ACM Research Is Gaining Ground as China Replaces Foreign Semiconductor Equipment

• ACM Research’s China revenue grew 15.8% in 2025, despite a 0.5% decline in China’s overall semiconductor equipment market.
• Revenue outside wafer cleaning surged approximately 160% in the first half of 2026, reaching 51.3% of consolidated sales.
• ACM Research’s $2.5 billion backlog, up 88.2% year over year, supports its 2026 revenue growth outlook.

China’s Equipment Localization Is Creating New Opportunities for ACM Research

China’s semiconductor equipment industry is undergoing a significant restructuring as domestic manufacturers expand their capabilities in wafer cleaning, deposition, etching, electrochemical plating, and advanced packaging. Although U.S. export restrictions have limited Chinese access to certain advanced semiconductor manufacturing technologies, these restrictions have also accelerated efforts by Chinese semiconductor manufacturers to qualify domestically produced equipment. This shift is creating opportunities for local suppliers to increase their penetration of China’s semiconductor manufacturing industry, even when overall capital expenditures are relatively weak.

ACM Research (ACMR) is one of the more interesting beneficiaries of this transition because its revenue growth has exceeded that of China’s overall semiconductor equipment market. In 2025, ACMR’s mainland China revenue increased 15.8%, compared with an approximately 0.5% decline in China’s semiconductor equipment market, according to The Information Network’s industry analysis. The divergence indicates that ACMR’s performance is increasingly dependent on expanding its equipment portfolio and increasing its penetration of existing semiconductor customers rather than simply benefiting from rising industry spending.

The distinction is important because China is moving beyond purchasing domestically manufactured equipment primarily for mature semiconductor technologies. Chinese equipment suppliers are expanding their capabilities across more sophisticated manufacturing processes, including those required for advanced logic, memory, and packaging. ACMR’s transition from a predominantly cleaning-equipment supplier toward a broader equipment manufacturer places it in a position to participate in this development.

ACM Research’s Revenue Growth Exceeds China’s Equipment Market

According to Table 1, ACMR’s mainland China revenue increased from $541.0 million in 2023 to $898.0 million in 2025, representing cumulative growth of approximately 66%. During the same period, mainland China’s contribution to consolidated revenue increased from 97.0% to 99.6%, underscoring the company’s dependence on Chinese semiconductor manufacturers.

The concentration of ACMR’s revenue in China presents both an opportunity and a risk. Chinese semiconductor manufacturers have strong incentives to qualify domestically manufactured equipment as export restrictions and geopolitical uncertainty complicate their dependence on foreign suppliers. Once an equipment system is qualified for production, the supplier can benefit from subsequent capacity expansions and additional installations. However, ACMR’s geographic concentration also exposes the company to changes in Chinese capital expenditures, government policies, and the financial condition of domestic semiconductor manufacturers.

The company’s ability to outperform the broader Chinese equipment market in 2025 suggests that its growth is not entirely dependent on industry spending. It is consistent with increasing customer penetration and a broader product portfolio, although the available revenue figures do not independently establish how much of its growth came from replacing foreign equipment suppliers.

China’s Domestic Equipment Suppliers Are Expanding Across Multiple Technologies

China’s equipment localization effort is not limited to a single manufacturing process or supplier. Domestic companies have been developing competitive positions in etching, deposition, wafer cleaning, electrochemical plating, and chemical mechanical polishing. As semiconductor manufacturing becomes more complex, equipment qualification across multiple processing steps is becoming increasingly important to China’s objective of reducing dependence on imported manufacturing technologies.

According to Table 2, equipment-related revenue across six Chinese suppliers increased from approximately $2.6 billion in 2022 to $7.6 billion in 2025. Combined sales increased 29.9% in 2025, with several suppliers recording substantially faster growth than ACMR.

The expansion across these companies illustrates the breadth of China’s domestic equipment development. NAURA has established a broad portfolio spanning several manufacturing processes, while AMEC has expanded in etching and Piotech in deposition. Hwatsing has developed a position in chemical mechanical polishing, another process in which equipment qualification and manufacturing experience create significant barriers to entry.

ACMR’s equipment-related revenue increased 15.2% in 2025, below the combined growth rate of the group. This distinction is important because domestic localization does not benefit every supplier equally. ACMR’s investment case rests increasingly on the introduction and adoption of additional equipment technologies rather than an assumption that the company will automatically capture market share across China’s semiconductor equipment industry.

ACM Research Is Moving Beyond Wafer Cleaning

ACMR initially established its competitive position through wafer cleaning equipment, including its proprietary technologies for removing particles and contaminants during semiconductor manufacturing. Cleaning remains a critical process because increasingly complex device structures and additional processing steps create more opportunities for contamination to affect manufacturing yields.

However, the company’s expansion into electrochemical plating, furnace processing, deposition, and advanced packaging is changing the composition of its revenue. These technologies allow ACMR to address additional manufacturing steps within existing customer facilities, increasing its potential revenue opportunity without requiring a proportional expansion of its customer base.

According to Table 3, revenue outside ACMR’s traditional cleaning category increased from $103.2 million during the first half of 2025 to $268.7 million during the first half of 2026. These businesses accounted for 51.3% of consolidated revenue, compared with 26.6% one year earlier.

The magnitude of the shift is particularly important. Revenue outside cleaning increased approximately 160%, generating $165.5 million of additional sales. Cleaning revenue, meanwhile, declined $29.1 million. Consequently, ACMR’s newer equipment categories generated more than the entire $136.5 million increase in consolidated revenue during the first half of 2026.

This development changes the company’s growth profile. A supplier dependent primarily on wafer cleaning is exposed to the capital expenditure cycle for that equipment category. By expanding into electrochemical plating, furnace technologies, and advanced packaging, ACMR can participate in additional equipment purchases within the same semiconductor manufacturing facilities.

The expansion is also relevant to advanced semiconductor manufacturing, where increasing process complexity creates additional requirements for deposition, plating, cleaning, and packaging. Although the company’s reported categories do not allow all revenue growth to be attributed specifically to artificial intelligence or advanced packaging, the diversification creates opportunities beyond its established cleaning business.

ACM Research’s $2.5 Billion Backlog Supports Its Growth Outlook

On September 30, ACMR disclosed that its Shanghai subsidiary had accumulated approximately $2.5 billion in backlog as of September 29, representing an increase of 88.2% year over year. The increase is significant because it indicates that customer demand has continued to expand despite the uncertainty surrounding China’s semiconductor capital expenditure environment.

The backlog requires careful interpretation, however. The reported amount includes equipment awaiting shipment as well as systems that have already been delivered but have not yet met the requirements for revenue recognition under Chinese accounting standards. Consequently, the backlog cannot be treated as an equivalent amount of future U.S.-GAAP revenue, nor does it establish when individual systems will be accepted by customers.

Management’s latest 2026 revenue guidance of $1.125 billion to $1.175 billion represents approximately 25% to 30% growth over 2025. With $524.2 million reported during the first half, ACMR must recognize approximately $600.8 million to $650.8 million in the second half to meet its guidance. The company’s preliminary nine-month financial results, scheduled for October 28, will provide an opportunity to evaluate whether the growth in equipment orders is translating into recognized revenue at the pace management anticipates.

The distinction between orders, shipments, customer acceptance, and revenue recognition is especially important in semiconductor equipment manufacturing. Systems can require installation, process qualification, and customer acceptance before revenue is recognized. As ACMR expands into additional equipment categories, investors should monitor these factors alongside the reported backlog.

Earnings Growth Has Not Yet Matched Revenue Growth

Although ACMR’s revenue increased 36.0% year over year during the second quarter of 2026, non-GAAP diluted earnings per share increased from $0.55 to $0.61, or approximately 10.9%. Non-GAAP gross margin declined from 48.7% to 46.0%, indicating that the acceleration in equipment sales has not yet produced a comparable improvement in per-share profitability.

The difference between revenue and earnings growth deserves attention because ACMR is investing in the expansion of its equipment portfolio while increasing manufacturing and customer-support capabilities. New product introductions can require additional engineering, qualification, and manufacturing expenditures before they achieve the production volumes necessary to improve operating leverage. Changes in equipment mix can also affect gross margins as different technologies carry different manufacturing costs and pricing characteristics.

An additional consideration is ACMR’s ownership structure. The company reported a 73.2% ownership interest in ACM Shanghai as of its June filing, meaning that a portion of the subsidiary’s earnings is attributable to minority shareholders. Investors therefore need to evaluate earnings attributable to ACM Research and diluted earnings per share rather than assuming that all consolidated profits accrue to holders of ACMR stock.

Export restrictions also create operational considerations. While China’s semiconductor localization effort can increase demand for ACMR’s equipment, restrictions affecting certain components and technologies supplied to its subsidiaries can complicate procurement and manufacturing. The company’s ability to maintain access to necessary components while expanding its product portfolio will influence both revenue growth and profitability.

ACM Research’s $4 Billion Revenue Target Requires a Broader Global Business

ACMR management has outlined a long-term revenue objective exceeding $4 billion, including approximately $2.5 billion from mainland China and $1.5 billion from markets outside China. The company’s planning assumptions envision substantial penetration in cleaning and electrochemical plating, with additional contributions from furnace, PECVD, and track equipment.

The geographic assumptions are particularly ambitious. Markets outside mainland China accounted for only $3.3 million of ACMR’s consolidated revenue in 2025, representing approximately 0.4% of total sales. Achieving $1.5 billion in international revenue would therefore require a major expansion of the company’s overseas customer base and manufacturing presence.

This distinction is important when evaluating ACMR’s long-term potential. China’s equipment localization effort provides a substantial opportunity within a market where the company already has established customers and manufacturing capabilities. International expansion offers another potential source of growth, but the $4 billion objective should be viewed as a long-term management target rather than a dated revenue forecast.

The company’s valuation should reflect the difference between demonstrated growth in China and the more ambitious assumptions associated with its international expansion. A larger addressable market can support higher revenue over time, but earnings growth, customer adoption, and capital efficiency will determine how much of that opportunity ultimately benefits shareholders.

Investor Takeaway

ACM Research is benefiting from a structural change in China’s semiconductor equipment industry as domestic manufacturers expand their capabilities and Chinese semiconductor producers increase their use of locally supplied manufacturing technologies. The company’s 15.8% mainland China revenue growth in 2025, compared with an approximately 0.5% decline in the overall Chinese equipment market, indicates that ACMR is gaining business beyond what would be expected from industry spending alone.

The more significant development is the company’s changing product portfolio. Revenue outside traditional wafer cleaning increased approximately 160% during the first half of 2026 and now accounts for more than half of consolidated sales. Electrochemical plating, furnace processing, and advanced packaging-related technologies are expanding ACMR’s opportunities within existing customer facilities and reducing its dependence on the cleaning equipment market.

The $2.5 billion backlog, representing 88.2% year-over-year growth, supports management’s revenue outlook and suggests that customer demand remains substantial. However, the company’s second-quarter results also demonstrate that revenue growth has not yet translated into comparable earnings-per-share growth. Customer acceptance, product mix, gross margins, and the conversion of backlog into recognized sales will therefore be important measures of performance during the remainder of 2026.

For investors, ACMR represents an opportunity to participate in China’s semiconductor equipment localization through a U.S.-listed company whose growth is increasingly supported by a broader product portfolio. Its long-term potential extends beyond cleaning equipment, but sustained profitability and execution

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