ACM Research continues to shine with advanced SPM

ACM Research has delivered a strong Q2 25 performance, showcasing robust growth across its business segments. Results were driven by increased sales of single wafer cleaning (SPM), plating, and furnace tools, alongside advanced packaging solutions. Despite rising operating expenses, the company demonstrated resilience with significant earnings growth. ACM Research continues to advance its semiconductor packaging technology, addressing the growing demand in AI applications, while navigating strategic market execution and geopolitical risks.

ACM Research, Inc. was founded in 1998 and is headquartered in Fremont, California. It specializes in developing, manufacturing, and selling production equipment and service solutions for the manufacture of semiconductors. The company offers single-wafer and batch wet cleaning, electroplating, stress-free polishing, plasma-enhanced chemical vapor deposition (PECVD), track, and thermal processes. ACM Research's wet wafer cleaning equipment includes two principal models based on Space Alternated Phase Shift (SAPS) technology: Ultra C SAPS II and Ultra C SAPS V.

In addition, it has developed Timely Energized Bubble Oscillation (TEBO) technology for cleaning 2D and 3D wafers with fine feature sizes. These tools are designed for fabricating foundry, logic, and memory chips, including DRAM, 3D NAND-flash memory, and compound semiconductor chips. ACM Research also provides advanced packaging tools for wafer assembly and packaging customers. The company has around 2,000 employees.

Strong Q2 25 performance

ACM Research published its Q2 25 results on August 6, 2025, posting a 6.4% y/y increase in revenue, which reached $215m, primarily driven by strong sales of SPM (single wafer cleaning), Tahoe, plating, and furnace tools, as well as advanced packaging solutions. However, operating income experienced a minus 15.7% y/y decrease to $31.7m, with a margin of 14.7%. This was primarily because operating expenses surged by 38.8% y/y, reflecting increased costs tied to expansion, R&D, and potentially operational inefficiencies. Net profit rose by 22.9% y/y to $29.8m.

Technology for advanced packaging

Plasma-Enhanced Chemical Vapor Deposition (PECVD) is crucial for advanced semiconductor packaging, particularly for AI applications. As chip designs shift to 2.5D and 3D packaging, PECVD is essential for through-silicon via (TSV) passivation, hybrid bonding, and metal layer insulation. It ensures excellent uniformity and dielectric step coverage, vital for TSVs and hybrid bonding. ACM Research's Ultra Pmax PECVD tool addresses the need for high throughput, uniformity, and precision in AI-centric packaging workflows.

Robust CFO increase

ACM Research posted robust revenue CAGR of 44.4% over FY 21-24, reaching $782m, primarily driven by strong demand for advanced semiconductor wafer cleaning equipment. Operating income increased at a CAGR of 57.4% to $151m in FY 24, with margins expanding from 14.9% to 19.3%. Net income rose at a CAGR of 40% to $104m in FY 24.

CFO witnessed robust growth over the last three years, reaching $152m in FY 24 from minus $40.1m in FY 21. In addition, the ROE improved from 8.4% in FY 21 to 13% in FY 24.

In comparison, Veeco Instruments Inc., a local peer, reported a lower revenue CAGR of 7.1% to $717m in FY 24. Operating income increased at a CAGR of 9.2% to $73.9m in FY 24. Net income rose at a CAGR of 41.5% to $73.7m in FY 24.

Robust stock returns

Over the past year, the company's stock delivered impressive returns of approximately 23.6%. In comparison, Veeco Instruments’ stock delivered negative returns of around 35.6% over the same period.

ACM Research is currently trading at a P/E of 13x, based on the FY 25 estimated EPS of $1.9, which is lower than its 3-year historical average of 13.3x and that of Veeco Instruments (P/E of 38x). Likewise, in terms of EV/EBIT, the company is currently trading at 5.4x, based on the estimated EBIT of $171.7m in FY 25, which is lower than its 3-year historical average of 5.5x, and well below that of Veeco Instruments (27.8x).

ACM Research is largely liked by nine analysts who cover the stock, with eight having ‘Buy’ ratings and one a ‘Hold’ rating with an average target price of $34.8, implying 38.7% upside potential from its current price.

Looking ahead, analysts anticipate revenue CAGR of 17.9% over FY 24-27, reaching $1.3bn in FY 27. Net income is estimated to rise at a CAGR of 21.7% to $187m, with margins expanding by 130bp to 14.6%. Likewise, analysts estimate a revenue CAGR of 2.7% and a net profit CAGR of minus 4.7% for Veeco Instruments.

Overall, the company demonstrates strong growth and promising future prospects, driven by its advanced semiconductor packaging technology and robust financial performance. Despite increased operating expenses, the company has shown resilience with rising net profits and impressive stock returns.

However, the company faces principal risks including US trade and export controls affecting its China business, supply chain disruptions delaying orders, and margin pressures from rising costs and inflation. Strategic market execution and geopolitical risks also pose challenges. Emphasizing supply chain resilience and product localization aims to mitigate these threats.