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ACM Research Maintains A Tricky Balancing Act

Mar. 05, 2021 12:46 AM ETACM Research, Inc. (ACMR)7 Comments
MarketGyrations profile picture


  • ACMR scored numerous gains in FY2020, including double-digit growth and laying the groundwork for future growth with new products and customers.
  • ACMR relies heavily on China for growth with three customers in China accounting for 76% of its revenue, a point of major concern.
  • ACMR trades at a premium over the competition, but that depends on ACMR sustaining the fast growth afforded to it by China.
  • The possibility of having it all taken away by U.S. sanctions hangs over ACMR, seriously dampening the bull case.

ACM Research (NASDAQ:ACMR) concluded what can be described as a productive year in FY2020 with the release of the Q4 quarterly report. Revenue and EPS grew by double digits. New products were launched and new customers presented themselves. However, in spite of all the good news, concerns hanging over ACMR were proven to be not without merit Why will be covered next.

Q4 FY2020 quarterly report

The Q4 report beat estimates. Q4 revenue increased by 85.2% YoY to $45.6M and non-GAAP net income increased by 35.5% to $6.2M. Note that there was a $3.6M unrealized gain on trading securities in Q4. This boosted the GAAP numbers for net income and EPS, but are absent in the non-GAAP numbers.

Tax items and foreign exchange fluctuations raised non-GAAP EPS by $0.05 in Q4 FY2019, but this benefit dropped to $0.04 in Q4 FY2020. If there had been no change, EPS would have increased by 30.4% YoY instead of the 26.1% it turned out to be.

Gross margins were significantly lower compared to a year ago, but within ACMR's targeted range of 40-45%. The fluctuations in margins were expected and are due to quarterly changes in product mix and manufacturing utilization. The table below shows the numbers for Q4. Keep in mind that Q3 is the strongest quarter of the year for ACMR, skewing the QoQ comparisons with Q4, which tends to be weaker than the third quarter.


Q4 FY2020

Q3 FY2020

Q4 FY2019









Gross margin






Operating income






Net income



















Gross margin






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MarketGyrations profile picture
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Comments (7)

China is expanding it electronic sector, Chinese mkt is big enough for ACMR,
How is water shortage in Taiwan going to impact ACMR?
MarketGyrations profile picture
Virtually nil. A shortage of water impacts ongoing chip production in Taiwan and then only temporarily. Also, ACMR is mostly exposed to China and South Korea to a lesser extent, not Taiwan.
@MarketGyrations are they planing to export to US or EU?
MarketGyrations profile picture
They're certainly trying to. One of the companies ACMR is going after hard is Intel. But it's too early to say. It's a lot more difficult for newcomers to gain a foothold in established markets like the U.S. than up and coming ones like China.
Unfortunately the artikel from MG is of marginal use and missleading. The question of delivery licenses to chinese customers was heavily discussed in Sept. 2020 due to the US restrictions on SMIC.
The main point and potential shortfall of revenue belongs to the supported technology (advanced node capacity) AND the customer. So as you can see in the ACMR 10Q SMIC is still a customer.
Further on, there are new licenses for SME companies to support SMIC - see ENTG. But of course there are delays to grant deliveries for AMAT and LRCX.
By the way, the risk of revenue with SMIC was estimated by Goldman with 10% rev 4Q 2020.
The stockprice reduction was driven by postponed STAR Board listing and sell off in high techs. Still the (12m) TP from the wall street is in a range of 120 - 150 USD

Best luck to your DD and stay save
MarketGyrations profile picture
If you're going to make assertions, provide concrete proof to back up your statements i.e. actual quotes or documents which is what I did in my article. Don't say say something is misleading without any evidence that contradict what is stated in the article. Otherwise, everything you say is a waste of time since anyone can make claims without any proof.

What Goldman says is irrelevant because it's not the one who decides if permission is to be granted. Goldman is also not the one who sets future policy companies like ACMR are legally obliged to comply with. That would be the Department of Commerce. ACMR was placed on the Entity List on Dec 22 when Q4 was almost over, so referencing statements from September is again pointless.
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