ACM Research(ACMR) - 2024 Q4 - Annual Report

Regulatory Environment - The company has been added to the U.S. Department of Commerce's BIS Entity List, impacting its ability to receive hardware, software, or technologies subject to U.S. export controls[22]. - The U.S. Department of the Treasury has implemented the Outbound Investment Security Program, which may limit ACM Research's cross-border investment opportunities[23]. - ACM Research's business is subject to complex laws and regulations in mainland China, which can change rapidly and may require additional permits[17]. - The financial condition and operational results of ACM Research may be materially impacted by regulatory changes in mainland China[25]. - The company anticipates that regulatory risks related to operations in mainland China may impact business and trading price of its Class A common stock[22]. - The U.S. Department of Commerce's Bureau of Industry and Security has added ACM Shanghai and ACM Korea to the BIS Entity List, impacting hardware and technology supply chains[22]. - The company has not experienced significant regulatory intervention from mainland China authorities beyond COVID-19-related restrictions in 2022[16]. - The company has not experienced significant intervention from mainland China central government authorities affecting its operations to date[16]. Business Operations - ACM Research operates primarily through its subsidiary ACM Research (Shanghai), holding an 81.5% ownership stake[16]. - The company emphasizes the importance of compliance with international regulations to maintain its operational capabilities[30]. - Future operations may be adversely affected if the PCAOB cannot inspect accounting firms in mainland China, potentially leading to delisting risks[21]. - The company has a direct ownership interest in ACM Shanghai, holding 81.5% of its outstanding shares, which is crucial for its operational structure[16]. - The company has delivered over 1,120 tools since 2009, with more than 920 being repeat orders[67]. - The company employs 2,023 full-time equivalent employees, with 933 in research and development, indicating a strong focus on innovation[92]. - The company has not granted licenses to third parties under its patents to date, but may consider licensing arrangements in the future[86]. - The company operates in the highly competitive semiconductor equipment industry, primarily in mainland China, emphasizing the importance of attracting and retaining skilled employees for R&D and manufacturing[93]. Financial Performance - Revenue from single wafer cleaning, Tahoe, and semi-critical cleaning equipment totaled $578.9 million, or 74.0$403.9 million, or 72.4% in 2023, and $272.9 million, or 70.2$151.1 million, or 19.3% of total revenue in 2024, compared to $103.4 million, or 18.5$52.2 million, or 6.7% of total revenue in 2024, compared to $50.5 million, or 9.1$105.5 million, representing 13.5% of revenue in 2024, compared to 16.6% in 2023[81]. Market Trends - The total worldwide semiconductor wafer fab equipment market grew by 4.1% from $102.9 billion in 2023 to$107.1 billion in 2024, and is expected to grow by another 4.1% to $111.5 billion in 2025[39]. - A substantial majority of sales of semiconductor capital equipment have been to customers in Asia, and this trend is expected to continue for the foreseeable future[40]. - The global wafer fab equipment market is estimated to be approximately$18 billion in 2024, with specific market opportunities of $5.9 billion for wafer cleaning equipment and$4.7 billion for PECVD equipment[38]. - Gartner estimates the total worldwide semiconductor wafer fab equipment market grew by 4.1% from $102.9 billion in 2023 to$107.1 billion in 2024, with China’s market growing by 11.5% to $37.5 billion in 2024[39]. Technology and Innovation - ACM Research supplies advanced capital equipment for the semiconductor industry, focusing on wet-cleaning and front-end processing tools[36]. - The company develops tools for fabricating various types of chips, including DRAM and 3D NAND-flash memory[36]. - The company has introduced new tools including the Ultra SFP ap tool for advanced packaging solutions and the Ultra C VI 18-chamber single wafer cleaning tool for advanced memory devices[43]. - The Ultra Pmax™ PECVD tool and Ultra Track tool were launched in 2022, aimed at improving film uniformity and performance across defectivity, throughput, and cost of ownership[44]. - SAPS technology has shown to be more effective than conventional megasonic and jet spray technologies in removing random defects across an entire wafer, especially at advanced production nodes[46]. - TEBO technology facilitates effective cleaning for 2D and 3D patterned wafers with fine feature sizes, addressing limitations of conventional cleaning methods[55]. - The company anticipates continued revenue growth driven by its strategic portfolio of intellectual property and innovative technologies[41]. - The company is focused on building a strategic portfolio of intellectual property to support key innovations, including SAPS and TEBO technologies for effective wafer cleaning[41]. - The company is focusing on developing new cleaning steps for Ultra C TEBO cleaners for various advanced technologies, including DRAM and 3D NAND[79]. - The company has designed tools that use significantly reduced levels of environmentally harmful chemicals, aligning with increasing environmental regulations[98]. - The company’s SAPS and TEBO technologies replace harmful chemicals with dilute alternatives, enhancing cleaning performance while reducing environmental impact[98]. Employee and Operational Strategy - The company has a strong focus on employee retention and development, offering competitive compensation packages and training programs[94]. - Employee retention is supported through training programs and housing assistance in the Lingang region of Shanghai, which is near the new R&D and production center[95]. - The company offers competitive total compensation packages to attract qualified employees, particularly in Shanghai[94]. - The company maintains disaster recovery and business continuity plans to mitigate risks from severe weather events[96]. - The company faces potential risks from severe weather events that could disrupt manufacturing and R&D activities, with increasing frequency and intensity of such events reported globally[96]. Environmental Considerations - The Ultra C Tahoe tool significantly reduces sulfuric acid and hydrogen peroxide consumption compared to conventional cleaning tools, aligning with environmental regulations[61]. - The company’s SAPS technology uses environmentally friendly dilute chemicals, reducing overall chemical consumption and environmental impact[48]. - The Ultra C TEBO II model includes features that enhance cleaning efficiency while minimizing material loss and roughing of wafer surfaces[61]. - Current climate change laws and regulations are not expected to materially impact the company's operations in the foreseeable future, although they may affect semiconductor fabricators' operations[97].