer cleaning equipment, $4.7 billion by our Plasma-Enhanced Chemical Vapor Deposition, or PECVD, equipment, $2.8 billion by our Track equipment, $2.4 billion by our furnace equipment, $1 billion by our electro-chemical plating, or ECP, equipment, and more than $1.2 billion by our stress-free polishing, advanced packaging, wafer processing, and other processing equipment.
Many of the US patents and applications have also been filed internationally, including one or more of the European Union, Japan, mainland China, Singapore, Korea, and Taiwan. Specifically, we own patents in wafer cleaning, electro-polishing and plating, wafer preparation, and other semiconductor processing technologies.
Many of the US patents and applications have also been filed internationally, including one or more of the European Union, Japan, mainland China, Singapore, Korea, and Taiwan. Specifically, we own patents in wafer cleaning, electro-polishing and plating, wafer preparation, and other semiconductor processing technologies. We manufacture advanced single-wafer cleaning systems equipped with our SAPS, TEBO and Tahoe technologies.
Revenue from advanced packaging (excluding ECP), services and spares totaled $50.5 million, or 9.1% of total revenue, in 2023, $38.4 million, or 9.9% of total revenue in 2022, and $37.3 million, or 14.4% of total revenue in 2021. Selling prices for our tools generally range from $0.5 million to more than $5 million.
Revenue from advanced packaging (excluding ECP), services and spares totaled $52.2 million, or 6.7% of total revenue in 2024, $50.5 million, or 9.1% of total revenue in 2023, and $38.4 million, or 9.9% of total revenue in 2022. Selling prices for our tools generally range from $0.5 million to more than $5 million.
Our Customers Since 2009 we have delivered more than 765 tools to our customers , more than 650 of which were repeat orders or acceptances upon contractual performance obligations having been met and thereby generated revenue to us.
Our Customers Since 2009 we have delivered more than 1,120 tools to our customers, more than 920 of w hich were repeat orders or acceptances upon contractual performance obligations having been met and thereby generated revenue to us.
Revenue from single wafer cleaning, Tahoe and semi-critical cleaning equipment totaled $403.9 million, or 72.4% of total revenue in 2023, $272.9 million, or 70.2% of total revenue in 2022, and $189.2 million, or 72.8% of total revenue in 2021.
Revenue from single wafer cleaning, Tahoe and semi-critical cleaning equipment totaled $578.9 million, or 74.0% of total revenue in 2024, $403.9 million, or 72.4% of total revenue in 2023, and $272.9 million, or 70.2% of total revenue in 2022.
To date, a substantial majority of our sales of single-wafer wet-cleaning equipment for front-end manufacturing have been to customers located in Asia, and we anticipate that a substantial majority of our revenue from these products will continue to come from customers located in this region for the foreseeable future.
To date, a substantial majority of our sales of semiconductor capital equipment have been to customers located in Asia, and we anticipate that a substantial majority of our revenue from these products will continue to come from customers located in this region for the foreseeable future.
SAPS V includes SAPS II features with the following upgrades: • compact design, with footprint of 2.55m x 5.1m x 2.85m (WxDxH), requiring limited clean room floor space; • up to 12 chambers, providing throughput of up to 375 wafers per hour; • chemical supply system integrated into mainframe; • inline mixing method replaces tank auto changing, reducing process time; and • improved drying technology using hot isopropyl alcohol and de-ionized water.
SAPS V includes SAPS II features with the following upgrades: • compact design, with footprint of 2.55m x 5.1m x 2.85m (WxDxH), requiring limited clean room floor space; • up to 12 chambers, providing throughput of up to 375 wafers per hour; • chemical supply system integrated into mainframe; • inline mixing method replaces tank auto changing, reducing process time; and • improved drying technology using hot isopropyl alcohol and de-ionized water. 10 Table of Contents TEBO Technology, Applications and Equipment TEBO Technology We developed TEBO technology for application in wet wafer cleaning during the fabrication of 2D and 3D wafers with fine feature sizes.
Revenue from ECP (front-end packaging), furnace and other technologies totaled $103.4 million, or 18.5% of total revenue, in 2023, $77.5 million, or 19.9% of total revenue in 2022, and $33.2 million, or 12.8% of total revenue in 2021.
Revenue from ECP (front-end packaging), furnace and other technologies totaled $151.1 million, or 19.3% of total revenue in 2024, $103.4 million, or 18.5% of total revenue, in 2023, and $77.5 million, or 19.9% of total revenue in 2022.
This could trigger technical support and indemnification obligations in some of our customer agreements. These obligations could result in substantial expenses, including the payment by us of costs and damages related to claims of patent infringement.
Our customers could become the target of litigation relating to the patent or other intellectual property rights of others. This could trigger technical support and indemnification obligations in some of our customer agreements. These obligations could result in substantial expenses, including the payment by us of costs and damages related to claims of patent infringement.
Of these employees, 1,416 were located in mainland China and the Taiwan region, 159 were located in Korea and 15 were 17 Table of Contents based in the United States. We have never had a work stoppage, and none of our employees are represented by a labor organization or subject to any collective bargaining arrangements.
Of these employees, 1,839 were located in mainland China and the Taiwan region, 160 were located in Korea and 24 were based in the United States. We have never had a work stoppage, and none of our employees are represented by a labor organization or subject to any collective bargaining arrangements. We consider our employee relations to be good.
By delivering megasonic energy in a highly uniform manner on a microscopic level, SAPS technology can precisely control the intensity of megasonic energy and can effectively remove random defects of all sizes across the entire wafer in less total cleaning time than conventional megasonic cleaning products, without loss of material or roughing of wafer surfaces.
The mechanical force of cavitations generated by megasonic energy enhances the mass transfer rate of dislodged random defects and improves particle removal efficiency. 8 Table of Contents By delivering megasonic energy in a highly uniform manner on a microscopic level, SAPS technology can precisely control the intensity of megasonic energy and can effectively remove random defects of all sizes across the entire wafer in less total cleaning time than conventional megasonic cleaning products, without loss of material or roughing of wafer surfaces.
Retention of these key employees is critical to secure our future growth and technology development. To assist in employee retention and recruitment, we offer employee housing in the Lingang region of Shanghai nearby our new research and development and production center.
To assist in employee retention and recruitment, we offer employee housing in the Lingang region of Shanghai nearby our new research and development and production center.
We may in the future initiate claims or litigation against third parties to determine the validity and scope of proprietary rights of others.
We may in the future initiate claims or litigation against third parties to determine the validity and scope of proprietary rights of others. In addition, we may in the future initiate litigation to enforce our intellectual property rights or the rights of our customers or to protect our trade secrets.
In conventional megasonic cleaning processes, megasonic energy forms bubbles and then causes those bubbles to implode or collapse, blasting destructive high-pressure, high-temperature micro jets toward the wafer surface.
Cavitation is the formation of bubbles in a liquid, and transient cavitation is a process in which a bubble in fluid implodes or collapses. In conventional megasonic cleaning processes, megasonic energy forms bubbles and then causes those bubbles to implode or collapse, blasting destructive high-pressure, high-temperature micro jets toward the wafer surface.
In 2021, 48.9% of our revenue was derived from two customers: The Huali Huahong Group accounted for 28.1% of our revenue; and YMTC accounted for 20.8% of our revenue. Sales and Marketing We market and sell our products worldwide using a combination of our direct sales force and third-party representatives.
In 2022, 43.8% of our revenue was derived from three customers: The Huali Huahong Group; accounted for 18.2% of our revenue; SMIC accounted for 15.6% of our revenue, and YMTC accounted for 10.0% of our revenue. Sales and Marketing We market and sell our products worldwide using a combination of our direct sales force and third-party representatives.
We purchase some of the components and assemblies that we include in our products from single source suppliers. We believe that we could obtain and qualify alternative sources to supply these components. Nevertheless, any prolonged inability to obtain these components could have an adverse effect on our operating results and could unfavorably impact our customer relationships. Please see “Item 1A.
We believe that we can obtain and qualify alternative sources to supply these components. Nevertheless, any delays or prolonged inability to obtain or to replace th ese components could have an adverse effect on our operating results and could unfavorably impact our customer relationships. Please see “Item 1A.
The planned 1,000,000 square foot facility will incorporate state-of-the-art manufacturing systems and automation technologies and will provide the floor space to support significantly more production capacity and related research and development activities when fully staffed and supplied. See “Item 2. Properties,” of Part I of this report.
The facility, when fully completed, is intended to comprise more than 1,000,000 square feet and incorporate state-of-the-art manufacturing systems and automation technologies to expand our production capacity and support additional research and development activities. See “Item 2. Properties,” of Part I of this report.
We have demonstrated the damage-free cleaning capabilities of TEBO technology on patterned wafers for feature nodes as small as 1xnm (16 to 19 nanometers, or nm), and we have shown TEBO technology can be applied in manufacturing processes for patterned chips with 3D architectures having aspect ratios as high as 60‑to‑1. 7 Table of Contents • Tahoe technology for cost and environmental savings.
We have demonstrated the damage-free cleaning capabilities of TEBO technology on 1 The information contains statistical data and estimates, including forecasts, that are based on information provided by Gartner®, "Forecast: Semiconductor Capital Spending, Wafer Fab Equipment and Capacity, Worldwide, 4Q24 Update, Bob Johnson et al., 26 December 2024." 7 Table of Contents patterned wafers for feature nodes as small as 1xnm (16 to 19 nanometers, or nm), and we have shown TEBO technology can be applied in manufacturing processes for patterned chips with 3D architectures having aspect ratios as high as 60‑to‑1. • Tahoe technology for cost and environmental savings.
In addition, semiconductor manufacturers must make a substantial investment to qualify and integrate new equipment into semiconductor production lines. Some manufacturers began fabricating chips for the 5nm node in 2020 and the 3nm node in 2022.
In addition, semiconductor manufacturers must make a substantial investment to qualify and integrate new equipment into semiconductor production lines.
Each successive advanced process node has led to finer feature sizes of interconnects such as contacts, which form electrical pathways between a transistor and the first metal layer, and vias, which form electrical pathways between two metal layers.
Each successive advanced process node has led to finer feature sizes of interconnects such as contacts, which form electrical pathways between a transistor and the first metal layer, and vias, which form electrical pathways between two metal layers. Advanced nodes have also resulted in higher aspect ratios for interconnect structures, with thinner, redesigned metal barriers being used to prevent diffusion.
Our ability to recruit and retain such employees depends on a number of factors, including our corporate culture and work environment, informed by our values and behaviors, our corporate philosophy of talent development and career opportunities, and compensation and benefits.
Our ability to recruit and retain such employees depends on a number of factors, including our corporate culture and work environment, informed by our values and behaviors, our corporate philosophy of talent development and career opportunities, and compensation and benefits. 16 Table of Contents To attract and retain qualified employees and key talent, we offer total compensation packages that are competitive with comparable companies, particularly in mainland China and, specifically, Shanghai.
In addition to providing cost savings resulting from vastly reduced sulfuric acid consumption, Ultra-C Tahoe meets the needs of customers who face increased environmental regulations and demand new, more environmentally friendly tools. We delivered our first Ultra C Tahoe tool to a strategic customer in 2019.
Tahoe employs a proprietary hybrid approach in which the sulfuric acid cleaning steps are processed in batch mode, and the final stage cleaning are processed with single-wafer cleaning technologies. In addition to providing cost savings resulting from vastly reduced sulfuric acid consumption, Ultra-C Tahoe meets the needs of customers who face increased environmental regulations and demand new, more environmentally-friendly tools.
In 2022, 43.8% of our revenue was derived from three customers: The Huali Huahong Group; accounted for 18.2% of our revenue; SMIC accounted for 15.6% of our revenue, and YMTC accounted for 10.0% of our revenue.
In 2024, 52.2% of our revenue was derived from four customers: The Huali Huahong Group accounted for 14.7% of our revenue; SMIC accounted for 13.6% of our revenue; YMTC accounted for 12.0%% of our revenue; and PXW accounted for 11.9% of our revenue.
Our People As of December 31, 2023, we ha d 1,590 fu ll-time equivalent employees, of whom 139 were in administration, 286 were in manufacturing, 733 were in research and development, and 432 were in sales and marketing and customer services.
Our People As of December 31, 2024, we had 2,023 full-time equivalent employees, of whom 165 were in administration, 328 were in manufacturing, 933 were in research and development, and 597 were in sales and marketing and customer services.
TEBO Technology, Applications and Equipment TEBO Technology We developed TEBO technology for application in wet wafer cleaning during the fabrication of 2D and 3D wafers with fine feature sizes. TEBO technology facilitates effective cleaning even with patterned features too small or fragile to be addressed by conventional jet spray and megasonic cleaning technologies.
TEBO technology facilitates effective cleaning even with patterned features too small or fragile to be addressed by conventional jet spray and megasonic cleaning technologies. TEBO technology solves the problems created by transient cavitation in conventional megasonic cleaning processes.
Our patent strategy is designed to provide a balance between the need for coverage in our strategic markets and the need to maintain costs at a reasonable level. As of December 31, 2023, we had 64 issued patents, and 29 patents pending, in the United States. These patents carry expiration dates from 2027 through 2038.
Our patent strategy is designed to provide a balance between the need for coverage in our strategic markets and the need to maintain costs at a reasonable level.
Our research and development expense totaled $92.7 million or 16.6% of revenue in 2023, $62.2 million or 16.0% of revenue in 2022, and $34.2 million or 13.2% of revenue in 2021.
We are also working to integrate our tools with third-party tools in adjacent process areas in the chip manufacturing flow. Our research and development expense totaled $105.5 million or 13.5% of revenue in 2024, $92.7 million or 16.6% of revenue in 2023, and $62.2 million or 16.0% of revenue in 2022.
These equipment segments are a subset of the total worldwide semiconductor WFE market, which Gartner estimates decreased by 7.7% from $100.6 billion in 2022 to $92.9 billion in 2023, and estimates will decrease by 1.7% to $91.3 billion in 2024.
Gartner estimates the total worldwide semiconductor WFE market grew by 4.1% from $102.9 billion in 2023 to $107.1 (1) billion in 2024, and estimates will increase by 4.1% to $111.5 billion in 2025.
To attract and retain qualified employees and key talent, we offer total compensation packages that are competitive with comparable companies, particularly in mainland China and, specifically, Shanghai. We provide training and development programs to our employees, and we have trained many of our key engineers and managers for more than a decade.
We provide training and development programs to our employees, and we have trained many of our key engineers and managers for more than a decade. Retention of these key employees is critical to secure our future growth and technology development.
Substantially all of our tools are built to order at our manufacturing facilities in the Pudong region of Shanghai, which now encomp ass a total of 236,000 square f eet of floor space for production capacity.
Substantially all of our tools are built to order at our Chuansha manufacturing facilities in the Pudong region of Shanghai. In the fourth quarter of 2024, we began initial operations at our Lingang development and production center.
We have been issued more than 498 patents in the United States, mainland China, Japan, Korea, Singapore and Taiwan. We manufacture advanced single-wafer cleaning systems equipped with our SAPS, TEBO and Tahoe technologies.
As o f December 31, 2024, we have been issued more than 537 patents in the United States, mainland China, Japan, Korea, Singapore and Taiwan, including 76 issued patents, and 32 patents pending, in the United States. These patents carry expiration dates from 2027 through 2039.
Removed
Based on Gartner’s estimates, the total available global market for these equipment segments decreased by 11.4% from $21.2 billion in 2022, to $18.7 billion in 2023, and is expected to decrease by 2.8% to $18.2 billion in 2024.
Added
Gartner estimates China WFE grew by 11.5%, from $33.7 billion in 2023 to $37.5 billion in 2024, and is expected to decrease by 23.6% to $28.7 billion in 2025 1 .
Removed
We have been issued more than 498 patents in the United States, the People’s Republic of China, or mainland China, Japan, Singapore, Korea and Taiwan. We conduct a substantial majority of our product development, manufacturing, support and services in mainland China, with additional product development and subsystem production in Korea.
Added
W e purchase some of the components and assemblies that we subsequently integrate into our products from a range of suppliers, some of which are single-source suppliers, and/or U.S. based suppliers which can no longer supply ACM Shanghai, ACM Korea and related entities as a result of recently enacted regulations including designations on the BIS Entity List.
Removed
Substantially all of our integrated tools are built to order at our manufacturing facilities in the Pudong region of Shanghai, which now encompass a total o f 236,000 square feet of floor space for production capacity, with leased buildings at our Chuansha campus.
Removed
In May 2020 ACM Shanghai, through its wholly owned subsidiary Shengwei Research (Shanghai), Inc., or ACM Shengwei, entered into an agreement for a land use right in the Lingang region of Shanghai.
Removed
In 2020 ACM Shengwei began a multi-year construction project for a new 1,000,000 square foot development and production center that will incorporate state-of-the-art manufacturing systems and automation technologies and will provide floor space to support significantly increased production capacity and related research and development, or R&D, activities.
Removed
We expect to commence initial operations and production activities at our Lingang facilities in the first half of 2024 timeframe. Our experience has shown that chip manufacturers in mainland China and throughout Asia demand equipment that meets their specific technical requirements and generally prefer to build relationships with local suppliers.
Removed
We will continue to seek to leverage our local presence in mainland China and Korea through our subsidiaries to address the growing market for semiconductor manufacturing equipment in the region by working closely with regional chip manufacturers to understand their specific requirements, encourage them to adopt our technologies, and enable us to design innovative products and solutions to address their needs.
Removed
The mechanical force of cavitations generated by megasonic energy enhances the mass transfer rate of dislodged random defects and improves particle removal efficiency.
Removed
Advanced nodes have also resulted in higher aspect ratios for interconnect 9 Table of Contents structures, with thinner, redesigned metal barriers being used to prevent diffusion.
Removed
TEBO technology solves the problems created by transient cavitation in conventional megasonic cleaning processes. Cavitation is the formation of bubbles in a liquid, and transient cavitation is a process in which a bubble in fluid implodes or collapses.
Removed
Tahoe employs a proprietary hybrid approach in which the sulfuric acid cleaning steps are processed in batch mode, and the final stage cleaning are processed with single-wafer cleaning technologies.
Removed
In May 2020 ACM Shanghai, through its wholly owned subsidiary ACM Shengwei, entered into an agreement for a land use right in the Lingang region of Shanghai. In July 2020 ACM Shengwei began a multi-year construction project for a new development and production center.
Removed
Our experience has shown that chip manufacturers in mainland China and throughout Asia demand equipment meeting their specific technical requirements and prefer building relationships with local suppliers.
Removed
We will continue to seek to leverage our local presence to address the growing market for semiconductor manufacturing equipment in the region by working closely with regional chip manufacturers to understand their specific requirements, encourage them to adopt our SAPS, TEBO, Tahoe, ECP, furnace, Track, PECVD, and other technologies in our current portfolio, and enable us to design innovative products and solutions to address their needs.
Removed
Longer term, we are working on new proprietary process capabilities based on our existing tool hardware platforms. We are also working to integrate our tools with third-party tools in adjacent process areas in the chip manufacturing flow.
Removed
In addition, we may in the future initiate litigation to enforce our intellectual property rights or the rights of our customers or to protect our trade secrets. 16 Table of Contents Our customers could become the target of litigation relating to the patent or other intellectual property rights of others.
Removed
Investors should note that we announce material information to our investors and others using filings with the SEC, press releases, public conference calls, webcasts or our website (www.acmrcsh.com), including news and announcements regarding our financial performance, key personnel, our brands and our business strategy. Information that we post on our corporate website could be deemed material to investors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

107 edited+31 added−52 removed338 unchanged
Biggest changeExport Administration Regulations (EAR), or controls introduced by other countries including Japan and the Netherlands, thereby impacting our ability to sell our tools to customers in these jurisdictions; • changes in government trade policies that could limit the demand for our tools and increase the cost of our tools; • changes in political and economic policies with respect to mainland China; • mainland China’s currency exchange control and government restrictions on investment repatriation may impact our ability to transfer funds outside of mainland China; Risks Related to Our STAR Listing • our ability to implement our strategy to expand our mainland China operations; • our ability to achieve the results contemplated by our business strategy and our strategy for growth in mainland China and expectations related to the STAR Listing; • the effect of ACM Shanghai’s status as a publicly traded company that is controlled, but less than wholly owned, by ACM Research; • our ability to manage potentially inconsistent accounting and disclosure requirements of ACM Research and ACM Shanghai as a result of the STAR Listing; Risks Related to Our Intellectual Property and Data Security • our ability to protect our intellectual property, including in mainland China; • breaches of our cybersecurity systems; Risks Related to Ownership of Class A Common Stock • the volatility in the market price of Class A common stock; • manipulative short sellers of our stock, which may drive down the market price of our Class A common stock and could result in litigation; • the difficulty to predict the effect of the STAR Listing and STAR IPO on the Class A common stock; • the dual class structure of common stock, which has the effect of concentrating voting control with our executive officers and directors; and • the limited experience of our management team managing a public company. 20 Table of Contents Risks Related to International Aspects of Our Business If any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, or if we inadvertently conclude that permissions or approvals are not required, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless.
Biggest changeGovernment has implemented an outbound investment review mechanism, which may prevent us from taking advantage of investment opportunities outside the United States that could otherwise be advantageous to our stockholders; • changes in government trade policies that could limit the demand for our tools and increase the cost of our tools; • changes in political and economic policies with respect to mainland China; • mainland China’s currency exchange control and government restrictions on investment repatriation may impact our ability to transfer funds outside of mainland China; Risks Related to the STAR Listing of ACM Shanghai • our ability to implement our strategy to expand our mainland China operations; • our ability to achieve the results contemplated by our business strategy and our strategy for growth in mainland China and expectations related to the STAR Listing; • the effect of ACM Shanghai’s status as a publicly traded company that is controlled, but less than wholly owned, by ACM Research; • our ability to manage potentially inconsistent accounting and disclosure requirements of ACM Research and ACM Shanghai as a result of the STAR Listing; Risks Related to Our Intellectual Property and Data Security • our ability to protect our intellectual property, including in mainland China; • breaches of our cybersecurity systems; Risks Related to Ownership of Class A Common Stock • the volatility in the market price of Class A common stock; • manipulative short sellers of our stock, which may drive down the market price of our Class A common stock and could result in litigation; • the difficulty to predict the effect of the STAR Listing and STAR IPO on the Class A common stock; • the dual class structure of common stock, which has the effect of concentrating voting control with our executive officers and directors; and • the limited experience of our management team managing a public company.
In addition, if mainland China were to impose additional tariffs on raw materials, subsystems or other supplies that we source from the United States, our cost for those supplies would increase.
In addition, if mainland China were to impose additional tariffs on raw materials, subsystems or other supplies that we source from the United States, our cost for those supplies would increase.
As a result of any of the foregoing events, the imposition of new or additional tariffs may limit our ability to manufacture tools, increase our selling and/or manufacturing costs, decrease margins, or inhibit our ability to sell tools or to purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of operations, or financial condition.
As a result of any of the foregoing events, the imposition of new or additional tariffs may limit our ability to manufacture tools, increase our selling and/or manufacturing costs, decrease margins, or inhibit our ability to sell tools or to purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of operations, or financial condition.
Our financial results in any given quarter can be influenced by a variety of factors, including: • the cyclicality of the semiconductor industry and the related impact on the purchase of equipment used in the manufacture of chips; • the timing of purchases of our tools by chip fabricators, which order types of tools based on multi-year capital plans under which the number and dollar amount of tool purchases can vary significantly from year to year; • the relatively high average selling price of our tools and our dependence on a limited number of customers for a substantial portion of our revenue in any period, whereby the timing and volume of purchase orders or cancellations from our customers could significantly reduce our revenue for that period; • the significant expenditures required to customize our products often exceed the deposits received from our customers; • the lead time required to manufacture our tools; 28 Table of Contents • the timing of recognizing revenue due to the timing of shipment and acceptance of our tools; • our ability to sell additional tools to existing customers; • the changes in customer specifications or requirements; • the length of our product sales cycle; • changes in our product mix, including the mix of systems, upgrades, spare parts and service; • the timing of our product releases or upgrades or announcements of product releases or upgrades by us or our competitors, including changes in customer orders in anticipation of new products or product enhancements; • our ability to enhance our tools with new and better functionality that meet customer requirements and changing industry trends; • constraints on our suppliers’ capacity; • our ability to sell our tools to Chinese customers due to regulatory restrictions, including the addition of our customers to the Entity List; • the ability of other suppliers to provide sufficient quantities of their tools to our Chinese customers which may indirectly impact the production plans of our customers and result in a reduction of demand for our tools; • the timing of investments in research and development related to releasing new applications of our technologies and new products; • delays in the development and manufacture of our new products and upgraded versions of our products and the market acceptance of these products when introduced; • our ability to control costs, including operating expenses and the costs of the components and subassemblies used in our products; • the costs related to the acquisition and integration of product lines, technologies or businesses; and • the costs associated with protecting our intellectual property, including defending our intellectual property against third-party claims or litigation.
Our financial results in any given quarter can be influenced by a variety of factors, including: • the cyclicality of the semiconductor industry and the related impact on the purchase of equipment used in the manufacture of chips; • the timing of purchases of our tools by chip fabricators, which order types of tools based on multi-year capital plans under which the number and dollar amount of tool purchases can vary significantly from year to year; • the relatively high average selling price of our tools and our dependence on a limited number of customers for a substantial portion of our revenue in any period, whereby the timing and volume of purchase orders or cancellations from our customers could significantly reduce our revenue for that period; • the significant expenditures required to customize our products often exceed the deposits received from our customers; • the lead time required to manufacture our tools; • the timing of recognizing revenue due to the timing of shipment and acceptance of our tools; • our ability to sell additional tools to existing customers; • the changes in customer specifications or requirements; • the length of our product sales cycle; • changes in our product mix, including the mix of systems, upgrades, spare parts and service; • the timing of our product releases or upgrades or announcements of product releases or upgrades by us or our competitors, including changes in customer orders in anticipation of new products or product enhancements; • our ability to enhance our tools with new and better functionality that meet customer requirements and changing industry trends; • constraints on our suppliers’ capacity; • our ability to sell our tools to Chinese customers due to regulatory restrictions, including the addition of our customers to the Entity List; • the ability of other suppliers to provide sufficient quantities of their tools to our Chinese customers which may indirectly impact the production plans of our customers and result in a reduction of demand for our tools; • the timing of investments in research and development related to releasing new applications of our technologies and new products; • delays in the development and manufacture of our new products and upgraded versions of our products and the market acceptance of these products when introduced; • our ability to control costs, including operating expenses and the costs of the components and subassemblies used in our products; • the costs related to the acquisition and integration of product lines, technologies or businesses; and • the costs associated with protecting our intellectual property, including defending our intellectual property against third-party claims or litigation.
Risks Related to International Aspects of Our Business • if any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, or if we inadvertently conclude that permissions or approvals are not required, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless; • mainland China central government authorities may intervene in, or influence, ACM Shanghai’s mainland China-based operations at any time, and those authorities’ rules and regulations in mainland China can change quickly with little or no advance notice; • the mainland China central government may determine to exert additional control over offerings conducted overseas or foreign investment in mainland China-based issuers, which could result in a material change in operations of ACM Shanghai and cause significant declines in the value of ACM Research Class A common stock, or make them worthless; • if we are unable to comply with recent and proposed legislation and regulations regarding improved access to audit and other information and audit inspections of accounting firms, including registered public accounting firms, such as our prior and current audit firms, operating in mainland China, we could be adversely affected; 19 Table of Contents • it may be difficult for overseas regulators to conduct investigations or collect evidence within mainland China; • substantially all of our assets are located outside of the United States and certain of our directors and officers reside outside of the United States, which may make it difficult for you to enforce your rights based on the U.S. federal securities laws; Risks Related to Our Business and Our Industry • our potential future needs for additional capital that may not be available at all or on terms acceptable to us; • the cyclicality in the semiconductor industry that may lead to substantial variations in demand for our products; • our dependence on a small number of customers for a substantial portion of our revenue; • industry manufacturers of chips adopting our SAPS, TEBO, Tahoe, ECP, furnace and other technologies; • our SAPS, TEBO, Tahoe, ECP, furnace and other technologies not achieving widespread market acceptance; • our ability to continue to enhance our existing single-wafer wet cleaning tools and identifying and entering new product markets; • our ability to establish and maintain a reputation for credibility and product quality; • our ability to expand our customer base; • our long and unpredictable sales cycle, including our incurrence of significant expenses long before we can recognize revenue from new products, if at all; • difficulties in forecasting demand for our tools; • our reliance on third parties to manufacture significant portions of our tools and our ability to manage our relationships with these parties; • any shortage of components or subassemblies, which could result in delayed delivery of products to us or in increased costs to us; • our dependence on a limited number of suppliers, including single source suppliers, for critical components and subassemblies; • our dependence on our Chief Executive Officer and President and other senior management and key employees; Regulatory Risks • regulatory actions limiting our ability and the broader industry's ability to export into China, as well as other specified countries, items sourced from the U.S. or otherwise subject to control under the U.S.
Risks Related to International Aspects of Our Business • if any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, or if we inadvertently conclude that permissions or approvals are not required, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless; • mainland China central government authorities may intervene in, or influence, ACM Shanghai’s mainland China-based operations at any time, and those authorities’ rules and regulations in mainland China can change quickly with little or no advance notice; • the mainland China central government may determine to exert additional control over offerings conducted overseas or foreign investment in mainland China-based issuers, which could result in a material change in operations of ACM Shanghai and cause significant declines in the value of ACM Research Class A common stock, or make them worthless; • if we are unable to comply with recent and proposed legislation and regulations regarding improved access to audit and other information and audit inspections of accounting firms, including registered public accounting firms, such as our prior and current audit firms, operating in mainland China, we could be adversely affected; • it may be difficult for overseas regulators to conduct investigations or collect evidence within mainland China; • substantially all of our assets are located outside of the United States which may make it difficult for you to enforce your rights based on the U.S. federal securities laws; Risks Related to Our Business and Our Industry • our potential future needs for additional capital that may not be available at all or on terms acceptable to us; • the cyclicality in the semiconductor industry that may lead to substantial variations in demand for our products; • our dependence on a small number of customers for a substantial portion of our revenue; • industry manufacturers of chips adopting our SAPS, TEBO, Tahoe, ECP, furnace and other technologies; • our SAPS, TEBO, Tahoe, ECP, furnace and other technologies not achieving widespread market acceptance; 18 Table of Contents • our ability to continue to enhance our existing single-wafer wet cleaning tools and identifying and entering new product markets; • our ability to establish and maintain a reputation for credibility and product quality; • our ability to expand our customer base; • our long and unpredictable sales cycle, including our incurrence of significant expenses long before we can recognize revenue from new products, if at all; • difficulties in forecasting demand for our tools; • our reliance on third parties to manufacture significant portions of our tools and our ability to manage our relationships with these parties; • any shortage of components or subassemblies, which could result in delayed delivery of products to us or in increased costs to us; • our dependence on a limited number of suppliers, including single source suppliers, for critical components and subassemblies; • our dependence on our Chief Executive Officer and President and other senior management and key employees; Regulatory Risks • regulatory actions limiting our ability and the broader industry's ability to export into China, as well as other specified countries, items sourced from the U.S. or otherwise subject to control under the U.S.
Because substantially all of our assets are located outside of the United States and certain of our directors and officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. federal securities laws against such assets or officers and directors or to enforce a judgment of a United States court against assets or officers and directors in mainland China.
Because substantially all of our assets are located outside of the United States and certain of our officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S. federal securities laws against such assets or officers or to enforce a judgment of a United States court against assets or officers in mainland China.
Any potential intellectual property claims or litigation commenced against us could: • be time consuming and expensive to defend, whether or not meritorious; • force us to stop selling products or using technology that allegedly infringes the third party’s intellectual property rights; • delay shipments of our products; • require us to pay damages or settlement fees to the party claiming infringement; • require us to attempt to obtain a license to the relevant intellectual property, which may not be available on reasonable terms or at all; 46 Table of Contents • force us to attempt to redesign products that contain the allegedly infringing technology, which could be expensive or which we may be unable to do; • require us to indemnify our customers, suppliers or other third parties for any loss caused by their use of our technology that allegedly infringes the third party’s intellectual property rights; or • divert the attention of our technical and managerial resources.
Any potential intellectual property claims or litigation commenced against us could: • be time consuming and expensive to defend, whether or not meritorious; • force us to stop selling products or using technology that allegedly infringes the third party’s intellectual property rights; • delay shipments of our products; • require us to pay damages or settlement fees to the party claiming infringement; • require us to attempt to obtain a license to the relevant intellectual property, which may not be available on reasonable terms or at all; • force us to attempt to redesign products that contain the allegedly infringing technology, which could be expensive or which we may be unable to do; • require us to indemnify our customers, suppliers or other third parties for any loss caused by their use of our technology that allegedly infringes the third party’s intellectual property rights; or • divert the attention of our technical and managerial resources.
While ACM Research is a Delaware corporation, certain of our officers and directors are nonresidents of the United States, and certain of our assets are located in mainland China, and the operations of ACM Shanghai are conducted in mainland China.
While ACM Research is a Delaware corporation, certain of our officers are nonresidents of the United States, and certain of our assets are located in mainland China, and the operations of ACM Shanghai are conducted in mainland China.
Future declines in the semiconductor industry, and the overall world economic conditions on which the industry is significantly dependent, could have a material adverse impact on our results of operations and financial condition. Our business depends on the capital equipment expenditures of chip manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits.
Declines in the semiconductor industry, or the overall world economic conditions on which the industry is significantly dependent, could have a material adverse impact on our results of operations and financial condition. Our business depends on the capital equipment expenditures of chip manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits.
Financial and other markets in the United States and worldwide have experienced significant volatility reflecting uncertainty over, among other things, (a) the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and mainland China, (b) unrest in Ukraine, the Middle East and Africa, and (c) the rising level of inflation in major industrial countries, including the United States, and worries that efforts to curb inflation may result in an economic recession.
Financial and other markets in the United States and worldwide have experienced significant volatility reflecting uncertainty over, among other things, (a) the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and mainland China, (b) unrest in Ukraine, the Middle East and Africa, and (c) the rising level of inflation in major industrial countries, including the United States, and worries that efforts to curb 24 Table of Contents inflation may result in an economic recession.
Our charter provides that the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for: • any derivative action or proceeding brought on our behalf; 49 Table of Contents • any action asserting a claim of breach of a fiduciary duty owed to us, our stockholders, creditors or other constituents by any of our directors, officers, other employees, agents or stockholders; • any action asserting a claim arising under the Delaware General Corporation Law, our charter or bylaws, or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; or • any action asserting a claim that is governed by the internal affairs doctrine.
Our charter provides that the Court of Chancery of the State of Delaware will, to the fullest extent permitted by law, be the sole and exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed to us, our stockholders, creditors or other constituents by any of our directors, officers, other employees, agents or stockholders; • any action asserting a claim arising under the Delaware General Corporation Law, our charter or bylaws, or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; or • any action asserting a claim that is governed by the internal affairs doctrine.
Moreover, some of our suppliers may experience financial difficulties that could prevent them from supplying us with components or subassemblies used in the design and manufacture of our products. In addition, our suppliers, including our sole supplier ProSys, may experience manufacturing delays or shut downs due to circumstances beyond their control, such as labor issues, political unrest or natural disasters.
Moreover, some of our suppliers may experience financial difficulties that could prevent them from supplying us with components or subassemblies used in the design and manufacture of our products. In addition, our suppliers, including our sole supplier ProSys, may experience manufacturing delays or shutdowns due to circumstances beyond their control, such as labor issues, political unrest or natural disasters.
Product development requires 31 Table of Contents significant investments in engineering hours, third-party development costs, prototypes and sample materials, as well as sales and marketing expenses, which will not be recouped if the product launch is unsuccessful. We may fail to predict the needs of other markets accurately or develop new, innovative technologies to address those needs.
Product development requires significant investments in engineering hours, third-party development costs, prototypes and sample materials, as well as sales and marketing expenses, which will not be recouped if the product launch is unsuccessful. We may fail to predict the needs of other markets accurately or develop new, innovative technologies to address those needs.
As we expand our global operations through operating subsidiaries outside of mainland China, those operating subsidiaries may need to license intellectual property from ACM Shanghai in order to operate, and there can be no assurance that conflicts of interest will not preclude those operating subsidiaries from licensing the required intellectual property from ACM Shanghai on reasonable terms or at all.
As we 41 Table of Contents expand our global operations through operating subsidiaries outside of mainland China, those operating subsidiaries may need to license intellectual property from ACM Shanghai in order to operate, and there can be no assurance that conflicts of interest will not preclude those operating subsidiaries from licensing the required intellectual property from ACM Shanghai on reasonable terms or at all.
As it is in the short seller’s interest for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding the relevant issuer, its business prospects and similar matters calculated to or which may create 50 Table of Contents negative market momentum, which may permit them to obtain profits for themselves as a result of selling the securities short.
As it is in the short seller’s interest for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding the relevant issuer, its business prospects and similar matters calculated to or which may create negative market momentum, which may permit them to obtain profits for themselves as a result of selling the securities short.
Risks Related to Our STAR Listing We may not achieve the results contemplated by our business strategy and our strategy for growth in mainland China may not result in increases in the price of Class A common stock.
Risks Related to the STAR Listing of ACM Shanghai We may not achieve the results contemplated by our business strategy and our strategy for growth in mainland China may not result in increases in the price of Class A common stock.
The mainland China central government may determine to exert additional control over securities offerings conducted overseas and/or foreign investment in mainland China-based issuers, which could result in a material adverse change in operations of ACM Shanghai and cause the value of ACM Research Class A common stock to significantly decline or become worthless.
The mainland China central government may determine to exert additional control over securities offerings conducted overseas and/or foreign investment in mainland China-based issuers, which could result in a material adverse change in operations of ACM Shanghai and cause the value of ACM Research Class A common stock to significantly decline or 22 Table of Contents become worthless.
We source the substantial majority of our components from Asia, and as a result, our supply chain can be adversely affected by a variety of global events, including COVID-19 restrictions, transportation delays, including those related to the June 2022 truck driver strike in Korea resulting from escalated fuel prices, and the armed conflict in Ukraine.
We source the substantial majority of our components from Asia, and as a result, our supply chain can be adversely affected by a variety of global events, including transportation delays, including those related to the June 2022 truck driver strike in Korea resulting from escalated fuel prices, and the armed conflict in Ukraine.
Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal development in mainland China. The Chinese economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, and control of foreign exchange and allocation of resources.
Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legal development in mainland China. 38 Table of Contents The Chinese economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, and control of foreign exchange and allocation of resources.
Our failure to successfully leverage the completion of the STAR Listing and the STAR IPO, and any future financings by ACM Shanghai, to expand our mainland China business could result in a decrease in the 43 Table of Contents price of the Class A common stock, and we cannot assure you that the success of ACM Shanghai will have an attendant positive effect on the price of the Class A common stock.
Our failure to successfully leverage the completion of the STAR Listing and the STAR IPO, and any future financings by ACM Shanghai, to expand our mainland China business could result in a decrease in the price of the Class A common stock, and we cannot assure you that the success of ACM Shanghai will have an attendant positive effect on the price of the Class A common stock.
In addition, we believe that the length of the sales cycle and intensity of the evaluation process may increase for those current and potential customers that centralize their purchasing decisions. Difficulties in forecasting demand for our tools may lead to periodic inventory shortages or excess spending on inventory items that may not be used.
In addition, we believe that the length of the sales cycle and intensity of the evaluation process may increase for those current and potential customers that centralize their purchasing decisions. 30 Table of Contents Difficulties in forecasting demand for our tools may lead to periodic inventory shortages or excess spending on inventory items that may not be used.
Because of the twenty-to-one voting ratio between Class B and Class A common stock, holders of Class B common stock collectively will continue to control a majority of the combined voting power of Class A common stock and therefore be able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock represent at least 4.8% of all outstanding shares of Class A and Class B common stock.
Because of the twenty-to-one voting ratio between Class B and Class A common stock, h olders of Class B common stock collectively will continue to control a majority of the combined voting power of Class A common stock and therefore be able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock represent at least 4.8% of all outstanding shares of Class A and Class B common stock.
We canno t reasonably estimate the duration or impact of such a downturn, and it could have a material adverse effect on our business and the value of our Class A common stock. 29 Table of Contents Conversely, during industry upturns we must successfully increase production output to meet expected customer demand.
We canno t reasonably estimate the duration or impact of such a downturn, and it could have a material adverse effect on our business and the value of our Class A common stock. Conversely, during industry upturns we must successfully increase production output to meet expected customer demand.
Instead, all of the Class B common stock generally will convert into Class A common stock only upon the election of the holders of a majority of the then-outstanding shares of Class B common stock, and specific shares of Class B common stock will convert into Class A common stock upon future transfers by the holders of those shares.
Instead, all of the Class B com mon stock generally will convert into Class A common stock only upon the election of the holders of a majority of the then-outstanding shares of Class B common stock, and specific shares of Class B common stock will convert into Class A common stock upon future transfers by the holders of those shares.
To date our strategy for commercializing our tools has been to place them with selected industry leaders in the manufacturing of memory and logic chips, the two largest chip categories, to enable those leading manufacturers to evaluate our technologies, and then leverage our reputation to gain broader market acceptance.
To date our strategy for commercializing our tools has been to place them with selected industry leaders in the manufacturing of memory and logic chips, the two largest chip categories, to enable those leading manufacturers to 27 Table of Contents evaluate our technologies, and then leverage our reputation to gain broader market acceptance.
We may also make investments in certain key suppliers to align our interests with such suppliers. If we seek acquisitions, we 37 Table of Contents may not be able to identify suitable acquisition candidates at prices we consider appropriate. We cannot readily predict the timing or size of our future acquisitions, or the success of any future acquisitions.
We may also make investments in certain key suppliers to align our interests with such suppliers. If we seek acquisitions, we may not be able to identify suitable acquisition candidates at prices we consider appropriate. We cannot readily predict the timing or size of our future acquisitions, or the success of any future acquisitions.
Most of 45 Table of Contents our competitors are larger than we are and have substantially greater resources, and they therefore are likely to be able to sustain the costs of complex patent litigation longer than we could. An adverse outcome in such litigation or proceedings may expose us to loss of our proprietary position.
Most of our competitors are larger than we are and have substantially greater resources, and they therefore are likely to be able to sustain the costs of complex patent litigation longer than we could. An adverse outcome in such litigation or proceedings may expose us to loss of our proprietary position.
From time to time, this industry has experienced significant downturns, often in connection with, or in anticipation of, maturing product and technology cycles, excess inventories and declines in general economic conditions. This cyclicality could cause our operating results to decline dramatically from one period to the next.
From time to time, this industry has experienced significant downturns, often in connection with, or in anticipation of, 26 Table of Contents maturing product and technology cycles, excess inventories and declines in general economic conditions. This cyclicality could cause our operating results to decline dramatically from one period to the next.
As a result, it is unlikely that funds raised or generated by ACM Shanghai will be readily distributable to ACM Research. If we succeed in raising additional funds through the issuance of equity or convertible securities, then the issuance could result in substantial dilution to existing stockholders.
As a result, it is unlikely that funds raised or generated by ACM Shanghai will be readily distributable to ACM Research. If we succeed in raising additional funds through the issuance of equity or convertible securit ies, then the issuance could result in substantial dilution to existing stockholders.
The continued expansion of our infrastructure will 36 Table of Contents require us to commit substantial financial, operational and management resources before our revenue increases and without any assurances that our revenue will increase. We are highly dependent on our Chief Executive Officer and President and other senior management and key employees.
The continued expansion of our infrastructure will require us to commit substantial financial, operational and management resources before our revenue increases and without any assurances that our revenue will increase. We are highly dependent on our Chief Executive Officer and President and other senior management and key employees.
In accordance with industry practice, our sales are on a purchase order basis, which we seek to obtain three to four months in advance of the expected product delivery date. Until a purchase order is received, we do not have a binding purchase commitment.
In accordance with industry practice, our sales are on a purchase order basis, which we seek to obtain three to four months in advance of the expected product delivery date. Until a purchase order is received, we do not have a binding purchase 29 Table of Contents commitment.
Certain of our stockholders may be non-U.S. investors, and in the aggregate, may comprise a substantial portion of our net asset value, which may increase the risks of such limitations being imposed in connection with investments pursued or made by us.
Certain of our stockholders may be non-U.S. investors, and in the aggregate, may comprise a substantial portion of our net asset value, which may increase the risks of such limitations being imposed 39 Table of Contents in connection with investments pursued or made by us.
Implementation and enforcement of intellectual property-related laws in mainland China has historically been lacking due primarily to ambiguities in mainland China intellectual property law. Accordingly, protection of intellectual property and proprietary rights in mainland China may not be as effective as in the United States or other countries.
Implementation and enforcement of intellectual property-related laws in mainland China has historically been 43 Table of Contents lacking due primarily to ambiguities in mainland China intellectual property law. Accordingly, protection of intellectual property and proprietary rights in mainland China may not be as effective as in the United States or other countries.
ACM Shanghai is not subject to the existing restrictions imposed by the Cyber Security Law or the Data Security Law, in part because its business operations do not involve the collection, processing or use of data 22 Table of Contents or information involving personal privacy or private information of customers.
ACM Shanghai is not subject to the existing restrictions imposed by the Cyber Security Law or the Data Security Law, in part because its business operations do not involve the collection, processing or use of data or information involving personal privacy or private information of customers.
We rely on third parties to manufacture most of the subassemblies and supply most of the components used 34 Table of Contents in our tools. Accordingly, we cannot directly control our delivery schedules and quality assurance. This reliance on third parties and lack of control could result in shortages or quality assurance problems.
We rely on third parties to manufacture most of the subassemblies and supply most of the components used in our tools. Accordingly, we cannot directly control our delivery schedules and quality assurance. This reliance on third parties and lack of control could result in shortages or quality assurance problems.
Even issued patents may later be found unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or in courts. The degree of future protection for our intellectual property is uncertain.
Even issued patents may later be found unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or in courts. The degree 42 Table of Contents of future protection for our intellectual property is uncertain.
The imposition of tariffs by the U.S. and mainland China governments and the surrounding economic uncertainty may negatively impact the semiconductor industry, including by reducing the demand of fabricators for capital 23 Table of Contents equipment such as our tools.
The imposition of tariffs by the U.S. and mainland China governments and the surrounding economic uncertainty may negatively impact the semiconductor industry, including by reducing the demand of fabricators for capital equipment such as our tools.
We are subject to a number of risks associated with our international business activities, including: • imposition of, or adverse changes in, foreign laws or regulatory requirements, such as work stoppages and travel restrictions imposed in connection with the COVID-19 pandemic; • the need to comply with the import laws and regulations of various foreign jurisdictions, including a range of U.S. import laws; • potentially adverse tax consequences, including withholding tax rules that may limit the repatriation of our earnings, and higher effective income tax rates in foreign countries where we conduct business; • competition from local suppliers with which potential customers may prefer to do business; • seasonal reduction in business activity, such as during the Lunar New Year in parts of Asia and in other periods in various individual countries; 26 Table of Contents • increased exposure to foreign currency exchange rates; • reduced protection for intellectual property; • longer sales cycles and reliance on indirect sales in certain regions; • increased length of time for shipping and acceptance of our products; • greater difficulty in responding to customer requests for maintenance and spare parts on a timely basis; • greater difficulty in enforcing contracts and accounts receivable collection and longer collection periods; • difficulties in staffing and managing foreign operations and the increased travel, infrastructure and legal and compliance costs associated with multiple international locations; • heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, our consolidated financial statements; and • general economic conditions, geopolitical events or natural disasters in countries where we conduct our operations or where our customers are located, including political unrest, war, acts of terrorism or responses to such events.
We are subject to a number of risks associated with our international business activities, including: • the need to comply with the import laws and regulations of various foreign jurisdictions, including a range of U.S. import laws; • potentially adverse tax consequences, including withholding tax rules that may limit the repatriation of our earnings, and higher effective income tax rates in foreign countries where we conduct business; • competition from local suppliers with which potential customers may prefer to do business; • seasonal reduction in business activity, such as during the Lunar New Year in parts of Asia and in other periods in various individual countries; • increased exposure to foreign currency exchange rates; • reduced protection for intellectual property; • longer sales cycles and reliance on indirect sales in certain regions; • increased length of time for shipping and acceptance of our products; • greater difficulty in responding to customer requests for maintenance and spare parts on a timely basis; • greater difficulty in enforcing contracts and accounts receivable collection and longer collection periods; • difficulties in staffing and managing foreign operations and the increased travel, infrastructure and legal and compliance costs associated with multiple international locations; • heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, our consolidated financial statements; and • general economic conditions, geopolitical events or natural disasters in countries where we conduct our operations or where our customers are located, including political unrest, war, acts of terrorism or responses to such events.
Conversely, if we underestimate demand for our tools or if our manufacturing partners fail to supply components we require at the time we need them, we may experience inventory shortages. Such shortages might delay production or 33 Table of Contents shipments to customers and may cause us to lose sales.
Conversely, if we underestimate demand for our tools or if our manufacturing partners fail to supply components we require at the time we need them, we may experience inventory shortages. Such shortages might delay production or shipments to customers and may cause us to lose sales.
Accordingly, you should not rely upon our past quarterly financial results as indicators of future performance. Any variations in our quarter-to-quarter performance may cause our stock price to fluctuate.
Accordingly, you should not rely upon our past quarterly financial results as indicators of future 25 Table of Contents performance. Any variations in our quarter-to-quarter performance may cause our stock price to fluctuate.
We believe that as a result of the October 2022 and October 2023 restrictions, several ACM Shanghai customers have significantly reduced production and related capital spending at facilities meeting the restricted advanced node capabilities. In addition, ACM Shanghai has experienced challenges as the companies in its supply chain adapt their policies to the new regulations.
We believe that as a result of the export control restrictions, several ACM Shanghai customers have significantly reduced production and related capital spending at facilities meeting the restricted advanced node capabilities. In addition, ACM Shanghai has experienced challenges as the companies in its supply chain adapt their policies to the new regulations.
In addition, such Rules specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM.
In addition, such Rules specify that mergers and acquisitions 21 Table of Contents by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM.
Legislative and regulatory changes, including changes to agency practice, in the future may negatively impact our ability to realize value from certain existing and future investments, including by limiting exit opportunities or causing us to favor buyers that we believe are less likely to require CFIUS review, even in circumstances where other buyers may offer better terms or more consideration. 42 Table of Contents The U.S.
Legislative and regulatory changes, including changes to agency practice, in the future may negatively impact our ability to realize value from certain existing and future investments, including by limiting exit opportunities or causing us to favor buyers that we believe are less likely to require CFIUS review, even in circumstances where other buyers may offer better terms or more consideration.
See also “—Our supply chain may be materially adversely impacted due to global events, including continuing COVID-19 outbreaks, transportation delays and the armed conflict in Ukraine.” These issues and our ability to manage increased demand could delay shipments of our tools, increase our testing or production costs or lead to costly failure claims.
See also “—Our supply chain may be materially adversely impacted due to global events, including public health issues, transportation delays, and the armed conflict in Ukraine.” These issues and our ability to manage increased demand could delay shipments of our tools, increase our testing or production costs or lead to costly failure claims.
In the event mainland China central government authorities were to significantly revise or revamp the current scope and structure of intellectual property protection in mainland China, our ability to protect and enforce our intellectual property rights for our key proprietary technologies may be adversely impacted and competitors may be able to match our technologies and tools in order to compete with us. • Title Defect in Leased Premises .
In the event mainland China central government authorities were to significantly revise or revamp the current scope and structure of intellectual property protection in mainland China, our ability to protect and enforce our intellectual property rights for our key proprietary technologies may be adversely impacted and competitors may be able to match our technologies and tools in order to compete with us. • Data Security .
Should the production and distribution closures continue for an extended period of time, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows. Business disruptions could also negatively affect the sources and availability of components and materials that are essential to the operation of our business.
Should these distributions and restrictions continue for an extended period of time, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows. Business disruptions could also negatively affect the sources and availability of components and materials that are essential to the operation of our business.
The market price of Class A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our revenue and other operating results; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • changes in projections for the chips or chip equipment industries or in the operating performance or expectations and stock market valuations of chip companies, chip equipment companies or technology companies in general; • changes in operating results; • any changes in the financial projections we may provide to the public, our failure to meet these projections, or changes in recommendations by any securities analysts that elect to follow Class A common stock; • additional shares of Class A common stock being sold into the market by us or our existing stockholders or the anticipation of such sales; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • lawsuits threatened or filed against us; • litigation and other developments relating to our patents or other proprietary rights or those of our competitors; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • general economic trends, including changes in the demand for electronics or information technology or geopolitical events such as war or acts of terrorism, or any responses to such events. 47 Table of Contents In recent years, the stock market in general, and Nasdaq in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations.
The market price of Class A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our revenue and other operating results; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • changes in projections for the chips or chip equipment industries or in the operating performance or expectations and stock market valuations of chip companies, chip equipment companies or technology companies in general; • changes in operating results; • any changes in the financial projections we may provide to the public, our failure to meet these projections, or changes in recommendations by any securities analysts that elect to follow Class A common stock; • additional shares of Class A common stock being sold into the market by us or our existing stockholders or the anticipation of such sales; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • lawsuits threatened or filed against us; • litigation and other developments relating to our patents or other proprietary rights or those of our competitors; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • general economic trends, including changes in the demand for electronics or information technology or geopolitical events such as war or acts of terrorism, or any responses to such events.
ACM Shanghai has determined that several of its customers have mainland China-based facilities that meet the restricted criteria set out in the October 2022 and October 2023 rules, and has also determined that several of its products, and/or components for its products, may meet the parameters of export control classification numbers, or ECCNs, affected by the restrictions.
ACM Shanghai has determined that several of its customers have mainland China-based facilities that meet the restricted criteria set out in the enhanced export control rules described above, and has also determined that several of its products, and/or components for its products, may meet the parameters of export control classification numbers, or ECCNs, affected by the restrictions.
While disruptions and governmental restrictions, as well as related general limitations on movement around the world, are expected to be temporary, the duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time.
While certain disruptions and governmental restrictions, as well as related general limitations on movement around the world, may be temporary, the duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time.
Our ability to introduce and market successfully any new or enhanced cleaning equipment is subject to a wide variety of challenges during the tool’s development, including the following: • accurate anticipation of market requirements, changes in technology and evolving standards; • the availability of qualified product designers and technologies needed to solve difficult design challenges in a cost-effective, reliable manner; • our ability to design products that meet chip manufacturers’ cost, size, acceptance and specification criteria, and performance requirements; • the ability and availability of suppliers and third-party manufacturers to manufacture and deliver the critical components and subassemblies of our tools in a timely manner; • market acceptance of our customers’ products, and the lifecycle of those products; and • our ability to deliver products in a timely manner within our customers’ product planning and deployment cycle.
Our ability to introduce and market successfully any new or enhanced cleaning equipment is subject to a wide variety of challenges during the tool’s development, including the following: • accurate anticipation of market requirements, changes in technology and evolving standards; • the availability of qualified product designers and technologies needed to solve difficult design challenges in a cost-effective, reliable manner; • our ability to design products that meet chip manufacturers’ cost, size, acceptance and specification criteria, and performance requirements; • the ability and availability of suppliers and third-party manufacturers to manufacture and deliver the critical components and subassemblies of our tools in a timely manner; • market acceptance of our customers’ products, and the lifecycle of those products; and • our ability to deliver products in a timely manner within our customers’ product planning and deployment cycle. 28 Table of Contents Certain enhancements to our products in future periods may reduce demand for our pre-existing tools.
In October 2023, BIS further expanded export controls on semiconductors, semiconductor manufacturing items and items for use in manufacturing designated types of semiconductor manufacturing equipment, including through new licensing requirements covering a broader variety of items, and an expansion in the geographical scope of the controls.
In October 2023, BIS further expanded export controls on semiconductors, semiconductor manufacturing items and items for use in manufacturing designated types of semiconductor manufacturing equipment, including through new licensing requirements covering a broader variety of items, and an expansion in the geographical scope of the controls. There were further export control restrictions imposed in 2024.
As a result, economic downturns could cause material adverse changes to our results of operations and financial condition including: • a decline in demand for our products; • an increase in reserves on accounts receivable due to our customers’ inability to pay us; • an increase in reserves on inventory balances due to excess or obsolete inventory as a result of our inability to sell such inventory; • valuation allowances on deferred tax assets; • restructuring charges; • asset impairments; • a decline in the value of our investments; • exposure to claims from our suppliers for payment on inventory that is ordered in anticipation of customer purchases that do not come to fruition; • a decline in the value of certain facilities we lease to less than our residual value guarantee with the lessor; and • challenges maintaining reliable and uninterrupted sources of supply. 38 Table of Contents Fluctuating levels of investment by chip manufacturers may materially affect our aggregate shipments, revenue, operating results and earnings.
As a result, economic downturns could cause material adverse changes to our results of operations and financial condition including: • a decline in demand for our products; 35 Table of Contents • an increase in reserves on accounts receivable due to our customers’ inability to pay us; • an increase in reserves on inventory balances due to excess or obsolete inventory as a result of our inability to sell such inventory; • valuation allowances on deferred tax assets; • restructuring charges; • asset impairments; • a decline in the value of our investments; • exposure to claims from our suppliers for payment on inventory that is ordered in anticipation of customer purchases that do not come to fruition; • a decline in the value of certain facilities we lease to less than our residual value guarantee with the lessor; and • challenges maintaining reliable and uninterrupted sources of supply.
We rely on: Product Systems, Inc., or ProSys, as the sole supplier of megasonic transducers, a key subassembly used in our single-wafer cleaning equipment; Ninebell Co., Ltd., or Ninebell, as the principal supplier of robotic delivery system subassemblies used in our single-wafer cleaning equipment; and Advanced Electric Co.
We rely on: Product Systems, Inc., or ProSys, as the sole supplier of megasonic transducers, a key subassembly used in our semiconductor capital equipment; Ninebell Co., Ltd., or Ninebell, as the principal supplier of robotic delivery system subassemblies used in our semiconductor capital equipment; Advanced Electric Co.
Customers may place purchase orders that exceed forecasted amounts, which could result in delays 32 Table of Contents in our delivery time and harm our reputation.
Customers may place purchase orders that exceed forecasted amounts, which could result in delays in our delivery time and harm our reputation.
Our supply chain may be materially adversely impacted due to global events, including continuing COVID‑19 outbreaks, transportation delays and the armed conflict in Ukraine. We rely upon the facilities of our global suppliers with operations in mainland China, Japan, Taiwan and the United States to support our business.
Our supply chain may be materially adversely impacted due to global events, including any new COVID‑19 outbreaks or other public health issues, transportation delays, and the armed conflict in Ukraine. We rely upon the facilities of our global suppliers with operations in mainland China, Japan, Taiwan and the United States to support our business.
If consummated in full, we estimate that our equity interest in ACM Shanghai would decline from 82.1% to approximately 74.6%.
If consummated in full, we estimate that our equity interest in ACM Shanghai would decline from 81.5% to approximately 74.1%.
ACM and ACM Shanghai have implemented modifications to their existing business policies and practices in response to the October 2022 and October 2023 restrictions, including by imposing limitations on the activities of their U.S. persons and undertaking measures in connection with their supply chains more broadly to comply with the new regulations.
ACM and ACM Shanghai have implemented modifications to their existing business policies and 36 Table of Contents practices in response to these enhanced export restrictions, including by imposing limitations on the activities of their U.S. persons and undertaking measures in connection with their supply chains more broadly to comply with the new regulations.
Our ability to utilize certain U.S. and state net operating loss carryforwards may be limited under applicable tax laws. As of December 31, 2023, we had net operating loss carryforward amounts, or NOLs, of $3.3 million for U.S. federal income tax purposes and $0.6 million for U.S. state income tax purposes.
Our ability to utilize certain U.S. and state net operating loss carryforwards may be limited under applicable tax laws. As of December 31 , 2024, we had certain net operating loss carryforward amounts, or NOLs, of $2 million for U.S. federal income tax purposes and $0.9 million for U.S. s tate income tax purposes (note 18).
The chip manufacturing industry is highly concentrated, and we derive most of our revenue from a limited number of customers. A total of three customers accounted for 45.5% of our revenue in 2023, three customers accounted for 43.8% of our revenue in 2022, and two customers accounted for 48.9% of our revenue in 2021.
The chip manufacturing industry is highly concentrated, and we derive most of our revenue from a limited number of customers. A total of four customers accounted for 52.2% of our revenue in 2024, three customers accounted for 45.5%% of our revenue in 2023, and three customers accounted for 43.8% of our revenue in 2022.
The ability of our manufacturers to supply our tools is dependent, in part, upon the availability of certain components and subassemblies. Our manufacturers may experience shortages in the availability of such components or subassemblies, which could result in delayed delivery of products to us or in increased costs to us.
Any shortage of components or subassemblies could result in delayed delivery of products to us or in increased costs to us, which could harm our business. The ability of our manufacturers to supply our tools is dependent, in part, upon the availability of certain components and subassemblies.
As of December 31, 2022, we had NOLs of $4.4 million for U.S. federal income tax purposes and $0.5 million for U.S. state income tax purposes. As of December 31, 2021, we had NOLs of $56.1 million for U.S. federal income tax purposes and $0.5 million for U.S. state income tax purposes.
As of December 31, 2023, we had NOLs, of $3.3 million for U.S. federal income tax purposes and $0.6 million for U.S. state income tax purposes. As of December 31, 2022, we had NOLs of $4.4 million for U.S. federal income tax purposes and $0.5 million for U.S. state income tax purposes.
Even though substantially all of the operations of ACM Research are currently conducted through ACM Shanghai, the information disclosed by the two companies will differ, and may differ materially from time to time, due to the distinct, and potentially inconsistent, accounting standards applicable to the two companies and disclosure requirements imposed by securities regulatory authorities, as well as differences in language, culture and expression habit, in composition of investors in the United States and mainland China, and in the capital markets of the United States and mainland China. 44 Table of Contents Differing disclosures could lead to confusion or uncertainty among investors in the publicly traded shares of one or both companies.
Even though substantially all of the operations of ACM Research are currently conducted through ACM Shanghai, the information disclosed by the two companies will differ, and may differ materially from time to time, due to the distinct, and potentially inconsistent, accounting standards applicable to the two companies and disclosure requirements imposed by securities regulatory authorities, as well as differences in language, culture and expression habit, in composition of investors in the United States and mainland China, and in the capital markets of the United States and mainland China.
Our product warranty requires us to provide labor and parts necessary to repair defects. As of December 31, 2023, we had accrued $9.8 million in liability contingency for potential warranty claims.
Our product warranty requires us to provide labor and parts necessary to repair defects. As of December 31, 2024, we had 31 Table of Contents accrued $12.7 million in liability contingency for potential warranty claims.
Such potential sanctions or pressure may include fines and penalties on ACM Shanghai’s operations in mainland China, limitations on its operating privileges in mainland China, delays in or restrictions on the transfer of proceeds from a public offering of ACM Research securities in the United States to ACM Shanghai, restrictions on or prohibition of the payments or remittance of dividends by ACM Shanghai to ACM Research, or other actions that 21 Table of Contents could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of ACM Research Class A common stock, which could decline in value or become worthless.
Such potential sanctions or pressure may include fines and penalties on ACM Shanghai’s operations in mainland China, limitations on its operating privileges in mainland China, delays in or restrictions on the transfer of proceeds from a public offering of ACM Research securities in the United States to ACM Shanghai, restrictions on or prohibition of the payments or remittance of dividends by ACM Shanghai to ACM Research, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of ACM Research Class A common stock, which could decline in value or become worthless. 20 Table of Contents Mainland China central government authorities may intervene in, or influence, ACM Shanghai’s mainland China-based operations at any time, and those authorities’ rules and regulations in mainland China can change quickly with little or no advance notice.
The federal and state NOLs will expire at various dates in the future. Utilization of these NOLs could be subject to a substantial annual limitation if the ownership change limitations under U.S. Internal Revenue Code Sections 382 and 383 and similar U.S. state provisions are triggered by changes in the ownership of our capital stock.
Utilization of these NOLs could be subject to a substantial annual limitation if the ownership change limitations under U.S. Internal Revenue Code Sections 382 and 383 and similar U.S. state provisions are triggered by changes in the ownership of our capital stock. Such an annual limitation would result in the expiration of the NOLs before utilization.
ACM Shanghai is continuing to assess the impact of the October 2023 changes, together with the October 2022 rules, and will continually adjust or modify its policies and practices as required to comply with these or other related updates.
ACM Shanghai is continuing to assess the impact of these export control restrictions, and will continually adjust or modify its policies and practices as required to comply with these or other related updates.
Since 2018, th e U.S. government has imposed new or higher tariffs on specified imported products originating from mainland China in response to what the U.S. government characterized as unfair trade practices.
Since 2018, th e U.S. government has imposed new or higher tariffs on specified imported products originating from mainland China in response to what the U.S. government characterized as unfair trade practices. The mainland China government responded to each of these rounds of U.S. tariff changes by imposing new or higher tariffs on specified products imported from the United States.
Such a mechanism could negatively impact our ability to realize value from certain existing and future investments, including by limiting exit opportunities or causing us to favor buyers that we believe are lower risk for the possible outbound investment reviews, even in circumstances where other buyers may offer better terms or more consideration.
Such a mechanism could negatively impact our ability to realize value from certain existing and future investments, including by limiting exit opportunities or causing us to favor buyers that may avoid complex notification requirements, even in circumstances where other buyers may offer better terms or more consideration.
Any such actions could materially affect our operations and stock price, including by resulting in our being de-listed from Nasdaq or being required to engage a new audit firm, which would require significant expense and management time.
Any such actions could materially affect our operations and stock price, including by resulting in our being de-listed from Nasdaq or being required to engage a new audit firm, which would require significant expense and management time. It may be difficult for overseas regulators to conduct investigations or collect evidence within mainland China.
Because of the market capitalization achieved by Class A common stock during October 2020, our charter no longer contemplates circumstances in which all of the shares of Class B common stock will mandatorily convert into Class A common stock.
Because of the market capitalization achieved by Class A common stock during October 2020, the trigger included in our charter pursuant to which all of the shares of Class B common stock must convert into Class A common stock no longer applies.
Moreover, our customers source a range of production equipment, supplies and services from other suppliers with operations around the world, and any reduction in supply capacity at those customers’ factories may reduce or even halt those customers’ production and result in a decrease in the demand for our products. 35 Table of Contents Any shortage of components or subassemblies could result in delayed delivery of products to us or in increased costs to us, which could harm our business.
Moreover, our customers source a range of production equipment, supplies and services from other suppliers with operations around the world, and any reduction in supply capacity at those customers’ factories may reduce or even halt those customers’ production and result in a decrease in the demand for our products.
Alternatively, if a court were to find the choice of forum provision contained in our charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition. 47 Table of Contents We incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies which could adversely affect our business, operating results and financial condition.
Such an annual limitation would result in the expiration of the NOLs before utilization. Our existing NOLs may be subject to limitations arising from previous ownership changes, including in connection with our initial public offering and concurrent private placement in November 2017, our follow-on public offering in August 2019, and any future equity issuances.
Our existing NOLs may be subject to limitations arising from previous ownership changes, including in connection with our initial public offering and concurrent private placement in November 2017, our follow-on public offering in August 2019, and any future equity issuances. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change.
If our suppliers’ operations are curtailed, we may need to seek alternate sources of supply, which may be more expensive. Alternate sources may not be available or may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations.
Alternate sources may not be available or 32 Table of Contents may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations.
Per current regulations, if ACM Research were to appear for two consecutive years on the “Conclusive list of issuers identified under the HFCAA”, the value of our securities may significantly decline or become worthless, and our securities would be prohibited from trading and may eventually be delisted.
However, if we were to appear for two consecutive years on the Conclusive List, the value of our securities may significantly decline or become worthless, and our securities would be prohibited from trading and may eventually be delisted.
To the extent that any capital investment or other assistance from the mainland China government is not provided to us, it could be used to promote the products and technologies of our competitors, which could adversely affect our business, operating results and financial condition. 41 Table of Contents Changes in political and economic policies with respect to mainland China may make it difficult for us to realize the benefit of our investments.
To the extent that any capital investment or other assistance from the mainland China government is not provided to us, it could be used to promote the products and technologies of our competitors, which could adversely affect our business, operating results and financial condition.
These factors had an adverse impact on ACM Shanghai’s shipments and sales in the twelve months ended 39 Table of Contents December 31, 2023. We anticipate these factors will continue to have an adverse impact on ACM Shanghai’s shipments and sales in future periods, including as a result of any impacts from the October 2023 revisions.
These factors had an adverse impact on ACM Shanghai’s shipments and sales in the twelve months ended December 31, 2023. We anticipate these factors will continue to have an adverse impact on ACM Shanghai’s shipments and sales in future periods.
Moreover, there is doubt whether courts in mainland China would enforce (a) judgments of United States courts against ACM Shanghai, our directors or officers based on the civil liability provisions of the securities laws of the United States or any state, or (b) in original actions brought in mainland China, liabilities against us or any nonresidents based upon the securities laws of the United States or any state.
Moreover, there is doubt whether courts in mainland China would enforce (a) judgments of United States courts against ACM Shanghai, our officers based on the civil liability provisions of the securities laws of the United States or any state, or (b) in original actions brought in mainland China, liabilities against us or any nonresidents based upon the securities laws of the United States or any state. 23 Table of Contents We conduct substantially all of our operations outside the United States and face risks associated with conducting business in foreign markets.
While we intend to strongly defend our public filings against any such short seller attacks, in many situations we could be constrained, for example, by principles of freedom of speech, applicable state law or issues of commercial confidentiality, in the manner in which we are able to proceed against the relevant short seller.
Short-seller publications may create the appearance or perception of wrongdoing, even when they are not substantiated, and may therefore affect the reputation or perception of our company and management. 48 Table of Contents While we intend to strongly defend our public filings against any such short seller attacks, in many situations we could be constrained, for example, by principles of freedom of speech, applicable state law or issues of commercial confidentiality, in the manner in which we are able to proceed against the relevant short seller.
The Regulation on Advanced Semiconductor Manufacturing Equipment entered force on September 1, 2023. From that point on, the export of certain advanced semiconductor manufacturing equipment, as specified in the Annex to the Regulation, is now subject to a national export license authorization requirement by the Dutch Central Import and Export Service.
From that point on, the export of certain advanced semiconductor manufacturing equipment, as specified in the Annex to the Regulation, is now subject to a national export license authorization requirement by the Dutch Central Import and Export Service. 37 Table of Contents Efforts to further tighten semiconductor-related export controls have continued in 2024.

… 110 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed7 unchanged
Biggest changeTo defend, detect and respond to cybersecurity incidents, we, among other things: conduct proactive privacy and cybersecurity reviews of systems and applications, audit applicable data policies, perform penetration testing using external third-party tools and techniques to test security controls, conduct employee training, monitor emerging laws and regulations related to data protection and information security and implement appropriate changes. 51 Table of Contents As part of our risk management process, we conduct application security assessments, vulnerability management, penetration testing, security audits, and ongoing risk assessments.
Biggest changeTo defend, detect and respond to cybersecurity incidents, we, among other things: conduct proactive privacy and cybersecurity reviews of systems and applications, audit applicable data policies, perform penetration testing using external third-party tools and techniques to test security controls, conduct employee training, monitor emerging laws and regulations related to data protection and information security and implement appropriate changes.
Cybersecurity Governance Cybersecurity is an important part of our risk management processes. Our Audit Committee is responsible for the oversight of risks from cybersecurity threats. Members of the Audit Committee receive reports of any breaches or developments regarding matters of cybersecurity.
Cybersecurity Governance Cybersecurity is an important part of our risk management processes. Our Audit Committee is responsible for the oversight of risks from cybersecurity threats. Members of the Audit Committee receive reports of any breaches or developments 49 Table of Contents regarding matters of cybersecurity.
We also maintain a variety of incident response plans that are utilized when incidents are detected. We require employees with access to information systems, including all corporate employees, to undertake data protection and cybersecurity training and compliance programs.
As part of our risk management process, we conduct application security assessments, vulnerability management, penetration testing, security audits, and ongoing risk assessments. We also maintain a variety of incident response plans that are utilized when incidents are detected. We require employees with access to information systems, including all corporate employees, to undertake data protection and cybersecurity training and compliance programs.

Item 2. Properties

Properties — owned and leased real estate

9 edited+5 added−3 removed0 unchanged
Biggest changeThe lease covers a total of 103,318 square feet, of which 100,000 square feet are allocated for production. Our lease currently extends until January 15, 2028. In February 2021, ACM Shanghai entered into an operating lease for a second building located adjacent to the above-mentioned second manufacturing space to provide additional manufacturing space.
Biggest changeWe conduct manufacturing, warehousing and R&D operations at three leased facilities located in the Chuansha area of Shanghai located about ten miles from ACM Shanghai's headquarters. The first facility includes a total of 103,318 square feet, of which 100,000 square feet are allocated for production, with a lease which extends until January 15, 2028.
After that ten-year period expires, ACM Shengwei’s subsidiary may use the apartment units as stock of commercial housing and may sell them separately in sets. Effective April 1, 2023, we entered an agreement to lease a 10,683 square foot facility in Hillsborough, Oregon beginning April 1, 2023 until August 31, 2030.
After that ten-year period expires, ACM Lingang’s subsidiary may use the apartment units as stock of commercial housing and may sell them separately in sets. Effective April 1, 2023, we entered an agreement to lease a 10,683 square foot facility in Hillsborough, Oregon beginning April 1, 2023 until August 31, 2030.
The contracts stipulate that, for a ten-year term, ACM Shengwei’s subsidiary is obligated to manage the apartment units for public rental use in accordance with public rental housing standards and must rent the apartment units to employees of ACM Shanghai and its subsidiaries who work in the Lingang Industrial Zone.
The contracts stipulate that, for a ten-year term, ACM Lingang’s subsidiary is obligated to manage the apartment units for public rental use in accordance with public rental housing standards and must rent the apartment units to employees of ACM Shanghai and its subsidiaries who work in the Lingang Industrial Zone.
ACM Shengwei’s subsidiary received ownership of the apartment units and corresponding land use rights in January 2022 as part of a pilot project of public rental housing in the “rent before sale” park in the Lingang Industrial Zone.
ACM Lingang’s subsidiary received ownership of the apartment units and corresponding land use rights in January 2022 as part of a pilot project of public rental housing in the “rent before sale” park in the Lingang Industrial Zone.
The planned 1,000,000 square foot facility will incorporate state-of-the-art manufacturing systems and automation technologies and will provide the floor space to support significantly more production capacity and related research and development activities when fully staffed and supplied. 52 Table of Contents In connection with the Lingang facility project, on October 28, 2020, a wholly owned subsidiary of ACM Shengwei entered into Shanghai Public Rental Housing Overall Pre-Sale Contracts with Shanghai Lingang Industrial Zone Public Rental Housing Construction and Operation Management Co., Ltd. for an aggregate price to us of approximately $40 million.
In connection with the Lingang facility project, on October 28, 2020, a wholly owned subsidiary of ACM Lingang entered into Shanghai Public Rental Housing Overall Pre-Sale Contracts with Shanghai Lingang Industrial Zone Public Rental Housing Construction and Operation Management Co., Ltd. for an aggregate price to us of approximately $40 million.
Item 2. Properties We have occupied our current corporate headquarters in Fremont, California, since February 2008, under a lease that, after an amendment in February 2023, now extends through March 31, 2025. We conduct research and development, service support operations and administrative activities at ACM Shanghai’s headquarters located in the Zhangjiang Hi Tech Park in Shanghai.
Item 2. Properties We have occupied our current corporate headquarters in Fremont, California, since February 2008, under a lease that, after an amendment in January 2025, now extends through March 31, 2027. Our new corporate headquarters for ACM Shanghai comprises of four buildings, purchased in the twelve months ended December 31, 2023.
In addition, we perform sales support, customer service operations, R&D, and production activities from leased facilities in Jiangyin and Wuxi in mainland China and Icheon in Korea. In May 2020 ACM Shanghai, through its wholly owned subsidiary ACM Shengwei, entered into an agreement for a 50-year land use right in the Lingang region of Shanghai.
In May 2020 ACM Shanghai, through its wholly owned subsidiary ACM Lingang, entered into an agreement for a 50-year land use right in the Lingang region of Shanghai. In July 2020 ACM Lingang began a multi-year construction project for a new development and production center.
The lease covers approximately 106,076 square feet of which 100,000 square feet are allocated for production. Our lease currently extends until July 15, 2024. In July 2022, ACM Shanghai entered into an operating lease for a third building to provide additional manufacturing and warehousing space.
The second facility includes a total of 106,076 square feet of which 100,000 square feet are allocated for production, and the lease extends unti l July 15, 2025.
The facility is being used for our U.S.-based sales and services team to support customer activities in the region.
The facility is being used for our U.S.-based sales and services team to support customer activities in the region. 50 Table of Contents On October 1, 2024, we acquired a commercial facility, comprised of 39,500 square foot total floor space and which includes a 5,200 square foot functional clean room, for a price of $7.75 million.
Removed
We have leased this facility since 2007 and our lease currently extends until December 31, 2024. In the year ended December 31, 2023, ACM Shanghai completed its purchase of facilities in the ZhangJiang free trade zone, part of the Pudong district of Shanghai.
Added
The facilities are situated in ZhangJiang E-Park located in the ZhangJiang Science City part of the Pudong district of Shanghai, where ACM Shanghai conducts sales, marketing, R&D and administrative activities. Additional research and development, service support operations and administrative activities are conducted at a multi-story office building located on Cailun Road in the ZhangJiang Science City in Shanghai.
Removed
The facilities consist of four buildings for administrative and R&D office use, and, following the expected move-in in the 2024 timeframe, are intended to serve as the corporate headquarters for ACM Shanghai. In January 2018, ACM Shanghai entered into an operating lease for a second manufacturing space located in Shanghai, ten miles from its headquarters.
Added
This facility has been leased since 2007 and currently extends until December 31, 2025. In addition, we perform sales support, customer service operations, R&D, and/ or production activities from leased facilities in Beijing, Chengdu, Jiangyin and Wuxi in mainland China and Icheon in Korea.
Removed
In July 2020 ACM Shengwei began a multi-year construction project for a new development and production center.
Added
The third facility includes a total of 105,970 s quare feet which provides additional manufacturing and w arehousing space, and subsequent to December 31, 2024, the lease w as extended until December 31, 2027.
Added
Construction of t he five-building complex which comprises more than 1,485,000 square foot of floor space in aggregate is nearly completed, and is intended to incorporate state-of-the-art manufacturing systems and automation technologies and provide the floor space to significantly increase production capacity and support additional research and development activities when fully-staffed and supplied.
Added
This facility is located in the City of Hillsboro in Oregon, and is intended to further expand our research and development and demonstration capabilities in the United States market.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. As of December 31, 2023, the Company had no outstanding material legal proceedings, other than ordinary routine litigation incidental to the business.
Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. As of December 31, 2024, the Company had no outstanding material legal proceedings, other than ordinary routine litigation incidental to the business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed4 unchanged
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans The information required by this item will be set forth in the definitive proxy statement we will file in connection with our 2024 Annual Meeting of Stockholders and is incorporated by reference herein. 53 Table of Contents Sales of Unregistered Securities During the three months ended December 31, 2023, ACM Research issued, pursuant to the exercise of stock options at a per share exercise price of $0.50 per s hare, an aggrega te of 235,581 shares of Class A common stock that were not registered under the Securities Act of 1933.
Biggest changeSales of Unregistered Securities During the three months ended December 31, 2024, ACM Research issued, pursuant to the exercise of stock options at a per share exercise price of $0.50 per s hare, an aggregate of 323,824 shares of Clas s A common stock that were not registered under the Securities Act of 1933.
The recipients of the shares acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were recorded with respect to the shares. The recipients of the shares were accredited investors under Rule 501 of Regulation D.
The recipients of the shares acquired the securities for investment only and not with 51 Table of Contents a view to or for sale in connection with any distribution thereof, and appropriate legends were recorded with respect to the shares. The recipients of the shares were accredited investors under Rule 501 of Regulation D.
As of February 23, 2024, there were 5,021,811 shares of Class B common stock held of record by 16 stockholders. We have never declared or paid cash dividends on our capital stock.
As of February 24, 2025, there were 5,021,811 shares of Class B common stock held of record by 16 stockholders. We have never declared or paid cash dividends on our capital stock.
Sale Date Exercised Shares (Net) November 3, 2023 26,821 November 14, 2023 174,776 November 14, 2023 33,984 Total 235,581 Performance Graph The following graph compares the total return of an investment of $100 in cash at the closing price of November 3, 2017, which is the date our common stock first began trading on Nasdaq, through December 31, 2023 for (1) our common stock, (2) the Russell 1000 index, and (3) the Nasdaq Composite Index.
Sale Date Exercised Shares (Net) November 5, 2024 27,028 November 14, 2024 34,058 November 14, 2024 262,738 Total 323,824 Performance Graph The following graph compares the total return of an investment of $100 in cash at the closing price of November 3, 2017, which is the date our common stock first began trading on Nasdaq, through December 31, 2024 for (1) our common stock, (2) the Russell 1000 index, and (3) the Nasdaq Composite Index.
Holders of Common Stock As of February 23, 2024, there we re 56,073,205 shares of Class A common stock outstanding held of record by 46 stockholders. The actual number of holders of Class A common stock is substantially greater and includes stockholders who are beneficial owners and whose shares are held of record by banks, brokers, and other financial institutions.
Holders of Common Stock As of February 24, 2025, there were 58,107,893 shares of Class A common stock outstanding held of r ecord by 46 stockholders. The actual number of holders of Class A common stock is substantially greater and includes stockholders who are beneficial owners and whose shares are held of record by banks, brokers, and other financial institutions.
Added
Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item will be set forth in the definitive proxy statement we will file in connection with our 2025 Annual Meeting of Stockholders and is incorporated by reference herein.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

125 edited+20 added−33 removed116 unchanged
Biggest changeWe and ACM Shanghai, together with the subsidiaries of ACM Shanghai, have short-term and long-term borrowings with six banks, as follows: 74 Table of Contents Lender Agreement Date Maturity Date Annual Interest Rate Maximum Borrowing Amount(1) Amount Outstanding at December 31, 2023 (in thousands) China CITIC Bank (2) July 2023 Repayable by installments and the last installments repayable in December 2025 4.50 % RMB200,000 RMB100,000 $ 28,240 $ 14,120 China Everbright Bank July 2021 August 2024 3.00 % RMB150,000 RMB17,440 $ 21,180 $ 2,463 Bank of China September 2023 September 2024 2.87 % RMB40,000 RMB40,000 $ 5,648 5536 $ 5,648 China Merchants Bank August 2023 September 2024 3.00 % RMB200,000 RMB153,000 $ 28,240 $ 21,603 China Merchants Bank November 2020 Repayable by installments and the last installments repayable in November 2030 3.95 % RMB128,500 RMB94,633 $ 18,144 $ 13,362 Bank of China June 2021 Repayable by installments and the last installments repayable in June 2024 2.60 % RMB10,000 RMB7,500 $ 1,412 $ 1,059.00 Bank of China September, 2021 Repayable by installments and the last installments repayable in September 2024 2.60 % RMB35,000 RMB28,000 $ 4,942 $ 3,954 Bank of Shanghai December,2022 October 2024 2.85 % RMB100,000 RMB100,000 $ 14,120 $ 14,120 China CITIC Bank August 2023 Repayable by installments and the last installments repayable in August 2025 3.10 % RMB100,000 RMB100,000 $ 14,120 $ 14,120 Industrial Bank of Korea July 2023 July 2024 6.03 % KRW500,000 KRW100,000 $ 386 $ 77 Industrial Bank of Korea December 2023 December 2024 4.27 % KRW2,000,000 KRW2,000,000 $ 1,544 $ 1,544 $ 137,976 $ 92,070 75 Table of Contents (1) Converted from RMB to dollars as of December 31, 2023.
Biggest changeNet cash provided by financing for the year ended December 31, 2024 was $92.5 million, primarily consisting of $130.2 million net proceeds from short and long-term borrowings, and $11.1 million in proceeds from the exercise of stock options, offset by ($ 41.9 million) of short-term and long-term loan repayment, and ($6.9 million) of dividends paid by ACM Shanghai. 71 Table of Contents We and ACM Shanghai, together with the subsidiaries of ACM Shanghai, have short-term and long-term borrowings with six banks, as follows: Lender Agreement Date Maturity Date Annual Interest Rate Maximum Borrowing Amount(1) Amount Outstanding at December 31, 2024 (in thousands) China CITIC Bank (2) July 2023 Repayable by installments and the last installments repayable in December 2025 3.45 % RMB200,000 RMB99,896 $ 27,820 $ 13,881 China Everbright Bank December 2024 December 2027 2.60 % RMB600,000 RMB399,327 $ 83,460 $ 55,549 China Merchants Bank August 2024 August 2025 2.60 % RMB200,000 RMB66,048 $ 27,820 $ 9,185 Bank of China September 2024 September 2025 2.50%-2.75% RMB400,000 RMB363,265 $ 55,640 $ 50,533 Industrial and Commercial Bank of China November 2024 November 2027 2.50 % RMB300,000 NIL $ 41,730 $ — Shanghai Pudong Development Bank December 2024 September 2025 2.60 % RMB300,000 NIL $ 41,730 $ — China Merchants Bank August 2024 August 2034 2.95 % RMB1,000,000 NIL $ 139,100 $ — Bank of China November 2024 November 2035 2.70 % RMB1,000,000 NIL $ 139,100 $ — China Merchants Bank November 2020 Repayable by installments and the last installments repayable in November 2030 3.65 % RMB128,500 RMB82,499 $ 17,874 $ 11,475 Agricultural Bank of China April 2024 Repayable by installments and the last installments repayable in April 2034 2.53%-2.78% RMB300,000 RMB93,604 $ 41,730 $ 13,020 Bank of Shanghai December 2022 October 2024 2.85 % RMB100,000 RMB100,079 $ 13,910 $ 13,920 72 Table of Contents China CITIC Bank August 2023 Repayable by installments and the last installments repayable in August,2025 3.10 % RMB100,000 RMB99,886 $ 13,910 $ 13,894 Industrial Bank of Korea December 2023 December 2024 4.27 % KRW2,000,000 KRW2,000,000 $ 1,354 $ 1,354 $ 645,178 $ 182,811 (1) Converted from RMB to dollars as of December 31, 2024.
For example, our Ultra C models for SAPS, TEBO and Tahoe solutions use common modular configurations that enable us to create a wet-cleaning tool meeting a customer’s specific requirements, while using pre-existing designs for chamber, electrical, chemical delivery and other modules. Because of the relatively high purchase prices of our tools, customers generally pay in installments.
For example, our Ultra C models for SAPS, TEBO, Tahoe and other solutions use common modular configurations that enable us to create a wet-cleaning tool meeting a customer’s specific requirements, while using pre-existing designs for chamber, electrical, chemical delivery and other modules. Because of the relatively high purchase prices of our tools, customers generally pay in installments.
Sales and Marketing Sales and marketing expense consists primarily of: • compensation of personnel associated with pre- and after-sales support and other sales and marketing activities, including stock-based compensation; • sales commissions paid to independent sales representatives; • fees paid to sales consultants; • cost of trade shows; • cost of promotional tools to new potential customers; • travel and entertainment; and • allocated overhead for rent and utilities.
Sales and Marketing Sales and marketing expense consists primarily of: • compensation of personnel associated with pre- and after-sales support and other sales and marketing activities, including stock-based compensation; • sales commissions paid to independent sales representatives; • fees paid to sales consultants; • cost of trade shows; • cost of promotional tools to potential new customers; • travel and entertainment; and • allocated overhead for rent and utilities.
Risk Factors–Regulatory Risks–Mainland China’s currency exchange control and government restrictions on investment repatriation may impact our ability to transfer funds outside of mainland China, which could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, otherwise fund and conduct our business, or pay dividends on our common stock.” For the years ended December 31, 2023 and 2022, with the exception of sales and services-related transfer-pricing payments in the ordinary course of business, and dividends paid by ACM Shanghai to ACM Research, no transfers or distributions have been made between ACM Research, and its subsidiaries, including ACM Shanghai, or to holders of ACM Research Class A common stock.
Risk Factors–Regulatory Risks–Mainland China’s currency exchange control and government restrictions on investment repatriation may impact our ability to transfer funds outside of mainland China, which could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, otherwise fund and conduct our business, or pay dividends on our common stock.” For the years ended December 31, 2024, 2023, and 2022, with the exception of sales and services-related transfer-pricing payments in the ordinary course of business, and dividends paid by ACM Shanghai to ACM Research, no transfers or distributions have been made between ACM Research, and its subsidiaries, including ACM Shanghai, or to holders of ACM Research Class A common stock.
We utilize ASC 606 which was adopted in 2018 set forth in Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606) , of the Financial Accounting Standards Board, or FASB, regarding the recognition, presentation and disclosure of revenue in our financial statements as described below under “—Critical Accounting Estimates—Revenue Recognition.” We offer extended maintenance service contracts to provide services such as trouble-shooting or fine-tuning tools, and installing spare parts, following expiration of applicable initial standard assurance type warranty coverage periods, which for sales to date have extended from 12 to 36 months as described under “—Critical Accounting Estimates—Warranty.” In 2023, 2022, and 2021, we received payments for parts and labor for service activities provided from time to time, but as of December 31, 2023 we had not yet entered into extended maintenance service contracts with respect to the substantial majority of tools for whi ch initial warranty coverage had expired.
We utilize ASC 606 which was adopted in 2018 set forth in Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606) , of the Financial Accounting Standards Board, or FASB, regarding the recognition, presentation and disclosure of revenue in our financial statements as described below under “—Critical Accounting Estimates—Revenue Recognition.” We offer extended maintenance service contracts to provide services such as trouble-shooting or fine-tuning tools, and installing spare parts, following expiration of applicable initial standard assurance type warranty coverage periods, which for sales to date have extended from 12 to 36 months as described under “—Critical Accounting Estimates—Warranty.” In 2024, 2023, and 2022, we received payments for parts and labor for service activities provided from time to time, but as of December 31, 2024 we had not yet entered into extended maintenance service contracts with respect to the substantial majority of tools for whi ch initial warranty coverage had expired.
How We Evaluate Our Operations We present information below with respect to four measures of financial performance: • We define “shipments” of tools to include (a) a “repeat” delivery to a customer of a type of tool that the customer has previously accepted, for which we recognize revenue upon delivery, and (b) a “first-time” delivery of a “first tool” to a customer on an approval basis, for which we may recognize revenue in the future if contractual conditions are met, or if a purchase order is received. • We define “adjusted EBITDA” as net income excluding interest expense (net), income tax benefit (expense), depreciation and amortization, unrealized (gain) loss on short-term investments, and stock-based compensation.
How We Evaluate Our Operations We present information below with respect to four measures of financial performance: • We define “shipments” of tools to include (a) a “repeat” delivery to a customer of a type of tool that the customer has previously accepted, for which we recognize revenue upon delivery, and (b) a “first-time” delivery of a “first 74 Table of Contents tool” to a customer on an approval basis, for which we may recognize revenue in the future if contractual conditions are met, or if a purchase order is received. • We define “adjusted EBITDA” as net income excluding interest expense (net), income tax benefit (expense), depreciation and amortization, unrealized (gain) loss on short-term investments, and stock-based compensation.
In 2021, 2022 and 2023 we introduced and delivered a range of new tools intended to broaden our revenue opportunity with global semiconductor manufacturers. Product extensions include the Ultra SFP ap tool for advanced packaging solutions, the Ultra C VI 18-chamber single wafer cleaning tool for advanced memory devices, and the Ultra ECP 3d platform for through-silicon-via, or tsv, application.
In 2022, 2023 and 2024 we introduced and delivered a range of new tools intended to broaden our revenue opportunity with global semiconductor manufacturers. Product extensions include the Ultra SFP ap tool for advanced packaging solutions, the Ultra C VI 18-chamber single wafer cleaning tool for advanced memory devices, and the Ultra ECP 3d platform for through-silicon-via, or tsv, application.
Our cash and cash equivalents at December 31, 2023 were held for working capital purposes and other potential investments. ACM Shanghai, our only direct mainland China subsidiary, is, however, subject to mainland China restrictions on distributions to equity holders. The use of proceeds raised by the STAR Market IPO, without further approvals, are limited to specific usage.
Our cash and cash equivalents at December 31, 2024 were held for working capital purposes and other potential investments. ACM Shanghai, our only direct mainland China subsidiary, is, however, subject to mainland China restrictions on distributions to equity holders. The use of proceeds raised by the STAR Market IPO, without further approvals, are limited to specific usage.
Certain entities which meet requirements according to the Policy of the Lingang New area in China (Shanghai) Pilot Free Trade Zone are entitled to a preferential income tax rate of 15%. ACM Lingang was certified for this in 2021, and this preferential income tax rate is valid from December 31, 2020 until December 31, 2024.
Certain entities which meet requirements according to the Policy of the Lingang New area in China (Shanghai) Pilot Free Trade Zone are entitled to a preferential income tax rate of 15%. ACM Lingang was certified for this in 2021, and this preferential income tax rate is valid from January 1, 2020 until December 31, 2024.
Unearned government subsidies received are deferred for recognition and recorded as other long-term liabilities (see note 13 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data.”) in the consolidated balance sheet until the criteria for such recognition are satisfied.
Unearned government subsidies received are deferred for recognition and recorded as other long-term liabilities (see note 12 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data.”) in the consolidated balance sheet until the criteria for such recognition are satisfied.
Contractual penalties in the case of a delay of Construction Completion Milestone : ◦ If ACM Lingang fails to complete the construction pursuant to the date agreed under the Grant Agreement or any extended completion date approved by the Grantor, ACM Lingang shall pay 50% of the deposit for timely completion of construction as liquidated damages; ◦ If ACM Lingang delays the completion for more than six months beyond the date agreed under the Grant Agreement, or beyond any extended completion date approved by the Grantor, it shall pay the total deposit for timely completion of construction as liquidated damages. 76 Table of Contents ◦ If the delay is more than one year, the Grantor is entitled to terminate the Grant Agreement and take back the Land Use Right.
Contractual penalties in the case of a delay of Construction Completion Milestone : ◦ If ACM Lingang fails to complete the construction pursuant to the date agreed under the Grant Agreement or any extended completion date approved by the Grantor, ACM Lingang shall pay 50% of the deposit for timely completion of construction as liquidated damages; ◦ If ACM Lingang delays the completion for more than six months beyond the date agreed under the Grant Agreement, or beyond any extended completion date approved by the Grantor, it shall pay the total deposit for timely completion of construction as liquidated damages. ◦ If the delay is more than one year, the Grantor is entitled to terminate the Grant Agreement and take back the Land Use Right.
These governmental authorities provide significant funding, although ACM Shanghai and ACM Shengwei is also required to invest certain amounts in the projects. The governmental grants contain certain operating conditions, and we are required to go through a government due diligence process once the project is complete.
These governmental authorities provide significant funding, although ACM Shanghai and ACM Lingang is also required to invest certain amounts in the projects. The governmental grants contain certain operating conditions, and we are required to go through a government due diligence process once the project is complete.
The increase in revenue for 2022 compared to 2021 was driven primarily by higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment, and increased contribution from newer ECP (front-end and packaging), furnace and other technologies.
The increase in revenue for 2023 compared to 2022 was driven primarily by higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment, and increased contribution from newer ECP (front-end and packaging), furnace and other technologies.
For shipments made to a customer that has previously accepted a specific type of tool, revenues are recognized upon shipment or delivery because we can objectively demonstrate that the goods meet all the required customer specifications. Stock-based compensation We account for grants of stock options based on their grant date fair value and recognize compensation expense over the vesting periods.
For shipments made to a customer that has previously accepted a specific type of tool, revenues are recognized upon shipment or delivery because we can objectively demonstrate that the goods meet all the required customer specifications. 60 Table of Contents Stock-based compensation We account for grants of stock options based on their grant date fair value and recognize compensation expense over the vesting periods.
During the year ended December 31, 2023, we funded our technology development and operations principally through our beginning global cash balances, including the cash balances at ACM Shanghai, borrowings by ACM Shanghai from local financial institutions and our loan from China CITIC Bank.
During the year ended December 31, 2024, we funded our technology development and operations principally through our beginning global cash balances, including the cash balances at ACM Shanghai, borrowings by ACM Shanghai from local financial institutions and our loan from China CITIC Bank.
We seek to obtain a purchase order for a tool from three to four months in advance of the expected delivery date. Depending upon the nature of a customer’s specifications, the lead time for production of a tool generally will extend from two to four months.
We seek to obtain a purchase order for a tool at least three to four months in advance of the expected delivery date. Depending upon the nature of a customer’s specifications, the lead time for production of a tool generally will extend from two to four months.
We cannot guarantee that ACM Lingang will achieve the missed milestone in 2024, or even if it does achieve the milestone in 2024, that it will be refunded some or all of the 20% portion of the performance deposit of RMB 2.5 million ($0.4 million).
We cannot guarantee that ACM Lingang will achieve the missed milestone, or even if it does achieve the milestone in 2025, that it will be refunded some or all of the 20% portion of the performance deposit of RMB 2.5 million ($0.4 million).
Fabricators of advanced integrated circuits, or chips, can use our wet-cleaning and other front-end processing tools in numerous steps to improve product yield, even at increasingly advanced process nodes. We have designed these tools for use in fabricating foundry, logic and memory chips, including DRAM 3D NAND-flash memory chips, power semiconductor and compound semiconductor chips.
Fabricators of advanced integrated circuits, or chips, can use our wet-cleaning and other front-end processing tools in numerous steps to 52 Table of Contents improve product yield, even at increasingly advanced process nodes. We have designed these tools for use in fabricating foundry, logic and memory chips, including DRAM 3D NAND-flash memory chips, power semiconductor and compound semiconductor chips.
ACM Shanghai has historically participated in certain mainland China government-sponsored grant and subsidy programs, as described under “—Key Components of Results of Operations—mainland China Government Research and Development Funding” and “—Contractual Obligations” and we expect that ACM Shanghai will continue to take 72 Table of Contents advantage of these programs when they are available and fit with our business strategy.
ACM Shanghai has historically participated in certain mainland China government-sponsored grant and subsidy programs, as described under “—Key Components of Results of Operations—mainland China Government Research and Development Funding” and “—Contractual Obligations” and we expect that ACM Shanghai will continue to take advantage of these programs when they are available and fit with our business strategy.
If the achievement of any of the above milestones is delayed or abandoned, ACM Shengwei may be subject to additional penalties and may lose its rights to both the use of the granted land and any partially completed facilities on that land.
If the achievement of any of the above milestones is delayed or abandoned, ACM Lingang may be subject to additional penalties and may lose its rights to both the use of the granted land and any partially completed facilities on that land.
See “Forward-Looking Statements and Statistical Data” at page 3 of this report. Please read “Item 1A. Risk Factors” for a discussion of factors that could cause our actual results to differ materially from our expectations 54 Table of Contents Overview ACM Research was incorporated in California in 1998 and redomesticated in Delaware in 2016.
See “Forward-Looking Statements and Statistical Data” at page 3 of this report. Please read “Item 1A. Risk Factors” for a discussion of factors that could cause our actual results to differ materially from our expectations Overview ACM Research was incorporated in California in 1998 and redomesticated in Delaware in 2016.
Following the completion of the STAR IPO, ACM Shanghai’s shares began trading on the STAR Market under the stock code 688082. In the STAR IPO, ACM Shanghai issued 43,355,753 shares, representing ten percent of the total 433,557,100 shares outstanding after the STAR IPO.
ACM Shanghai’s shares began trading on the STAR Market under the stock code 688082. In the STAR IPO, ACM Shanghai issued 43,355,753 shares, representing ten percent of the total 433,557,100 shares outstanding after the STAR IPO.
If we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary expense included in 80 Table of Contents operating expenses would be higher and our cash holdings would be less.
If we did not pay out a portion of our compensation in the form of stock-based compensation, the cash salary expense included in 77 Table of Contents operating expenses would be higher and our cash holdings would be less.
Interest and penalties related to uncertain tax positions are recorded in the provision for income tax expense on the consolidated statements of comprehensive income (loss). 64 Table of Contents Warranty We have provided standard assurance type warranty coverage on our tools for 12 to 36 months, covering labor and parts necessary to repair a tool during the warranty period.
Interest and penalties related to uncertain tax positions are recorded in the provision for income tax expense on the consolidated statements of comprehensive income (loss). Warranty We have provided standard assurance type warranty coverage on our tools for 12 to 36 months, covering labor and parts necessary to repair a tool during the warranty period.
We define adjusted EBITDA to also exclude restructuring costs, although we have not incurred any such costs to date. • We define “free cash flow” as net cash provided by operating activities less purchases of property and equipment (net of proceeds from disposals). 77 Table of Contents • We define “adjusted operating income (loss)” as our income (loss) from operations excluding stock-based compensation.
We define adjusted EBITDA to also exclude restructuring costs, although we have not incurred any such costs to date. • We define “free cash flow” as net cash provided by operating activities less purchases of property and equipment (net of proceeds from disposals). • We define “adjusted operating income (loss)” as our income (loss) from operations excluding stock-based compensation.
There are a number of limitations related to the use of shipments in evaluating our business, including that customers have significant, or in some cases total, discretion in determining whether to accept or purchase our tools after evaluation and their decision not to accept or purchase delivered tools is likely to result in our inability to recognize revenue from the delivered tools.
There are a number of limitations related to the use of shipments in evaluating our business, including that customers have significant, or in some cases total, discretion in determining whether to accept or purchase our tools after evaluation and their decision not to accept or purchase delivered tools is likely to result in our inability to 75 Table of Contents recognize revenue from the delivered tools.
Item 1A – Risk Factors – Regulatory Risks – Our ability to sell our tools to customers in mainland China has been impacted, and will likely continue to be materially and adversely impacted, by export license requirements, other regulatory changes, or other actions taken by the U.S. or other governmental agencies” for more information.
See “Part II. Item 1A – Risk Factors – Regulatory Risks – Our ability to sell our tools to customers in mainland China has been impacted, and will likely continue to be materially and adversely impacted, by export license requirements, other regulatory changes, or other actions taken by the U.S. or other governmental agencies” for more information.
Each purchase order from a customer for one of our tools contains specific technical requirements intended to ensure, among other things, that the tool will be compatible with the customer’s manufacturing process line. Until a 58 Table of Contents purchase order is received, we do not have a binding purchase commitment.
Each purchase order from a customer for one of our tools contains specific technical requirements intended to ensure, among other things, that the tool will be compatible with the customer’s manufacturing process line. Until a purchase order is received, we do not have a binding purchase commitment.
We currently intend for ACM Shanghai to retain all available funds from any future earnings for use in the operation of its business and do not anticipate it paying any cash dividends. Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities.
We currently intend for ACM Shanghai to retain all available funds from any 70 Table of Contents future earnings for use in the operation of its business and do not anticipate it paying any cash dividends. Our accounts receivable balance fluctuates from period to period, which affects our cash flow from operating activities.
Sales and marketing expense in a given period can be particularly affected by the increase in travel and entertainment expenses associated with the finalization of purchase orders or the installation of tools. 60 Table of Contents Research and Development Research and development expense relates to the development of new products and processes and encompasses our research, development and customer support activities.
Sales and marketing expense in a given period can be particularly affected by the increase in travel and entertainment expenses associated with the finalization of purchase orders or the installation of tools. Research and Development Research and development expense relates to the development of new products and processes and encompasses our research, development and customer support activities.
The increased gross margin versus the prior-year period was primarily due to a higher mix of ECP (front- 66 Table of Contents end and packaging), furnace, and other technologies, and a positive impact due to a change in the RMB to U.S. dollar currency exchange rate.
The increased gross margin versus the prior-year period was primarily due to a higher mix of ECP (front-end and packaging), furnace, and other technologies, and a positive impact due to a change in the RMB to U.S. dollar currency exchange rate.
We expect that, for the foreseeable future, research and development expense will increase in absolute dollars as compared to 2023, as we continue to invest in research and development to advance our technologies.
We expect that, for the foreseeable future, research and development expense will increase in absolute dollars as we continue to invest in research and development to advance our technologies.
We attribute the revenue growth to continued investments in mature process nodes by current and new mainland China-based customers amidst an ongoing target to achieve a greater share of the global semiconductor market, incremental contribution from newly introduced tools, and better penetration of our product portfolio across our customer base.
We attribute the revenue growth to continued investments in mature process nodes by current and new mainland China-based customers amidst an ongoing target to achieve a greater share of the global semiconductor market, incremental contribution from our new products, and better penetration of our product portfolio across our customer base.
Collectability is assessed based on our management’s assessment of the customer’s creditworthiness, historical payment experience, as well as other relevant factors. 62 Table of Contents Identify the performance obligations in the contract. Performance obligations are accounted for separately if they are distinct.
Collectability is assessed based on our management’s assessment of the customer’s creditworthiness, historical payment experience, as well as other relevant factors. Identify the performance obligations in the contract. Performance obligations are accounted for separately if they are distinct.
Under current regulations, if ACM Research were to be included on this list for two consecutive years due to our independent auditor being located in a jurisdiction that does not allow for PCAOB inspections, the SEC would prohibit trading in our securities and this ultimately could cause our securities to be delisted in the U.S., and their value may significantly decline or become worthless.
Under current regulations, if ACM Research were to be included on the Conclusive List 53 Table of Contents for two consecutive years due to our independent auditor being located in a jurisdiction that does not allow for PCAOB inspections, the SEC would prohibit trading in our securities and this ultimately could cause our securities to be delisted in the U.S., and their value may significantly decline or become worthless.
Upon satisfaction of a milestone, the portion of the performance deposit attributable to that milestone will be repayable to ACM Shengwei within ten business days.
Upon satisfaction of a milestone, the portion of the performance deposit attributable to that milestone will be repayable to ACM Lingang within ten business days.
Other income (expense), net primarily reflects (a) gains or losses recognized from the impact of exchange rates on our foreign currency-denominated working-capital transactions and (b) depreciation of assets acquired with government subsidies, as described under “—Government Research and Development Funding” above.
Other income (expense), net primarily reflects (a) gains or losses recognized from the impact of exchange rates on our foreign currency-denominated working-capital transactions and (b) government subsidies, as described under “—Government Research and Development Funding” above.
Bas ed on our ongoing review, we believe these regulations may directly impact ACM Shanghai’s ability to meet its future production plans, or indirectly impact the spending plans of ACM Shanghai’s customer base.
Based on our ongoing review, we believe these regulations may directly impact ACM Shanghai’s ability to meet its future production plans, or indirectly impact the spending plans of ACM Shanghai’s customer base.
Risk Factors—Risks Related to Our Business and Our Industry—Difficulties in forecasting demand for our tools may lead to periodic inventory shortages or excess spending on inventory items that may not be used.” Cost of Revenue Cost of revenue for capital equipment consists primarily of: • direct costs, which consist principally of costs of tool components and subassemblies purchased from third-party vendors; 59 Table of Contents • compensation of personnel associated with our manufacturing operations, including stock-based compensation; • depreciation of manufacturing equipment; • amortization of costs of software used for manufacturing purposes; • other expenses attributable to our manufacturing department; • inventory provision; and • allocated overhead for rent and utilities.
Risk Factors—Risks Related to Our Business and Our Industry—Difficulties in forecasting demand for our tools may lead to periodic inventory shortages or excess spending on inventory items that may not be used.” Cost of Revenue Cost of revenue fo r capital equipment consis ts primarily of: • direct costs, which consist principally of costs of tool components and subassemblies purchased from third-party vendors; • compensation of personnel associated with our manufacturing operations, including stock-based compensation; • depreciation of manufacturing equipment; • amortization of costs of software used for manufacturing purposes; • other expenses attributable to our manufacturing department; • inventory provision; and • allocated overhead for rent and utilities.
As described under “—Key Components of Results of Operations—mainland China Government Research and Development Funding,” ACM Shanghai has received research and development grants from local and central mainland China governmental author ities.
As described under “—Key Components of Results of Operations—Mainland China Government Research and Development Funding,” ACM Shanghai has received research and development grants from local and central mainland China governmental authorities.
The increased tax expense in 2023 primarily resulted from the tax effect of increased operating profit generated. As we collect and prepare necessary data, and interpret the guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, we may make adjustments to the provisional amounts.
The increased tax expense in 2024 primarily resulted from the tax effect of increased operating profit generated. 67 Table of Contents As we collect and prepare necessary data, and interpret the guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies, we may make adjustments to the provisional amounts.
If we did not receive the grants, our cash expenses therefore would be lower, 79 Table of Contents and our cash position would not be affected, to the extent we have accurately anticipated the amounts of the grants.
If we did not receive the grants, our cash expenses therefore would be lower, and our cash position would not be affected, to the extent we have accurately anticipated the amounts of the grants.
The rates at which we add customers and install tools will affect the level and time of this spending. In addition, because we often import components and spare parts from the United States, we have experienced, and expect to continue to experience, the effect of the currency fluctuations on our cost of revenue.
The rates at which we add customers and install tools will affect the level and time of this spending. In addition, because we often import components and spare parts from various foreign countries, we have experienced, and expect to continue to experience, the effect of the currency fluctuations on our cost of revenue.
ACM Lingang obtained rights to use approximately 43,000 square meters (10.6 acres) of land in the Lingang Heavy Equipment Industrial Zone of Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone, or the Land Use Right, for a period of fifty years, commencing on the date of delivery of the land in July 2020, which we refer to as the Delivery Date.
ACM Lingang obtained rights to use approximately 43,000 square meters (10.6 acres) of land in the East China Silicon Hub of Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone, or the Land Use Right, for a period of fifty years, commencing on the date of delivery of the land in July 2020, which we refer to as the Delivery Date.
The impact of fluctuations of the RMB to U.S. dollar currency exchange rate on a significant balance of our cash, and cash equivalents held in RMB-denominated accounts (Note 2) contributed t o a $1.7 million decrease in the value of these items during the year ended December 31, 2023.
The impact of fluctuations of the RMB to U.S. dollar currency exchange rate on a significant balance of our cash, and cash equivalents held in RMB-denominated accounts (Note 2) contributed t o a $4.8 million decrease in the value of these items during the year ended December 31, 2024.
We intend to retain all available funds and any future earnings to support the operation of and to finance the growth and development of our business and do not anticipate paying any cash dividends in the foreseeable future. 73 Table of Contents Cash Flow Used in Operating Activities.
We intend to retain all available funds and any future earnings to support the operation of and to finance the growth and development of our business and do not anticipate paying any cash dividends in the foreseeable future. Cash Flow Provided by (Used in) Operating Activities.
General and Administrative General and administrative expense consists primarily of: • compensation of executive, accounting and finance, human resources, information technology, and other administrative personnel, including stock-based compensation; • professional fees, including accounting and legal fees; • other corporate expenses; and • allocated overhead for rent and utilities.
General and Administrative General and administrative expense consists primarily of: • compensation of executive, accounting and finance, human resources, information technology, and other administrative personnel, including stock-based compensation; • professional fees, including accounting and legal fees; 58 Table of Contents • other corporate expenses; • credit losses; and • allocated overhead for rent and utilities.
Income from equity method investments for the year ended December 31, 2023 increased by $5.3 million compared to the year ended December 31, 2022 primarily due to higher net income from equity method investments. Income from equity method investments for the year ended December 31, 2022 was unchanged versus the year ended December 31, 2021.
Income from equity method investments for the year ended December 31, 2023 increased by $5.3 million compared to the year ended December 31, 2022 primarily due to higher net income from equity method investments.
We recorded an unrealized loss on short-term investments of $7.9 million for the year ended December 31, 2022 as compared to an unrealized gain of $0.7 million for the same period in 2021, due primarily to a change in market value of ACM Shanghai’s indirect investment in publicly traded shares.
We recorded an unrealized gain on short-term investments of $1.0 million for the year ended December 31, 2024 as compared to an unrealized loss of $2.7 million for the same period in 2023, due primarily to a change in market value of ACM Shanghai’s indirect investment in publicly traded shares.
Without reduction by grant amounts received from mainland China governmental authorities (see “—mainland China Government Research and Development Funding”), gross research and development expense totaled $94.5 million, or 16.9% of total revenue, in the year ended December 31, 2023 as compared to $63.4 million, or 16.3% of revenue, in the corresponding period in 2022.
Without reduction by grant amounts received from mainland China governmental authorities (see “—mainland China Government Research and Development Funding”), gross research and development expense totaled $105.9 million, or 13.6% of total revenue, in the year ended December 31, 2024 as compared to $94.5 million, or 16.9% of revenue, in the corresponding period in 2023.
Those adjustments may materially affect our provision for income taxes and effective tax rate in the period in which the adjustments are made. There were no adjustments made in 2023.
Those adjustments may materially affect our provision for income taxes and effective tax rate in the period in which the adjustments are made.
We will continue to seek to leverage our local presence to address the growing market for semiconductor manufacturing equipment in the region by working closely with regional chip manufacturers to understand their specific requirements, encourage them to adopt our SAPS, TEBO, Tahoe, ECP, furnace, PECVD, Track, and other technologies, and enable us to design innovative products and solutions to address their needs. 55 Table of Contents Our Independent Registered Public Accounting Firm The U.S.
We will continue to seek to leverage our local presence to address the growing market for semiconductor manufacturing equipment in the region by working closely with regional chip manufacturers to understand their specific requirements, encourage them to adopt our SAPS, TEBO, Tahoe, ECP, furnace, PECVD, Track, and other technologies, and enable us to design innovative products and solutions to address their needs.
First tool shipments for the years ended December 31, 2023, 2022, and 2021 totaled $286 million, $251 million, and $162 million, respectively.
First tool shipments for the years ended December 31, 2024, 2023, and 2022 totaled $468 million, $286 million, and $251 million, respectively.
Based on our experience with repeat sales of our tools, we expect that we will receive an initial payment upon delivery of a tool in connection with a repeat purchase, with the balance being paid after the tool has been tested and accepted by the customer. Our sales arrangements for repeat purchases do not include a general right of return.
Based on our experience with repeat sales of our tools, we expect that we will receive an initial payment upon delivery of a tool in connection with a repeat purchase, with the balance being paid after the tool has been tested and accepted by the customer.
The total cumulative investment of land, buildings and construction in progress related to ACM Lingang amounted to $116.9 million and $35.4 million at December 31, 2023 and December 31, 2022, respectively.
The total cumulative investment of land, buildings and construction in progress related to ACM Lingang amounted to $156.2 million and $116.9 million at December 31, 2024 and December 31, 2023, respectively.
Year Ended December 31, 2023 2022 2021 Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 50.5 52.8 55.8 Gross margin 49.5 47.2 44.2 Operating expenses: Sales and marketing 8.4 10.3 10.3 Research and development 16.6 16.0 13.2 General and administrative 7.3 5.8 5.9 Total operating expenses, net 32.3 32.0 29.4 Income from operations 17.2 15.2 14.8 Interest income (expense), net 1.0 1.8 (0.1) Realized gain from sale of short-term investments 1.6 0.3 - Unrealized gain (loss) on short-term investments (0.5) (2.0) 0.2 Other income (expense), net (0.3) 0.9 (0.2) Income from equity method investments 1.8 1.2 1.8 Income before income taxes 20.8 17.4 16.5 Income tax expense (3.5) (4.3) (0.1) Net income 17.3 13.0 16.4 Less: Net income attributable to non-controlling interests 3.5 2.9 2.0 Net income attributable to ACM Research, Inc. 13.8 % 10.1 % 14.4 % 65 Table of Contents Comparison of Years Ended December 31, 2023, 2022, and 2021 Revenue Year Ended December 31, 2023 2022 2021 % Change 2023 v 2022 % Change 2022 v 2021 (in thousands) Single wafer cleaning, Tahoe and semi-critical cleaning equipment $ 403,851 $ 272,939 $ 189,208 48.0 % 44.3 % ECP (front-end and packaging), furnace and other technologies 103,356 77,482 33,210 33.4 % 133.3 % Advanced packaging (excluding ECP), services & spares 50,516 38,411 37,333 31.5 % 2.9 % Total Revenue By Product Category $ 557,723 $ 388,832 $ 259,751 43.4 % 49.7 % Year Ended December 31, 2023 2022 2021 (in thousands) Mainland China $ 540,969 $ 377,752 $ 258,615 Other Regions 16,754 11,080 1,136 $ 557,723 $ 388,832 $ 259,751 The increase in revenue for 2023 compared to 2022 was driven by higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment, ECP (front-end and packaging), furnace and other technologies, and Advance packaging (excluding ECP), and services and spares.
Year Ended December 31, 2024 2023 2022 Revenue 100.0 % 100.0 % 100.0 % Cost of revenue 49.9 50.5 52.8 Gross margin 50.1 49.5 47.2 Operating expenses: Sales and marketing 8.4 8.4 10.3 Research and development 13.5 16.6 16.0 General and administrative 8.9 7.3 5.8 Total operating expenses, net 30.8 32.3 32.0 Income from operations 19.3 17.2 15.2 Interest income, net 0.7 1.0 1.8 Realized gain from sale of short-term investments 0.2 1.6 0.3 Unrealized gain (loss) on short-term investments 0.1 -0.5 -2.0 Other income (expense), net 0.8 -0.3 0.9 Income from equity method investments 0.1 1.8 1.2 Income before income taxes 21.2 20.8 17.4 Income tax expense -4.5 -3.5 -4.3 Net income 16.7 17.3 13.0 Less: Net income attributable to non-controlling interests 3.5 3.5 2.9 Net income attributable to ACM Research, Inc. 13.2 % 13.8 % 10.1 % Comparison of Years Ended December 31, 2024, 2023, and 2022 Revenue Year Ended December 31, 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 (in thousands) Single wafer cleaning, Tahoe and semi-critical cleaning equipment $ 578,887 $ 403,851 $ 272,939 43.3 % 48.0 % ECP (front-end and packaging), furnace and other technologies 151,057 103,356 77,482 46.2 % 33.4 % Advanced packaging (excluding ECP), services & spares 52,174 50,516 38,411 3.3 % 31.5 % Total Revenue By Product Category $ 782,118 $ 557,723 $ 388,832 40.2 % 43.4 % 63 Table of Contents Year Ended December 31, 2024 2023 2022 (in thousands) Mainland China $ 775,752 $ 540,969 $ 377,752 Other Regions 6,366 16,754 11,080 $ 782,118 $ 557,723 $ 388,832 The increase in revenue for 2024 compared to 2023 was driven by higher sales of single wafer cleaning, Tahoe and semi-critical cleaning equipment, ECP (front-end and packaging), furnace and other technologies, and advanced packaging (excluding ECP), services & spares.
Research and development expense represented 16.6% and 16.0% of our revenue in the years ended December 31, 2023 and 2022, respectively.
Research and development expense represented 13.5% and 16.6% of our revenue in the years ended December 31, 2024 and 2023, respectively.
Gross Margin We generally expect gross margin to range between 40% and 45% for the foreseeable future, with direct manufacturing costs approximating 50% to 55% of revenue and overhead costs totaling approximatel y 5% of revenue. We seek to maintain our gross margin by continuing to develop proprietary technologies that avoid pricing pressure for our wet cleaning equipment.
Gross Margin We generally expect gross margin to range betw een 42% and 48% for the foreseeable future, with direct manufacturing costs approximating 50% to 55% of revenue and overhead costs totaling ap proximately 5% of revenue. We seek to maintain our gross margin by continuing to develop proprietary technologies that avoid pricing pressure for our wet cleaning equipment.
For the years ended December 31, 2023, 2022, and 2021, related government subsidies recognized as reductions of relevant expenses in the consolidated statements of comprehensive income (loss) we re $1.7 million, $1.2 million, and $11.3 million, respectively. • Government subsidies related to depreciable assets are credited to income over the useful lives of the related assets for which the grant was received.
For the years ended December 31, 2024, 2023, and 2022, related government subsidies recogn ized as reductions of relevant expenses in the consolidated statements of comprehensive income (loss) were $0.5 million, $1.7 million and $1.2 million, respectively. • Government subsidies related to depreciable assets are credited to income over the useful lives of the related assets for which the grant was received.
The cumulative cost of “first tool” shipments under evaluation at customers which have not been accepted by the customer is carried at cost and reflected in finished goods inventory (see note 5 to the condensed consolidated financial statements included in this report).
The cumulative cost of “first tool” shipments under evaluation at customers which have not been accepted by the customer is carried at cost and reflected in finished goods inventory (see note 5 to the consolidated financial statements included in this report). “First tool” shipments exclude deliveries to customers for which ACM does not have a basis to expect future revenue.
Inventory Inventories consist of finished goods, raw materials, work-in-process and consumable materials. Finished goods are comprised of direct materials, direct labor, depreciation and manufacturing overhead. Inventory is stated at the lower of cost and net realizable value of the inventory on a moving weighted average basis.
Inventory Inventories consist of finished goods, raw materials, work-in-process and consumable materials. Finished goods are comprised of direct materials, direct labor, depreciation and manufacturing overhead. Inventory is stated at the lower of cost and net realizable value. Our costing of inventories is principally determined by the weighted average cost method for raw materials.
Cash and cash equivalents, restricted cash, short-term time deposits and long-term time deposits were $304.5 million at December 31, 2023, compared to $420.9 million at December 31, 2022.
Cash and cash equivalents, restricted cash, short-term time deposits and long-term time deposits wer e $441.9 million at December 31, 2024, compared to $304.5 million at December 31, 2023.
(b) within six years after the Delivery Date, or prior to July 9, 2026, it does not (i) generate a minimum specified amount of annual sales of products manufactured on the granted land or (ii) pay at least RMB 157.6 million ($22.2 million) in annual total taxes (including value-added taxes, corporate income tax, personal income taxes, urban maintenance and construction taxes, education surcharges, stamp taxes, and vehicle and shipping taxes) as a result of operations in connection with the granted land.
In addition to the milestones, covenants in the current Agreement require that, among other things, ACM Lingang will be required to pay liquidated damages in the event that within seven years after the Delivery Date, or prior to July 9, 2027, it does not (i) generate a minimum specified amount of annual sales of products manufactured on the granted land or (ii) pay at least RMB 157.6 million ($22.2 million) in annual total taxes (including value-added taxes, corporate income tax, personal income taxes, urban maintenance and construction taxes, education surcharges, stamp taxes, and vehicle and shipping taxes) as a result of operations in connection with the granted land.
We recognize a loss or impairment if in our judgement the inventory cannot be sold or used for production, if it has been damaged or should be considered as obsolete, or if the net realizable value is lower than the cost. We also assess the status of our raw materials.
We assess the recoverability of all inventories to determine if any adjustments are required. We recognize a loss or impairment if in our judgement the inventory cannot be sold or used for production, if it has been damaged or should be considered as obsolete, or if the net realizable value is lower than the cost.
During the twelve months ended December 30, 2023, two prominent exporters of advanced semiconductor manufacturing equipment, the Netherlands and Japan, announced and began to implement plans to join the United States in imposing semiconductor-focused export controls.
These factors had an adverse impact on ACM Shanghai’s shipments and sales for the twelve months ended December 30, 2023. During the twelve months ended December 30, 2023, two prominent exporters of advanced semiconductor manufacturing equipment, the Netherlands and Japan, announced and began to implement plans to join the United States in imposing semiconductor-focused export controls.
In such case, the Grantor shall refund the Grant Fees for the remaining land use term after deducting the deposit agreed under the Grant Agreement and refund the deposit for timely commencement of production and relevant bank interests in full to ACM Lingang. • The Production Start Milestone is now required to be met by January 9, 2025.
In such case, the Grantor shall refund the Grant Fees for the remaining land use term after deducting the deposit agreed under the Grant Agreement and refund the deposit for timely commencement of production and relevant bank interests in full to ACM Lingang. • The Production Start Milestone, as extended due to COVID-19 related delays, was required to be met by January 23, 2025 but was not achieved.
The sixth grant was made in 2020, and relates to the development of other cleaning technologies. The seventh grant was made in 2021, and relates to the development of the R&D and production center in the Lin-gang Special Area of Shanghai.
As of December 31, 2021, the fourth and fifth grants had been fully utilized. The sixth grant was made in 2020, and relates to the development of other cleaning technologies. The seventh grant was made in 2021, and relates to the development of the R&D and production center in the Lin-gang Special Area of Shanghai.
During the year-ended December 31,2023, ACM's ownership declined to 82.1% due to the exercise of 2,150,309 stock options related to ACM Shanghai shares (note 18). As a result, we reflect the portion of our net income allocable to the minority holders of ACM Shanghai shares as net income attributable to non-controlling interests.
During the year-ended December 31,2024, ACM's ownership declined to 81.5% due to the exercise of stock options related to ACM Shanghai shares (note 59 Table of Contents 17). As a result, we reflect the portion of our net income allocable to the minority holders of ACM Shanghai shares as net income attributable to non-controlling interests.
Net cash used by operations of ($75.3 million) during the year ended December 31, 2023 consisted of: Year Ended December 31, 2023 2022 2021 (in thousands) Net Income $ 96,852 $ 50,564 $ 42,921 Non-cash operating lease cost 3,580 2,816 2,451 Provision for inventory 575 2,248 75 Provision for credit losses 2,741 - - Gain on disposals of property plant and equipment (2) (12) - Depreciation and amortization 8,092 5,366 2,353 Realized gain on short-term investments (9,047) (1,116) - Income from equity method investments (9,952) (4,666) (4,637) Unrealized loss (gain) on short-term investments 2,737 7,855 (607) Deferred income taxes (13,647) 4,027 (1,840) Stock-based compensation 27,338 7,730 5,117 Net changes in operating assets and liabilities: (184,590) (137,006) (85,926) Net cash flow used in operating activities $ (75,323) $ (62,194) $ (40,093) Significant changes in operating asset and liability accounts during the year-ended December 31, 2023 included the following uses of cash: increases of inventories of $164.0 million (Note 5), and an increase of accounts receivable of $108.7 million (Note 4).
Net cash provided by (used in) operations during the year ended December 31, 2024, 2023, and 2022 consisted of: Year Ended December 31, 2024 2023 2022 (in thousands) Net Income $ 131,269 $ 96,852 $ 50,564 Non-cash operating lease cost 3,815 3,580 2,816 Provision for inventory 2,796 575 2,248 Provision for credit losses 13,517 2,741 - Gain on disposals of property plant and equipment 945 (2) (12) Depreciation and amortization 9,967 8,092 5,366 Realized gain on short-term investments (1,788) (9,047) (1,116) Income from equity method investments (423) (9,952) (4,666) Unrealized (gain) loss on short-term investments (973) 2,737 7,855 Deferred income taxes 5,286 (13,647) 4,027 Stock-based compensation 49,576 27,338 7,730 Dividends from unconsolidated affiliates 1,529 — — Net changes in operating assets and liabilities: (63,066) (184,590) (137,006) Net cash flow provided by (used in) operating activities $ 152,450 $ (75,323) $ (62,194) Significant changes in operating asset and liability accounts during the year-ended December 31, 2024, 2023, and 2022 included the following uses of cash: increases of inve ntories of $64.1 million (Note 5), and an increase of accounts receivable of $123.3 million (Note 4).
Adjusted operating income for the year ended December 31, 2022, as compared with the year ended December 31, 2021, increased by $22.9 million due to a $20.3 million increase in income from operations and a $2.6 million increase in stock-based compensation expense.
Adjusted operating income for the year ended December 31, 2023, as compared with the year ended December 31, 2022, increased by $56.4 million due to a $36.8 million increase in income from operations and a $19.6 million increase in stock-based compensation expense.
In 2021, ACM Shanghai was certified as an eligible integrated circuit production enterprise and is entitled to a preferential income tax rate of 12.5% from January 1, 2020 to December 31, 2022.
ACM Shanghai was certified as an “advanced and new technology enterprise” in 2012 and again in 2016, 2018, 2021 and 2024, effective until December 31, 2026. In 2021, ACM Shanghai was certified as an eligible integrated circuit production enterprise and was entitled to a preferential income tax rate of 12.5% from January 1, 2020 to December 31, 2022.
Operating Expenses We have experienced, and expect to continue to experience, growth in the absolute dollar amount of our operating expenses, as we invest to support the anticipated growth of our customer base and the continued development of proprietary technologies.
As a result, fluctuations in currency exchange rates may have a significant effect on our gross margin. Operating Expenses We have experienced, and expect to continue to experience, growth in the absolute dollar amount of our operating expenses, as we invest to support the anticipated growth of our customer base and the continued development of proprietary technologies.
ACM Shanghai receiv ed $51,000 of payments related to such grants in the year ended December 31, 2023, as compared to cash receipts of $1.1 million in the same period of 2022.
ACM Lingang received cash payments of $3.9 million related to such grants in the year ended December 31, 2024, as compared to cash receipts of $51,000 in the same period of 2023.
Shipments consist of two components: • a shipment to a customer of a type of tool that the customer has previously accepted, for which we recognize revenue when the tool is delivered; and • a shipment to a customer of a type of tool that the customer is receiving and evaluating for the first time, in each case a “first tool,” for which we may recognize revenue at a later date, subject to the customer’s acceptance of the tool upon the tool’s satisfaction of applicable contractual requirements or subject to the customer’s subsequent discretionary commitment to purchase the tool.
Shipments consist of two components: • a shipment made to a customer that have previously accepted a specific type of tool (“repeat shipments”), revenues are recognized upon shipment or delivery because the Company can objectively demonstrate that the tools meet all the required customer specifications; and • a shipment to a customer of a type of tool that the customer is receiving and evaluating for the first time, in each case a “first tool,” for which we may recognize revenue at a later date, subject to the customer’s acceptance of the tool upon the tool’s satisfaction of applicable contractual requirements or subject to the customer’s subsequent discretionary commitment to purchase the tool.
Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled.
Interest income (expense), net, increased in 2022 compared to 2021, principally as a result of reduced interest income from lower interest rates on reduced cash balances, offset by increase in interest expenses incurred from short-term and long-term bank loans.
Interest income (expense), net, decreased in 2023 compared to 2022, principally as a result of reduced interest income from lower interest income on reduced cash balances, offset by increase in interest expenses incurred from a higher balance of total bank loans.
Net cash used in investing activities for the year ended December 31, 2023, excluding net cash proceeds from the sale of time deposits, was ($60.2 million), primarily consisting of ($64.3 million) purchase of property and equipment and intangible assets, and ($7.5 million) purchase of long-term investments (note 14), partly offset by $3.4 million net proceeds from the sale of short-term investments, and $8.2 million of dividends received from long-term investments (note 14).
Net cash used in investing activities for the year ended December 31, 2024, excluding net cash proceeds from the sale of time deposits, was $103.8 million, primarily consisting of $85.9 million purchase of property and equipment and intangible assets, and $24.9 million purchase of long-term investments (note 13) and $1.4 million purchase of equity investments, partly offset by $8.4 million net proceeds from the sale of short-term investments.
Cost of Revenue and Gross Margin Year Ended December 31, 2023 2022 2021 % Change 2023 v 2022 % Change 2022 v 2021 (in thousands) Cost of revenue $ 281,508 $ 205,217 $ 144,895 37.2 % 41.6 % Gross profit 276,215 183,615 114,856 50.4 % 59.9 % Gross margin 49.5 % 47.2 % 44.2 % 2.30 3.00 Cost of revenue and gross profit increased in 2023 as compared to 2022 due to the increased sales volume and an increase in gross margin.
Cost of Revenue and Gross Margin Year Ended December 31, 2024 2023 2022 % Change 2024 v 2023 % Change 2023 v 2022 (in thousands) Cost of revenue $ 390,564 $ 281,508 $ 205,217 38.7 % 37.2 % Gross profit 391,554 276,215 183,615 41.8 % 50.4 % Gross margin 50.1 % 49.5 % 47.2 % 0.5 2.30 Cost of revenue and gross profit increased in 2024 as compared to 2023 due to the increased sales volume and an increase in gross margin.
Income from equity method investments increased by $4.0 million for the year ended December 31, 2021 due to higher net income from equity method investments. 69 Table of Contents Tax Benefit (Expense) Year Ended December 31, 2023 2022 2021 (in thousands) Current: U.S. federal $ (12,757) $ (479) $ (91) U.S. state (150) (18) (2) Foreign (19,696) (11,139) (2,195) Total current tax expense (32,603) (11,636) (2,288) Deferred: U.S. federal 7,316 (10,927) 2,089 U.S. state 63 8 - Foreign 5,860 5,757 65 Total deferred tax benefit (expense) 13,239 (5,162) 2,154 Total income tax expense $ (19,364) $ (16,798) $ (134) We recognized a tax expense of $19.4 million for the year ended December 31, 2023 as compared to a tax expense of $16.8 million for the prior year period.
Tax Benefit (Expense) Year Ended December 31, 2024 2023 2022 (in thousands) Current: U.S. federal $ (483) $ (12,757) $ (479) U.S. state (2) (150) (18) Foreign (29,120) (19,696) (11,139) Total current tax expense (29,605) (32,603) (11,636) Deferred: U.S. federal (5,244) 7,316 (10,927) U.S. state (63) 63 8 Foreign (119) 5,860 5,757 Total deferred tax benefit (expense) (5,426) 13,239 (5,162) Total income tax expense $ (35,031) $ (19,364) $ (16,798) We recognized a tax expense of $$35.0 million for the year ended December 31, 2024 as compared to a tax expense of $19.4 million for the prior year period.
The effective tax rate is highly dependent upon the geographic composition of worldwide earnings, tax regulations governing each region, availability of tax credits and the effectiveness of our tax planning strategies. We carefully monitor the changes in many factors and adjust our effective income tax rate on a timely basis.
On a quarterly basis, we provide income tax provisions based upon an estimated annual effective income tax rate. The effective tax rate is highly dependent upon the geographic composition of worldwide earnings, tax regulations governing each region, availability of tax credits and the effectiveness of our tax planning strategies.

… 98 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed7 unchanged
Biggest changeWe report the impact of foreign exchange fluctuations in the other income (expense) line item of our Consolidated Statements of Comprehensive Income statements. For 2023, 2022, and 2021, the effect of fluctuations of foreign currencies contributed realized gains (losses) of $(2.0) million, 1.7 million, and ($0.6 million), respectively.
Biggest changeWe report the impact of foreign exchange fluctuations in the other income (expense) line item of our Consolidated Statements of Comprehensive Income (Loss) statements. For 2024, 2023, and 2022, the effect of fluctuations of foreign currencies contributed realized gains (losses) of $4.2 million, (2.0) million, and $1.7 million, respectively.
Adjustments resulting from the translation are recorded in stockholders’ equity as part of accumulated other comprehensive income. The majority of our business is conducted through our ACM Shanghai subsidiary that manufactures and sells our products in various global markets, and we also have operations in Korea, the Taiwan Region, the United States, and other countries.
Adjustments resulting from the translation are recorded in stockholders’ equity as part of accumulated other comprehensive income (loss). The majority of our business is conducted through our ACM Shanghai subsidiary that manufactures and sells our products in various global markets, and we also have operations in Korea, the Taiwan Region, the United States, and other countries.
For example, because of our significant manufacturing operations in mainland China, a weakening RMB is advantageous and a strengthening RMB is disadvantageous to our financial results. At this time, we have not established a formal hedging 81 Table of Contents policy to attempt to reduce the inherent risks of potential currency fluctuations on our global operations.
For example, because of our significant manufacturing operations in mainland China, a weakening RMB is advantageous and a strengthening RMB is disadvantageous to our financial results. At this time, we have not established a formal hedging 78 Table of Contents policy to attempt to reduce the inherent risks of potential currency fluctuations on our global operations.
As of December 31, 2023, the balance of our long-term borrowings (see note 12 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data.”) carries a fixed interest rated and we may be exposed to fair value interest rate risk.
As of December 31, 2023, the balance of our long-term borrowings (see note 11 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data.”) carries a fixed interest rated and we may be exposed to fair value interest rate risk.
We have implemented policies and procedures to measure, manage, monitor and report risk exposures, which are reviewed regularly by management and the board of directors. We identify risk exposures and monitor and manage such risks on an ongoing basis. 82 Table of Contents
We have implemented policies and procedures to measure, manage, monitor and report risk exposures, which are reviewed regularly by management and the board of directors. We identify risk exposures and monitor and manage such risks on an ongoing basis. 79 Table of Contents
Interest Rate Risk As of December 31, 2023, 2022, and 2021, the balance of our short term bank borrowings (see note 9 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data.”), mature at various dates within the following year and do not expose us to interest rate risk.
Interest Rate Risk As of December 31, 2024, 2023, and 2022, the balance of our short term bank borrowings (see note 8 in the Notes to Consolidated Financial Statements included herein under “Item 8. Financial Statements and Supplementary Data.”), mature at various dates within the following year and do not expose us to interest rate risk.

Other ACMR 10-K year-over-year comparisons