Shares of AMEC Surge After Removal from US's 'China Military Company' List
Wednesday, Dec 18, 2024 2:36 am ET
Shares of Advanced Micro-Fabrication Equipment (AMEC), a leading Chinese chip equipment maker, surged by 4.35% on Wednesday after the company was removed from the U.S. Defense Department's (DOD) list of "Chinese military companies." The removal comes after AMEC filed a lawsuit against the DOD in August, challenging its inclusion on the list.
The DOD's list, first published in June 2021, restricts access of Chinese companies operating in the U.S. to some defense contracts if they are allegedly aiding China's military. AMEC was added to the list in January 2021, but the company was removed from the list five months later upon submission of adequate facts and complaints to the DOD. However, AMEC was added back to the list in January 2024, prompting the company to file a lawsuit against the DOD.
AMEC's removal from the list is a positive development for the company, as it alleviates concerns about its ties to the Chinese military and improves its reputation among investors. The lawsuit and subsequent removal also demonstrate AMEC's commitment to transparency and compliance with international standards, further boosting investor confidence.
AMEC's strong financial performance and growth prospects have also contributed to its share price increase. In the first quarter of 2024, AMEC reported a 31.23% year-over-year increase in sales revenue and a 15.4% year-over-year increase in net profit. Analysts from SDIC Securities have given AMEC a 'buy' rating and set a target price of 172.38 yuan for 2024, indicating their confidence in the company's long-term prospects.

However, the broader market conditions and geopolitical tensions have influenced AMEC's share price movement. The strained trading relationship between China and the U.S. has contributed to overall volatility in AMEC's share price. Despite these challenges, AMEC's progress in developing advanced etching equipment and rising product coverage in thin film deposition equipment has supported its share price.
AMEC's removal from the list opens up new business opportunities and partnerships. With the stigma of military ties lifted, AMEC can now explore collaborations with U.S. and international companies in the semiconductor industry. This includes joint ventures, technology sharing, and supply chain integration. Additionally, AMEC may consider expanding its presence in Southeast Asia, where demand for advanced chip manufacturing equipment is growing.
PMEC ROE(Average) YoY, ROE(Average)
In conclusion, AMEC's removal from the U.S. Defense Department's list of "Chinese military companies" has led to a surge in its share price, reflecting investor relief and optimism about the company's future prospects. AMEC's strong financial performance, growth prospects, and commitment to transparency have contributed to its share price increase. The company's removal from the list also opens up new business opportunities and partnerships, further strengthening its position in the global semiconductor market. However, the broader market conditions and geopolitical tensions may continue to influence AMEC's share price movement in the short term.