ACM Research’s Full-Year Shipment Growth Pivots, Q4 Outlook Clash in 2025 Earnings Call

Date of Call: Feb 26, 2026

Financials Results

• Revenue: Q4: $244M, up 9% YOY. Full Year: $901.3M, up 15.2% YOY.
• EPS: Q4: $0.25 per diluted share, down from $0.56 YOY. Full Year: $1.61, down from $2.26 YOY.
• Gross Margin: Q4: 41.0%, below long-term target range of 42%-48% and down 8.8 percentage points YOY. Full Year: 44.5%, down from 50.4% YOY.
• Operating Margin: Q4: 12.1%, down from 23.6% YOY. Full Year: 15.9%, down from 25.6% YOY.

Guidance:

• Revenue for full year 2026 expected in range of $1.08B to $1.175B, implying 25% YOY growth at the midpoint.
• Gross margin expected to be at lower end of long-term target range (42%-48%) for first half of 2026, with anticipated lift in second half.
• Effective tax rate expected to be 8% to 10% for 2026.
• Capital expenditures for 2026 expected to be about $200M.
• R&D spending planned at 16%-18% of sales, sales & marketing at 7%-8%, and G&A at 6% of sales for 2026.

Business Commentary:

Revenue Growth and Product Development:

• ACM Research reported revenue of $244 million for Q4 2025, up 9% from Q4 2024, and $901 million for the full year, up 15%.
• Growth was driven by progress in new product platforms and strengthened positions in China and globally, particularly in single-wafer cleaning and advanced packaging tools.

Operating Margin and Cost Pressures:

• The company's gross margin was 41% for Q4 2025, down from 42% to 48% long-term target range, and 44.5% for the full year.
• Margin pressure was attributed to product mix, particularly lower-margin semi-critical products, and higher inventory provisions.

Capital and Cash Position:

• ACM Research ended the year with a net cash of $845 million, compared to $259 million at the year-end of 2024.
• This strong cash position was due to a private offering by ACM Shanghai, providing the foundation for continued development of semiconductor tools.

Market Expansion and Strategic Investments:

• The company is expanding its production capacity at the Lingang facility, which can support up to $3 billion in annual output.
• Investments in new facilities and technology, such as the mini line and Oregon facility, aim to enhance R&D capabilities and establish a U.S. production base.

Sentiment Analysis:

Overall Tone: Positive

• CEO states: 'I'm pleased with our fourth quarter results, which capped off a solid year of execution.' and 'We have the customer, the product, the capacity and the capital to execute our global business plan, and we remain committed to our long-term target of $4 billion in revenue.' CFO adds: 'We think that will be -- the overall provision for 2026 probably be smaller than it was in 2025, and it will probably be more balanced throughout the year.'

Q&A:

• Question from Yu Shi (Needham & Company): Excluding new products, what's the growth expected for existing product lines?
  Response: Management highlighted strong existing product momentum, especially in SPM cleaning (with new nozzle design reducing particles) and N2 bubbling wet etch for 3D NAND, which are high-margin and addressing global demand beyond China.

• Question from Yu Shi (Needham & Company): Why has operating margin been under pressure, and how will it be addressed?
  Response: Management attributed margin pressure to product mix, competitive pricing on semi-critical products, and higher inventory provisions; expects R&D investment to continue as it is crucial for capturing AI-driven opportunities, with operating leverage anticipated in SG&A over the longer term.

• Question from Yu Lee (Jefferies): How much of Q4 weakness is due to product mix/seasonality, and when will numbers improve in 2026?
  Response: Management cited temporary factors (new products not yet contributing, some shipments pushed to 2026) and expects 2026 linearity with first half ~42-43% and second half ~57-58% of revenue, driven by existing and new product growth.

• Question from Yu Lee (Jefferies): How will the $111M from ACM Shanghai share sale be utilized?
  Response: Proceeds will fund R&D, manufacturing expansion (including second Lingang building for $3B annual capacity), mini-line development, and global marketing/sales to capitalize on international opportunities and reduce tariff impacts.

• Question from Jimmy Huang (JPMorgan): What is the potential size of shipments from the Singapore installation?
  Response: Management expects this installation to be a milestone, leading to more cleaning and copper plating tool orders in Asia and the U.S., with expansion already seen in Singapore, Korea, and Taiwan.

• Question from Jimmy Huang (JPMorgan): What is the progress on panel-level packaging (POP) with Taiwanese customers?
  Response: Management is in discussions with key Taiwanese customers for large-panel horizontal plating and vacuum cleaning, seeing strong interest as plating becomes a bottleneck; expects additional orders in 2026 beyond the announced global POs.

• Question from Jimmy Huang (JPMorgan): Will there be further disposal of ACM Shanghai stake to fund U.S. capacity?
  Response: Management noted flexibility in fundraising (both U.S. and Shanghai), stated Shanghai stock is currently undervalued, and indicated decisions on future sales will depend on market conditions and funding needs.

Contradiction Point 1

Full-Year Shipment Growth Expectations

Expectations for shipment growth shift from positive to negative within the same fiscal year.

Yu Lee (Jefferies) - Yu Lee (Jefferies)

2025Q4: The growth engine remains strong... with expansion into new products and markets. - [David Wang](CEO) and [Mark McKechnie](CFO)

What portion of Q4's margin decline and shipment drop is attributed to product mix and seasonality, and when does improvement begin in 2026? - Sujeeva De Silva (ROTH Capital Partners)

2025Q3: Shipments are still expected to grow next year. - [David Wang](CEO) and [Mark McKechnie](CFO)

Contradiction Point 2

Q4 Shipment Outlook

Direct contradiction on whether Q4 shipments will be down from Q3.

Yu Lee (Jefferies) - Yu Lee (Jefferies)

2025Q4: The Q4 weakness was partly due to a tough comparison from 2024 (which had a 63% shipment growth) and some new product shipments pushed into 2026. - [Mark McKechnie](CFO) and [David Wang](CEO)

To what extent is Q4's margin weakness and shipment decline attributed to product mix/seasonality, and when does improvement begin in 2026? - Yu Shi (Needham & Company)

2025Q3: Q4 shipments are expected to be down from Q3, making the full-year shipment year-over-year decline different from initial expectations. - [Mark McKechnie](CFO) and [David Wang](CEO)

Contradiction Point 3

Shipment Growth Outlook and Quarterly Performance

Contradiction on the strength and outlook of shipment growth between quarters.

Yu Lee (Jefferies) - Yu Lee (Jefferies)

2025Q4: The Q4 weakness was partly due to a tough comparison from 2024 (which had a 63% shipment growth) and some new product shipments pushed into 2026. - [David Wang](CEO) and [Mark McKechnie](CFO)

To what extent did product mix and seasonality contribute to Q4 margin weakness and shipment decline, and when is improvement expected in 2026? - Charles Shi (Needham & Company)

2025Q2: Q3 shipments are very strong, and Q4 is expected to see continued improvement ('some slot fill'). The outlook for Q4 is very good, consistent with expectations from 90 days ago. - [Hui Wang](CEO) and [Mark A. McKechnie](CFO)

Contradiction Point 4

Margin Pressure and Improvement Timeline

Conflicting statements on the duration and drivers of margin pressure.

What questions did Yu Shi from Needham & Company raise during the earnings call? - Yu Shi (Needham & Company)

2025Q4: The pressure is due to: 1) Product mix... and 2) Higher inventory provisions... This is expected to be temporary, with gross margins anticipated to improve in H2 2026. - [David Wang](CEO) and [Mark McKechnie](CFO)

What factors have caused the decline in operating margin over the past two years, and what strategies are planned to improve it? - Charles Shi (Needham & Company)

2025Q2: The company is managing supply chain risk... Strategic purchases of components in Q3 are a combination of preparing for higher demand and mitigating the risk of future export controls. - [Mark A. McKechnie](CFO)

Contradiction Point 5

Strategy for Domestic Competition and Consolidation

Inconsistent messaging regarding the company's stance on potential market consolidation and reliance on organic growth.

Yu Lee (Jefferies) - Yu Lee (Jefferies)

2025Q4: The use of proceeds... focuses on: 1) R&D and manufacturing expansion... and 2) Global marketing, sales, and establishing a U.S. presence... - [David Wang](CEO), [Mark McKechnie](CFO)

How will the proceeds from the ACM Shanghai share sale be utilized? - Charles Shi (Needham & Company)

2025Q1: The company is not overly concerned about domestic competition... Regarding consolidation, while it may occur in the market, ACM is currently focused on organic growth... - [David Wang](CEO), [Mark McKechnie](CFO)