ACM Research: Riding China's Semiconductor Localization Wave

ACM Research is a leading Chinese semiconductor equipment manufacturer that stands to benefit from China's localization efforts amid trade tensions with the US. Kathmandu Capital initiated a new position in ACM Research, citing its potential to gain from China's push for self-sufficiency in semiconductors. The company's shares have gained 26.68% over the last 52 weeks and closed at $24.93 on August 12, 2025.

ACM Research Inc. (ACMR) reported its fiscal 2025 Q2 earnings on August 6, revealing a mixed financial performance. The company posted an earnings per share (EPS) of $0.54, surpassing the forecast of $0.4816 by 12.13% [2]. However, revenue fell short of expectations, reaching $215.4 million against a projected $224.3 million, a negative surprise of 3.98% [2]. This revenue shortfall contributed to a sharp pre-market stock decline of 15.48%, bringing the price down to $25.06 [2].

The company's core single-wafer cleaning equipment segment remained a strong driver, contributing $154.96 million to the total revenue of $215.37 million in Q2 2025, a 6.4% increase compared to $202.48 million in the same period last year [1]. The gross margin improved to 48.7%, exceeding the target range of 42-48%, indicating robust operational execution [2]. However, net income slightly declined to $36.8 million from $37.5 million the previous year, partly due to increased operating expenses [2].

Despite the revenue miss, the EPS beat and improved gross margin suggest strong cost management and operational efficiency. The market reacted negatively to the revenue miss, with ACMR's stock price falling 18.04% post-earnings [2]. The pre-market price dropped to $25.06, significantly below the last close of $29.65 [2].

ACM Research maintains a positive outlook for 2025, projecting revenue between $850 million and $950 million, indicating a 15% year-over-year growth. The company is focusing on global expansion and new product contributions expected in 2026, particularly in advanced cleaning technologies and panel-level packaging [2]. Analyst consensus remains bullish, with price targets ranging from $30 to $40 [2].

The CEO, David Wong, highlighted confidence in market growth, stating, "We believe that the China WFE market will be $40 billion in the long run." CFO Mark McKechnie emphasized strategic investments in R&D and production capacity, saying, "We’re spending into the market opportunity" [2].

References:
[1] https://www.ainvest.com/news/acm-research-2025-q2-earnings-strong-performance-net-income-surges-15-5-2508-22/
[2] https://www.investing.com/news/transcripts/earnings-call-transcript-acm-research-q2-2025-sees-revenue-miss-stock-tumbles-93CH-4173613